S&P rates SMFG notes A-

Standard & Poor’s said it assigned A- ratings to three dollar-denominated senior unsecured notes issued by Sumitomo Mitsui Financial Group Inc. (SMFG).

The notes will likely qualify as having total loss-absorbing capacity (TLAC) when Japanese regulations on TLAC requirements become effective, S&P said, and this is the first issuance of such senior unsecured notes by SMFG.

The A- ratings are one notch lower than those on the group’s core operating entities, such as Sumitomo Mitsui Banking Corp., S&P explained, reflecting structural subordination of the holding company.

The ratings on both SMFG and its operating entities should be based on the supported group credit profile, which incorporates extraordinary support from the government, the agency said.

Also, S&P said it believes it will not be necessary to widen the gap to more than one notch considering the government’s highly supportive stance toward the banking sector and the current creditworthiness of SMFG.

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