Moody's rates Banorte debt Ba2 (hyb)

Moody's Investors Service said it assigned a provisional Ba2 (hyb) foreign-currency junior subordinated debt rating to Banco Mercantil del Norte, SA's (Banorte) proposed issuance of perpetual callable subordinated non-preferred non-cumulative additional tier 1 capital notes, with an optional redemption on the first call date.

The contingent convertible capital notes will be issued through Banorte's Cayman Islands branch, Banco Mercantil del Norte, SA, for an aggregate amount of about $1.5 billion.

The outlook remains negative.

The rating is positioned three notches lower than the bank's Baa2 adjusted baseline credit assessment in line with standard notching guidance for contractual non-viability securities and reflects both the high probability of default of these notes, as well as the high loss given default resulting from their subordination to the bank's senior debt and deposits, Moody's said.

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