Roundup: Banif Brasil, Banco Base rated, Sonora state's debt

- Tuesday, October 18, 2011

Roundup: Banif Brasil, Banco Base rated, Sonora state's debt

Moody's has assigned a bank financial strength rating (BFSR) of E+ to Banif Brasil, a sister company of Portugal's Banif.

The E+ BFSR translates to a baseline credit assessment (BCA) of B3, and reflects the bank's modest earnings given its small franchise and relatively short track record in commercial banking in Brazil, Moody's said in a report.

The rating also takes into account the bank's capital indicators, which are close to the minimum regulatory level and hence limit its prospects for growth.

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To read the full report, go to this link

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S&P has assigned national scale long and short-term ratings of A- and A-2, respectively, to Mexican lender Banco Base. The outlook is stable, the agency said in a report.

The ratings take into account Banco Base's takeover of local brokerage Base Internacional Casa de Bolsa.

"We expect that the bank will maintain a financial and business profile similar to that of the brokerage and that it will keep its good positioning in Mexico's FX market," the report reads.

The stable outlook incorporates S&P's view that Banco Base will maintain a healthy financial profile with adequate levels of profitability and capitalization.

To read the full report, go to this link

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Mexican lender Banorte and the local units of Spain's BBVA (NYSE: BBVA) and Canada's Scotiabank (NYSE: BNS) have participated in the recent 8.5bn-peso (US$635mn) debt restructuring of Mexico's Sonora state.

This follows the news at the beginning of October that Coahuila state had renegotiated 34bn pesos in debt with its creditors, which also included Banorte.

On October 2, Deutsche Bank (NYSE: DB) issued a report highlighting that several Mexican states and municipalities are highly leveraged, and that this could become a problem to the banks.

Banorte has been aggressively growing its loans to government entities in the past 2.5 years. In fact, government entities accounted for 17% of Banorte's loan book at the end of June 2011, up from 11% at the end of 2008.

According to local securities regulator CNBV, Banorte had an 18% market share of government loans at the end of June.

Deutsche Bank has a sell recommendation on Banorte's stock.