TEXT-S&P raise Ibercaja hybrids to 'CCC-'

Tue Nov 27, 2012 12:03pm EST

-- On Nov. 21, 2012, Spain-based Ibercaja Banco S.A. (iberCaja) announced 
the completion of its offer to repurchase, among other securities, its 
outstanding preferred stock and nondeferrable subordinated debt securities.
     -- We are raising our issue ratings on the remaining preferred stock to 
'CCC-' from 'C' and on the remaining nondeferrable subordinated debt to 'BB-' 
from 'D'.
     -- Today's action doesn't affect the counterparty credit ratings or any 
other issue ratings on iberCaja.
    
    Nov. 27 - Standard & Poor's Ratings Services said today that it has raised
its issue ratings to 'CCC-' from 'C' on the remaining preferred stock issued by
Spain-based Ibercaja Banco S.A. (iberCaja) and to 'BB-' from 'D' on its
remaining nondeferrable subordinated debt.

The rating action follows the bank's announcement on Nov. 21, 2012, that it 
had completed its Nov. 12, 2012, tender offer launched to repurchase, among 
other securities, its outstanding preferred stock and nondeferrable 
subordinated debt securities. This action doesn't affect the counterparty 
credit ratings on iberCaja or any other debt issue rating.

In our media release on Nov. 15, 2012, we said that we considered iberCaja's 
tender offer be a "distressed exchange" under our criteria. According to our 
criteria, we lowered our issue ratings to 'C' on the preferred stock and to 
'D' on the nondeferrable subordinated debt (see "Ibercaja's Hybrid And 
Subordinated Debt Downgraded To 'C' and 'D' On Distressed Exchange; No Other 
Ratings Affected"). 

We also stated that we would review our issue ratings on any securities 
subject to the offer that hadn't been purchased upon completion. As a result, 
we have decided to raise the ratings on the preferred stock to 'CCC-' from 'C' 
to reflect our view that, although the distressed exchange offer has been 
completed, there is a high probability of nonpayment of the preferred stock 
dividends in the fiscal year ending June 30, 2014. We think that iberCaja will 
report losses in 2012 once it recognizes the full impact of Spain's new 
provisioning regulation by the end of the year. This would trigger mandatory 
nonpayment because of the narrow earnings test typically included in the terms 
and conditions of the hybrid instruments for Spanish banks. In Spain, the 
payment of the preferred stock dividends for the current fiscal year is 
usually conditioned on the existence of distributable profits in the previous 
full year. Distributable profits are usually defined as the lower of net 
profits of either the bank or the consolidated group as reported to the Bank 
of Spain. We understand that the Bank of Spain could still allow the dividend 
payments to be made if iberCaja reported a loss, but we are unsure whether it 
would exercise this power, even though the dividend on the outstanding EUR8.6 
million of preferred stock would be fairly small. 

We have also decided to raise the ratings on the nondeferrable subordinated 
debt to 'BB-'. In accordance with our criteria, our issue ratings on the 
nondeferrable subordinated debt are two notches below iberCaja's stand-alone 
credit profile, which we assess at 'bb+'. Following the settlement of the 
purchase, the remaining outstanding amount of nondeferrable subordinated debt 
is EUR298 milllion.


RELATED CRITERIA AND RESEARCH

     -- Bank Hybrid Capital Methodology And Assumptions, Nov. 1, 2011
     -- Rating Implications Of Exchange Offers And Similar Restructurings, 
Update, May 12, 2009
     -- Timeliness of Payments: Grace Periods, Guarantees, And Use Of 'D' And 
'SD' Ratings, Dec. 23, 2010
     -- Credit FAQ: Applying The Bank Hybrid Capital Criteria To Specific 
Instruments, Dec. 20, 2011
     -- Ibercaja's Hybrid And Subordinated Debt Downgraded To 'C' and 'D' On 
Distressed Exchange; No Other Ratings Affected, Nov. 15, 2012
     -- S&P Says Lowering Of Some Spanish Banks' Preference Shares Were Due To 
Increased Vulnerability Of Nonpayment, May 28, 2012



RATINGS LIST

Upgraded 
                            To               From
Ibercaja Banco S.A.
 Preferred Stock            CCC-             C
 Subordinated               BB-              D


Complete ratings information is available to subscribers of RatingsDirect on 
the Global Credit Portal at www.globalcreditportal.com. All ratings affected 
by this rating action can be found on Standard & Poor's public Web site at 
www.standardandpoors.com. Use the Ratings search box located in the left 
column.
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