Moody's Investors Service put three major Puerto Rico banks on downgrade review Tuesday evening.
The banks are Banco Santander Puerto Rico; Popular, Inc.; and FirstBank Puerto Rico. However, Moody's has put on review the senior unsecured deposit ratings of just Banco Popular de Puerto Rico and of FirstBank. Moody's affirmed the senior unsecured deposit rating of Banco Santander of Ba2. It is reviewing the baseline credit assessment rating of that bank of Ba1.
The senior unsecured deposit rating measures expected loss, which is a combination of default risk and loss severity for bank bondholders. It incorporates external support that may be available to the bank in times of distress, a Moody's spokesman said.
Moody's baseline credit assessment rating is similar to Moody's bank financial strength rating. "Moody's Bank Financial Strength Ratings (BFSRs) represent Moody's opinion of a bank's intrinsic safety and soundness and, as such, exclude certain external credit risks and credit support elements that are addressed by Moody's Bank Deposit Ratings," Moody's stated in a guide to its ratings.
Moody's gives senior unsecured deposit ratings of Ba2 to Banco Popular and B2 to FirstBank.
Moody's will be looking at the potential impact of a further deterioration of the Puerto Rico economy and/or the commonwealth's fiscal condition on the bank's credit profiles, said Moody's vice president Joseph Pucella and managing director Robert Young.
On Jan. 24 Standard & Poor's put negative watches on the issuer credit ratings of the Puerto Rico banks OFG Bancorp, Santander BanCorp and FirstBank Puerto Rico.
