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Canadian Western Bank secures first debt rating

It took a while, but Canadian Western Bank finally locked down its first official debt rating Monday. DBRS Ltd. has rated the bank's deposits single-A (low) and its subordinated debentures triple-B (high), both with stable trends.

The Edmonton-based bank has been trying for some time to get rated, but the agencies had trouble comparing it to other Canadian banks because the majority of CWB's assets relate to commercial lending, rather than retail operations.

"We needed to really work on making sure our model was understood," said chief financial officer Tracey Ball. She added that commercial operations are considered to be riskier because the loans are bigger on average, and it took DBRS time to get comfortable with that.

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CWB had trouble getting rating agencies to look at their books during the recession because the entire industry was in turmoil and the agencies were simply trying to keep up. But it made sense for the bank to go back to them now that things have calmed down. CWB has posted 89 consecutive quarters of profitability.

Although DBRS's rating is the first, CWB has been able to arrange some public financings before. In the past few years the bank issued both subordinated debt and preferred shares, but Ms. Ball said the firm had to pay up for it. The preferred shares came at high spreads over Government of Canada bonds and the subordinated debt buyers had to do their own homework on the company.

Ms. Ball would not comment on whether or not a new financing is in the works now that the ratings have been assigned, but it would only make sense to raise money, considering the bank is growing quickly and now has $12-billion in assets.

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About the Author
Reporter and Streetwise columnist

Tim Kiladze is a business reporter with The Globe and Mail. Before crossing over to journalism, he worked in equity capital markets at National Bank Financial and in fixed-income sales and trading at RBC Dominion Securities. Tim graduated from Columbia University's Graduate School of Journalism and also earned a Bachelor in Commerce in finance from McGill University. More

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