OREANDA-NEWS. July 06, 2015. Fitch Ratings has today affirmed Rabobank’s Long-term Issuer Default Rating (IDR) at ‘AA-‘ with a Stable Outlook. The short-term IDR has been affirmed at ‘F1+’, also with a Stable Outlook.

Fitch assigns separate ratings to capture a bank’s stand-alone creditworthiness – reflected in its Viability Rating (VR) – and the likelihood of it receiving external support in case of need – reflected in its Support Rating (SR) and Support Rating Floor (SRF). A bank’s Issuer Default Ratings and issue ratings are derived from the VR and support ratings.

On 20 May 2015 Rabobank Group’s SR and SRF (expressing sovereign support) were downgraded and revised to ‘No Floor’ respectively. However, Rabobank’s Long-term and Short-term IDR were unaffected by that rating action. Today Rabobank’s VR was downgraded to reflect a no longer outstanding but still solid capitalisation and modest, although improved, structural profitability. Fitch expects profitability to further improve, strengthening internal capital generation and hence capitalisation. However, this one notch downgrade of the VR has been compensated by a ‘Junior Debt Buffer Uplift’: Fitch has notched up Rabobank’s Long-term IDR once from the group’s VR to reflect the substantial protection to senior creditors by the group’s qualifying junior debt. The result is that the Long-term IDR has been affirmed at ‘AA-‘. The Outlook has been changed to Stable from Negative.

Please note that in Fitch’s methodology subordinated debt and hybrid securities are notched off Rabobank’s VR. Therefore, their respective ratings have been downgraded by one notch in line with the downgrade of Rabobank’s VR.