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Sovereign downgrade prompts Moody's to cut ratings on 5 Chilean banks

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Sovereign downgrade prompts Moody's to cut ratings on 5 Chilean banks

Moody's on July 27 lowered certain ratings on five Chilean banks, while affirming other ratings for the same entities, following its downgrade of the country's sovereign ratings.

The rating agency recently lowered Chile's issuer and senior unsecured debt ratings to A1 from Aa3 and changed the outlook to stable from negative, saying that the country's fiscal position has deteriorated continuously during the past few years.

"As a result of the sovereign downgrade, several of the affected banks' ratings no longer benefit from as much uplift from government support as was previously the case," Moody's said in announcing the latest action on banks.

Banco de Chile's long-term local and foreign currency senior unsecured deposit ratings and foreign currency senior unsecured debt rating were lowered to A1 from Aa3, with the outlook revised to stable from negative. The bank's long-term local and foreign currency counterparty risk ratings were cut to A1 from Aa3 and its long-term counterparty risk assessment to A1(cr) from Aa3(cr).

The long-term local and foreign currency senior unsecured deposit ratings and foreign currency senior unsecured debt rating on Banco de Credito e Inversiones SA, meanwhile, were downgraded to A2 from A1, with the outlook changed to stable from negative.

Banco del Estado de Chile saw its long-term local and foreign currency senior unsecured deposit ratings and foreign currency senior unsecured debt rating drop to A1 from Aa3, with the outlook revised to stable from negative. The lender's long-term local and foreign currency counterparty risk ratings were downgraded to A1 from Aa3 and its long-term counterparty risk assessment to A1(cr) from Aa3(cr). The ratings on the bank's New York branch were similarly downgraded.

Banco Santander Chile's long-term local and foreign currency senior unsecured deposit and debt ratings were lowered to A1 from Aa3, with the outlook on the ratings revised to stable from negative. Its long-term local and foreign currency counterparty risk ratings fell to A1 from Aa3 and its long-term counterparty risk assessment to A1(cr) from Aa3(cr).

Banco Bilbao Vizcaya Argentaria Chile SA's long-term local and foreign currency counterparty risk ratings were lowered to A3 from A2, while its long-term counterparty risk assessment was downgraded to A3(cr) from A2(cr).

The short-term local and foreign currency deposit ratings and local and foreign currency counterparty risk ratings on Banco de Chile, Banco de Crédito, Banco del Estado and Santander Chile were all affirmed at P-1, while the same ratings on BBVA Chile were affirmed at P-2.

Meanwhile, Itaú CorpBanca's long-term local and foreign currency senior unsecured deposit ratings and foreign currency senior unsecured debt rating were affirmed at A3.

The outlook on both BBVA Chile and Itaú CorpBanca remains stable.