Fitch: Royal KPN notes BB

Fitch Ratings said it assigned an expected BB rating to Royal KPN NV's proposed reset subordinated perpetual and long-dated capital securities.

The company intends to raise €2 billion in hybrid securities in euro and pound-sterling tranches over time. The upcoming hybrid securities are proposed to be deeply subordinated and to rank senior only to the company's ordinary shares, while coupon payments can be deferred at the option of the issuer, Fitch said.

As a result of these features, the BB rating is two notches below Royal KPN's BBB- long-term issuer default rating, which reflects the securities' increased loss severity and heightened risk of non-performance relative to the senior obligations, the agency said.

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