Fitch Ratings expects to assign a rating of 'BBB(EXP)' to Brookfield Finance Inc.'s subordinated notes issuance. Brookfield Finance is a wholly-owned debt-issuing subsidiary of Brookfield Corporation, which holds an Issuer Default Rating (IDR) of 'A-/Stable'.
The expected rating on the subordinated notes is two notches below Brookfield's Long-Term IDR, in accordance with Fitch's 'Corporate Hybrids Treatment and Notching Criteria'. This reflects the notes' subordination and heightened risk of non-performance relative to other obligations, such as existing unsecured debt.
Fitch has afforded 50% equity credit to the expected subordinated note issuance, considering the long-dated nature of the notes, their coupon deferral features, and the absence of material covenants. The proceeds from this issuance are expected to be used for general corporate purposes.
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