Mubasher: Moody's Investors Service has on Tuesday assigned a Baa3 rating to the upcoming issuance of perpetual non-cumulative additional tier 1 (AT1) capital securities by NBK Tier 1 Financing Limited, a wholly-owned subsidiary of the National Bank of Kuwait (NBK).

“The Baa3 rating assigned to the notes is based on NBK's creditworthiness and is placed three notches below the bank's a3 Adjusted BCA, in accordance with Moody's standard notching guidance for contractual non-viability preferred securities with optional non-cumulative coupon suspension,” the rating agency said in its report.

Moody's further noted that it took into consideration its assessment of the probability of impairment associated with mandatory and/or discretionary coupon suspension on a non-cumulative basis, and the contractual principal write-down feature in combination with the securities subordinated claim in liquidation.

NBK announced on Tuesday that it will issue USD-denominated securities to enhance the bank's adequacy ratio and support medium-term growth, according to a statement to Boursa Kuwait.

NBK Tier 1 Financing Limited, established in the Dubai International Financial Centre (DIFC), is a special-purpose vehicle established for the purpose of issuing the AT1 securities; and using the proceeds to finance a subordinated loan to NBK.