Moody's rates Bancolombia notes Baa3

Moody's Investors Service said it assigned a Baa3 foreign-currency subordinated debt rating to Bancolombia SA's issuance of $400 million foreign-currency subordinated notes.

This rating is under review for possible downgrade in line with the reviews on Bancolombia's Baa1 and Prime-2 local-currency deposit ratings and D+ bank financial strength rating.

The agency said the Baa3 rating reflects the joint probabilities of default that are incorporated in Bancolombia's credit risk rating, which is indicated by its Baa1 global local-currency deposit rating, and Colombia's Ba1 foreign-currency ceiling for bonds and notes.

The ratings were placed under review for possible downgrade on Dec. 28 following the announcement of the bank's leveraged acquisition of a controlling stake in Banco Agricola, SA of El Salvador. The review reflects the potential impact of this acquisition on Bancolombia's overall future performance and, particularly, on its tangible common equity, Moody's said.

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