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Bond Market News
Banco de Brasilia Downgraded to B+
July 18, 2024
Banco de Brasília (BRB) was downgraded by a notch from B+ to B by S&P. The downgrade comes following the bank’s low recurring profit in recent years due to margin compression and high non-interest expenses. The Brazilian bank announced a private capital raise totaling BRL 294mn ($54mn), in addition to selling 49.9% of Financeira BRB, one of its subsidiaries at a price almost twice its book value. However, S&P believes that these measures will bring temporary capital relief and that the bank’s capitalization ratios will tighten for the remainder of this year and 2025. The rating agency has a stable outlook on the entity citing that the bank will continue to comply with regulatory capital requirements.
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