(Repeat for additional subscribers)
June 13 (The following statement was released by the rating agency)
Fitch Ratings has published the National Long-Term Rating on CTBC Bank Co., Ltd.'s
(CTBC Bank) upcoming TWD15bn subordinated bonds at 'AA-(twn)', on Rating Watch
The company's subordinated bonds will be issued in two tranches: 15-year
TWD13.5bn and 10-year TWD1.5bn. They carry a fixed coupon rate of 2% and a
floating coupon rate respectively, with maturities on 26 June 2029 and 26 June
2024. The proceeds, which qualify as Taiwanese Basel III Tier 2 capital, will be
used to refinance maturing debts and enhance the bank's capitalization.
KEY RATING DRIVER - Debt Rating
Fitch rates the bonds two notches down from CTBC Bank's anchor rating, its
Viability Rating (VR) of 'a' that is equivalent to 'AA+(twn)' on the National
Rating scale. The notching reflects poor recovery prospects at the point of
non-viability or government receivership and absence of terms for coupon
omission and deferral. Fitch views the recovery prospects for the bonds are poor
as Taiwan's authorities would only move a bank into insolvency administration
when it reaches a very low capital level or a 2% capital adequacy ratio. The
notching is in accordance with Fitch's criteria on rating bank subordinated and
The bank's VR is currently on RWN because the acquisition of The Tokyo Star
Bank, Ltd. by CTBC Bank will probably weaken the bank's core capitalisation and
consolidated earnings quality. Fitch will resolve the Rating Watch when there is
greater clarity on CTBC Bank's consolidated financials, likely in August 2014.
Tokyo Star Bank follows Basel II standards for its capital requirements and
Japanese GAAP for its financial reporting, while CTBC Bank uses Basel III
standards and IFRS.
RATING SENSITIVITIES - Debt Rating
Any rating action on CTBC Bank will trigger a similar move on the debt rating.
The other ratings on CTBC Bank are unchanged and are as follows:
Long-Term Foreign Currency IDR at 'A'; on RWN
Short-Term Foreign Currency IDR at 'F1'; on RWN
National Long-Term Rating at 'AA+(twn)'; on RWN
National Short-Term Rating at 'F1+(twn)'; on RWN
Viability Rating at 'a'; on RWN
Support Rating at '3'
Support Rating Floor at 'BB+'
Senior unsecured bonds' National Long-Term Rating at 'AA+(twn)'; on RWN
Subordinated bonds' Long-Term Rating at 'A-'; on RWN, and National Long-Term
Rating at 'AA(twn)'; on RWN
Perpetual cumulative New Taiwan dollar subordinated bonds' Long-Term Rating at
'BBB'; on RWN, and National Long-Term Rating at 'A+(twn)'; on RWN
Perpetual cumulative US dollar subordinated bonds' Long-Term Rating at 'BBB'; on
Perpetual non-cumulative New Taiwan dollar subordinated bonds' National
Long-Term Rating at 'A(twn)'; on RWN