Moody’s cuts Banco Mercantil deposits, debt

Moody's Investors Service said it downgraded Banco Mercantil do Brasil SA's long-term local- and foreign-currency deposit ratings to Caa1 from B3 and changed the outlook on all ratings to stable.

At the same time, the agency downgraded the bank's long-term national scale deposit rating to B3.br from B2.br and its long-term foreign-currency senior unsecured medium-term note program to provisional Caa1 from provisional B3, as well as its long-term foreign currency subordinated debt rating to Caa2 from Caa1.

Banco Mercantil's baseline credit assessment (BCA) and adjusted BCA were also downgraded to caa1 from b3, along with its long-term counterparty risk assessments to B3(cr) from B2(cr).

All short-term ratings and assessments were unaffected by the downgrade.

Moody’s said the action follows the continued deterioration of Banco Mercantil's asset quality, and takes into account its persistently weak capitalization levels and the challenges it faces in generating sustainable profitability. As of September, the bank reported that its 90-day delinquency ratio was at 11.1%, up from 8.5% a year earlier.

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