S&P rates Banco de Galicia notes CCC

S&P said it assigned a CCC rating on Banco de Galicia y Buenos Aires SA’s proposed class II subordinated notes due 2026.

The rating on the notes is two notches below the long-term issuer credit rating on the bank, reflecting the subordination characteristics of the instrument, S&P said.

Given the B- issuer credit rating, the agency said it is not including a notch for capital write-down clause of the instrument, which reflects default risk, and will only deduct two notches from the rating on the new notes for subordination.

Although the domestic regulator will consider the notes as tier 2 capital, S&P said it is treating them as minimal equity content because they have limited capacity to absorb losses on a going-concern basis.

The ratings also consider the bank’s adequate business position, weak capital and earnings, adequate risk position, average funding and adequate liquidity, the agency said.

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