Fitch rates OCBC notes BBB

Fitch Ratings said it assigned Oversea-Chinese Banking Corp. Ltd.'s (OCBC) proposed Singapore dollar-denominated non-cumulative non-convertible perpetual capital securities an expected rating of BBB.

The notes are intended to qualify as the bank's Basel III additional tier 1 capital securities.

The agency said the proposed securities are rated five notches below OCBC's viability rating of aa-, comprising two notches for loss severity and three notches for non-performance risk, in line with Fitch's bank rating criteria.

“The proposed securities have high loss-severity risk due to their deep subordination status,” the agency said in a news release.

“The proposed securities, together with all other additional tier 1 capital securities issued or guaranteed by OCBC, will rank ahead of claims only from OCBC's ordinary shareholders, and rank below all senior liabilities and tier 2 capital securities of the bank in liquidation.”

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