Fitch Rates Bantrab Capital Notes Trust's Subordinated Loan Participation Notes 'B+ (EXP)'

SAN SALVADOR, El Salvador & NEW YORK--()--Fitch Ratings assigns Bantrab Capital Notes Trust's (BCNT) upcoming 10-year USD subordinated loan participation notes (the notes) a long-term foreign currency rating of 'B+ (exp)'. The final rating is contingent upon the receipt of final documents conforming to information already received.

The notes will be issued for an amount to be determined (up to USD100 million) and will be secured by BCNT's sole asset, a 100% participation in and to a subordinated loan (the loan) from Deutsche Bank to Banco de los Trabajadores (Bantrab). As part of the transaction, Deutsche Bank will transfer its rights on the loan to BCNT which will in turn pledge the loan rights to the indenture trustee (The Deutsche Bank Trust Company Americas) as collateral for the notes; thus, in Fitch's opinion, the notes attain Bantrab's Viability Rating (VR), notched for subordination.

The notes will mirror all the conditions of the loan. Principal under the notes will mature in 10 years, and interest payments will be made semi-annually while capital will be paid at maturity of the loan. The notes will carry a fixed interest rate to be set at the time of issuance. The loan will be recognized by Guatemala's regulator as Tier II capital for regulatory capital purposes.

Given the securities have no discretion to cancel payments and no conversion to 'first loss' capital before, in Fitch's opinion, the bank becomes non-viable, Fitch has assigned no equity credit.

The expected rating of the notes is one notch below Bantrab's VR of 'bb-'. The notching for loss severity reflects the notes' subordinated status, and the fact that they effectively rank junior to all Bantrab's present and future senior indebtedness, pari passu with all other unsecured subordinated debt and senior to Bantrab's capital. No additional notching is given for non-performance risk given the absence of gone-concern loss-absorption features.

Bantrab will use the net proceeds of the loan for funding the expansion of its loan portfolio.

Bantrab's long-term Issuer Default Rating (IDR) is driven by its intrinsic creditworthiness, as reflected in its VR. The VR reflects Bantrab's moderate franchise, sound and recurring profitability driven by ample margins and good asset quality. The rating also considers the bank's concentration in the public sector, rapid loan growth and pressured capitalization.

Bantrab's support rating and support rating floor of '5' and 'NF', respectively, indicate that, although possible, external support cannot be relied upon, given the currently low state ownership and limited systematic importance.

RATINGS SENSITIVITIES

Changes in the notes' rating are contingent upon rating actions for Bantrab.

BANTRAB'S PROFILE

Bantrab was established in Guatemala in 1965 with an initial equity investment of Qtlz. 500,000 from the Central Government of Guatemala. The bank is mainly retail oriented and focuses its services on consumption loans to low-middle-income employees. Bantrab is currently the fifth-largest bank in Guatemala in terms of assets and deposits (5.9% and 6.1%, respectively, as of YE2014) and has traditionally provided its services through an ample network of branches, covering most parts of the country. It is supported by a workforce of 3,400 employees.

Fitch currently rates Bantrab as follows:

--Foreign currency long-term IDR 'BB-'; Outlook Stable;

--Foreign currency short-term IDR 'B';

--Local currency long-term IDR 'BB-'; Outlook Stable;

--Local currency short-term IDR 'B';

--Viability Rating (VR) 'bb-';

--Support rating '5';

--Support rating floor 'NF'.

--Long-term national rating at 'A(gtm)'; Outlook Stable;

--Short-term national rating at 'F1(gtm)'.

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

Applicable Criteria and Related Research:

--'Global Bank Rating Criteria' (Mar. 20, 2015);

--'Banco de los Trabajadores' (Jul. 01, 2014).

Applicable Criteria and Related Research:

Global Bank Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=863501

Banco de los Trabajadores

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=749536

Banco de los Trabajadores

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=751649

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=983326

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Contacts

Fitch Ratings
Primary Analyst
Mark Narron
Director
+1 212-612-7898
Fitch Ratings, Inc.
33 Whitehall Street,
New York, NY 10004
or
Secondary Analyst
Dario Sanchez
Associate Director
+503 2516-6608
Edificio Plaza Cristal, 3 Nivel
79 Av. Sur y Calle Cuscatlan
San Salvador, El Salvador
or
Theresa Paiz
Committee Chairperson
Senior Director
+1 212-908-0534
or
Media Relations:
Elizabeth Fogerty, +1 212-908-0526
elizabeth.fogerty@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Mark Narron
Director
+1 212-612-7898
Fitch Ratings, Inc.
33 Whitehall Street,
New York, NY 10004
or
Secondary Analyst
Dario Sanchez
Associate Director
+503 2516-6608
Edificio Plaza Cristal, 3 Nivel
79 Av. Sur y Calle Cuscatlan
San Salvador, El Salvador
or
Theresa Paiz
Committee Chairperson
Senior Director
+1 212-908-0534
or
Media Relations:
Elizabeth Fogerty, +1 212-908-0526
elizabeth.fogerty@fitchratings.com