Tokyo Century's (TYO:8439) proposed 20 billion yen subordinated loans have intermediate equity content, S&P Global Ratings said in a Thursday release.

The loans meet S&P's criteria for the classification, including loss absorption capabilities through interest deferral, a long residual term, and subordination in liquidation.

The rating agency will reclassify the loans as having no equity content after the first callable date in 2030, when the period to effective maturity left becomes less than 20 years.

S&P expects the financing company to replace these loans with instruments of similar or higher equity content if repaid early.

The loans will not affect Tokyo Century's capitalization assessment or its rating, as they are intended to replace existing subordinated bonds, S&P said.

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