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TEXT-Fitch expects to rate Davivienda notes 'BB+'
June 27, 2012 / 3:55 PM / 5 years ago

TEXT-Fitch expects to rate Davivienda notes 'BB+'

June 27 - Fitch Ratings expects to assign a 'BB+' rating to Davivienda's
upcoming 10-year U.S. dollar subordinated notes. A list of Davivienda's current
ratings follows the end of this press release.

The notes (the amount currently undetermined) will mature in 10 years. Interest
payments will be made semi-annually until maturity. The notes will carry a fixed
interest rate to be set at the time of issuance. The final rating is contingent
upon the receipt of final documents conforming to information already received.

The notes will be structurally subordinated to the existing and future
obligations of Davivienda's subsidiaries (including trade payables) and to
labor, tax and other obligations that are privileged by law. The notes will rank
pari-passu with all of Davivienda's existing and future subordinated. The notes
will be senior to Davivienda's capital stock and to any other instruments that
may qualify as Tier I capital according to Colombian regulation.

Fitch currently rates Davivienda long-term foreign and local currency IDRs
'BBB-' with a Stable Outlook. The notes do not meet the characteristics required
to achieve any equity credit. As such, Fitch deems these notes as debt (as per
its rating criteria). Accordingly, Fitch will rate the notes one notch below
Davivienda's IDRs. This reflects their subordinated nature and the higher than
average losses that these securities typically incur in case of a default.

Davivienda will use the proceeds of the issuance of the notes (together with
existing cash and cash equivalents) to pay for the acquisition of HSBC's
Subsidiaries in Central America and for general corporate purposes. However, the
notes do not meet Fitch's criteria for eligible capital. As such, Fitch expects
Davivienda's leverage -to increase slightly in the short run. Fitch expects that
continued growth and positive returns, will allow the bank to sustain adequate
Fitch core capital levels.

Fitch currently rates Davivienda as follows:

--Long-term foreign currency IDR 'BBB-'; Outlook Stable;
--Long-term local currency IDR: 'BBB-'; Outlook Stable;
--Short-term foreign currency IDR 'F3';
--Short-term local currency IDR 'F3';
--Viability rating 'bbb-';
--Support Rating '3';
--Support floor 'BB+';
--Subordinated debt 'BB+'.

Davivienda is Colombia's third largest bank by assets with a market share of
about 12% at March 2012. Davivienda is a universal bank operating across all
business segments with a particular strength in the consumer business.

Davivienda has an agreement to acquire HSBC's operations in El Salvador,
Honduras and Costa Rica, with the transaction likely to close during second
half-2012. Davivienda is controlled by Sociedades Bolivar, which has interests
in the construction and insurance industries in Colombia.


Additional information is available at 'www.fitchratings.com'. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.

Applicable Criteria and Related Research:
--'Global Financial Institutions Rating Criteria' (Aug. 16, 2011);
--'Treatment of Hybrids in Bank Capital analysis' (Jul. 11, 2011);
--'Rating bank Regulatory Capital and Similar Securities' (Dec. 15, 2011).

Applicable Criteria and Related Research:
Global Financial Institutions Rating Criteria
Treatment of Hybrids in Bank Capital Analysis
Rating Bank Regulatory Capital and Similar Securities

Our Standards:The Thomson Reuters Trust Principles.
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