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Commonwealth Bank of Australia's PERLS XIII Capital Notes Rated 'BBB-'

MELBOURNE (S&P Global Ratings) Feb. 24, 2021--S&P Global Ratings today said it has assigned its 'BBB-' issue credit rating to Commonwealth Bank of Australia's (CBA; AA-/Negative/A-1+) proposed CommBank PERLS XIII Capital Notes (PERLS XIII).

We rate PERLS XIII four notches below the CBA group's stand-alone credit profile (SACP) of 'a'. The starting point of the group SACP reflects our view that the Australian government's support for CBA and other Australian banks--if needed--would unlikely extend to hybrid capital instruments issued by the banks.

To arrive at the rating on PERLS XIII, we deduct four notches from the CBA group's SACP reflecting the following factors:

  • One notch for the notes' subordinated status;
  • Two notches for the risk of partial or untimely payment; and
  • One notch for a nonviability contingent capital feature that would require CBA to convert all or a proportion of the notes into ordinary shares or write them off if a nonviability trigger event occurred.

We have assessed the proposed issue as having intermediate equity content, reflecting our view that the notes would be able to absorb losses or conserve cash, if needed, through nonpayment (including noncumulative deferral) of coupons, principal write-down, or conversion into common equity, without causing a default or windup of the bank. In addition, we expect that PERLS XIII or its equivalent in replacement will remain part of CBA's capital structure for a long time. We expect the securities will qualify as Additional Tier 1 capital under regulatory standards.

Related Criteria

Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at for further information. Complete ratings information is available to subscribers of RatingsDirect at All ratings affected by this rating action can be found on S&P Global Ratings' public website at Use the Ratings search box located in the left column.

Primary Credit Analyst:Lisa Barrett, Melbourne + 61 3 9631 2081;
Secondary Contacts:Sharad Jain, Melbourne + 61 3 9631 2077;
Nico N DeLange, Sydney + 61 2 9255 9887;
Additional Contact:Riley Michel, Melbourne + (61) 3-9631-2108;

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