Banco do Brasil S.A.'s Proposed Senior Unsecured Notes Rated 'BB-'
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SAO PAULO (S&P Global Ratings) March 13, 2019--S&P Global Ratings said today
that it assigned its 'BB-' issue-level rating to Banco do Brasil S.A.'s (BdB;
BB-/Stable/B), through its Grand Cayman Branch, proposed fifth series of its
euro medium-term senior unsecured notes. The offering will have five-year
tenor and will be denominated in dollars.
The rating on the notes reflects their pari passu ranking with the bank's
other senior unsecured debt obligations. As a result, we rate them at the same
level as our long-term issuer credit rating on the bank. Even though the exact
amount is not yet defined, the notes should represent around 1% of BdB's total
funding base. Therefore, we don't expect this issuance to change our view of
the bank's above-average funding.
Our long-term issuer credit rating on BdB is three notches lower than its
stand-alone credit profile and is at the same level as the long-term foreign
currency rating on Brazil. Under our criteria, it's unlikely that we'd assign
an issuer credit rating on a bank that's above that on the sovereign, because
the bank would have to demonstrate a capacity to maintain sufficient capital
and liquidity to cover the significant stress that accompanies a sovereign
default. Additionally, BdB has significant asset exposure to the sovereign,
given that the bank's liquid assets are largely invested in sovereign bonds.
