S&P: Kiwi Capital notes BB-

Standard & Poor’s said it assigned a BB- rating to Kiwi Capital Funding Ltd.’s perpetual capital notes.

Kiwi Capital is a sister company of Kiwibank Ltd. and the parent of both companies is New Zealand Post Ltd.

The structure of the notes replicates the terms of the Basel III-compliant perpetual subordinated bonds to be issued out of Kiwibank, S&P said, and subscribed by Kiwi Capital.

As such, Kiwi Capital’s perpetual capital notes reflect the rating for the underlying Kiwibank perpetual subordinated bonds, the agency said.

While S&P said it considers Kiwibank as an integral part of the New Zealand Post group and accept that the parent company is highly supportive of all Kiwibank debt issues, timely government support for the proposed instruments is less likely than those for most of the other debt issued by New Zealand Post and Kiwibank.

This is because these instruments contain a non-viability clause that could lead to the conversion of these instruments into bail-in capital consistent with Basel III regulations, the agency said.

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