TEXT-Fitch rates Tanner Servicios Financieros notes 'BBB-(exp)'

Mon Feb 25, 2013 11:17am EST

Feb 25 - Fitch Ratings assigns an expected long-term foreign currency rating
of 'BBB-(exp)' to Tanner Servicios Financieros S.A.'s (Tanner) upcoming
five-year senior unsecured notes due 2018.

KEY RATING DRIVERS
The rating assigned to Tanner's new senior notes corresponds to the bank's
long-term Issuer Default Rating (IDR) and ranks equal to other senior unsecured
debt.

The notes will be issued by an amount to be determined (up to US$300 million),
and the bulk of the funds will be used to fund the expected growth in assets
(20% in 2013), as well as to prepay some domestic debt issuances (mostly USD
denominated). Given that Tanner lending activities are carried in local
currency, the company will engage proper FX hedge with local counterparties. The
proposed issuance will not have a material effect on Tanner's debt service
capacity and overall leverage, considering the recent capital increase completed
in late 2012 and also, the fact that part of the proceeds will be used to
amortize existing debt.

Tanner's ratings reflect its solid and stable financial performance throughout
the economic cycles, increased income diversification, and the positive
long-term perspectives in the different segments where it operates. Credit risk
ratios are low and controlled; the company's loan portfolio is relatively
short-term (factoring facilities represent around 43% of total loans) and shows
no debtor concentrations. Also, even when funding is wholesale and relatively
concentrated in nature, it is composed by a healthy mix of bank financing lines
and debt capital market issuances. Asset and liability management is prudent in
terms of tenors, yields and currency. Tanner's capital position is considered
adequate, and debt levels have decreased since 2007. A a recent capital
injection will help to fund future expected growth and maintain adequate
leverage levels.


Tanner's ratings are limited by its relatively small size and relatively narrow
business model that results in concentrations on its operations and revenue
sources. Also, recent fast growth will require more seasoning of its lending
exposures that may result in some asset quality pressures. A more moderate loan
growth and the preservation of its historic asset quality trends will bode well
for its financial profile.

Established in 1993, Tanner is one of the largest non-bank financial
institutions in Chile (USD 1,142.9 million in total assets and USD209.7 million
in equity as of December 2012) with a market share of around 9% in the factoring
industry granted by the financial institutions that compose Chilean association
of factoring enterprises (ACHEF). Its loan portfolio is composed mainly of
factoring loans (46.9%), car loans (40.5%) and leasing operations (12.6%).

Sensitivities
The Rating Outlook is Stable. However, a sustained reduction of Tanner's
performance and/or unexpected deterioration of its asset quality that dampens
the entity's capital position would trigger a negative rating action. Further
diversification of its business model that brings diversified income may sustain
positive rating actions.

Fitch currently rates Tanner as follows:

--Long-term IDR 'BBB-'; Stable Outlook
--Short-term IDR 'F3';
--Local currency long-term IDR 'BBB-'; Stable Outlook
--Local currency short-term IDR 'F3';
--Senior unsecured FC Bonds 'BBB-(exp)' (up to USD 300 million senior notes due
2018).

Additional information is available at 'www.fitchratings.com'. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.

Applicable Criteria and Related Research:
--'Global Financial Institutions Rating Criteria', Aug. 15, 2012;
--'Finance & Leasing Companies Criteria', Dec. 12, 2011;
--'National Ratings Criteria', Jan. 19, 2011;
--'Evaluating Corporate Governance', Dec. 13, 2011.

Applicable Criteria and Related Research
Global Financial Institutions Rating Criteria
Finance and Leasing Companies Criteria
National Ratings Criteria
Evaluating Corporate Governance
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