Gulf Bank – KWD50mn Basel III Tier 2 Bond Rated ‘BBB+’ with a Stable Outlook
Content is restricted
Summary
2 June 2022
Capital Intelligence Ratings (CI Ratings or CI) today announced that it has rated Gulf Bank’s (GB) KWD50mn Basel III-compliant Tier 2 Subordinated bond at ‘BBB+’. The local currency bond comprises a KWD25mn Floating Rate Tranche and a KWD25mn Fixed Rate Tranche. The Outlook on the rating is Stable.
The rating on the bond is derived from: (i) GB’s Bank Standalone Rating (BSR); (ii) the bond’s contractual subordination to senior unsecured obligations; and (iii) CI’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…