Moody's assigns Baa2(hyb) rating to Rabobank's senior contingent notes issued in 2010
As for senior debt, the coupons of the SCN may not be cancelled at issuer’s discretion or mandatorily upon a trigger breach. However, the principal of the securities would be permanently written down by 75% if Rabobank Group's Equity Capital Ratio (ECR) fell below 7%, this ratio being defined as the sum of retained earnings and Rabobank Certificates divided by risk-weighted assets.
Moody's expects that this rating will likely transition upwards over the next few years towards A3(hyb), in line with Rabobank's current Tier 2 debt rating. This is because the ECR will improve more quickly than the CET1 ratio because it benefits from earnings retention without suffering from increasing regulatory deductions as Basel 3 transitional provisions for regulatory capital deductions are removed.
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