Rating action follows the downgrade of PSA to Ba2
London, 27 July 2012 -- Moody's Investors Service has today downgraded the standalone Bank Financial
Strength Rating (BFSR) of Banque PSA Finance (BPF) to D+ from C-,
whilst its mapping to the long-term scale Baseline Credit Assessment
(BCA) was lowered to baa3 from baa2. Subsequently, the long-term
debt and bank deposit ratings were downgraded to Baa3 from Baa2,
in line with the BCA, and the bank's short-term debt and
deposit ratings were downgraded to P-3 from P-2.
This follows the downgrade of BPF's parent Peugeot S.A (PSA)'
s long-term ratings to Ba2 from Ba1 on 26 July 2012 (for further
details, please refer to the press release, "Moody's downgrades
Peugeot to Ba2; remains on review for downgrade", published
on 26 July 2012).
Further, Banque PSA's subordinated and junior subordinated
debt programme ratings were downgraded to (P)Ba1 and (P)Ba2 from (P)Baa3
and (P)Ba1 respectively. The backed long-term debt ratings
of Peugeot Finance International N.V. were downgraded to
Baa3 from Baa2, while the backed commercial paper ratings of SOFIRA
SNC were downgraded to P-3 from P-2.
All ratings remain under review for possible further downgrade further
to the review opened on 17 July, 2012 (see press release,
"Moody's places Banque PSA Finance's C- BFSR and Baa2 long-term
ratings on review for downgrade following the review on its parent PSA".)
RATING RATIONALE
Moody's continues to believe that given the intricate strategic,
commercial and financial ties to its parent, BPF's creditworthiness
is inherently linked to that of PSA. These credit linkages with
PSA include (i) BPF's dependence on PSA for its own business rationale
and franchise value; (ii) the potential, therefore, for
problems at PSA to impact BPF's funding capacity; (iii) the
ability of PSA to require BPF to pay exceptional dividends (EUR360 million
exceptional dividend paid in 2012; source: PSA interim 2012
financial report); (iv) BPF's credit exposures to PSA's
dealer networks; and (v) BPF's exposures to the value of the
PSA vehicles it finances, which provide the collateral against its
loan book. Set against this, Moody's recognizes that
BPF's financial performance has thus far displayed low correlation
with that of the manufacturer, and therefore the downgrade to Baa3
of BPF's long-term ratings balances BPF's intrinsic
exposure to its parent against its otherwise more healthy credit characteristics.
During the ongoing review, Moody's will further consider the
impact on BPF of the potential weakening credit profile of its parent
in the context of the current weak economic environment, including
any actions which BPF might take to reduce its correlation with PSA or
otherwise protect its own creditworthiness.
WHAT COULD CHANGE THE RATING UP / DOWN
Moody's believes there is little likelihood of any upward rating pressure
on BPF, given the current review for downgrade on PSA and rating
differential between the two entities.
A further downgrade of PSA's long-term ratings would likely result
in a downgrade of those of BPF, absent any factors which in Moody's
view could reduce its intrinsic links and correlation with PSA.
Even without a downgrade of PSA, BPF's ratings could be downgraded
due to a deterioration in its credit fundamentals, for example an
increase in expected credit losses, or more difficult refinancing
conditions. However a downgrade may be limited by evidence of external
support which is currently not factored into the bank's ratings.
The principal methodology used in these ratings was Moody's Consolidated
Global Bank Rating Methodology published in June 2012. Please see
the Credit Policy page on www.moodys.com for a copy of this
methodology.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides relevant regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides relevant regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides relevant regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
The ratings have been disclosed to the rated entities or their designated
agent(s) and issued with no amendment resulting from that disclosure.
Information sources used to prepare each of the ratings are the following:
parties involved in the ratings, public information, and confidential
and proprietary Moody's Investors Service information.
Moody's considers the quality of information available on the rated
entities, obligations or credits satisfactory for the purposes maintaining
these ratings.
Moody's adopts all necessary measures so that the information it
uses in assigning the ratings is of sufficient quality and from sources
Moody's considers to be reliable including, when appropriate,
independent third-party sources. However, Moody's
is not an auditor and cannot in every instance independently verify or
validate information received in the rating process.
Moody's Investors Service may have provided Ancillary or Other Permissible
Service(s) to the rated entities or their related third parties within
the two years preceding the credit rating action. Please see the
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to entities rated by MIS's EU credit rating agencies" on the
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for information on (A) MCO's major shareholders (above 5%) and
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for the last rating action and the rating history.
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Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Andrea Usai
Vice President - Senior Analyst
Financial Institutions Group
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
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Carola Schuler
MD - Banking
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Releasing Office:
Moody's Investors Service Ltd.
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SUBSCRIBERS: 44 20 7772 5454
Moody's downgrades Banque PSA Finance's long-term ratings to Baa3, ratings remain on review for potential further downgrade
