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Fitch assigns foreign, national ratings to BRDE

Fitch Ratings on July 25 has assigned long- and short-term foreignand local currency issuer default ratings of BB and B, respectively, to .

The outlook on the long-term ratings is negative.

The rating agency also assigned long- and short-term nationalratings of AA(bra) and F1+(bra), respectively, with a stable outlook on the long-termrating.

The action reflects BRDE's importance and strategic role as adevelopment bank in the southern region of Brazil and its integration with the economicpolicies of its controlling states: Paraná, Santa Catarina, and Rio Grande do Sul.The bank's ratings are equal to those of Paraná and Santa Catarina, which accountfor two-thirds of the bank's capital and a slightly larger portion of its totalloans.

Fitch believes the probability of BRDE receiving shareholdersupport "is not constrained by the relatively weaker financial profile of the Rio do Grande do Sul state,"given the capital injections received from the other controlling states over thelast two years, as well as Rio Grande do Sul's large capital reserves in the bank."The fact that the bank does not distribute dividends and reinvests all ofits profits, as per its bylaws, reinforces our view that a capital withdrawal wouldbe very unlikely," Fitch said.

In April, Moody's also assignedratings to BRDE.