MONTERREY, Mexico–(BUSINESS WIRE)–Fitch Ratings has assigned Nacional Financiera S.N.C.’s (Nafin) senior unsecured notes reopening a rating of ‘BBB+’ and ‘AAA(mex)’ to NAFF 260925 that will be held jointly with a local long-term senior unsecured NAFR 190417.
Because these notes are senior unsecured debt and rank at least equally with all of the bank’s other present and future unsecured and unsubordinated external debt, the ratings assigned to this debt class are the same as Nafin’s ‘BBB+’ Long-Term Issuer Default Ratings (IDRs). The proceeds from the offering are expected to be used for general corporate purposes.
The NAFF 260925 will be issued at fixed rate; it may have a tenor of 3,622 day (10 years) with irregular interest payments and a single payment of the principal at maturity day. The payment of the bond issued in Mexico will be paid through the Indeval and in turn, the bonds issued abroad will be paid through Euroclear and Clearstream.
The NAFR 190417 will be issued at floating rate referenced to the TIIE 28 interest rate, it may has a tenor of 908 days (three years) with interest payments every 28 days and a single payment of the principal at maturity day.
The target amount of these two issuances together should not exceed MXN6,000 million. The maximum and minimum amounts of each issue will be MXN5,000 million and MXN1,000 million, respectively.
KEY RATING DRIVERS
The ‘BBB+’ rating reflects that these are senior unsecured obligations of Nafin that rank pari passu with other senior indebtedness, and therefore, this rating is aligned with the company’s ‘BBB+’ Long-Term Foreign and Local Currency IDRs.
Nafin’s IDRs are aligned with Mexico’s sovereign ratings and reflect both the high ability and propensity of the sovereign to support Nafin, if needed. Mexico’s ability to provide support is reflected in its ‘BBB+’ investment-grade rating. The propensity of support relies on Nafin’s explicit guarantee as stated in its Organic Law (Article 10) which says that the Mexican government is responsible for domestic or foreign operations carried out by Nafin. Specifically, the Mexican government shall be responsible, at all times, for transactions entered into by Nafin with Mexican individuals and companies, and non/Mexican private, governmental and intergovernmental institutions.
The propensity of support also considers Nafin’s strategic role and high relevance in the Mexican federal government’s execution of its economic objectives. Nafin’s key role is to encourage the development of private-sector micro, small- and medium enterprises (MSMEs) by providing financing options and general services. Its credit activities are mainly ‘2nd tier’ loans (financial intermediaries) and to a lesser, but gradually growing extent, ‘1st tier’ loans. However, the entity has become an important player in providing loan guarantees, complemented by a range of products including factoring, derivatives and fiduciary services.
Given their senior unsecured nature, these notes will typically be aligned with the company’s IDRs, and the rating of the notes will mirror any potential change to Nafin’s IDRs.
Nafin’s Rating Outlook is Stable and is aligned with the Rating Outlook of Mexico’s sovereign ratings; therefore, no changes are expected to the ratings in the short or medium term. Nafin’s ratings would reflect any change to Mexico’s sovereign ratings, given that the bank’s IDRs are driven by the explicit support granted by the Mexican federal government in its organic law.
Date of Relevant Rating Committee: Aug 31, 2016
The financial information of the company considered for this rating action corresponds to unaudited information at June 30, 2016.
For further information about the rating sensitivities for Nafin’s ratings please see Fitch’s press release ‘Fitch Affirms IDRs of 5 Mexican Govt-Related Financial Institutions at ‘BBB+’; Outlook Stable’, available at www.fitchratings.com.
Global Bank Rating Criteria (pub. 15 Jul 2016)
National Scale Ratings Criteria (pub. 30 Oct 2013)
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