OREANDA-NEWS. March 16, 2015. Fitch Ratings has assigned Credito Emiliano's (Credem, BBB+/Negative/bbb+) EUR200m subordinated callable fixed rate reset Tier 2 debt issue a rating of 'BBB'.

The notes have an original maturity date in 2025, with an issuer call option in 2020. They will pay a 3.125% fixed annual coupon until the reset date.

The notes qualify as Tier 2 capital under the Capital Requirements Directive (CRD) IV. They contain contractual loss absorption features, which will be triggered at the point of non-viability of the bank, with no equity conversion feature.

The notes can be redeemed in whole but not in part, at their principal amount together with interest accrued upon the occurrence of a change in the regulatory classification of the notes that would be likely to result in their exclusion, in whole, as Tier 2 capital of Credem.

The subordinated notes will be transferable on the Luxemburg Stock Exchange.

KEY RATING DRIVERS
The notes are rated one notch below Credem's Viability Rating (VR) of 'bbb+', in accordance with Fitch's criteria for "Assessing and Rating Bank Subordinated and Hybrid Securities". The notching includes one notch for loss severity and zero notches for non-performance risk.

The one notch for loss severity reflects the below-average recovery prospects for the notes in case of non-viability. Fitch has applied zero notches for incremental non-performance risk, as the 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.

RATING SENSITIVITIES
The subordinated debt rating is directly linked to Credem's VR and is sensitive to the same factors that may affect the bank's VR.

The notes' rating is also sensitive to a change in notching should Fitch change its assessment of loss severity or non-performance risk.