S&P awards St George’s saintly issue a BBB rating
(20 July 2004 – Australia) Ratings services company Standard & Poor’s has given St George Bank’s proposed A$300 million subordinated adjustable income non-refundable Tier 1 security (SAINTS) a ‘BBB’ long-term rating.
S&P said the SAINTS were perpetual noncumulative preference shares, and as such the ratings agency supported the bank’s ability to absorb any losses.
The issue is set to be listed on the Australian Stock Exchange following finalisation of the issue allocation. Following APRA approval, the issue can be redeemed or converted to ordinary shares in 2014, or earlier if subject to tax or regulatory events.
S&P Financial Services credit analyst, Craig Bennett, said the three-notch rating differential between St George’s SAINTS and the bank’s senior debt reflected the equity like-characteristics of the issue, including its interest deferral features.
"Although the ultimate issue size may increase up to A$350 million, neither the rating on St George nor the rating on SAINTS will be affected," he said.
S&P said the ability to pay the noncumulative dividend on the issue was subject to the bank meeting earnings and capital adequacy tests, and that if the bank was in liquidation, holders of the issue ranked equally with the other preference issues of the bank.
"Standard & Poor’s recognises the capital credit for the issue in its 25 percent hybrid basket, supported by its equity-like characteristics and its regulatory approval as Tier 1 capital," Bennett said.
The issue is set to be listed on the Australian Stock Exchange following finalisation of the issue allocation. Following APRA approval, the issue can be redeemed or converted to ordinary shares in 2014, or earlier if subject to tax or regulatory events.
S&P Financial Services credit analyst, Craig Bennett, said the three-notch rating differential between St George’s SAINTS and the bank’s senior debt reflected the equity like-characteristics of the issue, including its interest deferral features.
"Although the ultimate issue size may increase up to A$350 million, neither the rating on St George nor the rating on SAINTS will be affected," he said.
S&P said the ability to pay the noncumulative dividend on the issue was subject to the bank meeting earnings and capital adequacy tests, and that if the bank was in liquidation, holders of the issue ranked equally with the other preference issues of the bank.
"Standard & Poor’s recognises the capital credit for the issue in its 25 percent hybrid basket, supported by its equity-like characteristics and its regulatory approval as Tier 1 capital," Bennett said.
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