S&P rates Hang Seng notes A+

Standard & Poor's said it assigned its AA- long-term and A-1+ short-term local currency counterparty credit ratings to Hang Seng Bank Ltd. The outlook on the long-term rating is stable. At the same time, Hang Seng was assigned an A+ long-term and an A-1 short-term foreign currency counterparty credit rating. The outlook on the long-term rating is positive.

S&P also assigned its A+ issue rating to a proposed HK$1.5 billion issue of subordinated notes due 2015, which will be callable in June 2010.

S&P said the ratings reflect the bank's strong franchise in Hong Kong, superior core profitability, above average asset quality, good liquidity, and status as a core member of the HSBC group. The bank's capitalization is satisfactory. In addition, the bank has proven management capability, evidenced by its performance through the most recent economic cycle in Hong Kong.

These positive factors are offset by the bank's geographic concentration, its highly concentrated exposure to the property sector, and Hong Kong's maturing and saturated banking market, which is characterized by keen competition and strong pressure on interest margins, the agency said.

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