Moody’s downgrades Banco Popular

Moody's Investors Service said it downgraded Banco Popular Espanol, SA's long-term deposit ratings to Ba3 from Ba1 and the bank's and its supported entities' long-term senior unsecured debt ratings to B1 from Ba2 with a negative outlook.

At the same time, the agency downgraded the bank's standalone baseline credit assessment (BCA) to b3 from b1 and its counterparty risk assessment to Ba2(cr) from Baa3(cr).

Moody’s said the action follows the April 3 announcement of needed adjustments to 2016 financials and reflects the agency’s heightened concerns regarding Banco Popular's creditworthiness, namely its weakened solvency levels, which are rapidly deteriorating against the background of still very significant asset quality challenges.

As part of this action, Banco Popular's subordinated debt ratings were downgraded to Caa1 from B2 as well as various ratings of preference stock to Caa3 (hyb) from Caa1 (hyb), which are guaranteed by Banco Popular and issued by several issuing vehicles. The short-term counterparty risk assessment was downgraded to Not Prime(cr) from Prime-3(cr). The short-term debt and deposit ratings of Not Prime were unaffected.

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