Fitch gives BBB- to BBVA Bancomer notes

Fitch Ratings said it assigned an expected long-term rating of BBB-(EXP) to BBVA Bancomer, SA's upcoming issue of up to $1 billion Reg S/144A Tier 2 subordinated preferred capital notes.

The proposed debentures will have a maturity of 10 to 15 years and a call option after five to 10 years.

Fitch said the downgrade by non-performance risk is typical of hybrids issued by Mexican banks because the agency considers that, according to applicable local regulation, coupon deferral will likely be triggered at relatively high levels of capitalization before the write-down occurs.

“The bank has established mandatory coupon deferral to be activated accordingly to Mexican capitalization regulatory requirements which are currently 8% of total net capital and 6% of Tier 1 capital (plus any applicable supplements such as the buffer for systemically important banks and countercyclical), or if BBVA Bancomer is classified by the regulator as a ‘Class III or IV’ bank, which currently implies a total regulatory capital ratio below 8%,” the agency said in a news release.

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