OREANDA-NEWS. September 15, 2015. Fitch Ratings has assigned Santander UK Group Holdings plc's (SGH; A/Positive/F1/a) Tier 2 dated subordinated notes a final 'A-' rating.

SGH issued notes denominated in US dollars, which were priced on 8 September 2015 and will be settled on 15 September 2015. The amounts issued were USD1bn (4.75% fixed-rate, ISIN:XS1291333760; US80281LAA35) and USD500m (5.625% fixed-rate, ISIN:XS1291352711; US80281LAB18).

KEY RATING DRIVERS
The dated subordinated notes are rated one notch below SGH's 'a' Viability Rating (VR) in line with Fitch's criteria for rating banks' subordinated and hybrid securities. The notching reflects the above-average loss severity of this type of debt.

The terms of the notes include a reference to noteholders who are bound by UK bail-in power. Given the lack of coupon deferral features, we have not applied notching for the non-performance risk of the notes relative to the risks captured by the issuer's VR. We expect the non-performance risk of the notes to be closely related to the factors that drive SGH's VR.

RATING SENSITIVITIES
The notes' rating is primarily sensitive to a change in SGH's VR. Double leverage at SGH, the holding company, could result in its VR being rated below Santander UK's VR, and hence a downgrade of the securities.

The notes' rating is also sensitive to a change in their notching, which could arise if Fitch changes its assessment of the probable loss severity of the notes or of the probability of their non-performance relative to the risk captured in SGH's VR.