Fitch Expects to Rate Banco de Bogota's Subordinated Notes 'BBB'; Rating Watch Negative

Fitch Ratings expects to assign a 'BBB' rating, Rating Watch Negative, to Banco de Bogota's (Bogota) upcoming 10-year U.S. dollar (USD) subordinated notes. A list of Banco de Bogota's current ratings follows at the end of this rating action commentary.

The notes, in the amount of up to USD1 billion, will pay a fixed interest rate to be set at the time of the issuance. The notes will mature in 10 years and interest payments will be made semi-annually until maturity. The final rating is contingent upon the receipt of final documents conforming to information already received.

The notes will be unsecured, subordinated obligations and will rank junior in right of payment to all Senior External Liabilities (as defined in Description of the Notes) at all times with or without legal preference, including, without limitation, senior indebtedness. The notes will be structurally subordinated to all indebtedness and other liabilities (including trade payables) of Bogota's subsidiaries.

KEY RATING DRIVERS

Fitch currently rates Banco de Bogota's Long-Term foreign and local currency Issuer Default Ratings (IDRs) 'BBB', Rating Watch Negative, and its Viability Rating (VR) is also 'bbb', Rating Watch Negative. The notes do not meet the characteristics required to achieve any equity credit; namely, they lack coupon deferral flexibility. As such, Fitch deems these notes as debt (as per its rating criteria). Accordingly, Fitch will rate the notes one notch below Banco de Bogota's VR. This reflects their subordinate nature and the higher than average losses that these securities typically incur in case of a default.

RATING SENSITIVITIES

The rating of the notes is sensitive to changes in Banco de Bogota's IDR and Viability rating, and would move in line with them.

Banco de Bogota will use the proceeds of the issuance for general corporate purposes, which may include working capital, retirement of debt and for other business opportunities.

With over 140 years of history, Bogota is Colombia's second-largest bank with a market share of 14.6% in terms of deposits and 13.6% in terms of loans. Traditionally oriented toward the corporate segment, the bank has diversified into the retail business and expanded abroad. The bank operates in six Central American countries through BAC-Credomatic and is controlled by Grupo Aval ('BBB', Rating Watch Negative), Colombia's largest financial services group.

Fitch currently rates Banco de Bogota as follows:

--Long-Term Foreign Currency IDR 'BBB+'; Rating Watch Negative;

--Short-Term Foreign Currency IDR 'F2'; Rating Watch Negative;

--Long-Term Local Currency IDR 'BBB+'; Rating Watch Negative;

--Short-Term Local Currency IDR 'F2'; Rating Watch Negative;

--Viability Rating 'bbb+'; Rating Watch Negative;

--Senior unsecured debt 'BBB+'; Rating Watch Negative;

--Subordinated debt 'BBB'; Rating Watch Negative;

--Support Rating '2';

--Support Rating Floor 'BBB-'.

Date of Relevant Rating Committee: April 27, 2016

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria

Global Bank Rating Criteria (pub. 20 Mar 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=863501

Metodologia de Calificacion Global de Bancos (pub. 29 May 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=866612

Additional Disclosures

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https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1003747

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1003747

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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