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RBS Hybrid Bonds May Be Upgraded After Coupon Payments, S&P Says

May 18, 2012

Royal Bank of Scotland Group Plc’s hybrid bonds may be upgraded by Standard & Poor’s when the state-owned lender pays its first coupons on the notes since the European Commission lifted a ban on the payments.

S&P put some of RBS’s preferred securities with discretionary coupon payments on CreditWatch positive today, the ratings firm said in a statement. S&P expects to raise the ratings to BB from C when payments resume.

The Edinburgh-based lender was prohibited from making payments on the notes for two years under the terms of its bailout by the U.K. government during the financial crisis. The Commission lifted the ban at the end of April.

RBS said on May 4 it will start paying optional coupons and dividends on hybrid capital notes, in what the bank called one of its “important recovery milestones.”

To contact the reporter on this story: Ben Martin in London at

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