S&P: Kommunal Landspensjonskasse notes BBB

Standard & Poor's said it assigned its BBB long-term issue rating to the proposed €500 million subordinated callable notes due in 2045 to be issued by Kommunal Landspensjonskasse (A-/negative/--).

According to the agency’s hybrid capital criteria, the rating on the proposed notes is two notches below the A- long-term counterparty credit rating on the company.

This reflects the notes' subordination and interest deferral features, and takes into account S&P’s understanding that:

• When issued, the notes are subordinated to senior debt;

• The issuer can choose to defer interest as long as it has not declared or made a dividend or payment (including payment in relation to redemption or repurchase) on more junior securities in the previous six months;

• Under the notes' terms and conditions, interest deferral is mandatory if a solvency event has occurred, which under the European Union's Solvency II regulations would be a breach of the solvency capital requirement; and

• The notes will be eligible as regulatory solvency capital under Solvency I and Solvency II.

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