Fitch Ratings affirmed Rabobank’s Long-Term Issuer Default Rating at AA-, Outlook to Negative from Stable

Fitch Ratings has affirmed Cooperatieve Rabobank U.A.’s Long-Term Issuer Default Rating (IDR) at ‘AA-’ and its Viability Rating (VR) at ‘a+’. Fitch has also revised the Outlook on the Long-Term IDR to Negative from Stable.

Please note that this Outlook revision has a ‘technical’ reason closely related to Fitch’s bank rating methodology. Currently, Rabobank's Long-Term IDR and senior debt ratings (including senior non-preferred debt) benefit from a one-notch uplift above its VR due to a large buffer of qualifying junior debt (QJD).

According to Fitch, the Outlook revision of today ‘reflects the increased uncertainty over whether the qualifying junior debt buffer will be maintained at a level sufficient to protect all senior obligations, including senior non-preferred debt, from default'. In addition, according to Fitch, the Outlook revision also reflects the likely regulatory-driven increase of Rabobank’s risk-weighted assets (RWAs).

In Fitch’s view Rabobank’s ratio of QJD to RWAs could therefore decrease to below the threshold that applies for the one-notch uplift. Consequently, Rabobank’s (layer of) senior non-preferred debt would in such case no longer benefit from a one-notch uplift above Rabobankʼs VR.

Under Fitchʼs methodology for any bank the lowest ranking layer of senior debt is the reference liability for the Long-Term IDR. Now that Rabobank has started issuing senior non-preferred debt, the reference liability for our Long-Term IDR has changed to senior non-preferred debt from senior (preferred) debt previously. Because of this change in reference liability, Rabobankʼs Long-Term IDR could be lowered by one notch.
 

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