Fitch rates Standard Chartered convertibles BBB

Fitch Ratings said it assigned an expected rating of BBB to Standard Chartered plc’s upcoming issue of perpetual subordinated contingent convertible securities.

The securities are additional tier 1 instruments with fully discretionary interest payments and are subject to conversion into Standard Chartered’s ordinary shares, Fitch said.

The rating of the securities is five notches below the company’s AA- viability rating, which is in line with the criteria for assigning ratings to hybrid instruments, the agency said.

The securities are notched twice for loss severity to reflect the conversion into common shares on a breach of the 7% fully loaded CET1 ratio trigger, Fitch said, and three times for non-performance risk.

The company is expected to continue to accrete solid levels of capital, the agency added.

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