RAM Ratings assigns AA3 & A1 ratings to AFFIN Bank's notes under proposed RM6 billion MTN programme
RAM Ratings has assigned respective AA3 and A1 ratings to the senior and subordinated notes under AFFIN Bank Berhad’s (the Bank) proposed RM6 billion MTN Programme; the ratings have a stable outlook.
At the same time, RAM has reaffirmed the Bank’s AA3/Stable/P1 financial institution ratings. The ratings reflect the extraordinary support from AFFIN Bank’s ultimate majority shareholder, Lembaga Tabung Angkatan Tentera, as well as the Bank’s still-satisfactory asset quality and strong capitalisation despite the more challenging operating environment. Nonetheless, the Bank’s profit performance remains weaker than its peers’ while its small franchise is a rating constraint.
The subordinated notes to be issued under the proposed MTN Programme are Basel III-compliant and will qualify as tier-2 regulatory capital. The subordinated notes will also have a loss-absorption feature linked to the occurrence of a non-viability event at the Bank. The senior notes will not qualify as capital, but will be utilised for funding purposes.