Fitch Ratings has assigned Industrial Senior Trust's (IST) upcoming five-, seven-, and 10-year USD loan participation notes (the notes) an expected long-term foreign currency rating of 'BB(exp)'. The final rating is contingent upon receipt of final documents conforming to information already received.
The expected rating of the notes is in line with the Guatemalan Banco Industrial's (BI) 'BB' long-term IDRs, reflecting that the notes will be senior unsecured obligations which will rank equally to BI's unsecured and unsubordinated obligations.
The notes will be issued for an amount to be determined (up to US$400 millions) and will be secured by IST's sole asset, a 100% participation in and to a senior unsecured loan (the loan) from Bank of America to BI. As part of the transaction, Bank of America will transfer its rights on the loan to IST. The notes will reflect all the conditions of the loan. Principal under the notes will be paid at maturity of the loan, and interest payments will be made semi-annually. The notes will carry a fixed interest rate to be set at the time of issuance.
BI's IDRs are driven by its strong national franchise, sound asset quality, good efficiency, ample deposit base, and sound liquidity which, in turn, are reflected in the bank's viability rating. BI's ratings are constrained by its modest capitalization, moderate profitability, and the relatively high loan portfolio concentrations.
Established in 1968, BI is Guatemala's largest bank, with a market share of 27.6% and 25.4% of the total assets and deposits as of June 2012. BI's primary focus is on commercial and corporate banking. BI's main shareholder is Bicapital Corp., a holding company domiciled in Panama, with assets of US$8.9 billion as of June 2012. Bicapital also owns the Honduras-based Banco del Pais since 2007.
Fitch has assigned a 'BB(exp)' rating to the following Industrial Senior Trust debt:
--Five-, seven-, and 10-year USD loan participation notes 'BB(exp)'.
Fitch currently rates BI as follows:
--Long-term IDR 'BB'; Outlook Positive;
--Short-term IDR 'B';
--Local-currency long-term IDR 'BB'; Outlook Positive;
--Local-currency short-term IDR 'B';
--Viability Rating 'bb';
--Support '3';
--Support Rating Floor 'BB-';
--Subordinated Tier I Capital Notes debt 'B-';
--National scale long-term rating 'AA-(gtm)'; Outlook Positive;
--National scale short-term rating 'F1+(gtm)'.
Additional information is available at 'www.fitchratings.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);
--'Treatment of Hybrids in Bank Capital Analysis' (July 9, 2012);
--'National Rating Criteria' (Jan. 19, 2011);
--'Central American Banks Withstand Financial Contagion Well-Positioned for Growth' (July 9, 2012);
--'Improved Efficiency Could Boost Credit Profiles of Central American Banks' (March 7, 2012);
--'Guatemala' (July 31, 2012).
Applicable Criteria and Related Research:
Global Financial Institutions Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686181
Treatment of Hybrids in Bank Capital Analysis
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=682453
National Ratings Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=595885
Central American Banks Withstand Financial Contagion Well-Positioned for Growth
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=681536
Efficiency Across Central American Banking Systems (The Hidden Potential)
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=672773
Guatemala
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=684439
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