SAO PAULO--(BUSINESS WIRE)--Fitch Ratings has affirmed the ratings of Brazilian Finance & Real Estate S.A. (BFRE) and its subsidiaries as follows:
BRFE,
--Foreign and Local Currency IDR (Issuer Default Rating)at 'BB-'; Outlook Stable;
--Short-Term Foreign and Local Currency IDR at 'B';
--Long-Term National Rating at 'A-(bra)'; Outlook Stable;
--Short-Term National Rating at 'F2(bra)'.
Brazilian Securities Companhia de Securitizacao (BS)
--Foreign and Local Currency IDR (Issuer Default Rating) at
'BB-'; Outlook Stable;
--Short-Term Foreign and Local Currency IDR at 'B';
--Long-Term National Rating at 'A-(bra)', Outlook Stable;
--Short-Term National Rating at 'F2(bra)';
--1st Issuance of Debentures, in the amount of BRL60 million due October 2014 ;
--Long-Term National Rating at 'A-(bra)'.
Brazilian Mortgages Companhia Hipotecaria (BM)
--Foreign and Local Currency IDR (Issuer Default Rating) at
'BB-'; Outlook Stable;
--Short-Term Foreign and Local Currency IDR at 'B';
--Long-Term National Rating at 'A-(bra)'; Outlook Stable;
--Short-Term National Rating at 'F2(bra)'.
The ratings' affirmation of BFRE reflects the group's strong experience in the real estate financial market chain in Brazil, its experienced and conservative team, and the well-identified and controlled risks. The ratings also consider BFRE's good credit quality and satisfactory performance. However, they also factor the concentration in the real estate market and reliance on institutional funding.
The ratings could be negatively impacted by credit quality deterioration, which Fitch believes is unlikely, over the medium term. In addition, strong outflows of third-party funds under management and certificates of real estate receivables (CRIs) issued could also damage the group's image and its access to institutional funding.
On Dec. 28, 2011, BFRE announced that it was negotiating the sale of the company and its subsidiaries to Banco Panamericano S.A. (BP, national rating 'AA-[bra]') and one of its owners, Banco BTG Pactual S.A. (BTG Pactual, LT IDR 'BBB-'). In Fitch's opinion, this operation should benefit BFRE, given its complementary activities with the new shareholders, lower funding costs and potentially better results.
After receiving the details of the transaction, Fitch will review the impact of the transaction on BFRE, BP and BTG Pactual. The analysis will focus on consolidated debt levels, capitalization and expected synergies of the transaction. Also, the agency will analyze the strategic importance of the acquired entities. Definitive documents of the transaction and pro-forma financial information are expected to be fully disclosed in February. The proposed transaction must still be approved by all shareholders and relevant regulatory bodies.
According to preliminary information, BP will receive a capital infusion from its shareholders for up to BRL1.8 billion to conclude this transaction. Also, BP relies upon a credit facility totaling BRL10 billion from Caixa Economica Federal (national rating 'AAA[bra]' by Fitch).
BFRE group is a provider of financial services, with exclusive focus on the real estate sector in Brazil. The main activities developed by BFRE are construction financing for real estate developers and constructors and real estate credit for the acquisition of residential and commercial properties for individuals through BM, besides the acquisition and issuance of real estate receivables by BS. This is the largest securitization company in Brazil, with a market share of around 31% in the local market. BFRE group is controlled by Ourinvest Real Estate Holding S.A., with 70.56% of the voting shares and 34% of the total capital. The remainder belongs to two international investors.
Additional information available at 'www.fitchratings.com' and 'www.fitchratings.com.br'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Global Financial Institutions Rating Criteria' (Aug. 16, 2011);
--'National Ratings Criteria' (Jan. 19, 2011);
--'Securities Firms Criteria' (Aug. 16, 2011).
Applicable Criteria and Related Research:
National Ratings Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=595885
Global Financial Institutions Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=649171
Securities Firms Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=649173
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