BII’s Covered Bond Programme Ratings Unchanged at BBB (high) After Sovereign Rating Action and Comment on BCP, Ratings Remain UR-Neg.

DBRS, Inc. (DBRS) has today commented that its ratings of the Series of the Banco de Investimento Imobiliário (BII) Covered Bond Programme remain unchanged following the extension of the DBRS review of Portuguese sovereign rating and comment on the Banco Comercial Português (BCP) Senior Long-Term Debt rating remaining at BBB (low) Under Review with Negative Implications. The ratings remain Under Review with Negative Implications, where they were placed on 25 May 2012, following DBRS similar action on the Republic of Portugal.

BII is a wholly-owned subsidiary of BCP. BCP directly controls BII and is liable for BII’s obilgations.

DBRS has recently announced the extension of its review on Portugal’s ratings given the unusually high degree of uncertainty regarding Portugal’s growth outlook, which is essential for debt stabilization. As a result, DBRS will wait for the conclusions of the EU-IMF 5th Program Review, which is expected in September 2012, and the 2013 budget proposal, which must be presented by October 15, 2012, prior to finalising its review. DBRS rates the Republic of Portugal at BBB (low). The Republic of Portugal’s long-term foreign and local currency ratings remain Under Review with Negative Implications, where they were placed on 22 May 2012.

DBRS views the higher systemic risks and challenging environment in Portugal as continuing to pressure the ratings of the Group. The economy remains weak, credit costs remain elevated and further deleveraging has the potential to pressure earnings, though this should have less of an impact than the aggressive deleveraging in 2011. Adding to the headwinds, access to market funding continues to be unavailable to Portuguese banks, pressured by heightened market concerns with the adequacy of liquidity and capitalisation of financial institutions, as well as the position of the Portuguese sovereign. These issues are likely to be exacerbated by the increased uncertainty about the prospects for the economy not only in Portugal, but more broadly in Europe. DBRS notes that potential negative rating action on the Portuguese sovereign would likely impact the ratings of BCP and the BII covered bonds.

Notes:
All figures are in Euros unless otherwise noted.

The principal methodologies applicable are:
• Master European Residential Mortgage-Backed Securities Rating Methodology
• Legal Criteria for European Structured Finance Transactions
• Rating European Covered Bonds
• Global Methodology for Rating Banks & Banking Organisations
• Swap Criteria For European Structured Finance Transactions
• Operational Risk Assessment for European RMBS Servicers
• Unified Interest Rate Model Methodology for European Securitisations
• Master European Structured Finance Surveillance Methodology

These can be found on dbrs.com under Methodologies. For a more detailed discussion of sovereign risk impact on Structured Finance ratings, please refer to DBRS commentary “The Effect of Sovereign Risk on Securitisations in the Euro Area”.

For additional information on this rating, please see the linking document.

This credit rating has been issued outside the European Union (EU) and may be used for regulatory purposes by financial institutions in the EU.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

Lead Analyst: Keith Gorman
Rating Committee Chair: Claire Mezzanotte
Initial Rating Date: 28 February 2012
Most Recent Rating Update: 25 May 2012