Sept 18 - Fitch Ratings expects to assign a ‘BBB-(exp)’ rating to Grupo Aval Limited’s (GAL) upcoming senior unsecured notes. The rating is subject to receipt of final documents conforming to information already received by Fitch.
The notes - for an amount to be determined - will be GAL’s senior unsecured obligations and will be unconditionally guaranteed by Grupo Aval (GA, sole shareholder of GAL, rated ‘BBB-’ by Fitch). The notes will rank pari passu with all of GAL’s existing and future senior unsecured obligations. GA’s guarantee will rank pari passu with all of GA’s existing and future senior unsecured obligations but will be structurally subordinate to all indebtedness and other liabilities of GA’s operating subsidiaries.
Principal under the notes will mature in up to 10 years and will carry a fixed interest rate to be set at the time of the issuance; interest payments will be made semi-annually. The expected rating of the notes is at the same level of the guarantor’s long-term foreign currency Issuer Default Rating (IDR) of ‘BBB-', which is driven by its Viability Rating. The rating will vary in line with GA’s rating, which is in turn sensitive to the performance of its operating subsidiaries.
Following the transaction, GA’s double leverage - including this new obligation in GAL’s books - will increase moderately but should remain relatively low, while debt service is amply covered by GA’s current dividend cash-flow. The issuer will use the proceeds from the planned issue for general corporate purposes.
GA’s ratings are as follows:
--Long-term IDR at ‘BBB-'; Outlook Stable;
--Short-term IDR at ‘F3’;
--Long-term local currency IDR at ‘BBB-'; Outlook Stable;
--Short-term local currency IDR at ‘F3’;
--Viability rating at ‘bbb-';
--Support rating at ‘5’;
--Support rating floor at ‘NF’.