Moody’s assigns Banco Hipotecario notes Ca

Moody’s Investors Service said it assigned a (P)Ca foreign currency senior unsecured debt rating to Banco Hipotecario SA’s series 4 proposed senior notes offering of up to $238 million. The notes will be issued in exchange of the bank’s outstanding series 29 notes, which mature on Nov. 30 and are currently rated Ca by Moody’s, with a negative outlook. The exchange is expected to occur on Oct. 8.

Hipotecario’s offer includes a cash payment of 35% of the outstanding principal at the date of the settlement (15% if subscribed after the early participation date). The remaining principal will be exchanged for the new notes. The exchange will not include principal write-downs and the new notes will bear the same 9¾% annual interest rate as the previous notes, the agency said.

“However, we view the offer as a distressed exchange that meets Moody’s definition of default because the tenor extension will likely imply a loss in value for investors in relation to the original promise, and the exchange would allow the bank to avoid a likely default,” Moody’s said in a press release.

The outlook is negative.

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