Fitch Expects to Rate Banco BVA S.A.'s Senior Unsecured Issuance 'B-/RR4'

Tools

SAO PAULO, Brazil--(BUSINESS WIRE)-- Fitch Ratings has assigned an expected Long-Term Foreign Currency Rating of 'B-/RR4' to Banco BVA S.A.'s (BVA) senior un-secured USD250 million three-year term notes.

These notes fall under the bank's USD500 million senior un-secured issuance program, which currently has no outstanding issuances. The interest rate will be set at time of issuance. The proceeds will be used to diversify the bank's funding structure and to assist the bank's lending activities. The final rating is contingent upon the receipt of final documents which confirms the information already received.

The expected rating assigned to BVA's new issuance corresponds to the bank's 'B-' Foreign Currency Long-Term Issuer Default Rating (IDR), and ranks equal with all other senior unsecured and unsubordinated debt. BVA's ratings reflect its growing yet relative small size and the leveraging of its capital. The rating also reflects BVA's good credit control and its well-developed proprietary systems to control guarantees, large expertise with its medium- and small-sized customer as well as good liquidity. Further, the rating takes into consideration concentration of assets and liabilities, which is common in small- and medium-sized banks, the bank's modest product and geographical diversification with revenue generation dependency on credit origination.

BVA has presented strong growth after the 2008 crisis, which has been accompanied by capital injections from its shareholders to maintain capitalization according to regulatory guidelines given the rapid credit growth. Credit standards and controls are considered good and the bank avoids extending credits to industry segments it considers riskier, however, the agency also highlights that these credits and new borrowers have not yet been tested in a downturn cycle.

BVA's ratings would be positively affected by a consistent and lasting improvement of its capitalization ratio, such as the recent capital injection of BRL130 million; lower dependency of Time Deposits with Special Guarantee (DPGE) as funding for growth and higher diversification of assets, funding, and sources of revenues. Ratings would be negatively affected by a further increase in its leverage, deterioration on its asset quality, or loss of its key concentrated depositors that might jeopardize liquidity.

Additional information available at 'www.fitchratings.com' or 'www.fitchratings.com.br'.

Applicable Criteria and Related Research:

--'Global Financial Institutions Rating Criteria' (Aug. 18, 2010);

--'National Ratings: Methodology Update' (Dec. 18, 2006).

Applicable Criteria and Related Research:

Global Financial Institutions Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=547685

National Ratings - Methodology Update

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=305544

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.

CONTACT:

Fitch Ratings
Primary analyst:
Edgard Dias, +55-11-4504-2600
Associate Director
Fitch Ratings Brasil Ltda.
Rua Bela Cintra 904
Sao Paulo, SP, Brazil
or
Secondary analyst:
Luiz Claudio Vieira, +55-21-4503-2600
Associate Director
or
Committee Chairperson:
Peter Shaw, +1-212-908-0553
Managing Director
or
Media Relations
Brian Bertsch, +1-212-908-0549
brian.bertsch@fitchratings.com