NEW YORK--(BUSINESS WIRE)--Based on the documentation provided, Fitch Ratings expects to rate Banco de Reservas de la Republica Dominicana, Banco de Servicios Multiples' (BANRESERVAS) upcoming USD subordinated notes 'B-(exp)'. The final rating is contingent upon the receipt of final documents conforming to information already received.
The expected rating is in line with the rating guidelines in Fitch's criteria 'Assessing and Rating Bank Subordinated and Hybrid Securities'. The notes rank junior to BANRESERVAS' senior unsecured debt and will be structurally subordinated to existing and future obligations. Their rating is one notch below BANRESERVAS' Viability Rating (VR) reflecting one notch for loss severity, but no notches for incremental non-performance risk relative to the bank's VR. The securities' rating is sensitive to any change in BANRESERVAS' VR.
The subordinated notes for an amount and maturity to be determined will carry a fixed interest rate, also to be determined. Interest payments will be made semi-annually. BANRESERVAS will use the proceeds from the planned issue for general business purposes.
Fitch will not assign equity credit to the subordinated bonds as these do not have any capital components according to Fitch's methodology, though a portion of the notes will be considered Tier II regulatory capital according to local capital adequacy regulations. The final amount issued is not expected to materially change BANRESERVAS' financial profile.
As of June 30, 2012, BANRESERVAS was the second largest bank out of 15 commercial and multiple service banks, with 28% of total system assets. The bank is the government's main paying agent and also has an important share of consumer and corporate markets.
Fitch currently rates BANRESERVAS as follows:
--Foreign currency IDR 'B'; Outlook Stable;
--Local currency IDR 'B'; Outlook Stable;
--Short-term foreign currency IDR 'B';
--Short-term local currency IDR 'B';
--Viability Rating 'b';
--Support Rating '4';
--Support Floor 'B';
--National long-term rating 'AA-(dom)'; Outlook Stable;
--National Short-Term Rating 'F1+(dom)'.
Additional information is available at 'www.fitchratings.com' and 'www.fitchdominicana.com'. 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. 15, 2012);
--'Assessing and Rating Bank Subordinated and Hybrid Securities' (Dec. 5, 2012);
--'2013 Outlook: Central America and the Dominican Republic' (Dec. 12, 2012).
Applicable Criteria and Related Research:
Global Financial Institutions Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686181
Assessing and Rating Bank Subordinated and Hybrid Securities
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=695542
2013 Outlook: Central America and the Dominican Republic
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=696486
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