RPT-Fitch Rates Bankia's EUR1bn Subordinated Debt 'B+'

Thu May 15, 2014 6:05am EDT

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May 15 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings has assigned Bankia, S.A.'s EUR1bn lower tier 2 subordinated debt, issued under its EUR30bn debt issuance programme, a 'B+' rating.

KEY RATING DRIVERS

The debt is notched down one level from Bankia's Viability Rating (VR) of 'bb-' for loss severity because of lower recovery expectations relative to senior unsecured debt. The securities are subordinated to all senior creditors.There is no notching for incremental non-performance risk relative to the bank's VR, reflecting no coupon flexibility. The rating is in line with Fitch's criteria 'Assessing and Rating Bank Subordinated and Hybrid Securities'.

The securities have a 10-year maturity, bear a fixed reset coupon rate from year five and are callable by the issuer from year five, subject to regulatory authorisation.

RATING SENSITIVITIES

As the securities are notched from Bankia's VR, their rating is sensitive to changes in the bank's VR.

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