New York, January 17, 2012 -- Moody's Investors Service assigned first time long and short term local
and foreign currency issuer ratings of Baa3 and Prime-3 to Grupo
Aval Acciones y Valores S.A. (Grupo Aval). Moody's
also assigned a Baa3 long term foreign currency debt rating to the expected
debt issuance of Grupo Aval's Cayman Islands subsidiary, Grupo
Aval Limited, in the form of senior unsecured notes with a maturity
of up to ten years, irrevocably and unconditionally guaranteed by
Grupo Aval. The outlook on all ratings is stable.
RATINGS RATIONALE
The Baa3 issuer and debt ratings incorporate Grupo Aval's credit
assessment and its overall low levels of indebtedness relative to ample
and steady dividend income from its operating subsidiaries, particularly
its principal banking subsidiary, Banco de Bogotá.
The ratings take into account the standalone financial strength of the
holding company's banking subsidiaries and the structural subordination
of Aval's liabilities to those of these operating entities.
Grupo Aval's ratings therefore reflect a one-notch differential
from the Baa2 standalone baseline credit assessment of Banco de Bogotá.
Moody's noted that Grupo Aval maintains a strong track record of
intrinsic financial performance that is based on dividend income from
its operating subsidiaries, primarily Banco de Bogotá (C-/Baa2
stable), which contributed approximately 62% of assets and
51% of the holding company's dividend income as of year-end
2010. Other contributions are derived from Banco de Occidente (unrated),
with approximately 19% of assets and 24% of dividend income,
Banco Popular (unrated), with 13% and 10%, and
Banco AV Villas (unrated), with 7% and 9%, respectively.
Together these entities comprise the largest banking franchise in Colombia,
with estimated combined market share of 31% of the system's
assets. The group's pension fund administrator AFP Porvenir
contributes a further 6% of dividend income.
The Baa3 issuer and debt ratings also incorporate the holding company's
low levels of indebtedness on a stand-alone basis relative to its
equity, dividend income, and EBITDA. Moody's
highlighted that Grupo Aval's leverage and debt service coverage
ratios prove adequate under various scenarios of debt levels and interest
expenses, as well as under potentially stressed conditions for income,
return on investments, and EBITDA.
Moody's noted, however, that Grupo Aval's high
growth profile and acquisitive strategy in Colombia and select countries
in the region could limit the predictability of the group's financial
performance. Consequently, another major acquisition at the
holding company level or at any of its operating entities could prompt
a reassessment of its ratings. This is relevant because of the
concentration of control and strategic decision-making power at
Grupo Aval's largest single shareholder, who can define policies
both at the holding and operating company level. Moody's
nevertheless acknowledges the depth and track record of the company's
professional management at all levels.
Moody's assigned a Baa3 foreign currency debt rating to Grupo Aval's
expected issuance of senior unsecured notes to be issued through its subsidiary
in the Cayman Islands, Grupo Aval Limited. The Baa3 debt
rating is based on Grupo Aval's irrevocable and unconditional guarantee
of Grupo Aval Limited's liabilities under the indenture.
The principal methodologies used in rating Grupo Aval were "Bank Financial
Strength Ratings: Global Methodology" published in February 2007
and "Incorporation of Joint-Default Analysis into Moody's Bank
Ratings: A Refined Methodology" published in March 2007.
The Local Market analyst for this rating is Felipe Carvallo Mendoza,
52-55-1253-5738.
The following issuer ratings were assigned to Grupo Aval Acciones y Valores
S.A., with a stable outlook:
Long term local currency issuer rating: Baa3
Short term local currency issuer rating: Prime-3
Long term foreign currency issuer rating: Baa3
Short term foreign currency issuer rating: Prime-3
The following ratings were assigned to Grupo Aval Limited's expected
foreign currency senior unsecured notes with a maturity of up to ten years
and guaranteed by Grupo Aval:
Long term foreign currency debt rating: Baa3, stable outlook
REGULATORY DISCLOSURES
Although this credit rating has been issued in a non-EU country
which has not been recognized as endorsable at this date, this credit
rating is deemed "EU qualified by extension" and may still
be used by financial institutions for regulatory purposes until 30 April
2012. Further information on the EU endorsement status and on the
Moody's office that has issued a particular Credit Rating is available
on www.moodys.com.
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.
Information sources used to prepare the rating 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
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 the ratings disclosure page on www.moodys.com
for general disclosure on potential conflicts of interests.
Please see the ratings disclosure page on www.moodys.com
for information on (A) MCO's major shareholders (above 5%) and
for (B) further information regarding certain affiliations that may exist
between directors of MCO and rated entities as well as (C) the names of
entities that hold ratings from MIS that have also publicly reported to
the SEC an ownership interest in MCO of more than 5%. A
member of the board of directors of this rated entity may also be a member
of the board of directors of a shareholder of Moody's Corporation;
however, Moody's has not independently verified this matter.
Please see Moody's Rating Symbols and Definitions on the Rating Process
page on www.moodys.com 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
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
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on our website www.moodys.com for further information.
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.
Jeanne Del Casino
VP - Senior Credit Officer
Financial Institutions Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
M. Celina Vansetti
MD - Banking
Financial Institutions Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's assigns issuer and debt ratings to Grupo Aval
