Bangkok--9 Jun--Moody's Investor Service
Moody's Investor Service has assigned the following ratings to securities to be issued under the S$5 billion Euro Medium Term Note (EMTN) programme of United Overseas Bank Limited (UOB):
Aa1 for senior notes
Aa2 for Lower Tier II capital qualifying subordinated notes
P-1 for short-term notes
The outlook for these ratings is stable.
Under the EMTN programme, UOB may issue senior notes of any maturity and subordinated notes that qualify as Lower Tier II capital securities, which will have a minimum maturity of five years. UOB may also issue Upper Tier II capital securities, the terms and conditions of which will be set out in separate supplementary documents.
"These ratings reflect both the structure of the proposed issue and UOB's
Aa1 long-term deposit ratings," says Christine Kuo, a Moody's Vice President and Senior Credit Officer.
"Plain vanilla subordinated debt has no coupon skip mechanism and generally absorbs losses only in liquidation, so the ratings for such debt typically incorporate uplift for systemic support to a level one notch below the issuer's long-term deposit and senior unsecured debt ratings, which captures subordination risk," adds Kuo.
However, these ratings do not immediately apply to any individual notes issued under the programme. Ratings on such notes are subject to our review of the terms and conditions set forth in the final prospectuses, supplements, or offering memoranda of the notes to be issued.
Furthermore, Moody's does not intend to assign ratings to individual notes issued under the programme, that are linked to the performance of another obligor (credit-linked notes) or to notes for which payment of principal or interest is variable and contractually dependent on the occurrence of a non-credit-linked event or the performance of an index (non-credit-linked notes), except for notes whose principal and coupon payments are affected by standard sources of variation (see Moody's Special Comment, "Moody's Update on Rating Debt Obligations with Variable Promises," June 2009).
UOB's Aa1 long-term deposit ratings take into account the bank's well established domestic franchise and sound financial fundamentals, as demonstrated in its bank financial strength rating (BFSR) of B.
In addition, UOB's ratings incorporate a very high probability of systemic support, if needed, given the bank's significant national market share and importance to Singapore's banking system.
UOB's other ratings are A1 on its junior subordinated debt, A3 on its preference shares, and P-1 on its short-term bank deposits. The outlook on all ratings is stable.
The last rating action on UOB was taken on May 20, 2010, when the outlook on its BFSR and long-term deposit and debt ratings was revised to stable from negative.
The principal methodologies used in rating these banks were "Bank Financial Strength Ratings: Global Methodology" (February 2007) and "Incorporation of Joint-Default Analysis into Moody's Bank Ratings: A Refined Methodology" (March 2007), which can be found at www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab.
"Moody's Guidelines for Rating Bank Hybrid Securities and Subordinated Debt" (November 2009) and other methodologies and factors that may have been considered in the process of rating these banks can also be found in the Rating Methodologies sub-directory on Moody's website.
UOB is headquartered in Singapore and reported total assets of approximately S$186 billion at end-2009.
Singapore
Christine S. Kuo
VP - Senior Credit Officer
Financial Institutions Group
Moody's Singapore Pte Ltd.
JOURNALISTS: (852) 2916-1150
SUBSCRIBERS: (65) 6398-8308
Singapore
Beatrice Woo
VP - Senior Credit Officer
Financial Institutions Group
Moody's Singapore Pte Ltd.
JOURNALISTS: (852) 2916-1150
SUBSCRIBERS: (65) 6398-8308