Fitch Ratings has today assigned Banco Bradesco S.A.''s (Bradesco) USD750 million subordinated fixed-rated notes due Sept. 29, 2019 a final long-term foreign currency rating of ''BBB''. The notes issued via Bradesco''s Grand Cayman branch, carry an interest rate set at 6.75% per annum, with interest payable semi-annually in arrears, starting on March 29, 2010.
Bradesco has a Fitch long-term local currency Issuer Default Rating (IDR) of ''BBB+'', and a long-term foreign currency IDR of ''BBB'', the latter constrained by Brazil''s Country Ceiling of ''BBB'', which addresses the risk that a local entity may not be able to access foreign currency. As Bradesco operates principally in local currency, the final rating of the subordinated notes is notched one notch below the bank''s long-term local currency IDR. This reflects the notes subordinated status, and the fact that the notes rank at least equally with similar subordinated debts.
The securities, which are subject to the approval of Brazil''s Central Bank to be treated as Tier II instruments for regulatory capital purposes, will likely be considered as Fitch class D securities and receive 75% equity-credit under Fitch''s capital assessment guidelines, reflecting their high loss absorption capacity. Bradesco has historically maintained adequate capitalization ratios and the bank will use the proceeds from the planned issue to replenish its regulatory Tier II capital as existing debt instruments mature, or its remaining maturities fall below minimum regulatory guidelines, rendering those instruments not eligible as capital. Eligible hybrids and other capital securities (equity-like instruments) can only account for 30% of Fitch''s definition of eligible capital, which is defined as core capital plus eligible hybrid debt and other capital securities.
Bradesco is one of Brazil''s leading banks in various segments. The group''s insurance operations, conducted via Bradesco Seguros (IFS ''BBB''), are an important part of the business and have historically contributed over 30% of consolidated net income.
Banco Bradesco S.A.''s ratings are as follows:
--Long-term foreign currency IDR ''BBB''; Outlook Stable;
--Short-term foreign currency IDR ''F2'';
--Long-term local currency IDR ''BBB+''; Outlook Stable;
--Short-term local currency IDR ''F2'';
--Individual Rating ''B/C'';
--Support Rating ''3'';
--Support Rating Floor ''BB'';
--National Long-term rating ''AAA(bra)''; Outlook Stable;
--National Short-term rating ''F1+(bra)''.
Note to Editors: Fitch''s National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated ''AAA'' and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as ''AAA(bra)'' for National ratings in Brazil. Specific letter grades are not therefore internationally comparable.
Additional information is available at ''www.fitchratings.com''.
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