Al Ahli Bank of Kuwait – KWD50mn Subordinated Bond Rating Affirmed with a Stable Outlook

4 July 2023

Capital Intelligence Ratings (CI Ratings or CI) today announced that it has affirmed the issue rating of Al Ahli Bank of Kuwait’s (ABK) KWD50mn Basel III-compliant Tier 2 Subordinated Bond at ‘BBB’. The Outlook on the rating is Stable.

The issue rating is derived from: (i) ABK’s Bank Standalone Rating (BSR); (ii) the bond’s contractual subordination to senior unsecured obligations; and (iii) CI Rating’s view that the bond’s loss absorption mechanism is unlikely to be triggered before the Bank is non-viable on a standalone basis. CI’s issue ratings for bank hybrid securities and subordinated debt instruments (especially those with contingent capital features) capture impairment risk (which includes the likelihood of losses due to the activation of any loss absorbing mechanisms) and repayment priority. CI typically uses a bank’s BSR as the starting point for such securities. This is because it is considered more likely that extraordinary support,…