Fitch Ratings has placed on Rating Watch Negative the ratings assigned to Banco UBS Pactual S.A. (UBS Pactual), except the Individual Rating, following announcement of the sale of the bank to the financial services company, BTG Investiments LP (BTG), controlled by Andre Esteves, one of the former controlling shareholders of Banco Pactual S.A. (Pactual), before the latter was sold to its present owner, UBS AG (UBS) in 2006.
The rating actions are as follows:
-Foreign currency long-term Issuer Default Rating (IDR) ‘BBB+’ on Watch Negative;
-Foreign Currency short-Term IDR ‘F2’ on Watch Negative;
-Local currency long-term IDR ‘BBB’ on Watch Negative;
-Local currency short-term IDR ‘F2’ on Watch Negative;
-Individual rating affirmed at ‘C/D’;
-Support rating ‘2’ on Watch Negative;
-National long-term rating ‘AAA(bra)’ on Watch Negative;
-National short-term rating ‘F1+(bra)’ on Watch Negative.
The IDRs and national ratings of UBS Pactual are derived from the support of its current shareholder, UBS, whose IDRs (‘A+’/Stable Outlook) were affirmed by Fitch in March 2009 and are at their Support rating floor. These ratings also contemplate the systemic importance of UBS, and the support capacity of the Swiss Government (IDR ‘AAA’/Stable Outlook). With the sale to BTG, the institution’s credit ratings will reflect the financial capacity of UBS Pactual, expressed in its Individual rating, and should be downgraded by more than one notch on all scales.
With conclusion of the sale, projected for mid-2009 and subject to approval of the regulatory authorities, the ratings of the successor bank, which will be called BTG Pactual S.A., will reflect the challenges of consolidating this franchise with a smaller distribution capacity in a more challenging environment, but supported by experienced professionals and good risk controls. Fitch believes that UBS will continue to provide full support to UBS Pactual until the final transfer is effected.
Fitch’s national ratings provide a relative measure of creditworthiness for rated entities in countries where the sovereign’s foreign and local currency ratings are below ‘AAA’. National ratings are not internationally comparable since the best relative risk within a country is rated ‘AAA’ and other credits are rated only relative to this risk. They are signified by the addition of an identifier, for the country concerned, such as ‘AAA (bra)’ for national ratings in Brazil.
L.D.