Fitch Ratings has assigned
The notes will be issued under OCBC's
Key Rating Drivers
The securities are rated four notches below OCBC's 'aa-' Viability Rating, comprising two notches for loss severity and two notches for non-performance risk, in accordance with Fitch's Bank Rating Criteria.
The loss severity is high in light of the securities' deep subordination. In the event of any winding-up proceeding, holders of these securities and all other additional Tier 1 securities of OCBC will rank ahead of claims of only OCBC's ordinary shareholders, and below the bank's senior creditors, including covered bondholders, depositors and holders of the bank's Tier 2 capital securities, in priority of claims.
The securities are also subject to write-off at a point of non-viability as determined by the
Non-performance risk arises from the unrestricted discretion that OCBC and MAS have in cancelling any periodic distribution on the securities.
OCBC will also not be obliged to make any distribution if it is prevented from doing so under
Rating Sensitivities
Factors that could, individually or collectively, lead to negative rating action/downgrade:
A downgrade of OCBC's Viability Rating will result in a downgrade of the securities.
Factors that could, individually or collectively, lead to positive rating action/upgrade:
The rating on the securities will be upgraded if OCBC's Viability Rating is upgraded. However, positive rating momentum is limited as the Viability Rating is already near the top for Fitch's global bank universe.
Best/Worst Case Rating Scenario
International scale credit ratings of Financial Institutions and Covered Bond issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from '
Date of Relevant Committee
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
ESG Considerations
Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg
(C) 2022 Electronic News Publishing, source