Fitch Ratings has assigned a 'BBB-' rating to Heartland Australia Group Pty Ltd's (HAG; BBB-/Stable) AUD75 million guaranteed senior unsecured floating-rate medium-term notes due 21 April 2023.

KEY RATING DRIVERS

HAG's guaranteed notes are rated one notch below parent Heartland Group Holdings Limited's (HGL; BBB/Stable) Long-Term Issuer Default Rating (IDR). HGL guarantees the notes. Fitch's Non-Bank Financial Institutions Rating Criteria, published 28 February 2020, states that fully guaranteed debt is usually rated in line with the higher of the senior unsecured debt rating of the guarantor or the issuer.

Fitch does not currently rate the senior unsecured debt of HGL or HAG. HGL's long-term senior unsecured debt rating is likely to be one notch below its Long-Term IDR, reflecting a lack of sufficient bank holding company senior debt and group junior debt buffers. Fitch's Bank Rating Criteria, published 28 February 2020, states that we would normally notch a bank holding company's senior unsecured debt rating one level below its IDR, if we believe recoveries are likely to be below average, for example, if bank holding company senior and group junior debt buffers were to be less than 10% of risk-weighted-assets. HGL does not currently issue senior unsecured holding company debt and there are no Tier 2 and Additional Tier 1 instruments issued by HGL-owned entities.

We expect the long-term senior unsecured debt issued by HAG to be rated no higher than its Long-Term IDR of 'BBB-', in line with Fitch's Non-Bank Financial Institutions Rating Criteria.

RATING SENSITIVITIES

Factors that could, individually or collectively, lead to negative rating action/downgrade:

The senior debt ratings of HAG's guaranteed debt instruments would be downgraded if HGL's IDR is downgraded.

Factors that could, individually or collectively, lead to positive rating action/upgrade:

The senior debt ratings of HAG's guaranteed debt instruments would be upgraded if HGL's IDR is upgraded.

The rating may also be upgraded if HGL builds up sufficient bank holding company senior and group junior debt buffers that lead to the equalisation of its senior unsecured debt rating with its IDR. However, this appears unlikely in the short term.

BEST/WORST CASE RATING SCENARIO

International scale credit ratings of Financial Institutions and Covered Bond issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit [https://www.fitchratings.com/site/re/10111579]

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS

HAG's guaranteed debt ratings are equalised with HGL's senior unsecured debt rating as the parent provides guarantees on these instruments.

RATING ACTIONS

ENTITY/DEBT	RATING

Heartland Australia Group Pty Ltd

guaranteed

LT	BBB- 	New Rating

VIEW ADDITIONAL RATING DETAILS

Additional information is available on www.fitchratings.com

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