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

NEW YORK & SAN SALVADOR, El Salvador--()--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)'.

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

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=732397

2014 Outlook: Central America and the Dominican Republic

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=725825

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=824849

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Contacts

Fitch Ratings
Primary Analyst
Diego Alcazar, +1-212-908-0396
Director
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Rolando Martinez, +503 2516 6619
Director
or
Edgar Cartagena, +503 2516 6613
Director
or
Committee Chairperson
Eduardo Santibanez, +562 499 3307
Senior Director
or
Media Relations
Elizabeth Fogerty, +1-212-908-0526 (New York)
elizabeth.fogerty@fitchratings.com

Sharing

Contacts

Fitch Ratings
Primary Analyst
Diego Alcazar, +1-212-908-0396
Director
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Rolando Martinez, +503 2516 6619
Director
or
Edgar Cartagena, +503 2516 6613
Director
or
Committee Chairperson
Eduardo Santibanez, +562 499 3307
Senior Director
or
Media Relations
Elizabeth Fogerty, +1-212-908-0526 (New York)
elizabeth.fogerty@fitchratings.com