Rating Preferred Stock and Hybrid Securities - ACT Response

In summary, our understanding is that the proposal involves combining existing notching guidelines, which address severity of loss in the event of a default, with incremental notching to reflect the fact that scheduled payments may be omitted without triggering a default by the issuer.

Although we recognise the potential for additional risk to investors if the issuer is able to omit payments without subsequent re-instatement, we would make the following observations.