April 28, 2015 / 1:15 PM / in 4 years

Fitch Affirms EPIC Bpi-Group at 'AA'; Outlook Stable

(The following statement was released by the rating agency) PARIS/FRANKFURT, April 28 (Fitch) Fitch Ratings has affirmed EPIC BPI-Groupe (EPIC) Long-term foreign and local currency Issuer Default Ratings (IDRs) at 'AA' with a Stable Outlook, and its Short-term foreign currency IDR at 'F1+'. Fitch has also affirmed Bpifrance Financement's EUR4bn certificate of deposit programme, EUR20bn euro medium term notes programme and EUR4bn negotiable medium-term notes at Long-term 'AA' and Short-term 'F1+'. The bonds issued under these programmes benefit from an unconditional and irrevocable first-call guarantee from EPIC BPI-Groupe. Fitch rates the holding company EPIC, but not BPI-Groupe SA or its subsidiaries (including Bpifrance Financement) represented by Bpifrance Group. Fitch rates EPIC on a top-down basis under its public-sector entity rating criteria, due to EPIC's status as a public agency, its tight control by the French State (AA/Stable/F1+) and to a lesser extent, its strategic importance for the government. As a result, the ratings of EPIC are equalised with those of, and credit-linked to, France. KEY RATING DRIVERS EPIC would benefit from very strong state support in case of need. Although the French government has no legal obligation to prevent a default, Fitch assumes that it is highly motivated to provide support on a long- or short-term basis and that it has the legal and financial means to enable EPIC to meet its debt service obligations on time. By virtue of its status, EPIC's assets and liabilities cannot be liquidated or transferred to entities other than the French State. EPIC is 100% owned by the French government and its missions are carried out through BPI-Groupe SA and its subsidiaries that make up Bpifrance Group. Bpifrance Group is subject to a strong administrative, legal and financial oversight by the French State which defines its missions. As part of public policy, Bpifrance Group's commitments are monitored by parliament through annual performance reports. Bpifrance Group is a strategic tool for French economic policy through co-lending (with commercial banks) for small and medium-sized enterprises (SMEs) and mid-caps. Its public missions have been reinforced with export financing and by a framework-agreement with Agence Francaise de Developpement (AFD; AA/Stable/F1+) to foster the international development of French SMEs. Underpinned by the absence of high fixed costs as it has no significant branch network, Bpifrance Group continues to post a sound cost/income ratio on its different activities. Under its 2014-2017 strategic plan, Bpifrance Group expects to continue to post sound budgetary performance, with a low cost of risk and a positive operating income of EUR502m at end-2017 (2014: EUR389m). Bpifrance Group benefits from diversified sources of funding, through EPIC's debt financing division subsidiary (Bpifrance Financement), allowing it to limit its refinancing risk. Since 2015, its funding is also underpinned by the eligibility of Bpifrance Financement's securities for the public sector purchase programme of the European Central Bank. Bpifrance Financement has a solid and safe liquidity profile, with a confirmed amount of liquidity reserves of EUR9.6bn at end-2014, representing one year of business activity. This translates into a solid liquidity coverage ratio (LCR) under Basel III regulations (600% at end-2014). The breakdown of exposures by product and by sector is diversified in terms of both exposure and number of counterparties. Bpifrance Group has a strict policy on large exposures, thereby limiting high individual exposure and favouring portfolio diversification. RATING SENSITIVITIES EPIC's ratings are credit linked to the sovereign. A positive or negative rating action on the sovereign would result in a similar rating action on the issuer. Changes to EPIC's legal status that weaken potential support from the state could also lead to a downgrade. A movement in the ratings of EPIC would affect the ratings of guaranteed bonds issued by Bpifrance Financement. Contact: Primary Analyst Arnaud Dura Associate Director + 33 1 44 29 91 79 Fitch France S.A.S. 60, rue de Monceau 75008 Paris Secondary Analyst Christophe Parisot Managing Director + 33 1 44 29 91 45 Committee Chairperson Guido Bach Senior Director +49 69 768076 111 Media Relations: Francoise Alos, Paris, Tel: +33 1 44 29 91 22, Email: francoise.alos@fitchratings.com; Peter Fitzpatrick, London, Tel: +44 20 3530 1103, Email: peter.fitzpatrick@fitchratings.com. Additional information is available at www.fitchratings.com. Applicable criteria, 'Tax-Supported Rating Criteria' dated 14 August 2012, and 'Ratings of Public-Sector Entities - Outside the United States' dated 26 February 2015, are available on www.fitchratings.com. Applicable Criteria and Related Research: Tax-Supported Rating Criteria here Rating of Public-Sector Entities - Outside the United States 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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