NEW YORK--(BUSINESS WIRE)--Fitch Ratings has assigned a long-term foreign currency rating of 'A+' to Banco del Estado de Chile's (Banco Estado) senior unsecured debt due 2017. This issuance is made under the umbrella of the bank's medium-term notes program of up to USD2 billion.
The senior unsecured bonds will be issued for an amount of USD200 million. Banco Estado has already issued USD1.5 billion bonds under the medium-term notes program.
KEY RATING DRIVERS
The rating assigned to Banco Estado's senior unsecured bonds corresponds to the bank's foreign currency long-term Issuer Default Rating (IDR) and ranks equal to other senior unsecured debt.
Banco Estado's IDR is driven by the extremely high probability of support from its owner, the State of Chile. Banco Estado represents an instrument of the State of Chile for developing counter-cycle credit policies, plays a strategic social role for the government and has a systemic importance. The bank is connected to the Chilean Government through the Ministry of Finance. Based on these drivers, the bank's IDR is aligned with Chile's Sovereign Foreign Currency IDR ('A+'; Outlook Stable).
The senior unsecured debt is embedded in Banco Estado's strategy to diversify and extend its funding sources using international markets. Banco Estado's Viability Rating (VR) fundamentals remain unchanged by this new debt.
Banco Estado's VR reflects its strong liquidity given a high proportion of liquid assets, and sound structural funding based on a wide, solid customer base. The bank has shown good overall financial performance in spite of the high level of competition in the banking business. The bank's VR is limited by moderate capitalization and lower credit quality in its mortgage loan portfolio (although with a strong guarantee and additional provisions position) compared to local and international private peers (emerging market commercial banks with VR in the 'bbb' category).
RATING SENSITIVITIES
The Rating Outlook for Banco Estado's long-term IDR is Stable. Changes in the bank's IDR and senior unsecured debt are correlated to sovereign rating actions for Chile.
Credit Profile:
Banco Estado was incorporated in 1953 and is the only state-owned bank of the Chilean financial system. Banco Estado is the third largest bank measured by loans (13.8%) and the first by deposits (18.4%) at year-end 2012, due to its extensive branch and non-traditional network (branches: 345; ATMs: 2,367; non-banking correspondents agents: 10,289).
Fitch currently rates Banco Estado as follows:
--Long-term foreign currency IDR 'A+'; Outlook Stable;
--Long-term local currency IDR 'AA-'; Outlook Stable;
--Short-term foreign and local currency ratings 'F1';
--Viability rating 'bbb';
--Support '1';
--Support floor 'A+';
--Senior unsecured foreign currency bonds 'A+'(USD500 million senior notes due 2017, USD500 million senior notes due 2020 and USD500 million senior notes due 2022);
--Senior unsecured foreign currency bond program 'A+' (USD2 billion senior notes program);
--Long-term national scale rating 'AAA(cl)';
--Short-term national scale rating 'N1+(cl)';
--Senior unsecured bonds rating 'AAA(cl)';
--Senior unsecured bond program rating 'AAA(cl)';
--Subordinated bonds rating 'AA(cl)';
--Subordinated bond program rating 'AA(cl)'.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Financial Institutions Rating Criteria' (August 2012).
Applicable Criteria and Related Research
Global Financial Institutions Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686181
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=790611
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