Fitch Rates Allied Irish Banks' Upcoming Tier 2 Issue 'BB-(EXP)'
OREANDA-NEWS. Fitch Ratings has assigned Allied Irish Banks, Plc's (AIB; BB/Positive) upcoming Tier 2 subordinated debt issue an expected Long-term rating of 'BB-(EXP)'.
The assignment of the final rating is contingent on receipt of final documentation confirming to information already received.
KEY RATING DRIVERS
The issue is rated one notch below AIB's 'bb' Viability Rating (VR), reflecting the higher than average loss severity of this type of debt than senior unsecured obligations. Fitch has not applied additional notching for incremental non-performance risk relative to the VR given that loss absorption would only occur once the bank reaches the point of non-viability.
RATING SENSITIVITIES
As the securities are notched down from AIB's VR, their rating is mostly sensitive to any change in this rating. The Positive Outlook on AIB's Long-term IDR reflects Fitch's view that as improvements in the bank's capital profile and deleveraging of problematic assets continue to feed through to its credit profile, the ratings may be upgraded. However, if any of Fitch's expectations are not met, or if macroeconomic conditions reverse and cause further weakening of asset quality to the extent that impairment charges would compromise the banks' profitability and therefore capital flexibility, this would be rating negative.
The issue's rating is also sensitive to a change in Fitch's assessment of loss severity or non-performance risk.
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