OREANDA-NEWS. August 17, 2015. Fitch Ratings has assigned Barclays Africa Group Limited's (BAGL) forthcoming Basel III compliant subordinated notes (Tier 2 notes) an expected National Rating of 'AA+(zaf)(EXP)'.

The notes will be issued under BAGL's existing ZAR30bn domestic medium-term note programme, under which BAGL has already issued both senior unsecured notes and Basel III compliant Tier 2 notes.

Final ratings are subject to the receipt of final documentation conforming to the information already received by Fitch.

The Tier 2 notes will qualify as regulatory Tier 2 capital under Basel III, which was introduced in South Africa on 1 January 2013. The notes contain contractual loss absorption features, which will be triggered at the point of non-viability of the bank. According to the draft terms, the notes can be fully or partially written off upon the occurrence of a trigger event, at the discretion of the regulator, the South Africa Reserve Bank (SARB). Any partial write down would be permanent. There are no equity conversion provisions in the terms.

KEY RATING DRIVERS
BAGL has a National Long-term Rating of 'AAA(zaf)' with a Stable Outlook and a National Short-term Rating of 'F1+(zaf)'. The notes' rating is notched down once from BAGL's National Long-term Rating to reflect Fitch's view of the notes' potential loss severity via contractual write-off features. The rating of the notes reflects the likelihood of a partial write-down rather than a full write-down.

RATING SENSITIVITIES
The ratings are linked, and are therefore sensitive to a change in BAGL's National Long-term Rating, which reflects the bank's creditworthiness relative to the best credits in South Africa.

BAGL's other ratings are as follows:

Long-term Issuer Default Ratings (IDR): 'A-'; Outlook Negative
Local currency Long-term IDR: 'A-'; Outlook Stable
Short-term IDR: 'F2'
National Long-term Rating: 'AAA(zaf)'; Outlook Stable
National Short-term Rating: 'F1+(zaf)'
Viability Rating: 'bbb'
Support Rating: '1'