OREANDA-NEWS. S&P Global Ratings today assigned its 'BB-' long-term issue rating to the proposed additional Tier 1 notes by Standard Chartered PLC (SCPLC; BBB+/Stable/A-2). The issue rating is subject to our review of the final issuance documentation.

We are assigning an issue rating to these notes in accordance with our criteria for hybrid capital instruments (see "Bank Hybrid Capital And Nondeferrable Subordinated Debt Methodology And Assumptions," published Jan. 29, 2015, on RatingsDirect). The rating reflects our assessment of SCPLC's unsupported group credit profile of 'a-' and our approach, which involves deducting:One notch because the notes are contractually subordinated;Two notches because we expect the notes to have Tier 1 regulatory capital status;One notch because the notes contain a contractual write-down clause;One notch because the notes contain a mandatory, going-concern conversion feature and we expect the bank will maintain a common equity Tier 1 (CET1) ratio (calculated on a fully loaded Basel III basis) that is 300-700 basis points above the 7% conversion trigger. At the end of June 2016, SCPLC reported a 13.1% CET1 ratio; andOne notch because the notes are issued by a non-operating holding company (NOHC), where we see potential structural subordination and consider it unclear that the NOHC would avoid defaulting on this instrument if SCPLC was to default on an equivalent hybrid instrument. (For more information on the use of this notch, see "Credit FAQ: The Rating Implications Of The Emerging Bank Resolution Frameworks In The U. K., Germany, Austria, And Switzerland," published Feb. 3, 2015.)Our view of these notes as having "intermediate" equity content is based on several factors. In particular, we expect that they will be regulatory Tier 1 capital instruments and will have no coupon step-up. In addition, the notes can absorb losses on a going-concern basis through the principal conversion feature and the non-payment of coupons, which are fully discretionary.