Fitch Expects to Rate Agromercantil Senior Trust's Loan Participation Notes 'BB'

Mon Mar 24, 2014 5:50pm EDT

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(The following statement was released by the rating agency) NEW YORK/SAN SALVADOR, March 24 (Fitch) Fitch Ratings expects to assign Agromercantil Senior Trust's (AST) upcoming USD loan participation notes (the notes) a long-term foreign currency rating of 'BB'. The final rating is contingent upon receipt of final documents conforming to information already received. KEY RATING DRIVERS The expected rating of the notes is in line with Banco Agromercantil de Guatemala, S.A. (BAM) long-term Issuer Default Ratings (IDRs) of 'BB', reflecting that the notes will be senior unsecured obligations which will rank equally with BAM's unsecured and unsubordinated obligations. The notes will be issued for an amount to be determined (up to USD300 millions) and will be secured by AST's sole asset, a 100% participation in and to a senior unsecured loan (the loan) from Bank of America to BAM. As part of the transaction, Bank of America will transfer its rights on the loan to AST which will in turn pledge the loan right to the indenture trustee (The Bank of New York Mellon). The notes will reflect all the conditions of the loan. Principal under the notes will be paid at maturity of the loan (between five and seven years), and interest payments will be made semi-annually. The notes will carry a fixed interest rate to be set at the time of issuance. BAM's IDRs and Viability Rating (VR) reflect its intrinsic strengths, including its improving loan quality and profitability, a significant capital strengthening during last year and an ample although short-term funding. BAM's ratings also factors in the operational assistance provided by its minority stakeholder, Bancolombia. RATING SENSITIVITIES Changes in the notes' rating will mirror rating actions on BAM. KEY ASSUMPTIONS AND SENSITIVITIES The notes' ratings assume: --The trust structure and its enforceability are reasonably air tight so as to effectively reflect the bank's credit risk. BAM'S PROFILE BAM is a Guatemalan universal bank mainly focused on the corporate segment (close to 75% of its loan portfolio) with a market share of 8.09% and 8.03% as of December 2013 in term of assets and deposits, respectively. BAM was founded in 1926 but operates under its current name since 2000, as a result of the merger of Banco del Agro and Banco Agricola Mercantil de Guatemala. Fitch expects to rate the following Agromercantil Senior Trust debt: --Senior Trust's Loan Participation Notes 'BB'. Fitch currently rates BAM as follows: --Long-term IDR 'BB'; Outlook Stable; --Short-term IDR 'B'; --Local-currency long-term IDR 'BB'; Outlook Stable; --Local-currency short-term IDR 'B'; --Viability Rating 'bb'; --Support '5'; --Support Rating Floor 'NF'; --National scale long-term rating 'A+(gtm)'; Outlook Stable; --National scale short-term rating 'F1(gtm)'. Contact: Primary Analyst Diego Alcazar Director +1- 212 908 0396 Fitch Ratings, Inc. One State Street Plaza New York, NY 10004 Secondary Analyst Rolando Martinez Director +503 2516 6619 Edgar Cartagena Director +503 2516 6613 Committee Chairperson Eduardo Santibanez Senior Director +562 499 3307 Media Relations: Elizabeth Fogerty, New York, Tel: +1 (212) 908 0526, Email: elizabeth.fogerty@fitchratings.com. Additional information is available at 'www.fitchratings.com'. Applicable Criteria and Related Research: --'Global Financial Institutions Rating Criteria' (Jan. 31, 2014); --'2014 Outlook: Central America and the Dominican Republic' (Dec. 16, 2013). Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria here 2014 Outlook: Central America and the Dominican Republic here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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