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Moody's assigns Baa2 (hyb) rating to Dah Sing Bank's contractual non-viability subordinated debt.

Summary: The outlook for all ratings is negative

Moody's Investors Service, ("Moody's") has

assigned a B2 (hyb) rating to Dah Sing Bank's proposed subordinated

notes with contractual point of non-viability (PONV) loss absorption

features. The notes mature in January 2024, and are callable by the bank

after the first five years. This is the first time Moody's has assigned a

rating to a Basel III-compliant subordinated debt instrument issued by a

Hong Kong bank.

The subordinated notes with PONV loss absorption features are rated two

notches below Dah Sing Bank's a3 adjusted baseline credit assessment

(BCA). The rating outlook is negative, in line with the negative outlook

for the bank.

The rating is subject to the receipt of final documentation, the terms

and conditions of which are not expected to change in any material way

from the draft documents that Moody's has reviewed.

Moody's has also assigned a (P)B2 rating for subordinated obligations

under the $2 billion MTN programme of Dah Sing Bank, Dah Sing MTN

Financing Limited, and Dah Sing SAR Financing Limited. Going forward,

Moody's expects all subordinated debt securities issued under the

programme will be Basel III-compliant. There is no impact on the B1

ratings of outstanding Basel II-compliant subordinated notes issued under

the programme prior to the amendment of the program documents.


The MTN programme's conditions have been revised to incorporate Basel

III-compliant PONV language, allowing future subordinated debt drawdown

to be considered as Tier 2 capital.

Under the programme's terms, the Hong Kong Monetary Authority (HKMA) has

discretion to determine the point at which the bank is non-viable. The

principal on these capital securities would be written down, partially or

in full in the event that the HKMA notifies the bank that without such

write-off, the bank would become non-viable or it decides to make a

public sector injection of capital without which the bank would become


In line with Moody's standard notching guidance for subordinated debt

with contractual non-viability loss-absorption language, the assigned

ratings are positioned two notches below Dah Sing Bank's a3 adjusted BCA.

The rating for the bank's contractual PONV subordinated debt is one notch

below that of the bank's plain vanilla subordinated debt. The additional

notching reflects the potential uncertainty associated with the timing of

the loss absorption of the contractual PONV subordinated debt.

The (P)B2 rating on the MTN programme subordinated obligations of Dah

Sing Bank, Dah Sing MTN Financing Limited, and Dah Sing SAR Financing

Limited is provisional. Ratings assigned to future drawdowns will be

contingent upon their specific terms and conditions, which are expected

to be the same as those under the programme.

Technically, the (P)B2 rating is a downgrade from the prior (P)B1

rating assigned to Basel II-compliant subordinated obligations under the


Dah Sing Bank's other ratings remain unaffected. The ratings are as


Dah Sing Bank, Limited:

- BCA/Adjusted BCA: a3/a3

- Bank Financial Strength Rating: C

- Local and foreign currency long-term/short-term deposits: A3/P-2

- Foreign currency senior unsecured: A3

- Foreign currency senior unsecured MTN: (P)A3

- Foreign currency subordinated debt: B1

- Foreign currency junior subordinated: B2 (hyb)

- Foreign currency junior subordinated MTN: (P)B2

The outlook for all ratings is negative

Dah Sing MTN Financing Limited:

- Local currency backed senior unsecured MTN: (P)A3

- Local currency backed junior subordinated MTN: (P)B2

The outlook for all ratings is negative

Dah Sing SAR Financing Limited:

- Local currency backed junior subordinated MTN: (P)B2

The outlook for all ratings is negative

Dah Sing Bank is headquartered in Hong Kong and reported total assets of

HKD161 billion ($21 billion) at end-June 2013.

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Publication:EMBIN (Emerging Markets Business Information News)
Date:Jan 20, 2014
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