OREANDA-NEWS. Fitch Ratings has assigned The Paragon Group of Companies PLC's (Paragon; BBB-/Stable) fixed rate reset callable subordinated tier 2 notes an expected rating of 'BB+(EXP)'.

The final rating assignment is contingent on the receipt of final documentation conforming to information already received by Fitch.


The notes are rated one notch below Paragon's Long-Term Issuer Default Rating (IDR) of 'BBB-', reflecting their higher loss severity due to below-average recovery prospects for the subordinated obligations in case of a winding-up event of Paragon. Fitch has applied one notch, rather than two, for loss severity, because the notes do not include a full write-down provision and a partial, and not solely full, write-down of the notes is, in our view, possible.

Fitch has not applied any notches for incremental non-performance risk because non-payment of either principal or interest is defined as an event of default of Paragon and there is no coupon flexibility in a going concern scenario.

Paragon is rated under Fitch's "Global Non-Bank Financial Institutions Rating Criteria". As the consolidated group is subject to Prudential Regulation Authority (PRA) capital supervision, the notes themselves have been rated in accordance with Fitch's "Global Bank Rating Criteria", as required by the Global Non-Bank Financial Institutions Rating Criteria in respect of subordinated instruments issued by prudentially regulated non-bank financial institutions.


The notes' rating is primarily sensitive to a change in the Long-Term IDR of Paragon.

The notes' rating is also sensitive to a change in notching due to a revision in Fitch's assessment of the probability of the notes' non-performance risk relative to the risk captured in Paragon's Long-Term IDR, or in its assessment of loss severity in case of non-performance.