Moody’s Downgrade on Brazilian Financial Institutions
Moody’s Investors Service has today downgraded the standalone bank financial strength ratings (BFSR) or lowered the standalone baseline credit assessments (BCA) of eight Brazilian financial institutions by one to three notches. The long-term global local currency (GLC) deposit ratings or issuer ratings of 11 financial institutions were downgraded by one to two notches, while the deposit rating of one bank was confirmed. In addition, the short-term deposit ratings of six banks were downgraded by one notch. These rating actions conclude the reviews initiated on 24 February and 15 March, 2012.
The revised standalone ratings of three banks carry a positive outlook. A positive outlook has also been assigned to the supported local currency ratings of twelve issuers, while the outlook on the deposit rating of one bank is negative.
Today’s rating actions took place in the context of Moody’s ongoing global review of all banks whose standalone assessments are higher than the rating of the country in which they are domiciled as discussed in the rating implementation guidance “How Sovereign Credit Quality May Affect Other Ratings” published on 13 February 2012, and further detailed in the special comment “Banks and Sovereigns: Risk Correlations Constrain Standalone Bank Credit Assessments” published on 30 April 2012. The repositioning of the ratings also incorporates Moody’s recent rating actions taken on the affected banks’ parent banking groups, as discussed in the press release entitled “Moody’s downgrades firms with global capital markets operations” dated 21 June 2012.
Moody’s ratings assigned to other 39 banks in Brazil were unaffected by this global review because their standalone assessments are at or below the rating of the sovereign.