Hana Securities Issues First Foreign Currency Hybrid Capital Securities... S&P 'BBB' [fn Market Watch]

[Financial News] Hana Securities is set to issue foreign currency hybrid capital securities for the first time. Global credit rating agency S&P Global assigned a 'BBB' rating to the securities, two notches lower than Hana Securities' issuer credit rating. One notch each was reflected for subordinated risk and the possibility of interest payment deferral.
According to the financial investment industry on the 3rd, S&P Global has assigned a 'BBB' long-term foreign currency bond rating to the US dollar-denominated hybrid capital securities that Hana Securities is preparing to issue. This marks the first time Hana Securities has issued foreign currency hybrid capital securities. The securities are direct, unsecured subordinated debt, and the funds raised are intended to be used for general corporate operations.
The 'BBB' rating is two notches lower than Hana Securities' issuer credit rating of 'A-'. S&P reflected the possibility of group-level support in the rating calculation, considering that Hana Securities is a core subsidiary of Hana Financial Group Inc.
However, it was lowered by one notch to account for the subordinated risk of hybrid capital securities, and by an additional notch to reflect the risk of interest payment deferral. If the Financial Services Commission (FSC) issues a management improvement order, interest payments may be mandatorily deferred.
Hana Securities is currently assessed to have sufficient capital reserves. As of the end of June this year, its Net Capital Ratio (NCR) stood at approximately 1,551%, significantly exceeding the minimum requirement of 100%. S&P judged that, considering the high NCR buffer, the likelihood of the ratio falling below 0% is very low.
These securities are recognized as regulatory capital under domestic financial investment business regulations. However, starting from the point when the remaining maturity is less than 5 years, 20% of the outstanding balance is deducted from the recognized NCR amount each year.
S&P did not assign a capital recognition ratio to these securities in its own assessment. This is because it determined that there is an incentive for redemption, as the interest rate step-up clause applies at the time of the first call option exercise five years after issuance.

[email protected] Kim Hyun-jung Reporter