October 17, 2016 / 3:32 PM / a year ago

Fitch Rates Landshypotek's Tier 2 Issue 'A-'

(The following statement was released by the rating agency) LONDON, October 17 (Fitch) Fitch Ratings has assigned Landshypotek Bank AB's (Landshypotek; A/Stable/F1) SEK1.2bn Tier 2 subordinated debt issue a long-term rating of 'A-'. KEY RATING DRIVERS The issue is rated one notch below Landshypotek'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 Landshypotek's VR and to a change in Fitch's assessment of loss severity or non-performance risk. The rating is also sensitive to additional notching for loss severity, which could arise from a material increase in balance sheet encumbrance or senior unsecured issuance. Landshypotek's VR is primarily sensitive to weakening of asset quality metrics or any indication of an increase in risk appetite. Any notable weakening of earnings or capital could also result in a downgrade. A prolonged dislocation in funding markets, reducing Landshypotek's access to funding or materially increasing pricing would also be rating- negative. Contact: Primary Analyst Bjorn Norrman Senior Director +44 20 3530 1330 Fitch Ratings Limited 30 North Colonnade London E14 5GN Secondary Analyst David Bengtsson Analyst +44 20 3530 1664 Committee Chairperson Olivia Perney Guillot Senior Director +33 144 299 174 Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153, Email: elaine.bailey@fitchratings.com. 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