Fitch Affirms Nacional Financiera's IDRs at 'BBB+/A-'; Outlook Stable

Fri May 9, 2014 12:31pm EDT

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(The following statement was released by the rating agency) MONTERREY, May 09 (Fitch) Fitch Ratings has affirmed the Long-term foreign and local currency Issuer Default Ratings (IDRs) of Nacional Financiera, S.N.C. (Nafin) at 'BBB+' and 'A-', respectively. In addition, Fitch affirms Nafin's short-term IDRs at 'F2', its Support Rating at '2', Support Rating floor at 'BBB+', and its long- and short-term national scale ratings at 'AAA(mex)' and 'F1+(mex)', respectively. The entity's local senior unsecured debt issues were also affirmed at 'AAA(mex)'. The Rating Outlook on the Long-term ratings is Stable. A full list of rating actions is at the end of this rating action commentary. IDRs and national scale ratings: KEY RATING DRIVERS Nafin's IDRS remain aligned with the sovereign ratings and reflect the high probability that the entity will receive support from Mexico's federal government if required, according to an explicit guarantee stated in its Organic Law (Article 10) and considering Mexico's investment grade rating. Under this law, the Mexican government is explicitly responsible for the operations held by Nafin with domestic or foreign institutions, as well as for its deposits. The ratings also consider the high importance of Nafin as the second largest development bank in Mexico in terms of total assets and that the Mexican federal government is its major shareholder (99.99%). RATING SENSITIVITIES Nafin's ratings would reflect any change in Mexico's sovereign ratings, which currently have a Stable Rating Outlook, given that the bank's IDRs are driven by the explicit support granted by the Mexican federal government in its organic law. Support and Support Rating Floor: KEY RATING DRIVERS Nafin's Support Rating and Support Rating floor were affirmed at '2' and 'BBB+', respectively, given its important policy role as the second largest development bank in Mexico and the full guarantee it has from the sovereign. Fitch's Support Rating floors indicate a level below which the agency will not lower the bank's Long-term IDRs as long as the assessment of the support factors does not change. RATING SENSITIVITIES A potential upgrade or downgrade of Nafin's Support Rating and Support Rating floor will be driven by a change in Mexico's sovereign rating and/or a change in the expected propensity of support from the Mexican government; both unlikely events at present. Credit Profile Nafin's key role is to encourage the development of private-sector micro, small and medium enterprises by providing technical and consultancy support via financing options and general services in order to improve the productivity and development of these companies. Its credit activities are mainly 2nd floor loans (i.e. using financial intermediaries), and to a lesser extent, but gradually growing, 1st floor loans. Since end-2010, the entity has increased off-balance-sheet guarantees, mitigating the sluggish growth of its loans from 2011-2013. Fitch affirms the following: Nafin: --Long-term foreign currency IDR at 'BBB+'; --Long-term local currency IDR at 'A-'; --Short-term foreign and local currency IDRs at 'F2'; --Support rating at '2'; --Support rating floor at 'BBB+'; --National scale long-term rating at 'AAA(mex)'; --National scale short-term rating at 'F1+(mex)'; --Local senior unsecured debt issues at 'AAA(mex)'. The Rating Outlook is Stable. Contact: Primary Analyst Monica Ibarra Director +52 818 399 9150 Fitch Mexico S.A. de C.V. Prol. Alfonso Reyes 2612 64920 Monterrey, Mexico Secondary Analyst Manuel Valdes Analyst +52 818 399 9157 Committee Chairperson Franklin Santarelli Managing Director +1 212 908 0739 Media Relations: Elizabeth Fogerty, New York, Tel: +1 (212) 908 0526, Email: elizabeth.fogerty@fitchratings.com. Additional information is available on www.fitchratings.com Applicable Criteria and Related Research: --'Global Financial Institutions Rating Criteria' (Jan. 31, 2014); --'National Scale Ratings Criteria' (Oct. 30, 2013). Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria here National Scale Ratings Criteria here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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