S&P lowers Banco Espirito Santo

Standard & Poor’s said it lowered the counterparty credit ratings on Banco Espirito Santo SA (BES) and its core subsidiary, Banco Espirito Santo de Investimento SA (BESI) to B-/C from B+/B.

The long-term rating remains on CreditWatch, where it was placed with negative implications July 11, S&P said.

The short-term rating was removed from the CreditWatch listing.

S&P also said it lowered the rating on BES’ non-deferrable subordinated debt to CCC- from CCC+ and lowered the rating on BES’ hybrid instruments to CCC- from CCC.

The CCC- ratings on the non-deferrable subordinated debt and hybrids remain on CreditWatch with negative implications.

The downgrade and credit watch action reflects the company’s weakened capital position as a result of the higher losses that the company is likely to face given its direct exposure to the Espirito Santo Financial Group, SA, to its subsidiaries and to Rio Forte Investments SA, the agency said.

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