Action follows the change of the outlook on Brazil's Ba2 sovereign rating to stable
Sao Paulo, March 16, 2017 -- Moody's America Latina (MAL) has today changed the outlooks to stable,
from negative, of the local currency debt and/or issuer ratings
assigned to Banco BBM S.A., Banco Daycoval S.A.,
BNDES Participações S.A. - BNDESPAR,
Itaúsa -- Investimento Itaú S.A.,
and BM&FBovespa S.A. At the same time, MAL affirmed
all the affected ratings. These actions follow the announcements
by Moody's Investors Service that it had changed the outlook on
Brazil's Ba2 government bond rating to stable from negative and that it
affirmed the baseline credit assessments of several of the affected entities
on 15 March 2017 and 16 March 2017 respectively. For additional
information, please refer to the related announcements: https://www.moodys.com/research/--PR_362466;
https://www.moodys.com/research/--PR_363487
For additional information on bank ratings, please refer to the
webpage containing Moody's related announcements.
The following are the Brazilian entities covered in this press release:
- Banco BBM S.A.
- Banco Daycoval S.A.
- BNDES Participações S.A. -
BNDESPAR
- Itaúsa -- Investimento Itaú S.A.
- BM&FBovespa S.A.
RATINGS RATIONALE
These rating actions were prompted by the change in outlook to stable,
from negative, on Brazil's bond rating. Sovereign credit
quality can directly affect the credit standing of other issuers domiciled
within the country, and, more generally, tends to be
associated with macroeconomic and financial market trends that affect
all domestic issuers. Banks in particular exhibit strong credit
interlinkages with their sovereign. As such, the change in
Brazil's outlook to stable, from negative, reduced the risk
of these financial institutions being downgraded in conjunction with a
sovereign downgrade.
Consequently, Moody's changed the outlooks to stable,
from negative, and affirmed all ratings whose outlooks were revised,
as well as the Brazilian national scale ratings.
The affirmations consider that the credit fundamentals of the affected
entities remain sound despite the depth and duration of Brazil's
recession. The stable outlooks consider that the underlying fundamentals
of the affected issuers are stable and/or the affected ratings continue
to be constrained by Brazil's sovereign rating or its country ceilings.
The impact of the recession on Brazil's banking system, and
in particular the banks affected by today's action, has been
contained. The system-wide non-performing loan ratio
remains moderate at 3.7%, up just 90 basis points
from January 2015 while loan loss reserves total 6.5% of
gross loans. In addition, Brazilian banks continue to post
strong earnings notwithstanding mounting credit costs, with return
on assets averaging 1.1%, and capitalization has remained
stable. Strong liquidity and a largely domestic funding structure
reduces the vulnerability of Brazilian banks to unexpected shocks from
global markets, and will support the gradual expansion of lending
activities.
The recession finally appears to have bottomed out, laying the foundation
for a modest recovery as business and consumer confidence improve.
Nevertheless, banks will remain cautious in 2017; following
a 3.5% contraction in 2016, credit markets are expected
to expand by just 2% in the year. The lagging effects of
the deep downturn over the past two years and the high level of unemployment
will continue to pressure asset quality, but any further deterioration
of the system-average problem loan ratio is expected to be limited.
At the same time, profitability is expected to improve as declining
domestic interest rates reduce funding costs, and credit costs decrease,
helping to compensate for still low business volumes.
WHAT COULD CHANGE THE RATING -- DOWN/UP
The affected ratings could face upward pressure if Brazil's government
bond rating is upgraded and its country ceilings raised. Upward
pressure could also depend upon an improvement in the issuers' credit
fundamentals or Brazil's macroeconomic environment. On the
other hand, if Brazil's government bond rating again faces
downward pressures, the affected ratings would be negatively pressured
as well.
The following ratings assigned to Banco BBM S.A. were affirmed:
. Long-term global local-currency senior
unsecured debt rating of to Ba1; outlook changed to stable,
from negative
. Long-term Brazilian national scale senior unsecured
debt rating of Aaa.br
The following ratings assigned to Banco Daycoval S.A. were
affirmed:
. Long-term global local-currency senior
unsecured debt rating of Ba2; outlook changed to stable, from
negative
. Long-term global local-currency senior
unsecured MTN rating of (P)Ba2
. Long-term Brazilian national scale senior unsecured
debt rating of Aa2.br
. Long-term Brazilian national scale senior unsecured
MTN rating of Aa2.br
The following ratings assigned to BM&FBovespa S.A. were
affirmed:
.... Long term global local currency senior
unsecured debt rating of Ba1; outlook changed to stable, from
negative
.... Long term Brazilian national scale debt
rating of Aaa.br
The following ratings assigned to BNDES Participações S.A.
- BNDESPAR were affirmed:
. Long-term global local-currency issuer
rating of Ba2; outlook changed to stable, from negative
. Long-term global local-currency senior
unsecured debt rating of Ba2; outlook changed to stable, from
negative
.Long-term Brazilian national scale issuer rating
of Aa1.br
.Long-term Brazilian national scale senior unsecured
debt rating of Aa1.br
The following ratings assigned to Itaúsa -- Investimento
Itaú S.A. were affirmed:
. Long-term global local-currency issuer
rating of Ba3; outlook changed to stable, from negative
. Long-term Brazilian national scale issuer rating
of A1.br
The ratings of CCB Brasil Arrendamento Mercantil S.A. were
not affected by this rating action.
METHODOLOGIES USED
The principal methodology used in rating Banco BBM S.A.,
Banco Daycoval S.A., BNDES Participações
S.A. - BNDESPAR and Itaúsa --
Investimento Itaú S.A., was Banks published
in January 2016.
The principal methodology used in rating BM&FBovespa S.A.
was Securities Industry Service Providers, published in February
2017. Please see the Rating Methodologies page on www.moodys.com.br
for a copy of these methodologies.
Moody's National Scale Credit Ratings (NSRs) are intended as relative
measures of creditworthiness among debt issues and issuers within a country,
enabling market participants to better differentiate relative risks.
NSRs differ from Moody's global scale credit ratings in that they are
not globally comparable with the full universe of Moody's rated entities,
but only with NSRs for other rated debt issues and issuers within the
same country. NSRs are designated by a ".nn"
country modifier signifying the relevant country, as in ".za"
for South Africa. For further information on Moody's approach to
national scale credit ratings, please refer to Moody's Credit rating
Methodology published in May 2016 entitled "Mapping National Scale Ratings
from Global Scale Ratings". While NSRs have no inherent absolute
meaning in terms of default risk or expected loss, a historical
probability of default consistent with a given NSR can be inferred from
the GSR to which it maps back at that particular point in time.
For information on the historical default rates associated with different
global scale rating categories over different investment horizons,
please see https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1060333.
REGULATORY DISCLOSURES
Information sources used to prepare the rating are the following:
parties involved in the ratings, public information, and confidential
and proprietary Moody's information.
Information type used to prepare the rating is the following: debt
documentation, public information, Moody's information and
regulatory filings.
Sources of Public Information: Moody's considers public information
from many third party sources as part of the rating process. These
sources may include, but are not limited to, the list available
in the link http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_193459.
Moody's considers the quality of information available on the rated entity,
obligation or credit satisfactory for the purposes of issuing a rating.
Moody's adopts all necessary measures so that the information it uses
in assigning a rating is of sufficient quality and from sources Moody's
considers to be reliable including, when appropriate, independent
third-party sources. However, Moody's is not an auditor
and cannot in every instance independently verify or validate information
received in the rating process.
The rating has been disclosed to the rated entity or its designated agent(s)
and issued with no amendment resulting from that disclosure.
Please see the ratings disclosure page on www.moodys.com.br
for general disclosure on potential conflicts of interests.
Moody's America Latina Ltda. may have provided Other Permissible
Service(s) to the rated entity or its related third parties within the
12 months preceding the credit rating action. Please go to the
report "Ancillary or Other Permissible Services Provided to Entities Rated
by Moody's America Latina Ltda." in the link http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_194573
for detailed information.
Entities rated by Moody's America Latina Ltda. and the rated entities'
related parties may also receive products/services provided by parties
related to Moody's America Latina Ltda. engaging in credit ratings
activities within the 12 months preceding the credit rating action.
Please go to the link http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_194574
for a list of entities receiving products/services from these related
entities and the products/services received.
The date of the last Credit Rating Action for Banco BBM S.A.
was 4 November 2016.
The date of the last Credit Rating Action for Banco Daycoval S.A.
was 11 October 2016.
The date of the last Credit Rating Action for BNDES Participacoes S.A.
- BNDESPAR was 15 January 2017.
The date of the last Credit Rating Action for BM&FBovespa S.A.
was 18 November 2016.
The date of the last Credit Rating Action for Itausa - Investimentos
Itau S.A. was 11 May 2016.
Moody's ratings are constantly monitored, unless designated as point-in-time
ratings in the initial press release. All Moody's ratings are reviewed
at least once during every 12-month period.
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 credit rating action on the support provider and in relation to
each particular credit 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.br.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this credit rating action,
and whose ratings may change as a result of this credit 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.
Please see ratings tab on the issuer/entity page on www.moodys.com.br
for the last rating action and the rating history. The date on
which some ratings were first released goes back to a time before Moody's
ratings were fully digitized and accurate data may not be available.
Consequently, Moody's provides a date that it believes is the most
reliable and accurate based on the information that is available to it.
Please see the ratings disclosure page on our website www.moodys.com.br
for further information.
Please see Moody's Rating Symbols and Definitions on the Ratings Definitions
page on www.moodys.com.br for further information
on the meaning of each rating category and the definition of default and
recovery.
The below contact information is provided for information purposes only.
Please see the ratings tab of the issuer page at www.moodys.com.br,
for each of the ratings covered, Moody's disclosures on the
lead analyst and the Moody's legal entity that has issued the ratings.
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.br 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.br
for additional regulatory disclosures for each credit rating.
Alcir Freitas
VP - Senior Credit Officer
Financial Institutions Group
Moody's America Latina Ltda.
Avenida Nacoes Unidas, 12.551
16th Floor, Room 1601
Sao Paulo, SP 04578-903
Brazil
JOURNALISTS: 800-891-2518
SUBSCRIBERS: 55-11-3043-7300
M. Celina Vansetti
MD - Banking
Financial Institutions Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's America Latina Ltda.
Avenida Nacoes Unidas, 12.551
16th Floor, Room 1601
Sao Paulo, SP 04578-903
Brazil
JOURNALISTS: 800-891-2518
SUBSCRIBERS: 55-11-3043-7300
