Moody’s rates CIMB MTN program A3/Baa3

Moody's Investors Service said it assigned a provisional A3 foreign currency senior unsecured rating and a provisional Baa3 foreign currency subordinated rating to CIMB Bank Bhd.’s proposed $5 billion euro medium-term note program.

CIMB is the first Malaysian bank to obtain a Moody's rating for capital qualifying subordinated debt with contractual loss absorption at the point of non-viability. The security qualifies under Bank Negara Malaysia's Basel III bank capital regulations.

The provisional A3 rating assigned to the senior unsecured medium-term notes is in line with CIMB's A3 foreign currency senior unsecured debt rating.

Notes issued under the program will represent direct, senior, unsubordinated and unsecured obligations of CIMB. As such, they will rank pari passu with the bank's existing and future unsecured and unsubordinated obligations. The senior unsecured notes can be issued by CIMB or any of its domestic or foreign branches.

Moody’s said the provisional Baa3 rating is positioned two notches below CIMB's baa1 adjusted baseline credit assessment, in line with the agency’s standard notching guidance for subordinated debt, with loss triggered at the point of non-viability on a contractual basis. The extra notch relative to "plain vanilla" subordinated debt with normal loss severity reflects the potential uncertainty associated with the timing of loss absorption, given that Bank Negara Malaysia – Malaysia's banking regulator – has not defined the point at which it would deem the bank to be non-viable.

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