NOTE: On July 19, 2012 the press release was revised as follows: Added a hybrid (hyb) indicator to the preferred stock ratings for Sovereign Capital Trusts IV and VI. Revised release follows.
Actions follow downgrade of parent's standalone rating
New York, May 18, 2012 -- Moody's Investors Service has today downgraded the supported debt
ratings of Banco Santander S.A.'s (Santander) North
American bank subsidiaries, including Sovereign Bank and Banco Santander
Puerto Rico. See List Of Affected Ratings below.
Today's rating actions conclude the reviews initiated on 22 February
2012, when Santander's North American subsidiaries'
supported ratings were placed on review for downgrade.
RATINGS RATIONALE
Today's announcement follows the two-notch downgrade of Santander's
standalone bank financial strength rating (BFSR) to C, mapping to
a standalone credit assessment of a3, from B-/a1 (see "Moody's
downgrades Spanish banks; ratings carry negative outlooks or remain
on review for downgrade," dated 17 May 2012 and available on moodys.com).
Today's actions reflect the potential adverse effects of Santander's
lower capacity to support its subsidiaries in North America, reflected
by its lower standalone credit assessment. The downgrade of Santander's
standalone credit assessment was driven primarily by the expected negative
impact on earnings and asset quality indicators stemming from the bleak
economic prospects in many of Santander's core markets, namely
Spain and Portugal. The downgrade was also driven by Santander's
reliance on market funding. Moody's said that Santander's
weakened credit profile reduces its capacity to support its subsidiaries
in North America. However, today's actions do not reflect
a change in Moody's expectation of the willingness or likelihood
that Santander would provide support to these subsidiaries, if needed.
RATIONALE FOR THE NEGATIVE OUTLOOKS
Following today's actions, the outlooks on the supported ratings
of these subsidiaries are negative, consistent with the negative
outlook on the parent's standalone credit assessment.
LIST OF AFFECTED RATINGS
The affected subsidiaries are as follows:
- Santander Holdings USA, Inc.: senior unsecured
debt rating downgraded to Baa2 from Baa1; subordinate debt rating
downgraded to (P)Baa3 from (P)Baa2; the Prime-2 commercial
paper rating was affirmed
- Sovereign Bank: long- and short-term bank
deposit ratings downgraded to A3/Prime-2 from A2/Prime-1;
subordinate debt rating downgraded to Baa1 from A3; the standalone
rating (C-/baa1 standalone BFSR/standalone credit assessment) was
affirmed with a stable outlook
- Sovereign Capital Trust IV: preferred stock downgraded
to Ba1(hyb) from Baa3(hyb)
- Sovereign Capital Trust V: preferred stock downgraded to
(P)Ba1 from (P)Baa3
- Sovereign Capital Trust VI: preferred stock downgraded
to Ba1(hyb) from Baa3(hyb)
- Sovereign Real Estate Investment Trust: preferred stock
downgraded to Baa3 from Baa2
- Banco Santander Puerto Rico: long- and short-term
bank deposit ratings downgraded to A3/Prime-2 from A2/Prime-1;
commercial paper rating downgraded to Prime-2 from Prime-1;
the standalone rating (C-/baa1 standalone BFSR/standalone credit
assessment), which was placed on review for downgrade on 10 April
2012 because of Puerto Rico's difficult operating environment,
remains on review.
For a complete list of affected ratings, please refer to the individual
issuer pages on www/moodys.com. For additional information
on bank ratings, please refer to the webpage containing Moody's
related announcements: http://www.moodys.com/bankratings2012.
RATING METHODOLOGIES
The methodologies used in these ratings were Bank Financial Strength Ratings:
Global Methodology published in February 2007, Incorporation of
Joint-Default Analysis into Moody's Bank Ratings: Global
Methodology published in March 2012 and Moody's Guidelines for Rating
Bank Hybrid Securities and Subordinated Debt published in November 2009.
Please see the Credit Policy page on www.moodys.com for
a copy of these methodologies.
REGULATORY DISCLOSURES
The Global Scale Credit Ratings on this press release that are issued
by one of Moody's affiliates outside the EU are endorsed by Moody's
Investors Service Ltd., One Canada Square, Canary Wharf,
London E 14 5FA, UK, in accordance with Art.4 paragraph
3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies.
Further information on the EU endorsement status and on the Moody's
office that has issued a particular Credit Rating is available on www.moodys.com.
For ratings issued on a program, series or category/class of debt,
this announcement provides relevant 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 relevant 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 relevant 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.
Information sources used to prepare the ratings are the following:
parties involved in the ratings, public information, confidential
and proprietary Moody's Investors Service information.
Moody's considers the quality of information available on the rated
entities, obligations or credits satisfactory for the purposes of
issuing these ratings.
Moody's adopts all necessary measures so that the information it
uses in assigning the ratings 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 below contact information is provided for information purposes only.
Please see the issuer page on www.moodys.com for Moody's
regulatory disclosure of the name of the lead analyst and the office that
has issued the credit rating.
Please see the ratings disclosure page on www.moodys.com
for general disclosure on potential conflicts of interests.
Please see the ratings disclosure page on www.moodys.com
for information on (A) MCO's major shareholders (above 5%) and
for (B) further information regarding certain affiliations that may exist
between directors of MCO and rated entities as well as (C) the names of
entities that hold ratings from MIS that have also publicly reported to
the SEC an ownership interest in MCO of more than 5%. A
member of the board of directors of this rated entity may also be a member
of the board of directors of a shareholder of Moody's Corporation;
however, Moody's has not independently verified this matter.
Please see Moody's Rating Symbols and Definitions on the Rating Process
page on www.moodys.com for further information on the meaning
of each rating category and the definition of default and recovery.
Please see ratings tab on the issuer/entity page on www.moodys.com
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 for further information.
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.
Gregory Frank
Vice President - Senior Analyst
Financial Institutions Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Robert?Franklyn?Young
MD - Financial Institutions
Financial Institutions Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's downgrades the supported debt ratings of Santander's North American bank subsidiaries; outlooks negative
