SOLITO GRAN TIMING....
Dec. 14 (Bloomberg) -- Fitch Ratings said it may cut its
ranking on some subordinated notes and preferred shares by at
least one step as part of proposed changes to its ratings of
hybrid securities.
New guidelines due this month are expected to result in a
one-step downgrade of the ratings of many “performing”
hybrids, loss absorbing securities that rank after senior debt
for repayment, which take losses before senior debt, Fitch said
in a statement today. Hybrids with greater loss-absorption
provisions may be lowered by two levels or more, Fitch said.
Fitch, with headquarters in New York and London, is among
rating companies reviewing their rankings of subordinated debt
and preferred shares sold primarily by financial companies.
Moody’s Investors Service said in November it’s reviewing
ratings on $450 billion of hybrid and subordinated notes.
The proposed guidelines have been “influenced by the
experience gained from observing the events of the past two
years, a period of financial distress for many hybrid issuers in
the financial institutions sector,” Fitch said.
Fitch expects to announce an updated policy by Dec. 30.
Hybrid securities are different from other debt instruments in
that they absorb losses without triggering a default or
affecting senior obligations.
