OREANDA-NEWS. Fitch Ratings has assigned Nykredit Realkredit's (Nykredit; A/Stable/F1) EUR50m Tier 2 subordinated debt issue a Long-term rating of 'A-'.

KEY RATING DRIVERS
The issue is rated one notch below Nykredit's 'a' Viability Rating (VR). The notching reflects the notes' higher expected loss severity relative to senior unsecured creditors. Fitch did not apply additional notching for incremental non-performance risk relative to the VR given that any loss absorption would only occur once the bank reaches the point of non-viability.

RATING SENSITIVITIES
The issue's rating is sensitive to changes in Nykredit's VR. The latter is sensitive to Nykredit being unable to competitively access wholesale funding markets or if the group reduces its focus on liquidity. An increased reliance on international debt investors who may prove less stable during financial stress, or increasing risk appetite - particularly at Nykredit Bank - would also be rating negative.

The issue's rating is also sensitive to a change in Fitch's assessment of loss severity or non-performance risk.