Fitch Ratings has placed an A(EXP) (twn) expected rating on Bank of Kaohsiung's (TPE:2836) proposed subordinated unsecured bonds, according to a Friday release.

The bonds will amount to 1.8 billion new Taiwan dollars and serve as the bank's Basel III tier two capital.

The bank's national long-term rating supports its subordinated bonds, since the government has a strong interest in helping the bank with its financial obligations, according to Fitch.

The bank retains a close relationship with the Kaohsiung city government and is systemically important within the city, given its 7% deposit market share there, Fitch said.

The bonds' rating is two notches below the bank's national long-term rating, reflecting two notches for loss severity given the poor recovery outlook for Taiwanese Basel III tier two debt, the rating agency said.

Changes in the bank's national long-term rating could prompt similar actions on the bonds, Fitch said.