Ratings roundup: Santander unit bonds, Santander BanCorp

Wednesday, March 16, 2011

Ratings agencies Feller Rate and Fitch have rated Santander Chile's (NYSE: SAN) fourth line of bonds on a national scale, while the latter affirmed Santander BanCorp (NYSE: SBP), the Puerto Rican unit of Spain's Santander (NYSE: STD).

Feller Rate, a Chilean agency, has assigned a AAA rating to Santander Chile's up to 30-year series E bonds worth 35mn of the country's inflation-linked unit, the UF, (755bn pesos, or US$1.56bn), of which 12mn UFs have already been placed.

Proceeds will be used by the bank, Chile's largest, to improve its assets/liabilities structure and finance loan growth, Feller Rate said in a report.

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The rating on Santander Chile's bonds reflects its strong financial profile, good capital levels and above-industry average returns, high efficiency, and continuing risk administration improvements.

To read the full report in Spanish, go to this link


Fitch also rated the upcoming bonds AAA, reflecting support from its parent company given its strategic importance, as well as the bank's performance, which includes solid profitability history, healthy asset quality, a leading position in the market and good capital adequacy levels.

Santander Chile is the market leader in virtually every segment of the Chilean banking industry, and had an overall 20.9% market share as of end-December.

The bank is 75% owned by Spain's Santander, while the rest is widely held.

To read the full report in Spanish, go to this link


Fitch also affirmed Santander BanCorp's individual rating at C and issuer default ratings (IDRs) at AA-/F1+, reflecting Santander's ownership. The bank's rating outlook is stable, the agency said in a report.

Despite operating in the challenging Puerto Rican market, Santander BanCorp continues to have sound overall financial indicators. Fitch's main concern is the level of non-performing loans, which stems from the difficult economic environment and real estate market in Puerto Rico.

Nevertheless, Santander BanCorp's loan portfolio has held up much better than local peers, due to more conservative underwriting and risk management practices, the report reads.

Santander BanCorp is the fifth largest bank in Puerto Rico by total assets and the fourth largest by deposits.

To read the full report in English, go to this link