Fitch lowers KBC Bank hybrids

Fitch Ratings said it downgraded KBC Bank's hybrid securities following the announcement that the bank will defer discretionary coupon payments on some hybrids securities while it is discussing the potential deferral of other hybrids securities with the European Commission.

KBC Bank's £525 million perpetual debt securities were downgraded to CCC from BB+. The coupon payment due in December is being deferred, and Fitch is concerned about the potential deferral of future coupon payments.

The €280 million perpetual non-callable for 10 years preferreds issued by KBC Funding Trust II were downgraded to B- from BB+. The potential deferral of coupon payment on these notes is being discussed with the European Commission.

The $600 million non-cumulative guaranteed trust preferreds issued by KBC Funding Trust III, the €300 million non-cumulative guaranteed trust preferreds issued by KBC Funding Trust IV and KBC Bank's €1.95 billion perpetual debt securities were downgraded to B from BB+. The upcoming coupons on these will be paid, but the agency is concerned about the potential deferral of future coupon payments.

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