Moody’s gives Volksbank Wien notes Ba2(hyb)

Moody's Investors Service said it assigned a provisional Ba2(hyb) rating to the proposed sub-benchmark-size undated preferred stock non-cumulative fixed- to reset-rate additional tier 1 notes to be issued by Volksbank Wien AG.

The agency said the rating takes into account the instrument's undated deeply subordinated claim in liquidation, as well as the security's non-cumulative coupon deferral features, and is positioned three notches below Volksbank’s baa2 adjusted baseline credit assessment.

One notch reflects the high loss given failure that the securities are likely to face in a resolution scenario, due to their deep subordination, small volume and limited protection from residual equity, Moody’s said.

The rating also incorporates two additional notches to reflect the higher risk associated with the non-cumulative coupon skip mechanism, which could take effect prior to the issuer reaching the point of non-viability, the agency added.

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