Madrid, February 11, 2014 -- Moody's Investors Service has today changed to stable from negative the
outlook on Banco Bilbao Vizcaya Argentaria, S.A.'s
(BBVA) Baa3 long-term senior debt and deposit ratings. Concurrently,
Moody's affirmed these ratings.
The change in outlook and affirmation of the Baa3 ratings follow (1) the
affirmation of the bank's standalone bank financial strength rating
(BFSR) at D+ (equivalent to a baa3 baseline credit assessment (BCA))
with a stable outlook; and (2) the gradual economic recovery in Spain.
The bank's short-term ratings were affirmed at Prime-3.
RATINGS RATIONALE
--- RATIONALE FOR CHANGING THE OUTLOOK TO STABLE
The change in outlook of BBVA's standalone rating prompted the outlook
change on the long-term ratings. This reflects Moody's view
that the downside risks to the bank's credit profile have substantially
diminished against a background of gradual economic recovery in Spain.
Spanish assets represent 55% of the group's loan book.
The changes in asset quality and profitability trends are already visible
in BBVA's Q4 2013 performance. Gross non-performing
loans (NPLs) have stabilised at the group level and in its domestic franchise,
and new NPL formation is decreasing. Furthermore, domestic
recurrent pre-provision income has started to increase after several
quarters of negative pressure.
At close to 76% of shareholders equity and loan loss reserves,
the group's problematic exposures (broadly defined as NPLs,
real-estate assets and refinanced loans) remain high, a key
factor underpinning a standalone rating in the baa range.
However, BBVA's continued strong preprovision earnings,
despite the challenging environment in Spain, have allowed the bank
to absorb substantial credit costs while continuing to build its capital
base. Moody's believes that BBVA's NPL evolution has
the potential to create positive momentum for the bank's credit
rating if the recovery in Spain continues.
--- RATIONALE FOR AFFIRMATION OF BBVA's RATINGS
In affirming BBVA's ratings, Moody's noted that BBVA
remains heavily exposed to the domestic market with 55% of the
group's loan book located in Spain. Moreover, while
the bank's credit linkage to Spain's Baa3 government debt
ratings has reduced somewhat, because its exposure to the Spanish
sovereign -- including loans and receivables to sub-sovereigns
-- has declined in the second half of 2013 while its capital
base continues to improve, linkage remains material at current levels
of exposure.
The affirmation of BBVA's ratings has also been driven by the bank's
stable revenue-generation capacity, its high risk-adjusted
profitability and its capacity to generate capital and liquidity in times
of stress. In particular, since the beginning of the crisis,
and despite the group's strong provisioning effort, BBVA has
increased by more than 530 basis points its core capital ratio that stood
at 11.6% at end-2013 and has reported a 5.6%
leverage ratio (fully-loaded and as per CRDIV criteria).
--- SUBORDINATED DEBT AND HYBRID RATINGS
In line with the affirmation of BBVA's BFSR, Moody's
has today affirmed the bank's senior subordinated debt ratings at
Ba1and its preference shares ratings at B1 (hyb). The outlook on
these ratings has also been changed to stable from negative.
WHAT COULD MOVE THE RATING UP/DOWN
Upward pressure on BBVA's ratings remains dependent in part on the banks'
linkage to Spain's government bond rating. While this has,
on some measures, reduced somewhat, it remains a binding constraint
given the bank's high exposure to the Spanish sovereign.
Setting aside this constraint, BBVA's standalone rating could
come under upward pressure from a continued improvement of its financial
performance, primarily a reduction of its stock of non-performing
loans (including real estate and refinanced loans) and improving profitability
in its principal place of business, Spain.
Downward pressure on BBVA's BCA could develop following (1) inadequate
risk-absorption capacity (i.e., recurring earnings,
excess capital and loan loss reserves) compared with Moody's estimated
credit losses; (2) failure to withstand Moody's liquidity stress
test; and (3) a lower share of recurring earnings. Negative
pressure on the rating could also result from a downgrade of the Spanish
government ratings currently at Baa3 with a stable outlook.
As the bank's debt and deposit ratings are linked to the standalone
BCA, any change to the BCA would likely also affect these ratings.
The outlooks were changed to stable from negative.
Affirmations:
..Issuer: Banco Bilbao Vizcaya Argentaria, S.A.
.... Adjusted Baseline Credit Assessment,
Affirmed baa3
.... Baseline Credit Assessment, Affirmed
baa3
.... Bank Financial Strength Rating,
Affirmed D+
.... Issuer Rating, Affirmed Baa3
.... Deposit Rating, Affirmed P-3
....Multiple Seniority Medium-Term
Note Program, Affirmed (P)Ba1
....Multiple Seniority Medium-Term
Note Program, Affirmed (P)P-3
....Multiple Seniority Medium-Term
Note Program, Affirmed (P)Baa3
....Subordinate Regular Bond/Debenture,
Affirmed Ba1
....Senior Unsecured Regular Bond/Debenture,
Affirmed Baa3
....Senior Unsecured Deposit Rating,
Affirmed Baa3
..Issuer: Banco Bilbao Vizcaya Argentaria, SA
London Br
.... Deposit Rating, Affirmed P-3
....Senior Unsecured Commercial Paper,
Affirmed P-3
....Senior Unsecured Deposit Rating,
Affirmed Baa3
..Issuer: Banco Bilbao Vizcaya Argentaria, SA
Paris Br
.... Deposit Rating, Affirmed P-3
....Senior Unsecured Deposit Program,
Affirmed P-3
....Senior Unsecured Deposit Rating,
Affirmed Baa3
..Issuer: Banco de Credito Local de Espana,
S.A.
....Multiple Seniority Medium-Term
Note Program, Affirmed (P)Baa3
..Issuer: BBVA Capital Finance, S.A Unipersonal
....Pref. Stock Non-cumulative
Preferred Stock, Affirmed B1(hyb)
..Issuer: BBVA Capital Funding Limited
....Multiple Seniority Medium-Term
Note Program, Affirmed (P)Ba1
....Subordinate Regular Bond/Debenture,
Affirmed Ba1
....Subordinate Shelf, Affirmed (P)Ba1
..Issuer: BBVA Global Finance Ltd.
....Multiple Seniority Medium-Term
Note Program, Affirmed (P)P-3
....Multiple Seniority Medium-Term
Note Program, Affirmed (P)Baa3
....Subordinate Regular Bond/Debenture,
Affirmed Ba1
....Senior Unsecured Shelf, Affirmed
(P)Baa3
..Issuer: BBVA Global Markets B.V.
....Senior Unsecured Medium-Term Note
Program, Affirmed (P)P-3
....Senior Unsecured Medium-Term Note
Program, Affirmed (P)Baa3
....Senior Unsecured Regular Bond/Debenture,
Affirmed Baa3
..Issuer: BBVA International Limited
....Pref. Stock Non-cumulative
Preferred Stock, Affirmed B1(hyb)
..Issuer: BBVA International Pref S.A.
Unipersonal
....Pref. Stock Non-cumulative
Preferred Stock, Affirmed B1(hyb)
..Issuer: BBVA Senior Finance, S.A.
Unipersonal
....Senior Unsecured Commercial Paper,
Affirmed P-3
....Senior Unsecured Medium-Term Note
Program, Affirmed (P)P-3
....Senior Unsecured Medium-Term Note
Program, Affirmed (P)Baa3
....Senior Unsecured Regular Bond/Debenture,
Affirmed Baa3
..Issuer: BBVA Subordinated Capital, S.A.
Unipersonal
....Multiple Seniority Medium-Term
Note Program, Affirmed (P)Ba1
....Subordinate Regular Bond/Debenture,
Affirmed Ba1
..Issuer: BBVA U.S. Senior, S.A.
Unipersonal
....Senior Unsecured Commercial Paper,
Affirmed P-3
....Senior Unsecured Medium-Term Note
Program, Affirmed (P)P-3
....Senior Unsecured Medium-Term Note
Program, Affirmed (P)Baa3
....Senior Unsecured Regular Bond/Debenture,
Affirmed Baa3
..Issuer: BCL International Finance Limited
....Senior Unsecured Regular Bond/Debenture,
Affirmed Baa3
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Global Banks published
in May 2013. Please see the Credit Policy page on www.moodys.com
for a copy of this methodology.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides certain regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this rating action, and
whose ratings may change as a result of this rating action, the
associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Maria Cabanyes
Senior Vice President
Financial Institutions Group
Moody's Investors Service Espana, S.A.
Calle Principe de Vergara, 131, 6 Planta
Madrid 28002
Spain
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Johannes Felix Wassenberg
MD - Banking
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Releasing Office:
Moody's Investors Service Espana, S.A.
Calle Principe de Vergara, 131, 6 Planta
Madrid 28002
Spain
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moody's changes outlook on BBVA's Baa3 ratings to stable from negative; affirms ratings
