Fitch rates BT Group hybrids BB+

Fitch Ratings said it assigned BT Group plc's planned dual-tranche, benchmark long-dated, subordinated capital securities an expected BB+ with a tenor of 60 years.

The two tranches will have differing non-call provisions of 5.25 and 10 years, respectively. The securities will be sold by British Telecommunications plc and guaranteed by BT Group on a subordinated basis.

“The expected rating is two notches below BT Group's long-term issuer default rating (IDR) and reflects the highly subordinated nature of the proposed capital securities, their greater loss severity and heightened risk of non-performance relative to senior obligations'. The capital securities rank senior only to the share capital of BT Group and British Telecommunications plc. The 50% equity credit reflects the equity-like characteristics of the proposed issue including subordination, effective maturity of at least five years, full discretion to defer interest coupon payments, limited events of default, as well as the absence of material covenants and look-back provisions,” Fitch said in a press release.

The outlook is stable.

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