(The following statement was released by the rating agency)
Jan 22 - Standard & Poor's Ratings Services assigned its 'BBB' rating to BBVA Banco Continental's proposed senior unsecured fixed-rate notes for up to $300 million. The new dollar-denominated issuance will have a tenor of up to four years. The bank will use proceeds of the issuance to primarily to fund its expansion.
Holding Continental S.A. (not rated) is a joint venture between Banco Bilbao Vizcaya Argentaria S.A. (BBVA; BBB-/Negative/A-3) and Grupo Brescia (not rated), where all relevant strategic decisions are taken through consensual agreement. Through Holding Continental S.A, these two entities jointly control 92.24% of BBVA Banco Continental. In our view, BBVA Banco Continental is a "moderately strategically" important subsidiary of BBVA; its operations, risk management practices, and strategy are consistent with those of BBVA.
Our rating methodology applies notches of uplift to the bank's stand-alone credit profile (SACP) for either group support or extraordinary government support, whichever is stronger. Following the Oct. 15th, 2012 downgrade of BBVA, government support has become more relevant in our analysis than the support from BBVA. We view the government of the Republic of Peru (foreign currency rating BBB/Positive/A-2; local currency rating BBB+/Positive/A-2) as "supportive" towards its financial system as a whole and that BBVA Banco Continental demonstrates "high" systemic importance in Peru. The bank is the second largest in the country, with a market share of about 23% of total deposits. As a result, we believe there is a "moderately high" likelihood of government support if needed. The issuer credit ratings on the bank are limited by the foreign currency rating on Peru, given the bank's significant exposure to changes in Peru's economy.
The ratings on BBVA Continental reflect its "strong" business position, "adequate" capital and earnings, "adequate" risk position, "average" funding, and "adequate" liquidity (as our criteria define these terms). The bank's stand-alone credit profile is 'bbb+'.
-- Banks: Rating Methodology And Assumptions, Nov. 9, 2011
-- Banking Industry Country Risk Assessment Methodology and Assumptions, Nov. 9, 2011
-- Group Rating Methodology And Assumptions, Nov. 9, 2011
-- Bank Hybrid Capital Methodology And Assumptions, Nov. 1, 2011
BBVA Banco Continental
Issuer credit rating BBB/Positive/A-2
BBVA Banco Continental
$300M sr unsec fixed notes due 2016 BBB