OREANDA-NEWS. Fitch Ratings expects to rate BBVA Colombia's upcoming U.S. dollar subordinated notes 'BBB (exp)'. The notes, for an amount to be determined, will mature in 10 years and interest payments will be semi-annual until maturity. The notes will bear interest at a fixed rate to be determined at the time of closing. The final rating is contingent upon the receipt of final documents conforming to information already received.

KEY RATING DRIVERS

As per Fitch's criteria, the notes will be rated one notch below BBVA Colombia's supported IDR, reflecting one notch for loss-severity, but no notches for incremental non-performance risk relative to the bank's supported IDR. The notes are plain vanilla subordinated debt with no coupon deferral.

In Fitch's opinion, losses for the bondholders would only arise when and if the bank becomes insolvent or is liquidated, which is why these securities receive no equity credit under the agency's criteria.

BBVA Colombia's Issuer-Default Ratings (IDRs) reflect the support it would receive from its parent (BBVA, rated 'A-'/ Stable Outlook by Fitch), should it be needed. Given its profitability and growth potential, BBVA Colombia is considered a strategically important subsidiary of its parent in Latin America. The bank's Viability rating (VR) reflects the bank's asset quality, sustained profitability and improved capital/reserve cushions, which are generally in line with other entities rated with the same VR.

The notes will rank (i) junior in right of payment to all of the Bank's existing and future Senior External Liabilities in accordance with the subordination provisions of the indenture; (ii) pari passu in right of payment with all of the Bank's existing and future Parity Obligations; and (iii) senior in right of payment to all of the Bank's existing and future Junior Obligations.

BBVA Colombia will use the proceeds for general corporate purposes. Considering the bank's current capital levels and sound profitability, the impact on the bank's leverage is not deemed significant by Fitch.

RATING SENSITIVITIES

The subordinated notes' rating is sensitive to any changes in BC's IDR which is in turn linked to BBVA's ratings.

Fitch has assigned the following expected rating:

BBVA Colombia S.A.
--Subordinated debt 'BBB'(exp);

Fitch currently rates BBVA Colombia as follows:
--Long-term foreign currency IDR 'BBB+'; Stable Outlook;
--Short-term foreign currency IDR 'F2';
--Long-term local currency IDR 'BBB+'; Stable Outlook;
--Short-term local currency IDR 'F2';
--Viability Rating 'bbb';
--Support rating '2';
--National long-term rating 'AAA(col)';
--National short-term rating 'F1+(col)';
--National senior unsecured debt 'AAA(col)';
--National long-term subordinated debt 'AAA(col)';