Ratings roundup: S&P, Moody's upgrade FirstBank, Fitch affirms Banco de Costa Rica

Tuesday, October 11, 2011

S&P has raised the rating of Puerto Rico's FirstBank to B+ from CCC+, following parent company First BanCorp's (NYSE: FBP) announcement that it had completed its US$525mn capital hike, the ratings agency said in a report.

FirstBank also successfully converted into common stock the US$424mn series G preferred shares held by the US Treasury.

"We believe that FirstBank now has the much-needed capital to absorb what we expect will be higher losses for the next several quarters," S&P credit analyst Kevin Cole wrote in the report.

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To read the full report, go to this link


In turn, Moody's upgraded FirstBank's long-term deposit rating to B2 from B3 and affirmed its E+ standalone financial strength rating (BFSR) and Not-Prime short-term rating.

Despite that the increase in First BanCorp's capital base, the equity raise and resulting conversion of the Series G Preferred into common shares significantly increase the company's tangible common equity, the added capital by no means guarantees First BanCorp's long-term success, the agency said in a report.

San Juan-based First BanCorp is the second-largest financial institution in Puerto Rico, with US$14.1bn in assets. It also operates in the US and the British Virgin Islands.

To read the full report, go to this link


Fitch has affirmed Banco de Costa Rica's issuer default rating (IDR) at BB+ driven by the explicit guarantee from Costa Rica's government, its sole owner, for all its liabilities. The outlook is stable, the agency said in a report.

Banco de Costa Rica's bb+ viability rating reflects its strong franchise, good asset quality and adequate capital ratios. It also considers the bank's profitability, seen as modest due to the high operating expenses; low interest margins; and the negative impact of the recent economic crisis on credit quality, which resulted in higher credit costs.

Banco de Costa Rica is the country's second largest bank, with market shares of some 25% of total loans and deposits.

To read the full report, go to this link