OREANDA-NEWS. Fitch Ratings has confirmed the rating on Singapore-based United Overseas Bank Limited's (UOB) USD200m 3.50% Basel III-compliant Tier 2 subordinated notes due 2026 at 'A+'.

The USD200m is an addition to the USD500m notes issued in Singapore on 16 March 2016. The notes will be issued under the bank's SGD15bn Euro medium-term note programme.

Fitch assigned the notes a final rating on 15 March 2016.

KEY RATING DRIVERS
The Basel III-compliant Tier 2 securities are rated one notch below UOB's 'aa-' Viability Rating (VR). This reflects their higher loss-severity risk relative to senior unsecured instruments, which is due to their subordinated status, the presence of a non-viability clause and the partial, rather than mandatory, full write-down feature at the point of non-viability.

The Monetary Authority of Singapore has sole discretion in determining if UOB is non-viable. If it does so, the notes may be written down in full or in part to the extent necessary to restore the bank's viability. A write-down of the Tier 2 notes will occur only after any Additional Tier 1 securities with loss-absorption features are fully written off, after which the Tier 2 notes would be written down pro rata with other parity Tier 2 instruments containing loss-absorption features. The write-down would be permanent.

No additional notching has been ascribed to non-performance risk, as Fitch regards it to be minimal relative to the VR assigned. The notes will not qualify for equity credit under Fitch's criteria.

In the event of any winding-up proceeding, holders of these notes and other UOB Tier 2 securities will rank below the bank's senior creditors, including covered bondholders and depositors, but above the bank's ordinary shareholders, preference shareholders and holders of perpetual capital securities in priority of claims. The notes will rank equally with all subordinated debts issued by UOB qualifying as Tier 2 capital securities.

RATING SENSITIVITIES
A change in UOB's VR will impact the notes' rating.

For more details on UOB's ratings and credit profile, see "Fitch Affirms Major Singaporean Banks at 'AA-'; Outlook Stable" dated 14 August 2015 and its rating report dated 27 October 2015, available at www.fitchratings.com

UOB's other ratings are as follows:
Long-Term Issuer Default Rating 'AA-'; Outlook Stable
Short-Term Issuer Default Rating 'F1+'
Viability Rating 'aa-'
Support Rating '1'
Support Rating Floor 'A-'