Fitch rates Banrisul notes B

Fitch Ratings said it assigned an expected B rating to Banco do Estado do Rio Grande do Sul SA’s (Banrisul) tier 2 subordinated notes. The 10-year notes may be redeemed in whole at the issuer’s option on the issuance’s fifth anniversary. Interest will be payable on a semi-annual basis. The size of the issuance is not yet determined but will likely be a benchmark size.

According to the draft terms, the notes are subject to permanent partial or full write off upon the occurrence of a non-viability event. If Banrisul’s common equity tier 1 capital falls below 4.5% of the risk-weighted assessment as determined by the Brazilian regulator, Fitch said.

Fitch said it bases the rating on Banrisul’s viability rating and then deducts two notches for subordination and the expected severity of the notes’ losses.

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