US Bank Other Senior Obligation Ratings
Deposit notes, bank notes and bank subordinated notes are bank obligations that are structured to be sold and traded as securities similar to corporate bonds or medium-term notes. As bank obligations, such instruments are exempt from SEC registration (if issued by a US bank or by the US branch of a foreign bank). Deposit notes have the legal status of deposits and will rank pari passu in liquidation with certificates of deposit and other domestic deposit obligations. Bank notes, although nominally senior, are not deposit obligations. US law provides that foreign deposits and senior unsecured obligations, including bank notes, will rank behind domestic deposit obligations of US banks in the event of liquidation.
Moody’s Other Senior Obligations (OSO) rating definitions parallel those for long-term and short-term obligations, and may be assigned to foreign deposits and International Banking Facility deposits, as well as to other senior non-depository obligations, including bank notes, letter-of-credit supported obligations, federal funds and financial contracts. A rating distinction between domestic deposits and OSOs will be reflected in those cases where there is a material susceptibility for impairment at a future time. Bank subordinated notes will rank behind both domestic deposits and OSOs in a failed bank liquidation. Therefore, Moody’s will generally rate the subordinated debt of US banks substantially below the comparable deposit rating.
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09 Dec 2005, 08:04 Greenwich Mean Time