TEXT - Fitch raises Yorkshire Building Society rating
Jan 10 - Fitch Ratings has upgraded Yorkshire Building Society's (YBS) GBP100m 13.5% subordinated contingent convertible Tier 2 notes due 1 April 2025 (XS0498549194) to 'BBB-' from 'BB+'. The upgrade of the outstanding notes reflects a revision of Fitch's subordinated and hybrid securities rating criteria (see 'Assessing and Rating Bank Subordinated and Hybrid Securities', dated 5 December 2012 at www.fitchratings.com) and is not linked to YBS's standalone credit profile. YBS has a Long-term Issuer Default Rating (IDR) of 'BBB+' with a Stable Outlook, a Short-term IDR of 'F2', a Viability Rating (VR) of 'bbb+', a Support Rating of '5' and a Support Rating Floor of 'No Floor'. These ratings are unaffected by this rating action According to Fitch's subordinated and hybrid securities rating criteria, Tier 2 instruments with contractual write-off language or conversion triggers are likely to be notched between once and four times from the VR. Given the very low automatic conversion feature of YBS' convertible issue (5% regulatory core Tier 1 capital) compared with the bank's current core Tier 1 ratio (12.9%), Fitch has therefore revised its view of the non-performance of the instrument from 'Average' to 'Minimal' and has reduced the total notching from three to two notches. RATING SENSITIVITIES The rating of YBS' subordinated contingent convertible Tier 2 notes is linked to the bank's VR and is mainly sensitive to a change in the bank's VR.