Moody’s rates Banco Estado hybrids Baa3

Moody's Ratings said it assigned a Baa3 (hyb) rating to the proposed additional tier 1 non-viability non-cumulative contingent capital preferred stock to be issued by Banco del Estado de Chile (Banco Estado).

The agency said the notes, which have an optional redemption on the first call date in the fifth year or at any interest payment date thereafter, subject to the approval of the central bank or any other government authority in Chile, are Basel III-compliant.

The securities are perpetual and will be subordinated obligations and rank junior to all of Banco Estado's existing and future senior obligations and will rank senior only to Banco Estado's capital stock.

The agency said the Baa3 (hyb) rating for Banco Estado's proposed AT1 securities considers the incremental probability of default of the notes absent extraordinary support from the Chilean government, in line with Moody's standard notching guidance for preferred securities with contractual non-viability and mandatory non-cumulative coupon skip mechanisms.

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