New York, May 16, 2022 -- Moody's Investors Service ("Moody's") has today affirmed the baseline credit assessment (BCA), adjusted BCA, and issuer ratings of Nacional Financiera, S.N.C. (Nafin). Moody's also affirmed the certificate of deposit (CD) program ratings of Nacional Financiera, S.N.C., London Branch (Nafin London Branch). The ratings assigned to the Instituto para la Protección del Ahorro Bancario (IPAB), Mexico's deposit insurer, were also affirmed.
Moody's also assigned Counterparty Risk Assessments (CR Assessments) and Counterparty Risk Ratings (CRRs) to Nafin and Nafin London Branch.
The outlook of Nafin and the IPAB remains negative in line with the negative outlook on the Government of Mexico (Baa1 negative).
A complete list of affected ratings can be found at the end of the press release.
RATINGS RATIONALE
AFFIRMATION OF NAFIN'S RATINGS WITH A NEGATIVE OUTLOOK
The affirmation of the Baa1 issuer ratings of federal development bank Nafin reflects the very high likelihood of government support, based on an explicit statutory support set in bank's laws, as well as its public policy mandate. Nafin's mandate is to promote the development and modernization of Mexico's private sector, with an emphasis on the development of micro, small and medium-sized enterprises (MSMEs) by enhancing their access to credit. Because the government's statutory support does not qualify for credit substitution, the ratings also consider the bank's ba1 BCA.
Nafin's ba1 BCA captures the bank's strong capitalization and relatively low credit risk portfolio, resulting from its main focus on on-lending via other financial institutions and its prudent risk management. However, Nafin's standalone strength is constrained by its high reliance on market funding, which increases repricing risks and funding costs, and its modest profitability.
The negative outlook on Nafin's issuer ratings reflects the negative outlook on the Government of Mexico's Baa1 sovereign debt rating.
AFFIRMATION OF THE IPAB'S RATINGS WITH A NEGATIVE OUTLOOK
The affirmation of the IPAB's Baa1 issuer ratings incorporates the fact that the deposit insurer is an integral part of the Government of Mexico (Baa1 negative) and, therefore, benefits from implicit sovereign backing, which covers its obligations. As a result, IPAB's ratings and outlook are aligned with those of the Mexican government.
ASSIGNMENT OF CR ASSESSMENTS TO NAFIN AND NAFIN LONDON BRANCH
The assigned long- and short-term CR Assessments of Baa1(cr) and Prime-2(cr) to Nafin and Nafin London Branch take into consideration the development bank's standalone strength and the fact that Nafin is government-backed as well as the anticipated seniority of counterparty obligations in the liabilities hierarchy. The CR Assessment also incorporates other steps authorities can take to preserve the key operations of a bank should it enter a resolution.
ASSIGNMENT OF CRRs TO NAFIN AND NAFIN LONDON BRANCH
The CRRs assigned to Nafin and Nafin London Branch are aligned to their CR Assessments.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
A rating upgrade for Nafin and the IPAB is unlikely, given their negative outlook. In addition, if Mexico's government bond rating is downgraded, the supported ratings of Nafin and the IPAB would be downgraded as well.
Affirmations:
..Issuer: Nacional Financiera, S.N.C.
.... Adjusted Baseline Credit Assessment, Affirmed ba1
.... Baseline Credit Assessment, Affirmed ba1
.... ST Issuer Rating (Foreign Currency), Affirmed P-2
.... ST Issuer Rating (Local Currency), Affirmed P-2
.... LT Issuer Rating (Foreign Currency), Affirmed Baa1, Negative
.... LT Issuer Rating (Local Currency), Affirmed Baa1, Negative
..Issuer: Nacional Financiera S.N.C., London Branch
.... ST Deposit Program (Foreign Currency), Affirmed (P)P-2
.... ST Deposit Program (Local Currency), Affirmed (P)P-2
.... LT Deposit Program (Foreign Currency), Affirmed (P)Baa1
.... LT Deposit Program (Local Currency), Affirmed (P)Baa1
..Issuer: Instit.para la Protec.al Ahorro Bancario
.... ST Issuer Rating (Foreign Currency), Affirmed P-2
.... ST Issuer Rating (Local Currency), Affirmed P-2
.... LT Issuer Rating (Foreign Currency), Affirmed Baa1
.... LT Issuer Rating (Local Currency), Affirmed Baa1
Assignments:
..Issuer: Nacional Financiera S.N.C., London Branch
.... ST Counterparty Risk Assessment, Assigned P-2(cr)
.... LT Counterparty Risk Assessment, Assigned Baa1(cr)
.... ST Counterparty Risk Rating (Foreign Currency), Assigned P-2
.... ST Counterparty Risk Rating (Local Currency), Assigned P-2
.... LT Counterparty Risk Rating (Foreign Currency), Assigned Baa1
.... LT Counterparty Risk Rating (Local Currency), Assigned Baa1
..Issuer: Nacional Financiera, S.N.C.
.... ST Counterparty Risk Assessment, Assigned P-2(cr)
.... LT Counterparty Risk Assessment, Assigned Baa1(cr)
.... ST Counterparty Risk Rating (Foreign Currency), Assigned P-2
.... ST Counterparty Risk Rating (Local Currency), Assigned P-2
.... LT Counterparty Risk Rating (Foreign Currency), Assigned Baa1
.... LT Counterparty Risk Rating (Local Currency), Assigned Baa1
Outlook Actions:
..Issuer: Nacional Financiera, S.N.C.
....Outlook, Remains Negative
..Issuer: Instit.para la Protec.al Ahorro Bancario
....Outlook, Remains Negative
The principal methodologies used in rating Nacional Financiera, S.N.C. and Nacional Financiera S.N.C., London Branch were Banks Methodology published in July 2021 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1269625, and Government-Related Issuers Methodology published in February 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1186207. The principal methodology used in rating Instit.para la Protec.al Ahorro Bancario was Government-Related Issuers Methodology published in February 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1186207. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.
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 at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
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 ratings tab on the issuer/entity page for the respective issuer on www.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 unsolicited.
a.With Rated Entity or Related Third Party Participation: YES
b.With Access to Internal Documents: NO
c.With Access to Management: YES
For additional information, please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.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 http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288235.
The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.
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 www.moodys.com.
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.
Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.
Felipe Carvallo
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: 1 888 779 5833
Client Service: 1 212 553 1653
Ceres Lisboa
Associate Managing Director
Financial Institutions Group
JOURNALISTS: 0 800 891 2518
Client Service: 1 212 553 1653
Releasing Office:
Moody's Investors Service, Inc.
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New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
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