Fitch Ratings has revised the Rating Outlook on
Fitch has also affirmed BRB's Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'B'/Outlook Stable.
The Negative Outlook on BRB's National ratings reflects Fitch's reassessment on the Government of
The bank's Viability Rating (VR) is not part of this review and was last downgraded on
A full list of rating actions is below.
Key Rating Drivers
Ratings Driven by Shareholder Support: BRB's IDRs and Shareholder Support Rating (SSR) are driven by shareholder support of its majority shareholder, the GDF, as per Fitch criteria's 'higher of' approach, reflecting Fitch's assessment that the support is stronger than BRB's standalone profile (as reflected in its VR). BRB's National Ratings are notched from Fitch's view of GDF's creditworthiness on the national scale. Fitch believes the bank's national scale rating better reflects its creditworthiness relative to its respective supporting entity.
The Negative Outlook on the National Ratings reflects our view of GDF's deteriorating fiscal flexibility to support the bank and Fitch's view that a downgrade on the state would likely result in a downgrade of the issuers' Long-Term National Ratings. The Stable Outlook on the Long-Term IDR reflects Fitch's view that any downside on the banks' IDRs, that could potentially arise from further weakening of GDF's creditworthiness, would be limited, due to sufficient headroom on BRB's main source of support in the international scale.
Moderate Probability of Support: The support assessment combines GDF's moderate propensity to support BRB and limited ability to do so. BRB is strategically important to GFD, as it is the local government's main financial agent and has a meaningful share in the
VR Not Affected: The bank's VR, which indicates its standalone credit strengths, is not affected by this development. In
For details on the Key Rating Drivers and Sensitivities of BRB's VR, please see the press release ' Fitch Downgrades BRB's L-T IDRs to 'B'/Stable; Places VR Rating on Negative Watch', dated
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
NATIONAL RATINGS
BRB's Long-Term National Ratings could be downgraded if GDF's operating balances continue to deteriorate, which would likely jeopardize its ability to service debt and put further pressure on the state's creditworthiness in the national scale, from which BRB's ratings are notched from.
IDRs and SSR
Material negative changes in Fitch's assessment of GDF's ability and willingness to provide support to BRB could affect the Shareholder Support Rating (SSR) of the bank.
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
IDR, SSR and NATIONAL RATINGS
Positive changes in Fitch's assessment of GDF's ability and willingness to provide support to BRB could affect the ratings. This is unlikely in the near term due to GDF's key financial metrics.
Best/Worst Case Rating Scenario
International scale credit ratings of Financial Institutions and Covered Bond issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from '
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
Public Ratings with Credit Linkage to other ratings
BRB's ratings are linked to GDF's.
ESG Considerations
Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg.
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