OREANDA-NEWS. Fitch Ratings has assigned Citizens Financial Group, Inc.'s (CFG) $350 million senior debt issuance an expected long-term debt rating of 'BBB+(EXP)'. The senior notes will pay interest semi-annually, and are expected to mature in 2021. CFG intends to use the net proceeds, plus available cash, of the offering to repurchase approximately $500 million of subordinated notes owned by Royal Bank of Scotland Group plc (RBS).

KEY RATING DRIVERS - SENIOR DEBT

CFG's long-term debt ratings are equalized with its long-term IDR of 'BBB+' in accordance with Fitch's rating criteria.

CFG's Issuer Default Rating (IDR) is primarily supported by a solid capital profile. Fitch expects greater upward ratings momentum for CFG over time as the company successfully executes on its strategic initiatives and improves its operating performance, which has demonstrated improvement over the past year.

Despite the improvement in the return on assets, CFG's earnings profile, which remains a key rating driver, lags the peer median, which is in excess of 1% during the quarter. CFG has also grown certain loan categories significantly over the past few years, amidst a competitive lending environment. Lastly, some legacy regulatory matters have yet to be resolved.

Fitch views CFG's ratings as well-situated at their current levels and likely to remain as such over the near term.

RATING SENSITIVITIES - SENIOR DEBT

CFG's senior debt ratings are sensitive to changes to its long-term IDR.

Going forward, positive rating momentum could emerge should management continue to execute on its strategic initiatives and enhance its franchise in key markets and products. The key to this would be whether execution of these strategies results in improved profitability commensurate with higher rated peers. Coupled with strategic execution and improved profitability, positive rating momentum would incorporate an expectation that CFG maintains sound asset quality and solid capital levels, consistent with higher rated peers.

CFG's long-term IDR is currently 'BBB+' and was last affirmed on Aug. 19, 2015. Please refer to the press release 'Fitch Affirms Citizens Financial Group Inc.'s IDR at 'BBB+'; Outlook Remains Stable', dated Aug. 19, 2016 for additional details.

Fitch expects to assign the following rating:

Citizens Financial Group, Inc.

--Senior unsecured debt 'BBB+(EXP)'.