Fitch rates Fibabanka notes B+

Fitch Ratings said it assigned Fibabanka AS' (BB-/stable/bb-) planned issue of Basel III-compliant Tier 2 capital notes an expected rating of B+(EXP).

The size of the issue is not yet determined but is likely to be up to $300 million.

The notes qualify as Basel III-compliant Tier 2 instruments and contain contractual loss absorption features, which will be triggered at the point of non-viability of the bank. According to the draft terms, the notes are subject to permanent partial or full write-down upon the occurrence of a non-viability event (NVE). There are no equity conversion provisions in the terms.

The notes are rated one notch below Fibabanka's viability rating of bb- in accordance with Fitch's "Global Bank Rating Criteria." The notching includes zero notches for incremental non-performance risk relative to the viability rating and one notch for loss severity, the agency said.

Fitch said it applied zero notches for incremental non-performance risk, as it believes that write-down of the notes will only occur once the point of non-viability is reached and there is no coupon flexibility prior to non-viability.

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