Scope Ratings today assigned a rating of BB+ with Stable Outlook to Handelsbanken’s 5.25% USD 1.2bn Additional Tier 1 notes issued in February 2015. The notes are high-trigger instruments (8% CET1 ratio trigger) with temporary write-down features. This is the first rating publicly assigned by Scope to AT1 securities issued by Handelsbanken.

Scope notes that the rated security’s issued amount is slightly over 2% of group RWAs at the end of 2015, hence fully filling up the amount recognised for capital purposes (1.5%).

The BB+ rating is positioned five notches below Handelbanken’s Issuer Credit Strength Rating (ICSR) of A. In addition to the minimum of four notches applied to the bank’s AT1 securities, the extra notch reflects Scope’s approach to rating high-trigger instruments – as detailed in the rating methodology for bank capital instruments (please see at www.scoperatings.com).

Scope has not added any notches for coupon cancellation risk, in light of Handelsbanken’s ample estimated Available Distributable Items of SEK 96.4bn and distance to the Combined Buffer Requirement of 10.5%. Scope’s calculation does not include Pillar 2 requirements, in line with the guidance of the Swedish Finansinspektionen.

This rating has not been solicited by the issuer and is based on public information. The bank has participated in the rating process.

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