Moody's: Industrial Subordinated Trust notes Ba2

Moody's Investors Service said it assigned a Ba2 foreign-currency subordinated debt rating to the proposed issuance of 10-year notes due 2021 by Industrial Subordinated Trust.

The trust is a Cayman Islands-based trust established for the sole purpose of acquiring a 100% participation interest in an unsecured subordinated loan made by Bank of America to Guatemala's Banco Industrial SA to secure the note issuance.

The trust will therefore provide a pass through of both interest and principal cash flows on the Industrial loan to the trust's noteholders, Moody's said.

The proposed notes are guaranteed by Banco Industrial and subject to certain conditions, the agency said.

The notes will pay interest semi-annually in arrears equivalent to the amount due and owing from Industrial under the subordinated loan. The loan will be junior in right of payment to all of Banco Industrial's existing and future senior indebtedness and will rank senior only to Banco Industrial's capital stock or any other instrument that may qualify as tier 1 capital, the agency said

The subordinated loan is expected to receive tier 2 capital treatment for Banco Industrial.

Moody's said the Ba2 foreign-currency subordinated debt rating assigned to the trust is based on Banco Industrial's Ba2 local-currency equivalent and incorporates the support of the bank's unsecured subordinated obligations.

The rating also considers a two-notch differential from the trust's Baa3 local-currency deposit rating, reflecting the limited recourse of the note obligations under the transaction's legal structure, the agency said.

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