New York, November 06, 2014 -- Moody's Investors Service has today assigned a Baa3 (hyb) subordinated
debt rating to the proposed USD-denominated cumulative, non
convertible, dated Tier 2 subordinated capital notes (CoCos) issued
by BBVA Bancomer, S.A. through its Texas Agency (BBVA
Bancomer, S.A. Texas Agency). The outlook on
the Baa3 (hyb)rating is positive.
The capital notes are Basel III-compliant, and the terms
and conditions have been defined to qualify the instrument as additional
Tier 2 capital.
The following rating was assigned to BBVA Bancomer's cumulative
non-convertible Tier 2 subordinated notes issued through BBVA Bancomer,
S.A. Texas Agency: Baa3 (hyb), outlook positive.
The Baa3 (hyb) rating is subject to the receipt of final documentation,
the terms and conditions of which are not expected to change in any material
way from the draft documents that Moody's has reviewed.
RATINGS RATIONALE
The assigned Baa3 (hyb) rating is positioned two notches below BBVA Bancomer's
baa1 adjusted baseline credit assessment (adjusted BCA), in line
with Moody's standard notching guidance for cumulative non-convertible
subordinated securities with contractual provisions calling for a full
or partial principal write-down triggered at or close the point
of non-viability, such as when the bank is subject to financial
rehabilitation, and/or upon the breach of capital triggers set at
or close to the point of non-viability.
Under the terms of the subordinated notes, principal will be written
down (partially or in full) in the event that BBVA Bancomer's Common Equity
Tier 1 Capital (Capital Básico 1) equals or falls below 4.5%,
or if the CNBV, in consultation with the Mexican central bank,
Banco de México (Banxico), and BBVA Bancomer, makes
a determination, pursuant to Article 29 Bis of the Mexican Banking
Law (Ley de Instituciones de Crédito) that a cause for revocation
of the bank's license has occurred and that the bank has not cured such
cause for revocation in a timely manner.
BBVA Bancomer also has the right to defer but not cancel payment of interest
or principal if the banking regulator, Comisión Nacional
Bancaria y de Valores (CNBV), initiates any corrective measure against
the bank that requires the deferral of payment of principal or interest
pursuant Article 134 Bis and Article 134 Bis 1 of the Mexican Banking
Law or if the bank is classified at or below Class III under Mexican capitalization
requirements.
The capital notes (i) will be subordinate and junior in right of payment
and in liquidation to all of BBVA Bancomer's present and future senior
indebtedness, (ii) will rank pari passu with all other unsecured
subordinated preferred indebtedness and (iii) will be senior to subordinated
non-preferred indebtedness and to all classes of capital stock.
The positive outlook on the notes reflects the positive outlook on Bancomer's
C- standalone bank financial strength rating, which maps
to a baa1 baseline credit assessment (BCA), and considers the bank's
perspectives for future franchise development in an environment that will
offer improved business opportunities as a result of the recent reforms
approved in Mexico and the resulting boost to economic activity expected.
The baa1 standalone BCA takes into account BBVA Bancomer's earnings power,
which derives from an established and dominant domestic franchise,
its access to ample and low-cost core funding, and leadership
across various banking business segments in Mexico, including a
superior foothold in retail banking. BBVA Bancomer's intrinsic
fundamentals remain strong relative to local and regional peers,
particularly its profitability and liquidity, but some asset quality
deterioration has been observed. Nevertheless, consistent
core earnings have led to strong internal capital generation which together
with reserves provide good loss absorption capacity.
The principal methodology used in this rating was Global Banks published
in July 2014. Please see the Credit Policy page on www.moodys.com
for a copy of this methodology.
Headquartered in Mexico City, Mexico, BBVA Bancomer reported
total assets of MXN1,154 billion, gross loans of MXN762 billion,
total deposits of MXN697 billion, shareholders' equity of MXN134
billion and net income of MXN20 billion, as of 30 September 2014.
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.
David Olivares Villagomez
VP - Senior Credit Officer
Financial Institutions Group
Moody's de Mexico S.A. de C.V
Ave. Paseo de las Palmas
No. 405 - 502
Col. Lomas de Chapultepec
Mexico, DF 11000
Mexico
JOURNALISTS: 001-888-779-5833
SUBSCRIBERS:52-55-1253-5700
Maria Celina Vansetti-Hutchins
MD - Banking
Financial Institutions Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
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Moody's rates Baa3 (hyb) BBVA Bancomer's non-viability subordinated capital notes