S&P rates BBVA Bancomer notes BB+

S&P said it assigned a BB+ issue-level rating to BBVA Bancomer, SA’s up to $1 billion tier 2 subordinated preferred cumulative capital notes.

The agency said the rating is three notches below the long-term issuer credit rating, reflecting the notes' contractual subordination to other senior debt, the debt's discretionary and mandatory non-payment clause, which allows the instrument to defer coupon payments, and the mandatory contingent capital clause that would lead to a principal write-down.

“In our view, this issuance wouldn't have characteristics of a going-concern contingent capital–it would have more loss-absorption characteristics at the point of nonviability–and the residual life would be shorter than the residual life standards for all other hybrid capital instruments with intermediate equity, above 15 years,” the agency said in a news release.

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