Moody’s has assigned a B3 (hyb) rating to Optima Bank’s planned €200 million Additional Tier 1 (AT1) bond, which is part of the bank’s efforts to further strengthen its capital base. The agency clarified that all other ratings for Optima Bank remain unchanged.
According to Moody’s, the instrument to be issued is a perpetual Additional Tier 1 (AT1) bond, with a call option for the bank after five years. The instrument has loss-absorbing features in the event of insolvency, and principal write-down is provided for if the CET1 capital ratio falls below the 5.125% threshold.
The agency also notes that interest payments are fully discretionary and non-cumulative, meaning they can be canceled in part or in full either by the bank’s decision or if required by the regulatory framework.
The B3 rating is based on the bank’s credit assessment (BCA and Adjusted BCA at the ba3 level), as well as on the analysis of loss given failure (Advanced Loss Given Failure). Moody’s rates this instrument three notches below the bank’s adjusted rating, reflecting the increased risk inherent in AT1 bonds.
As noted, these instruments rank low in the hierarchy of claims in the event of a bank’s resolution, ranking only above common equity and CET1 capital, while receiving no support from the government intervention scenario.