Fitch: Westpac convertibles BBB

Fitch Ratings said it assigned a BBB rating to Westpac Banking Corp.'s $1.25 billion fixed-rate resetting perpetual subordinated contingent convertible securities.

The notes qualify as additional tier 1 securities for regulatory capital purposes, Fitch said.

The notes are rated five notches lower than Westpac's viability rating of AA-, Fitch said.

Two notches are for loss severity and three notches for incremental non-performance risk in line with the agency's approach to rating hybrid capital securities, the agency explained.

The two notches for loss severity reflect that the notes can be converted to ordinary equity of Westpac before the point of non-viability, Fitch added.

Westpac has solid profitability against that of many international peers and can quickly increase its internal capital generation by placing a discount on the dividend reinvestment plan, the agency said.

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