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Fitch Maintains Kiwibank on Rating Watch Negative Following Shareholder Change
November 7, 2016 / 2:27 AM / 9 months ago

Fitch Maintains Kiwibank on Rating Watch Negative Following Shareholder Change

(The following statement was released by the rating agency) SYDNEY, November 06 (Fitch) Fitch Ratings has maintained the Rating Watch Negative (RWN) on Kiwibank Limited's (Kiwibank) Long-Term Foreign-Currency Issuer-Default Rating (IDR) of 'AA' and Long-Term Local-Currency IDR of 'AA+', following the completion of an ownership restructure on 31 October 2016. Kiwibank's other ratings have not been considered as part of this rating action. KEY RATING DRIVERS The RWN on Kiwibank's Long-Term IDRs reflects the proposed withdrawal on 28 February 2017 of the guarantee provided by New Zealand Post (NZ Post) in favour of Kiwibank's liabilities. This follows the completion of an ownership restructure, which saw NZ Post sell 47% of its shareholding in Kiwi Group Holdings Limited (KGHL), the holding company of Kiwibank, to New Zealand Superannuation Fund (25%) and the Accident Compensation Corporation (22%), which are also sovereign-owned entities. Kiwibank's IDRs remain aligned with the ultimate owner, the New Zealand sovereign (AA/Stable/F1+), as the guarantee from NZ Post is still in place. Fitch expects the downgrade of Kiwibank's Long-Term IDRs to be limited to one notch if the guarantee is removed as proposed, reflecting the reduced level of a legal and binding commitment to support the bank. The agency believes the sovereign maintains a high propensity to support Kiwibank despite the lower level of legal commitment, as reflected in the provisions and structure of the transaction. The new shareholders have the ability to sell their share to external parties, but the sovereign retains first right of refusal. Additionally, the NZD300m capital facility previously provided to NZ Post to support the bank has been replaced with a facility of the same size directly to the bank. Kiwibank's existing senior debt ratings are unaffected by the proposed removal of the guarantee, as the guarantee covers existing liabilities until final maturity, even if it is removed. Liabilities incurred up until the removal of the guarantee are also covered. Fitch expects to resolve the RWN once the withdrawal of the guarantee has taken place. RATING SENSITIVITIES A one notch downgrade of Kiwibank's IDRs is probable once the guarantee provided by NZ Post is withdrawn. This rating action will not affect the ratings of existing debt, as it remains covered by the guarantee until final maturity. Future senior debt ratings will be subject to the terms and conditions of the issuance. Kiwibank's IDRs and Support Ratings are sensitive to changes in New Zealand's Long-Term Foreign- and Local-Currency IDRs, and ultimately, the sovereign's ability and propensity to provide timely support to the bank. Contact: Primary Analyst: Jack Do Associate Director +61 2 8256 0355 Fitch Australia Pty Ltd Level 15, 77 King St, Sydney NSW 2000 Secondary Analyst: Andrea Jaehne Director +61 2 8256 0343 Committee Chairperson: Parson Singha Senior Director +66 2 108 0151 Media Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: leslie.tan@fitchratings.com. Additional information is available on www.fitchratings.com Applicable Criteria Global Bank Rating Criteria (pub. 15 Jul 2016) here Additional Disclosures Solicitation Status here Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2016 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch's factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch's ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided "as is" without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

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