Fitch cuts mBank senior preferreds

Fitch Ratings said it downgraded mBank SA's senior preferred long-term debt rating to BBB- from BBB and senior non-preferred (SNP) long-term debt rating to BB+ from BBB- and removed them from rating watch negative. The issuer default rating is unchanged at BBB- is unchanged.

“The downgrade of mBank's senior long-term debt ratings primarily reflects the change in Fitch's expectations about the structure of the bank's resolution buffer, including likely more extensive use of SP debt, and Fitch's forecasts for mBank's capital ratios and requirements. The bank's SNP and more junior debt buffer will not sustainably exceed 10% of risk-weighted assets (RWA),” the agency said in a press release.

The company’s SP debt ratings are aligned with its IDRs and its SNP debt is rated one notch below its long-term IDR to reflect the risk of below-average recoveries for SNP creditors in a resolution. “This is because we expect mBank to use SP debt to meet its resolution buffer requirements, and we do not expect SNP and more junior debt to sustainably exceed 10% of mBank's resolution group's RWAs,” Fitch said.

The outlook is stable.

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