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Moody's reviews GNB Sudameris, BBVA Paraguay for downgrades

Moody's on Aug. 13 placed Banco GNB Sudameris SA, Gilex Holding SARL and BBVA Paraguay SA on review for downgrades.

The decision follows the recent announcement of an agreement under which Banco GNB Paraguay SA will acquire BBVA Paraguay from Spain's Banco Bilbao Vizcaya Argentaria SA.

The rating agency said the deal, which is still subject to regulatory approval but once obtained will transform GNB into Paraguay's largest commercial bank, could weaken the three units by exposing them to a more fragile environment.

As such, it placed GNB Sudameris' long-term ratings and its ba3 stand-alone baseline credit assessment on review for downgrade, as the proposed purchases of BBVA Paraguay "would expose the bank to weaker operating conditions in Paraguay, which would account for 36% of GNB Sudameris' loans upon closing, doubling its current 17% exposure," Moody's said.

Meanwhile, the rating agency also placed all of Gilex's long-term ratings on review for downgrade due to its exposure to the deal as the holding company of GNB Sudameris.

Moody's also placed BBVA Paraguay's Ba1 deposit rating on review for downgrade, as it currently benefits from its Spanish parent's support.

Earlier in August, BBVA said it was off-loading its Paraguayan unit to GNB Sudameris for about $270 million. According to previous reports, Banco GNB Paraguay will have total assets of $3.25 billion and will hold 16.7% of the market share in the country, based on data from the close of the first half of the year.