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Fitch Launches Additional Tier 1 Tracker Tool
October 20, 2014 / 8:17 AM / 3 years ago

Fitch Launches Additional Tier 1 Tracker Tool

(The following statement was released by the rating agency) Link to Fitch Ratings' Report: Banks AT1 Dashboard here LONDON, October 20 (Fitch) Fitch Ratings has launched its AT1 Tracker Tool, an interactive product tracking AT1 and T2 CoCo debt issued by global financial institutions. Fitch has also published a complementary 'Banks AT1 Tracker' dashboard summarising key themes relevant to the asset class. The tool allows users to assess the absolute and relative coupon risk of AT1 instruments and the write-down / conversion risk of AT1 and T2 CoCo instruments issued by a broad range of banks globally. The tool also provides a comprehensive overview of key features of outstanding instruments and includes an issue comparison function, which allows the user to compare coupon omission and write-down buffers of up to five different issues. The interactive component allows users to set various parameters arbitrarily based on the user's own assumptions and to track against other instruments. Finally, a 'trigger distance average' calculation allows users to track risk trends for the whole AT1 asset class. Fitch currently rates approximately USD80bn of AT1s and T2 CoCo, which represent an estimated 85% of all outstanding AT1 instruments. Fitch's criteria for rating these bonds have not materially changed in recent years, resulting in broadly stable ratings. Approximately 56% of bonds and 79% of AT1s are rated in the 'BB' category, reflecting Fitch's general policy to notch Basel III-compliant Tier 1 instruments down at least five times from the issuer's Viability Rating. For the vast majority of banks, AT1s are likely to be non-investment grade. David Weinfurter, Global Head of Financial Institutions, said: "AT1s are an instrument class of great interest to market participants and given the longer-term regulatory support for this asset class, we expect global issuance volumes to increase significantly. Building on Fitch's consistent methodology and insightful research, the AT1 tool provides comprehensive data and visibility on this increasingly important and fast-growing market." Volumes of AT1 issuance were moderate and country-limited prior to 2H13 before increasing significantly. The volume of bonds issues during the first nine months of 2014 - approximately USD56bn - already exceeds total issuance volume for 2013. Most European banks have ample scope to issue AT1s, with Basel III/CRDIV regulations providing an incentive to do so. Accordingly, Fitch expects AT1 issuance by western European banks to be strong over the long-term, albeit punctuated by periods of shortage when markets are volatile. In Asia, AT1 issuance is also expected to grow. Bank of China recently announced sizeable AT1 transactions and we expect other large Chinese banks to follow. Similarly, we expect Indian banks to start issuing AT1 instruments in the medium-term. Fitch will regularly republish the Banks AT1 tracker dashboard and update the AT1 Tracker Tool to include any omitted or newly issued bonds, to update issuer financial data used to assess trigger points, and to incorporate market feedback on its functionality. For more information, visit here Contact: Christian Kuendig Senior Director +44 20 3530 1399 Fitch Ratings, Inc. 30 North Colonnade, Canary Wharf London E14 5GN James Longsdon, London (EMEA) Managing Director +44 20 3530 1076 Mark Young, Singapore (APAC) Managing Director +65 6796 7229 Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153, Email: elaine.bailey@fitchratings.com; Brian Bertsch, New York, Tel: +1 212-908-0549, Email: brian.bertsch@fitchratings.com; Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: leslie.tan@fitchratings.com. Additional information is available on www.fitchratings.com. Applicable Criteria and Related Research: Assessing and Rating Bank Subordinated and Hybrid Securities Criteria 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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