Mexico, September 10, 2013 -- Moody's de México today affirmed all Banco Mercantil del Norte,
S.A.'s (Banorte) ratings and changed the outlook to stable
from negative. The ratings affirmed were the C- (C minus)
standalone bank financial strength rating (BFSR), which maps to
a baa2 standalone baseline credit assessment (BCA), and the A3 long-term
global local currency deposit rating. Moody's also affirmed the
bank's Baa3 long-term subordinated debt and Ba1 junior subordinated
debt ratings. All the existing short-term ratings were affirmed.
The Mexican National Scale ratings were also affirmed. The outlook
on all these ratings is stable.
At the same time, Moody's affirmed with stable outlook the
A3 and Baa1 global local currency issuer ratings of Arrendadora y Factor
Banorte, S.A. and Casa de Bolsa Banorte Ixe,
S.A., respectively. All the existing short-term
ratings were affirmed. The Mexican National Scale ratings of all
these related issuers were also affirmed.
LIST OF AFFECTED RATINGS
The following ratings were affirmed:
Banco Mercantil del Norte, S.A.
- Bank financial strength rating of C-, stable outlook
- Long-term global local currency deposits rating of A3,
stable outlook
- Short-term global local currency deposits rating of Prime-2
- Long-term global local currency subordinated debt rating
of Baa3, stable outlook
- Long-term global local currency subordinated debt program
rating of (P) Baa3
- Long-term global local currency junior subordinated debt
rating of Ba1 (hyb), stable outlook
- Long-term global local currency junior subordinated debt
program rating of (P) Ba1
- Long-term Mexican National Scale deposits rating of Aaa.mx,
stable outlook
- Short-term Mexican National Scale deposits rating of MX-1
- Long-term Mexican National Scale subordinated debt rating
of Aa2.mx, stable outlook
- Long-term Mexican National Scale subordinated debt program
rating of Aa2.mx
- Long-term Mexican National Scale junior subordinated debt
rating of Aa3.mx (hyb), stable outlook
- Long-term Mexican National Scale junior subordinated debt
program rating of Aa3.mx
Arrendadora y Factor Banorte, S.A.
- Long-term global local currency issuer rating of A3,
stable outlook
- Short-term global local currency issuer rating of P-2
- Long-term Mexican National Scale issuer rating of Aaa.mx,
stable outlook
- Short-term Mexican National Scale issuer rating of MX-1
- Long-term global local currency senior debt program rating
of (P) A3
- Short-term global local currency senior debt program rating
of (P) P-2
- Long term Mexican National Scale senior debt rating of Aaa.mx,
stable outlook
- Short term Mexican National Scale senior debt rating of MX-1
Casa de Bolsa Banorte Ixe, S.A. de C.V.
- Long-term global local currency issuer rating of Baa1,
stable outlook
- Short-term global local currency issuer rating of P-2
- Long-term Mexican National Scale issuer rating of Aaa.mx,
stable outlook
- Short-term Mexican National Scale issuer rating of MX-1
RATINGS RATIONALE
CHANGE OF OUTLOOK TO STABLE
In changing Banorte's outlook to stable from negative, Moody's
cited the successful $2.5 billion capital raising by its
holding company, Grupo Financiero Banorte, S.A.B.'s
(GFNorte, unrated), which allows the group to fund recent
acquisitions and repay debt, including plans to repay certain Banorte's
subordinated debt. Because Banorte is the largest contributor to
the holding's earnings, GFNorte's financial commitments
with acquisitions could have pressured Banorte's capital position absent
the fresh capital injection.
Moody's noted that part of the proceeds from the shares offering
is being used to repay some perpetual subordinated debt in Banorte's
balance sheet, thus strengthening the quality of the bank's
capital, as it replaces lower-quality Tier 2 instruments
with core capital, while more closely aligning it to that of its
peers.
AFFIRMATION OF STANDALONE AND DEPOSIT RATINGS
In affirming the standalone C-/baa2 ratings, Moody's cited
Banorte's strong franchise value supported by important and growing market
shares and recurrent and diversified earnings power. Following
the absorption of IXE Banco, S.A.,in May 2013
, Banorte now holds an important market share of nearly 13.5%
of the system's deposits, and is now the third largest bank in Mexico
by this measure. GFNorte commands the largest customer base with
more than 26 million clients, and the 3rd largest banking branch
network, which enhance the bank's deposit taking capability and
offers significant opportunities particularly in the consumer banking
segment.
Banorte's A3 deposit rating incorporates two notches of uplift from the
baa2 standalone credit assessment because of Moody's assessment of a high
probability of systemic support from the Mexican government if a stress
situation were to occur. Moody's assumptions take into account
the bank's importance as a deposit-taker and lender in the Mexican
market.
Banorte is headquartered in Mexico City. As of 30 June 2013,
the bank reported Mx$760.0 billion in assets (source:
Comisión Nacional Bancaria y de Valores).
The principal methodology used in this rating was Global Banks Methodology
published in May 2013. Please see the Credit Policy page on www.moodys.com.mx
for a copy of this methodology.
Moody's National Scale Ratings (NSRs) are intended as relative measures
of creditworthiness among debt issues and issuers within a country,
enabling market participants to better differentiate relative risks.
NSRs differ from Moody's global scale ratings in that they are not globally
comparable with the full universe of Moody's rated entities, but
only with NSRs for other rated debt issues and issuers within the same
country. NSRs are designated by a ".nn" country
modifier signifying the relevant country, as in ".mx"
for Mexico. For further information on Moody's approach to national
scale ratings, please refer to Moody's Rating Methodology published
in October 2012 entitled "Mapping Moody's National Scale Ratings
to Global Scale Ratings".
The date of the last Credit Rating Action on Banorte was on 17 June 2013
when Moody's affirmed Banorte's ratings; outlook remained negative.
The period of time covered in the financial information used to determine
Banorte's rating is between 31 December 2006 and 30 June 2013 (source:
Moody's, Issuer's financial statements, CNBV and Banxico).
The sources and items of information used to determine Banorte's rating
include 2011, 2012 and 2013 interim financial statements (source:
Grupo Financiero Banorte); year-end 2011 and 2012 audited
financial statements (source: Grupo Financiero Banorte, audited
by Deloitte Touche Tohmatsu Limited); financial statements and information
on market position (source: CNBV); regulatory capital information
(source: Banxico); debt offering memorandum (source:
Grupo Financiero Banorte).
REGULATORY DISCLOSURES
Information sources used to prepare the rating are the following:
parties involved in the ratings, parties not involved in the ratings,
public information, and confidential and proprietary Moody's
information.
The rating has been disclosed to the rated entity prior to public dissemination.
A general listing of the sources of information used in the rating process,
and the structure and voting process for the rating committees responsible
for the assignment and monitoring of ratings can be found in the Disclosure
tab in www.moodys.com.mx.
For ratings issued on a program, series or category/class of debt,
this announcement provides certain 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 certain 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 certain 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.mx.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this rating action, and
whose ratings may change as a result of this rating action, the
associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
This Rating is subject to upgrade or downgrade based on future changes
in the financial condition of the Issuer/Security, and said modifications
will be made without Moody's de Mexico S.A. de C.V
accepting any liability as a result.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Moody's considers the quality of information available on the rated entity,
obligation or credit satisfactory for the purposes of issuing a rating.
Moody's adopts all necessary measures so that the information it uses
in assigning a rating 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.
Please see Moody's Rating Symbols and Definitions on the Rating Process
page on www.moodys.com.mx for further information
on the meaning of each rating category and the definition of default and
recovery.
Please see ratings tab on the issuer/entity page on www.moodys.com.mx
for the last rating action and the rating history. The date on
which some ratings were first released goes back to a time before Moody's
ratings were fully digitized and accurate data may not be available.
Consequently, Moody's provides a date that it believes is the most
reliable and accurate based on the information that is available to it.
Please see the ratings disclosure page on our website www.moodys.com.mx
for further information.
Please see www.moodys.com.mx for any updates on changes
to the lead rating analyst and to the Moody's legal entity that has issued
the rating.
The ratings issued by Moody's de Mexico are opinions regarding the credit
quality of securities and/or their issuers and not a recommendation to
invest in any such security and/or issuer.
Please see the ratings tab on the issuer/entity page on www.moodys.com.mx
for additional regulatory disclosures for each credit rating.
David Olivares Villagomez
VP - Senior Credit Officer
Financial Institutions Group
Moody's de Mexico S.A. de C.V
Ave. Paseo de las Palmas
No. 405 - 502
Col. Lomas de Chapultepec
Mexico, DF 11000
Mexico
JOURNALISTS: 001-888-779-5833
SUBSCRIBERS:52-55-1253-5700
Maria Celina Vansetti-Hutchins
MD - Banking
Financial Institutions Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's de Mexico S.A. de C.V
Ave. Paseo de las Palmas
No. 405 - 502
Col. Lomas de Chapultepec
Mexico, DF 11000
Mexico
JOURNALISTS: 001-888-779-5833
SUBSCRIBERS:52-55-1253-5700
Moody's affirms Banorte's ratings, outlook changed to stable
