Paris, October 04, 2022 -- Moody's Investors Service ("Moody's") today affirmed Caisse Centrale du Credit Immobilier de France's (3CIF's) long-term deposit and issuer ratings of Baa2, with a stable outlook, and short-term ratings of Prime-2. The bank's Baseline Credit Assessment (BCA) and Adjusted BCA of ba2 were also affirmed. Finally the rating agency affirmed 3CIF's Counterparty Risk (CR) Assessment of Baa2(cr)/Prime-2(cr), and its long-term and short-term Counterparty Risk Rating (CRR) of Baa2 and Prime-2, respectively.
A list of all affected ratings is provided towards the end of this press release.
RATINGS RATIONALE
The affirmation of 3CIF's ba2 BCA is primarily driven by Groupe Credit Immobilier de France's (CIF's) orderly run-off that began in 2013, and adequate capitalization. Moody's also factored in the risk of higher capital depletion than currently expected, which could be prompted by an unexpected worsening of asset quality in the context of high inflation.
CIF's loan book has decreased markedly in the past decade, amounting to €7.2 billion at the end of December 2021 (from €8.6 billion a year before, and down from €45 billion in 2012). The dynamic real estate market in recent years, lifted by historically low interest rates, triggered early repayments above historical levels, which contributed to a swifter than expected downsizing of the loan book. Loan amortization will slow down as Moody's expects early repayments to dwindle, because of increased interest rates. The amount of problem loans in absolute terms decreased by 11% to €950 million between year-end 2021 and year-end 2020, slower than the shrinkage of the portfolio. Nevertheless Moody's believes that most defaults have already occurred given that CIF group has discontinued its lending activities since 2013.
3CIF will have ample room for further issuances, the outstanding amount of guaranteed debt (€3.3 billion as of year-end 2021) being well below the €16 billion cap that applies to the bank's government guaranteed debt to be externally issued until 2035. The guarantee will enable CIF to maintain its diversified funding profile, composed of senior unsecured guaranteed debt, securitizations and covered bonds, throughout the run-off.
Moody's expects CIF's net income to remain negative over the run-off, mainly because of the material cost of the State guarantee. Nevertheless, in case of a potential breach of the 12% Common Equity Tier 1 (CET1) minimum set out in the run-off plan, the payment of the State guarantee fee would be suspended. Moody's thus expects 3CIF's capitalization (CET1 ratio stood at 15.6% as of year-end 2021) to remain adequate throughout the run-off period, despite the resumption of dividend payments since 2018.
The Baa2 long-term ratings of 3CIF benefit from a three notch uplift from the bank's Adjusted BCA. This stems from Moody's assumption of a very high likelihood of government support in case of need. As the group is already in run-off, Moody's assumes that 3CIF is, in practice, out of the scope of the EU's operational resolution regime and that the government would extend support as needed to ensure an orderly completion of the wind down.
OUTLOOK
The outlook on both the bank's long-term deposit and issuer ratings is stable, reflecting Moody's view that the group will continue to wind-down its activities as planned.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
3CIF's BCA already incorporates achievements made during the run-off process and the stabilizing effect on the group's fundamentals of the state aid received since 2013. The potential for an upgrade of the BCA is therefore relatively limited. The bank's BCA could nonetheless be upgraded if the bank materially improved its profitability, while keeping its capital buffers at current levels. Given its run-off status, an upgrade of the bank's long-term deposit and issuer ratings is unlikely, even if the BCA were to be upgraded.
3CIF's BCA could also be downgraded in the case of a worse-than-expected asset performance, resulting in a significant decline in capital. A downgrade of 3CIF's BCA would likely result in a downgrade of all ratings.
LIST OF AFFECTED RATINGS
Issuer: Caisse C'ale du Credit Immobilier de France
..Affirmations:
....Long-term Counterparty Risk Ratings, affirmed Baa2
....Short-term Counterparty Risk Ratings, affirmed P-2
....Long-term Bank Deposits, affirmed Baa2, outlook remains Stable
....Short-term Bank Deposits, affirmed P-2
....Long-term Counterparty Risk Assessment, affirmed Baa2(cr)
....Short-term Counterparty Risk Assessment, affirmed P-2(cr)
....Long-term Issuer Rating, affirmed Baa2, outlook remains Stable
....Baseline Credit Assessment, affirmed ba2
....Adjusted Baseline Credit Assessment, affirmed ba2
....Senior Unsecured Medium-Term Note Program, affirmed (P)Baa2
....Commercial Paper, affirmed P-2
....Other Short Term, affirmed (P)P-2
..Outlook Action:
....Outlook remains Stable
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Banks Methodology published in July 2021 and available at https://ratings.moodys.com/api/rmc-documents/71997. Alternatively, please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
REGULATORY DISCLOSURES
For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found on https://ratings.moodys.com/rating-definitions.
For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security 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 credit rating action on the support provider and in relation to each particular credit 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 issuer/deal page for the respective issuer on https://ratings.moodys.com.
For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit 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.
The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.
These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website https://ratings.moodys.com.
Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.
Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://ratings.moodys.com/documents/PBC_1288235.
The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on https://ratings.moodys.com.
Please see https://ratings.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.
Please see the issuer/deal page on https://ratings.moodys.com for additional regulatory disclosures for each credit rating.
Roland Auquier
Vice President - Senior Analyst
Financial Institutions Group
Moody's France SAS
96 Boulevard Haussmann
Paris, 75008
France
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454
Alain Laurin
Associate Managing Director
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454
Releasing Office:
Moody's France SAS
96 Boulevard Haussmann
Paris, 75008
France
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454
