March 13, 2014 / 3:31 PM / in 4 years

Fitch Rates Banco Daycoval S.A.'s Senior Unsecured Notes 'BBB-'

(The following statement was released by the rating agency) SAO PAULO, March 13 (Fitch) Fitch Ratings assigns a long-term foreign currency rating of 'BBB-' to Banco Daycoval's (Daycoval) issue of senior unsecured notes in U.S. Dollars in the amount of USD500 million with a maturity of five years. The notes were issued by Daycoval's Cayman branch. Interest payments will be made semiannually and the principal will be paid at the maturity of the issuance. The notes are part of a global medium-term notes program of up to USD2 billion and proceeds shall be used to enable new business generation. KEY RATING DRIVERS The rating assigned to Daycoval's issuance corresponds to Fitch's Long-Term IDR ('BBB-; Outlook Stable) for the bank and ranks equal with its other senior unsecured debt. Daycoval's ratings reflect its consistent track record of performance, maintained in different cycles of the local economy, higher business diversification, and comfortable liquidity and capitalization positions. The bank has recorded consistent profitability, even during stress scenarios, sustained by adequate asset pricing, strong cost control and low funding cost. It also profits from its prudent liquidity management and adequate assets and liabilities management which help to mitigate the burden of a less diversified funding base compared to larger peers. Given its current business model, with asset and liability concentrations inherent to its size, including its wholesale funding nature, further upgrades to Daycoval ratings may be limited. Such positive changes will be contingent on significant reduction of the concentration in its funding and a successful diversification of its lending activities. RATING SENSITIVITIES The ratings of the bank and its issuance could be negatively affected by continued asset quality deterioration that results in pressure on the bank's results (ROA below 2%) and on capital (Fitch core capital lower than 11%), which may be triggered by larger than expected asset quality deterioration and/or aggressive asset growth or cash dividend policy. Contact: Primary analyst Eduardo Ribas Director +55-11-4504-2213 Fitch Ratings Brasil Ltda. Alameda Santos 700 - 7th floor, Sao Paulo, SP, Brazil Secondary analyst Claudio Gallina Director +55-11-4504-2216 Committee Chairperson Franklin Santarelli Senior Director +1-212-908-0379 Media Relations: Jaqueline Carvalho, Rio de Janeiro, Tel: +55 21 4503 2623, Email: jaqueline.carvalho@fitchratings.com; Elizabeth Fogerty, New York, Tel: +1 (212) 908 0526, Email: elizabeth.fogerty@fitchratings.com. Additional information available at 'www.fitchratings.com' or 'www.fitchratings.com.br'. Applicable Criteria and Related Research: -- Global Financial Institutions Criteria (Jan. 31, 2014); -- National Scale Ratings Criteria (Oct. 30, 2013). Applicable Criteria and Related Research: National Scale Ratings Criteria here Global Financial Institutions Rating Criteria 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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