Debt watcher Fitch Ratings on Monday assigned a BBB (EXP) expected rating to the Development Bank of the Philippines’ (DBP) proposed US dollar senior unsecured notes.
In a statement, Fitch Ratings said the unsecured notes will constitute the bank’s direct, unconditional, unsubordinated and unsecured obligations and will at all times rank the same with all DBP’s other unsecured and unsubordinated obligations.
Fitch Ratings said the final rating is “subject to the receipt of final documentation conforming to information already received.”
“The debt watcher noted that the senior unsecured instruments are rated at the same level as DBP’s Long-Term Foreign-Currency Issuer Default Rating (IDR), in accordance with Fitch’s criteria. DBP’s IDR is driven by its Support Rating Floor (SRF) of ‘BBB,’ which is higher than its Viability Rating of ‘bb’,” said Fitch Ratings.
“We expect a high probability of extraordinary state support for DBP, if needed, due to its strategic policy role, full state ownership, systemic importance as the second-largest state-owned bank in the Philippines with around 5-percent share of system assets, and the state’s ability to provide support as indicated in the sovereign rating of ‘BBB’/Stable,” it added.
Fitch Ratings said factors that could lead to a negative rating action include any significant reduction in the state’s ownership and or influence and if DBP’s Long-Term Foreign-Currency IDR is downgraded.
“A downgrade in the sovereign rating will lead us to downgrade DBP’s SRF and IDR,” it said.
It said, meanwhile, that an upgrade in the sovereign rating may lead to an upgrade of DBP’s SRF and Long-Term Foreign-Currency IDR, with a corresponding upgrade in the proposed notes’ rating.