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.
- General Criteria: Hybrid Capital: Methodology And Assumptions, July 1, 2019
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- General Criteria: Methodology For National And Regional Scale Credit Ratings, June 25, 2018
- Criteria | Financial Institutions | General: Risk-Adjusted Capital Framework Methodology, July 20, 2017
- General Criteria: Methodology For Linking Long-Term And Short-Term Ratings, April 7, 2017
- General Criteria: Guarantee Criteria, Oct. 21, 2016
- General Criteria: Ratings Above The Sovereign--Corporate And Government Ratings: Methodology And Assumptions, Nov. 19, 2013
- Criteria | Financial Institutions | Banks: Assessing Bank Branch Creditworthiness, Oct. 14, 2013
- Criteria | Financial Institutions | Banks: Quantitative Metrics For Rating Banks Globally: Methodology And Assumptions, July 17, 2013
- Criteria | Financial Institutions | Banks: Banks: Rating Methodology And Assumptions, Nov. 9, 2011
- Criteria | Financial Institutions | Banks: Banking Industry Country Risk Assessment Methodology And Assumptions, Nov. 9, 2011
- General Criteria: Principles Of Credit Ratings, Feb. 16, 2011
- Criteria | Financial Institutions | Banks: Commercial Paper I: Banks, March 23, 2004
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 www.standardandpoors.com for further information. Complete ratings information is available to subscribers of RatingsDirect at www.capitaliq.com. All ratings affected by this rating action can be found on S&P Global Ratings' public website at www.standardandpoors.com. 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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