DBRS Discontinues Rating of RY.PR.W

DBRS has announced that it:

has today discontinued its rating of Royal Bank of Canada’s (RBC) Non-Cumulative First Preferred Shares, Series W (Series W). DBRS had placed the Series W, which is convertible to common equity at the issuer’s option, Under Review with Negative Implications on August 17, 2011.

This action follows the application of the updated “DBRS Criteria: Rating Bank Capital Securities – Subordinated, Hybrid, Preferred & Contingent Capital Securities,” which was released earlier today. In the updated criteria, the ratings principles for contingent capital instruments (CoCo) indicate that DBRS may not rate CoCo instruments in cases where their triggers are inadequately defined, where they have poorly specified mechanisms for conversion or where the probabilities of their activation are difficult to predict and not closely tied to the issuer’s credit position. If the level of difficulty in assessing these risks is high enough, DBRS may be unable to assign a rating to the instrument.

Because the trigger for conversion into common equity is inadequately defined, DBRS has concluded it is unable to assign a rating to the Series W. Although DBRS believes conversion of the Series W is not likely, the lack of trigger control has led DBRS to conclude the instrument cannot be rated under the updated criteria. This action does not reflect any change in DBRS’s view of RBC’s credit profile and is not related to any issuer-specific credit events.

The Review-Negative was reported on PrefBlog.

As previously noted on PrefBlog, S&P does not discriminate between RY.PR.W and other RY preferred issues.

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