NEW YORK & SANTIAGO--(BUSINESS WIRE)--Fitch Ratings has assigned an 'A+(EXP)' rating to Banco Santander Chile's (BSC) upcoming USD185 million senior unsecured floating-rate notes (FRNs). This issuance is made under the umbrella of the Medium-Term Notes Program of up to USD5.5 billion.
The senior unsecured bonds will be denominated in U.S. dollars and will mature on Nov. 28, 2021 and carry a floating annual interest rate of three-month LIBOR plus 120 basis points.
KEY RATING DRIVERS
IDRS, VR AND SENIOR DEBT
The rating assigned to BSC's new debt issuance corresponds to the bank's Long-Term Issuer Default Rating (IDR) of 'A+', Outlook Stable.
BSC's IDRs and National long-term rating are driven by its Viability Rating (VR) of 'a+' and these do not factor in any extraordinary support from its parent, although it remains a strategically important subsidiary for Banco Santander.
BSC's VR and IDRs reflect its market-leading position and strong franchise within Chile. At June 30, 2016, BSC was the largest bank in Chile by total loans and deposits, with market shares of 19.5% and 19.0%, respectively.
The ratings also reflect the favorable operating environment in Chile compared to its regional peers, which has supported its healthy asset-quality ratios, sound core profitability, diversified funding, and adequate capital position.
The ratings of BSC's senior unsecured and subordinated debt are directly linked to the bank's IDR.
The Outlook on BSC's Long-Term IDRs is Stable. Downward pressure for BSC's VR and IDRs could arise from a considerable deterioration of the operating environment in Chile or of the bank's company profile, which is not Fitch's baseline scenario. Sustained pressure on profitability or consistently lower capitalization could also pressure the bank's VR. More specifically, BSC's VR could be downgraded if its operating profit on risk weighted assets (RWAs) falls and consistently remains below 1.5%, its Fitch Core Capital/RWAs ratio falls and sustains below 9%. In our view, there is limited upside potential in the near future for BSC's VR.
Fitch currently rates BSC as follows:
--Long-Term Foreign and Local Currency IDRs at 'A+'; Outlook Stable;
--Short-Term Foreign and Local Currency IDRs at 'F1';
--Viability rating at 'a+';
--Support rating at '1';
--Support rating floor at 'A-';
--Long-term National rating at 'AAA(cl)'; Outlook Stable;
--Short-term National rating at 'N1+(cl)';
--Senior unsecured bonds at 'A+' and National long-term rating at 'AAA(cl)';
--$5 billion commercial paper program at 'F1';
--Senior secured bonds National long-term rating at 'AAA(cl)';
--Subordinated bonds National long-term rating at 'AA(cl)';
--National equity rating at 'Primera Clase nivel 1'.
Date of Relevant Rating Committee: Nov. 7, 2016
Additional information is available at 'www.fitchratings.com'
Covered Bonds Rating Criteria (pub. 26 Oct 2016)
Global Bank Rating Criteria (pub. 15 Jul 2016)
Copyright (c) 2016 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch's factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch's ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed.
The information in this report is provided "as is" without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers.
For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001