(Repeat for additional subscribers)
July 11 (The following statement was released by the rating agency)
Fitch Ratings has affirmed Union Finances Grains' (UFG) commercial paper (CP) programme
rating at 'F1'. A list of rating actions is at the end of this comment.
KEY RATING DRIVERS
UFG's French CP programme's Short-term rating reflects Fitch's view that the
four banks guaranteeing the CPs would be extremely likely to honour their
commitment to guarantee the CPs issued under the programme, if required. The
four banks are Credit Agricole Corporate and Investment Bank (A/Stable/F1), Le
Credit Lyonnais (A/Stable /F1), Credit Cooperatif (A/Stable/F1) and Banque
Europeenne du Credit Mutuel. Banque Europeenne du Credit Mutuel benefits from a
counter-guarantee from Banque Federative du Credit Mutuel (A+/Stable/F1).
The following banks guarantee the repayment of individual tranches of UFG's CPs,
subject to limits on the total volume of CPs:
EUR84m for Credit Agricole Corporate and Investment Bank;
EUR141m for Le Credit Lyonnais;
EUR83m for Credit Cooperatif; and
EUR160m for Banque Europeenne du Credit Mutuel The banks' guarantees are not joint, and each
bank is only exposed to the CPs it
Fitch considers that the bank guarantees are extremely likely to be honoured,
given the huge reputational damage the banks would face if they failed to repay
the CPs and the small amounts guaranteed in absolute terms. These guarantees are
renewed on an annual basis, but are grandfathered (i.e. guaranteed CPs benefit
from the guarantee until they mature).
The Short-term ratings assigned to the CPs individually would move in tandem
with the Short-term Issuer Default Ratings of the banks guaranteeing the related
Fitch does not assign a rating to UFG as an entity, as it is purely an issuing
vehicle. UFG is a union of agricultural cooperatives (with variable capital)
authorised by the French Ministry of Agriculture. Currently, 32 French cereal
cooperatives are members of the union. UFG's sole purpose is to provide its
members with alternative forms of financing; UFG finances part of the
cooperatives' cereal inventories by issuing CPs. UFG has no funding needs for
itself and its overheads are paid by the member cooperatives. UFG has equity of
EUR1.4m, which bears no relation to the amounts issued on the financial markets.
The rating actions are as follows:
UFG's Commercial paper guaranteed by Credit Agricole Corporate and Investment
Bank: affirmed at 'F1'
UFG's Commercial paper guaranteed by Le Credit Lyonnais: affirmed at 'F1'
UFG's Commercial paper guaranteed by Credit Cooperatif: affirmed at 'F1'
UFG's Commercial paper guaranteed by Banque Europeeenne du Credit Mutuel:
affirmed at 'F1'