Fitch might downgrade Brazilian banks' subordinated debt

Fitch Ratings said it placed the subordinated debt ratings of four Brazilian banks on Rating Watch negative after revising its criteria for assigning credit ratings to regulatory capital and similar securities issued by banks.

Placed on Rating Watch were Itau Unibanco Holding SA $1 billion of subordinated notes due 2020, $1.25 billion of subordinated notes due 2021 and $500 million subordinated notes due 2021, which are rated BBB; Banco Bradesco SA's $750 million of subordinated notes due 2019 and $1.1 billion of subordinated notes due 2021, which are rated BBB; Banco Pine SA's $125 million of subordinated notes due 2017, which are rated B; and Banco BMG SA's $250 million subordinated notes due 2020 and $300 million subordinated notes due 2019, which are rated B.

The agency said that among the main changes to the criteria is the determination of an anchor rating from which there will be a differentiation of the notching of the hybrid securities. Under most circumstances, the anchor rating will be a bank's viability rating. Also changed is the number of notches that can take place depending on relative subordination and non-performance risk characteristics.

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