StockMarketWire.com – Moody’s Investors Service has assigned a Baa1 foreign currency senior unsecured debt rating to the 1.125% CHF125m senior unsecured notes issued by Banco Santander (Brasil).

The notes – issued by Banco Santander (Brasil) (Sant Br), acting through its Grand Cayman branch – are due June 2015 and were issued under the existing US$10bn global medium term programme rated (P)Baa1. The outlook on the rating is stable.

The rating agency explained that the foreign currency senior unsecured debt rating derives from Sant Br’s Baa1 global local currency deposit rating, which in turn incorporates the bank’s standalone credit assessment of baa2 in the global rating scale).

Moody’s noted that the one notch of uplift on Sant Br’s deposit rating reflects the assessment of probability of systemic support because of the bank’s significant participation in the deposit market in Brazil.

The baa2 standalone credit assessment acknowledges Sant Br’s comfortable capital levels that support its large balance sheet, and could absorb potential loan losses.

The rating also incorporates its competitive footprint in many key retail banking segments, such as mortgage, credit card and vehicle finance, a strategic position aligned to the group’s operations in other Latin American countries.

The rating also takes into account the bank’s weaker asset quality and tighter profitability levels, pressured by low operational leverage, relative to other large retail bank peers’, as San Br continues to pursue the expansion in specific consumer segments, namely consumer and commercial (SME) lending, where competitive conditions have intensified.

As a result, Sant BR has experienced margin compression in line with market trend, and still higher delinquencies than industry.

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