S&P rates Banco Schahin notes B

Standard & Poor's said it assigned its B foreign-currency short-term senior unsecured debt rating to Banco Schahin SA's $10 million senior unsecured notes to be issued in May and maturing in one year. The coupon of the transaction is 6.0% per annum fixed rate.

The counterparty credit ratings on Banco Schahin SA (B/stable/B) reflect the intrinsic risks of a small bank facing the challenge of growing its retail business while maintaining adequate funding in the increasingly competitive and volatile Brazilian banking market; the bank's loan portfolio, with comparatively worse quality than those of its peers; and the relatively low core profitability in past years as compared to the bank's risk profile.

S&P said these risk factors are partially offset by the bank's coherent strategy to generate more retail business while gradually reducing the weight of loans to small and midsize companies; the bank's efforts to improve gradually its credit quality by means of diluting its credit risk, while improving profitability by increasing its retail operations; and the conservative approach of its Treasury activity.

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