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Fitch Upgrades Popular's Preference Shares to 'B'
March 12, 2013 / 4:51 PM / 5 years ago

Fitch Upgrades Popular's Preference Shares to 'B'

(The following statement was released by the rating agency) BARCELONA/LONDON, March 12 (Fitch) Fitch Ratings has upgraded Banco Popular Espanol, SA's (Popular; 'BB+'/Stable/'bb+') preference shares, issued through its vehicles, to 'B' from 'B-' and removed them from Rating Watch Positive (RWP). RATING ACTION RATIONALE The rating action follows the approval to amend the trigger on the coupon omission of the notes from the availability of "Distributable Profits" to "Distributable Profits and Reserves". The change lowers the coupon omission trigger to the prevailing regulatory capital minima and will therefore make it harder for the issuer not to pay coupons on the notes. Popular is now able to pay coupons out of distributable reserves and not just out of the previous year's income. RATING DRIVERS According to Fitch's criteria, the notching of hybrid instruments reflects an assessment of relative loss severity and an assessment of incremental non-performance risk relative to that captured by the anchor rating, usually the Viability Rating (VR). In this case, Fitch applies two notches for loss severity as recoveries are expected to be poor relative to the average. In relation to the non-performance risk, Fitch applies two extra notches for non-performance risk given the high relative risk of non-performance from the combination of residual coupon-deferral risk and the potential vulnerability to a distress debt exchange. In total, Popular's preference shares are now notched four times from its VR. SENSITIVITIES Popular's preference shares' ratings are sensitive to any rating action on its VR. The rating actions are as follows: BPE Preference Shares International Limited: Preference shares (ISIN: KYG717151099 and KYG1280W1015) upgraded to 'B' from 'B-', removed from RWP Popular Capital, S.A.: Preference shares (ISIN: DE0009190702; DE000A0BDW10; XS0288613119 and ES0170412003) upgraded to 'B' from 'B-', removed from RWP Contact: Primary Analyst Roger Turro Director +34 93 323 8406 Fitch Ratings Espana Paseo de Gracia, 85 08008 Barcelona Secondary Analyst Josep Colomer Director + 34 93 323 8414 Committee Chairperson Cristina Torrella Senior Director +34 93 323 8405 Media Relations: Hannah Huntly, London, Tel: +44 20 3530 1153, Email: hannah.huntly@fitchratings.com. Additional information is available on www.fitchratings.com. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings. Applicable criteria, 'Assessing and Rating Bank Subordinated and Hybrid Securities' dated 5 December 2012 is available at www.fitchratings.com. Applicable Criteria and Related Research Assessing and Rating Bank Subordinated and Hybrid Securities here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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