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Fitch Rates BAGL's New Basel III-Compliant Tier 2 Notes 'AA+(zaf)'
February 2, 2015 / 3:52 PM / 3 years ago

Fitch Rates BAGL's New Basel III-Compliant Tier 2 Notes 'AA+(zaf)'

(The following statement was released by the rating agency) DUBAI/LONDON, February 02 (Fitch) Fitch Ratings has assigned Barclays Africa Group Limited's (BAGL; AAA(zaf) /Stable/F1+(zaf)) new Basel III-compliant subordinated notes (Tier 2 notes) a National Long-term Rating of 'AA+(zaf)' and simultaneously upgraded BAGL's existing Basel III- compliant Tier 2 notes to 'AA+(zaf)' from 'AA(zaf)'. The new notes, totalling ZAR2.5bn, are being issued under BAGL's ZAR30bn domestic medium term note (DMTN) programme. The notes qualify as regulatory Tier 2 capital under Basel III, which was introduced in South Africa on 1 January 2013. The notes contain contractual loss absorption features, which will be triggered at the point of non-viability of the issuer. According to the final terms, the principal amount of the notes can be permanently written-off in full or partially upon the occurrence of a trigger event, at the option of the South African regulator. There are no equity conversion provisions in the terms. KEY RATING DRIVERS The notes' rating is notched down once from BAGL's National Long-term Rating to reflect Fitch's view of the notes' potential loss severity via contractual write-off features. While there is uncertainty as to the extent of losses the notes would face in case of a non-viability event we believe that the large new subordinated notes issue further increases the layer of junior non-equity capital available to meet any such loss. The rating of the new notes and the upgrade of the existing notes reflect the increased likelihood of a partial rather than a full write-down. RATING SENSITIVITIES The ratings are linked and therefore sensitive to a change in BAGL's National Long-term Rating. RATING ACTIONS: New issue of ZAR807m of fixed-rate subordinated notes and ZAR1,693m of floating-rate subordinated notes: assigned at 'AA+(zaf)' Existing issues of ZAR130m of fixed-rate subordinated notes and ZAR370m of floating-rate subordinated notes: upgraded to 'AA+(zaf)' from 'AA(zaf)' BAGL's other ratings are as follows: Long-term Issuer Default Rating (IDR): 'A-'; Outlook Negative Local currency Long-term IDR: 'A-'; Outlook Stable Short-Term IDR: 'F2' National Long-Term Rating: 'AAA(zaf)'; Outlook Stable National Short-Term Rating: 'F1+(zaf)' Viability Rating 'bbb' Support Rating '1' Contact: Primary Analyst Redmond Ramsdale Director +971 4 424 1202 Fitch Ratings Limited Al Thuraya Tower 1, Office 1805 and 1806 Media City, PO Box 502030 Dubai Secondary Analyst Mahin Dissanayake Director +44 20 3530 1618 Committee Chairperson Eric Dupont Senior Director +33 1 44 29 91 31 Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153, Email: elaine.bailey@fitchratings.com. Additional information is available at www.fitchratings.com. Applicable criteria, Global Financial Institutions Rating Criteria, dated 31 January 2014, and Assessing and Rating Bank Subordinated and Hybrid Securities Criteria, dated 31 January 2014, are available at www.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 Global Financial Institutions Rating Criteria here Additional Disclosure Solicitation Status 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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