Westpac Banking Corp. Additional Tier 1 Capital Securities Rated #BB+#

Stocks and Financial Services Press Releases Wednesday September 13, 2017 17:14
SYDNEY--13 Sep--S&P Global Ratings

SYDNEY (S&P Global Ratings) Sept. 13, 2017--S&P Global Ratings today said it has assigned its 'BB+' issue credit rating to the Additional Tier 1 capital securities that Westpac Banking Corp. (Westpac; AA-/Negative/A-1+) has proposed to issue out of the bank's New Zealand branch.

The securities are fixed-rate resetting perpetual subordinated contingent convertible securities. We rate these securities four notches below Westpac's stand-alone credit profile of 'a-'.
We exclude a three-notch uplift for government support, reflecting our view that support from the Australian government is unlikely to extend to hybrid capital instruments issued by Westpac.

The following factors reflect the difference: The securities' subordinated status (deduct one notch);The risk of partial or untimely payment of coupons, in our view (deduct two notches); andContingent capital clauses for conversion into common equity or write-down (deduct one notch).

We have assessed the proposed issue as having intermediate equity content. In our view, these securities would be able to absorb losses on a going-concern basis through nonpayment of coupons, conversion into common equity, or principal write-down.

On issuance, we understand that these securities will qualify as fully compliant Basel III Additional Tier 1 capital under the Australian Prudential Regulation Authority's requirements.
These securities are perpetual instruments with no fixed maturity date.

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