KUALA LUMPUR (April 26): Fitch Ratings has rated Malayan Banking Bhd (Maybank)’s US dollar denominated Basel III subordinated securities, two notches below the bank’s anchor rating.

The ratings agency currently has an A-/Negative rating on Maybank.

“Under Fitch's criteria, the notes would be rated two notches below the banks' anchor ratings, which for Malaysian commercial banks would be their Viability Rating (VR).

“The two notches reflect the instruments' higher loss severity relative to senior unsecured instruments given their subordinated status. It also reflects Fitch's expectation of permanent full principal loss at the non-viability trigger event,” said the credit ratings agency in a statement today.

It said a non-viability event would occur when Bank Negara Malaysia (BNM) and the Malaysia Deposit Insurance Corp (MDIC) decide that a write-off or conversion into ordinary equity is necessary, or when a public capital injection or other equivalent support is to be provided, without which the bank would not be viable.

Fitch noted that the subordinated securities were the first offshore Basel III notes issued by a Malaysian bank, as previously, issuances by banks had been in local currency, with lower costs.

Going forward, it expects further offshore issuances to be mainly carried out by regional banking institutions with sizeable balance sheets, while domestically-focused banks will continue to issue in local currency.