Moody’s, Fitch assign high ratings to RCBC’s proposed notes issue

MANILA, Philippines - Credit rating firms Moody’s Investors Service and Fitch Ratings rated yesterday the proposed issuance of senior notes of Rizal Commercial Banking Corp. (RCBC).

Moody’s has assigned a Baa3 rating with a stable outlook, while Fitch assigned a BB rating to the proposed US dollar-denominated senior unsecured notes by RCBC as part of its $1 billion medium-term note program.

Moody’s said the assessment takes into account its intrinsic strengths that stem out from its well-established niche in the corporate middle market and special economic zones, as well as potential synergies from its affiliation with the Yuchengco Group (unrated) of companies.

It added the rating also takes into account its relatively small market presence, steady earnings and improving asset quality.

A Baa3 rating is medium grade with some speculative elements and moderate credit risk.

On the other hand, Fitch said the senior notes are rated at the same level as RCBC’s ‘BB’ long-term issuer default rating (IDR) because the notes constitute direct, unsubordinated and unsecured obligations of the bank, and rank equally with all its other unsecured and unsubordinated obligations.

‘BB’ ratings indicate an elevated vulnerability to default risk particularly in the event of adverse changes in business or economic conditions over time. However, business or financial flexibility exists which supports the servicing of financial commitments.