DBRS threatens to put “rating” in the Box in the “trash” – Jornal de Negócios – Portugal

The problems of the government of the society after the resignation of a majority of the directors, the major risks arising from the recapitalisation plan and the difficulty in improving the profitability and quality of assets led to DBRS put the “rating” Box under review with negative implications.

THE DBRS evaluates currently the public bank at BBB (low), one level above the category view as “garbage” by the markets. If this trial period, which can last up to three months, resulting in a decline in the debt of Caixa Geral de Depósitos passes the level of speculative. The agency of the canadian, the only one of the largest that evaluates to Portugal and also to the public bank in investment-grade, said that will be particularly attentive to the “how will the resignation of the majority of the members of the administration to 27 November will affect the restructuring of the group”.

Maria Rivas, the analyst of the agency responsible for the report, still shows concern with the delay in the process of recapitalisation. “Despite the group being in a process of recapitalization that would strengthen its balance sheet, have been taken into account for this review period, the delays and the risk of running in this process”, refers to the note of the DBRS. “As a result, DBRS expects that the group is weakly capitalized by a greater period than initially planned”.

in addition, the resignation of the directors of António Domingues places, according to the DRBS, “additional challenges for the group to return to profitability, reduce the problems in the quality of assets and improve the confidence of investors”. The agency of canada states that the Government will continue to support the bank, if necessary. But caveat that it sees as less likely that this support remains unconditional if the group needs to strengthen its capital position in the medium term”.

to Place subordinated debt is essential for the “rating”

The agency explains that this assessment process may last up to three months. During this period, the DBRS says that it will focus “on the process of recapitalization, including the placement of instruments subordinated debt with private investors, as well as the problems of corporate governance and the challenges of asset quality and profitability.

In connection with the issuance of subordinated debt outlook DBRS are not encouraging. “We see the placement successful instruments in the market as a challenge given the current volatility in the global financial and the very limited access of the GBD to the funding markets”.

Thus, a rise in the “rating” is something that the DBRS sees as “unlikely in the short to medium term given the period of review.” If the evaluation process results in a descent of the “rating” Box will no longer have credit ratings of investment grade to agencies that are considered by the ECB. The S&P has a rating of BB+ (one level below investment grade). Fitch BB- (three levels below investment grade) and Moody’s to B1 (four levels below investment level).

(News updated at 18:22 with more information)