Fitch has assigned an 'A' rating to the $500 million of 6.576% Capital Securities issued by Comerica Capital Trust II, a Delaware statutory trust. The trust will invest the proceeds of the Capital Securities in Capital Efficient Notes (CENts), a form of junior subordinated notes, of Comerica Incorporated (NYSE:CMA).
Based upon Fitch's hybrid capital rating criteria, the securities have a high equity component. Fitch has assigned Class D equity treatment to the issuance (75% equity/25% debt). The equity credit classification for the securitization recognizes its junior subordinate ranking, as these securities rank junior to all senior, subordinated, and junior subordinated debt of CMA. With a scheduled maturity of 2037 and callable in 2032, the notes can be extended in a stress scenario for as long as it takes the issuer to raise qualifying capital, with an event of default for non-payment at 2082. Payments may be deferred for up to 10 years. If deferred, interest is cumulative and subject to an alternative payment mechanism requiring commercially reasonable attempts to issue high equity content securities to pay the interest, subject to limitations. The notes are redeemable at any time for a make-whole redemption price and provided that acceptable qualifying capital is raised prior to redemption as per the replacement capital covenant.
Fitch's rating criteria for assigning equity credit for hybrids, dated Sept. 27, 2006, is available on Fitch's website, www.fitchratings.com under the title 'Equity Credit for Hybrids and Other Capital Securities'.
Fitch assigns the following rating:
Comercia Capital Trust II
-- Capital Securities 'A'
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
