S&P rates KBC Group notes BB

S&P said it assigned a BB long-term issue rating to the proposed perpetual additional tier 1 capital notes to be issued by KBC Group NV (BBB+/stable/A-2).

The agency said the rating is five notches below its a- assessment of KBC's unsupported group credit profile.

S&P said the five-notch difference represents one notch for subordination risk, two notches for the risk of nonpayment at the issuer's full discretion and the hybrid's expected inclusion in the issuer's tier 1 regulatory capital, one notch due to a mandatory contingent capital clause and one notch to reflect structural subordination because the notes will be issued by KBC Group, a nonoperating holding company.

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