-- 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-'
-- 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
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
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