(The following statement was released by the rating agency)
March 14 - Fitch Ratings has assigned DBS Bank Ltd.’s (DBS) proposed USD-denominated subordinated notes an expected rating of ‘A+(exp)'. The notes will be issued under DBS’s USD15bn global medium term note programme. The final rating is subject to the receipt of final documentation conforming to information already received.
The notes are rated one notch below DBS’s ‘aa-’ Viability Rating to reflect its subordinated status and the absence of any going-concern loss-absorption mechanism. This is in accordance with Fitch’s criteria on rating bank regulatory capital and similar securities.
The notes will represent direct, subordinated and unsecured obligations of DBS, and will rank equally with the bank’s other Lower Tier 2 capital instruments. The subordinated notes will rank below DBS’s senior creditors, including depositors, but they will rank senior to holders of the bank’s share capital, Tier 1 capital securities and Upper Tier 2 securities.
While qualifying as regulatory capital, the notes are not intended to contain any going-concern loss absorption features (such as coupon deferral under specified conditions), which would otherwise have resulted in wider notching for the issue rating.
The notes are expected to qualified as Lower Tier 2 capital as per the Monetary Authority of Singapore’s guidelines. The proceeds will be used for DBS’s general corporate purposes. Fitch notes that DBS has USD2bn in Lower Tier 2 securities that are callable this year.
DBS is 29.7%-owned by the Singapore government, via Temasek Holdings, and is the largest of the three Singapore banking groups by assets.
For more details on DBS’s ratings and credit profile, please refer to “Fitch Affirms DBS at ‘AA-'; Outlook Stable”, dated 29 April 2011, and DBS’s full rating report, dated 11 May 2011, available at www.fitchratings.com.
The list of DBS’s ratings is as follows:
- Long-Term Foreign-Currency Issuer Default Rating ‘AA-'; Outlook Stable
- Short-Term Foreign-Currency Issuer Default Rating ‘F1+’
- Viability Rating ‘aa-’
- Support Rating ‘1’
- Support Rating Floor ‘A-'