Moody’s downgrades BESI Brazil

Moody's Investors Service said it downgraded BES Investimento do Brasil SA's (BESI) ratings, including the bank financial strength rating to E from D-, which now maps to a baseline credit assessment of b1 from ba3; the long-term global local and foreign currency deposit ratings to B1 from Ba3; and the long- and short-term Brazilian national scale deposit rating to Baa2.br from A2.br, and to BR-3 from BR-2, respectively.

In addition, the agency affirmed the short-term global local and foreign currency deposit ratings of Not Prime.

Moody's also placed all ratings on review for further downgrade, with the exception of the Not Prime short-term debt and deposit ratings.

At the same time, Moody's America Latina Ltda. downgraded BESI Brazil’s senior unsecured local currency debt rating to B1 from Ba3 and national scale debt rating to Baa2.br from A2.br. All ratings were placed on review for downgrade.

Moody’s said the downgrades reflect the ratings downgrade of its parent bank, Banco Espirito Santo, on concerns regarding Banco Espirito’s creditworthiness.

The action incorporates the uncertainty around the parent bank's financial strength that could negatively affect BESI's liquidity position and access to funding. Further, BESI's profitability could also suffer were its cost of funding to rise or its core investment banking deal flow be affected by recent developments at the parent, the agency said.

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