Limassol :Moody’s Investors Service has today assigned a provisional (P)Baa1(hyb) long-term local-currency rating to National Bank of Kuwait S.A.K.P’s (NBK) planned issuance of Kuwaiti dinar-denominated subordinated bonds with contractual point of non-viability (PONV) loss absorption features. NBK already carries local and foreign-currency deposit ratings of Aa3 stable, underpinned by a baseline credit assessment (BCA) of a3.
The (P)Baa1(hyb) rating assigned to NBK’s Tier 2 PONV instrument reflects (1) the specific characteristics of the security being issued and its relative ranking in the liability structure of the bank; (2) Moody’s view on how the Kuwaiti regulatory authorities would likely resolve an ailing bank; and (3) NBK’s standalone credit profile, which underpins the BCA assigned to the bank and constitutes the anchor point for positioning the debt on Moody’s global rating scale.
Moody’s expects that the terms and conditions of the subordinated bonds will allow them to qualify as Tier 2 capital under the Central Bank of Kuwait’s Basel III implementation.
This is the first time Moody’s has assigned a rating to a Basel III-compliant subordinated debt instrument issued by a bank in Kuwait and the Gulf Cooperation Council (GCC) in general.
Please see our report “National Bank of Kuwait: First-ever issuance of loss-absorbing Tier 2 bonds in Kuwait will bolster the bank’s capital ahead of Basel III deadline”, which will be published later today, for further details on our rating approach and the features of this instrument.