Fitch Expects to Rate Caixa's Proposed Senior Unsecured Notes 'BBB'

RIO DE JANEIRO--()--Fitch Ratings expects to assign Caixa Economica Federal's (Caixa) proposed medium-term senior unsecured notes a foreign currency long-term rating of 'BBB'.

The final amount, tenor, and interest rate will be set at the time of the issuance. The notes will bear a semi-annual fixed coupon with a bullet payment without any grace period. This issuance is part of a global medium-term notes program of up to USD5 billion, and its proceeds will be used to expand the bank's lending activities.

KEY RATING DRIVERS

The notes rank equally with Caixa's other senior unsecured notes issued under the program and rated by Fitch. The expected rating is aligned with Caixa's foreign currency long-term Issuer Default Rating (IDR) of 'BBB'/Outlook Stable, which is equal to Brazil's sovereign rating and driven by support from the federal government. The final rating is contingent upon the receipt of final documents conforming to the information already received.

Caixa's ratings reflect full ownership by the federal government, its systemic importance, and the role it plays in the implementation of government economic programs. Fitch believes the probability of support by the government would be high, should it be required. Caixa's strategy is driven by government economic policies aiming at the extension of credit to the lower income population at competitive rates. Caixa finances and/or manages government programs, such as Programa Minha Casa Minha Vida (PMCMV) and Bolsa Familia. It also manages various public funds. It is the largest lender in the politically important housing sector, with 68% market share.

RATING SENSITIVITIES

Caixa's and its issues' ratings would be affected by potential changes in the sovereign ratings and/or its shareholder's willingness to provide support.

Fitch currently rates Caixa as follows:

--Foreign and local currency long-term IDRs 'BBB', Outlook Stable;

--Foreign and local currency short-term IDRs 'F2';

--Support rating '2';

--Support rating floor 'BBB';

--National long-term rating 'AAA(bra)', Outlook Stable;

--National short-term rating 'F1+(bra)';

--Foreign currency long-term rating of senior unsecured USD notes maturing in 2017, 2018 and 2022 'BBB'.

Additional information available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Financial Institutions Rating Criteria' (Jan. 31, 2014).

Applicable Criteria and Related Research:

Global Financial Institutions Rating Criteria

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

Additional Disclosure

Solicitation Status

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Contacts

Fitch Ratings
Primary Analyst
Esin Celasun, +55-21 4503-2626
Director
Fitch Ratings Brasil Ltda.
Praca XV de Novembro 20- 401 B
Rio de Janeiro, RJ, Brazil
or
Secondary Analyst
Maria Rita Goncalves, +55-21-4503-2621
Senior Director
or
Committee Chairperson
Franklin Santarelli, +1-212-908-0739
Managing Director
or
Media Relations
Elizabeth Fogerty, New York, +1-212-908-0526
elizabeth.fogerty@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst
Esin Celasun, +55-21 4503-2626
Director
Fitch Ratings Brasil Ltda.
Praca XV de Novembro 20- 401 B
Rio de Janeiro, RJ, Brazil
or
Secondary Analyst
Maria Rita Goncalves, +55-21-4503-2621
Senior Director
or
Committee Chairperson
Franklin Santarelli, +1-212-908-0739
Managing Director
or
Media Relations
Elizabeth Fogerty, New York, +1-212-908-0526
elizabeth.fogerty@fitchratings.com