BOCHK’s subordinated notes rated 'BBB+'

Standard & Poor's assigned its 'BBB+' rating to BOCHK’s proposed U.S. dollar-denominated subordinated notes due 2020.

Bank of China Hong Kong's proposed notes will be direct, unsecured, and subordinated to the claims of senior creditors, including depositors. The proposed notes will rank senior to all share capital of BOCHK, core capital securities, and other junior subordinated securities, if any. These notes will bear interest at a fixed rate.

The proposed notes are intended to qualify as supplementary capital of BOCHK. Regardless of the regulatory capital recognition by the Hong Kong Monetary Authority, the local regulator, Standard & Poor's does not recognise any equity credit on the proposed issue in its financial analysis.

The differential between the rating on the proposed notes and the 'A-' counterparty credit rating on BOCHK reflects the subordinated nature of the notes. The notes have no interest deferral feature. The proceeds of the notes will mainly be used for repayment of its existing subordinated loans from its parent.

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