SYDNEY (S&P Global Ratings) Nov. 23, 2023--S&P Global Ratings today assigned its 'BBB-' long-term issue rating to Westpac Banking Corp.'s (AA-/Stable/A-1+) Capital Notes 10 (CN10).
To arrive at the rating on CN10, we deduct four notches from the 'a' stand-alone credit profile of Westpac, reflecting the following factors:
- One notch for the notes' subordinated status;
- Two notches for risk of partial or untimely payment; and
- One notch for a nonviability contingent capital feature that would require Westpac 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 of coupons, conversion into common equity, or principal write-down, without causing a default or windup of the bank.
In addition, we expect CN10 or its equivalent in replacement will remain part of Westpac's capital structure for a long time. We expect the securities will qualify as additional Tier-1 capital under regulatory standards.
In our view, the Australian government is unlikely to extend any financial support to these instruments, if needed.
Related Criteria
- General Criteria: Hybrid Capital: Methodology And Assumptions, March 2, 2022
- Criteria | Financial Institutions | Banks: Banking Industry Country Risk Assessment Methodology And Assumptions, Dec. 9, 2021
- Criteria | Financial Institutions | General: Financial Institutions Rating Methodology, Dec. 9, 2021
- General Criteria: Environmental, Social, And Governance Principles In Credit Ratings, Oct. 10, 2021
- General Criteria: Group Rating Methodology, July 1, 2019
- 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: Principles Of Credit Ratings, Feb. 16, 2011
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| Primary Credit Analyst: | Nico N DeLange, Sydney + 61 2 9255 9887; nico.delange@spglobal.com |
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