MONTERREY, Mexico--(BUSINESS WIRE)--Fitch Ratings has assigned an 'A-' rating to BBVA Bancomer's US$750 million 4.500% fixed rate senior notes due 2016. At the same time, Fitch has assigned a 'BBB+' rating to BBVA Bancomer's US$1.25 billion 6.500% fixed rate subordinated preferred notes due 2021. These notes were placed through the bank's Texas agency.
The 'A-' rating assigned to the senior notes is aligned to BBVA Bancomer's long-term foreign currency Issuer Default Rating (IDR), which in turn reflects the strong willingness and ability to support of its parent, Spain's BBVA. In Fitch's view, there is a very high probability that support to BBVA Bancomer from BBVA (IDR 'AA-' with a Stable Outlook by Fitch) would be forthcoming, if required.
In turn, the difference between the 'BBB+' rating of the subordinated notes and BBVA Bancomer's local currency IDR of 'A' reflects Fitch's notching criteria for senior and more junior obligations, indicating the higher expected loss for more junior debt instruments. In the event of bankruptcy (concurso mercantil), liquidation or dissolution, the notes will rank junior to all of BBVA Bancomer's present and future senior indebtedness, pari passu with all other present or future unsecured subordinated preferred liabilities, and senior only to non-preferred indebtedness and common equity.
At present, Fitch is reviewing its approach regarding the equity credit of banks' hybrid securities (see 'Related Research' at the end of this release) and therefore is not assigning an equity class to the aforementioned issue of subordinated preferred notes. Fitch has stated that it is likely that most hybrids with these characteristics will no longer receive any equity credit when assessing a bank's capital adequacy.
Additional information is available at www.fitchratings.com.
Applicable Criteria and Related Research:
--'Global Financial Institutions Rating Criteria', dated Aug. 16, 2010;
--'Short Term Ratings Criteria for Corporate Finance', dated Nov. 2, 2010;
--'Equity Credit for Hybrids and Other Capital Securities', dated Dec. 29, 2009;
--'Rating Hybrid Securities', dated Dec. 29, 2009;
--'Fitch to Review Equity Credit for Hybrid & Capital Securities', dated Sep. 22, 2010;
--'Bank Hybrid Securities: Debt Genes To the Fore During Financial Crisis', dated Feb. 10, 2011;
--'Exposure Draft: Proposed Revisions to Criteria for Treatment of Hybrids in Capital and Leverage Analysis', dated Feb. 10, 2011.
Applicable Criteria and Related Research:
Exposure Draft: Proposed Revisions to Criteria for Treatment of Hybrids in Capital and Leverage Analysis
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=593667
Bank Hybrid Securities: Debt Genes To the Fore During Financial Crisis
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=588605
Equity Credit for Hybrids and Other Capital Securities: Market Feedback and Fitch's Responses
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=291784
Short-Term Ratings Criteria for Corporate Finance
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=568726
Global Financial Institutions Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=547685
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