China Merchants Bank's Proposed Additional Tier-1 Offshore Preference Shares Assigned 'BB-' Rating

HONG KONG (S&P Global Ratings) Oct. 18, 2017--S&P Global Ratings today assigned its 'BB-' foreign currency long-term issue rating to a proposed issuance of additional Tier-1 (AT1) non-cumulative offshore preference shares by China Merchants Bank Co. Ltd. (CMB: BBB+/Stable/A-2). We also classify the instruments as having intermediate equity content. The rating is subject to our review of the final issuance documentation. The rating on the AT1 notes is four notches below CMB's 'bbb' stand-alone credit profile (SACP). The notching considers: (1) one notch for subordination risks; (2) two notches for probability of coupon nonpayment, which could occur before the bank reaches the point of non-viability; and (3) one notch for the risk of full or partial mandatory H-share conversion upon

...HONG KONG (S&P Global Ratings) Oct. 18, 2017--S&P Global Ratings today assigned its '##-' foreign currency long-term issue rating to a proposed issuance of additional Tier-1 (AT1) non-cumulative offshore preference shares by China Merchants Bank Co. Ltd. (CMB: ###+/Stable/A-2). We also classify the instruments as having intermediate equity content. The rating is subject to our review of the final issuance documentation. The rating on the AT1 notes is four notches below CMB's '###' stand-alone credit profile (SACP). The notching considers: (1) one notch for subordination risks; (2) two notches for probability of coupon nonpayment, which could occur before the bank reaches the point of non-viability; and (3) one notch for the risk of full or partial mandatory H-share conversion upon a trigger event. We consider CMB's SACP as the notching starting point because we believe financial support from the Chinese government to prevent non-payment on the AT1 instruments is uncertain. The notching...

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