New York, February 11, 2019 -- Moody's Investors Service ("Moody's") downgraded
the Counterparty Risk Assessments (CRAs) of two Mexican banks' subsidiaries
and the CRAs and Counterparty Risk Ratings (CRRs) of two Colombian banks.
The following Counterparty Risk Assessments were downgraded:
Banco de Bogotá S.A.
.Long-term Counterparty Risk Assessment of Baa1(cr),
to Baa2(cr)
Banco Mercantil del Norte, S.A.(Cayman I)
.Long-term Counterparty Risk Assessment of A2(cr),
to A3(cr)
.Short-term Counterparty Risk Assessment of Prime-1(cr),
to Prime-2(cr)
Bancolombia S.A.
.Long-term Counterparty Risk Assessment of Baa1(cr),
to Baa2(cr)
BBVA Bancomer, S.A. Texas Agency
.Long-term Counterparty Risk Assessment of A2(cr),
to A3(cr)
.Short-term Counterparty Risk Assessment of Prime-1(cr),
to Prime-2(cr)
The following Counterparty Risk Ratings were downgraded:
Banco de Bogotá S.A.
.Long-term Global Local Currency Counterparty Risk Rating
of Baa1, to Baa2
.Long-term Foreign Currency Counterparty Risk Rating of
Baa1, to Baa2
Bancolombia S.A.
.Long-term Global Local Currency Counterparty Risk Rating
of Baa1, to Baa2
.Long-term Foreign Currency Counterparty Risk Rating of
Baa1, to Baa2
RATINGS RATIONALE
The rating action does not affect any other ratings or assessments of
these entities.
The rating actions reflect Moody's assessment that the likelihood
of a default by the affected banks on their operating obligations and
other contractual commitments, and the expected loss of the uncollateralized
portion of those banks´ non-debt counterparty financial liabilities,
is aligned with that of the banks´ deposits and senior debt and
of their respective national governments. Moody's rates the
Mexican government at A3, with a stable outlook, and the Colombian
government at Baa2, with a negative outlook.
This assessment incorporates Moody´s view that there is a very high
default correlation, or dependence, between the banks and
their respective sovereigns, and is in line with Moody´s assessments
of the default correlations of the large majority of banks with their
respective sovereigns globally. In turn, the very high default
correlation incorporates the size of the Mexican and Colombian banking
systems relative to their respective governments´ resources,
which in neither case is particularly low compared to other banking systems
globally. Specifically, in Mexico the banking system's
total loans are equal to 110% of government revenues, while
in Colombia, these loans equal 190% of government revenues.
These figures compare to a global median of 200%. By this
measure, just 22 of the 94 banking systems covered by Moody´s
are smaller than Mexico and twice that many are smaller than Colombia.
Notwithstanding Banco de Bogotá's and Bancolombia's
substantial exposures outside of Colombia, at 46% of total
loans for Banco de Bogotá and about 25% for Bancolombia
as of September 2018, Moody's reserves lower dependence levels
for banks that operate principally outside of their home countries.
WHAT COULD CHANGE THE RATING -- DOWN/UP
The banks' Counterparty Risk Assessments (CRAs) and Counterparty
Risk Ratings (CRRs) will likely face downward pressure if the sovereign
ratings are downgraded. Analogously, the CRAs and CRRs are
likely to face upward pressure if and when the sovereign ratings are upgraded.
Given the current negative outlook in Colombia's sovereign the latter
scenario is unlikely for Colombian banks.
The principal methodology used in these ratings was Banks published in
August 2018. Please see the Rating Methodologies 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 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.
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.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
The below contact information is provided for information purposes only.
Please see the ratings tab of the issuer page at www.moodys.com,
for each of the ratings covered, Moody's disclosures on the
lead rating analyst and the Moody's legal entity that has issued
the ratings.
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.
Diego Kashiwakura
Vice President - Senior Analyst
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
Client Service: 1 212 553 1653
M. Celina Vansetti-Hutchins
MD - Banking
Financial Institutions Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
