New York, April 13, 2018 -- Moody's Investors Service has today affirmed the cross border debt ratings
of four Mexican banks, and changed their outlooks to stable from
negative. These actions follow the change in the outlook to stable,
from negative, on Mexico's government bond rating of A3, on
11 April 2018. For additional information, please refer to
the related announcement: "Moody's changes outlook on Mexico's
ratings to stable from negative; A3 ratings affirmed."
Specifically, Moody's revised the outlooks and affirmed the senior
unsecured debt ratings of BBVA Bancomer, S.A. Texas
Agency (BBVA Bancomer), Banco Santander (México), S.A.
(Santander México), Nacional Financiera, S.N.C.
(Nafin), and Banco Nacional de Comercio Exterior, SNC (CI)
(Bancomext). The above issuers' other ratings were unaffected
by today's action.
Please click on this link : http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_199062
for the List of Affected Credit Ratings. This list is an integral
part of this Press Release and identifies each affected issuer.
RATINGS RATIONALE
Please click on this link : http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_199062
for the List of Affected Credit Ratings. This list is an integral
part of this Press Release and provides, for each of the credit
ratings covered, Moody's disclosures on the following items:
[Principal Methodologies]
The rating actions on the four banks were prompted by the change in outlook
to stable, from negative, on Mexico's bond rating of A3,
which Moody's uses to assess the government's capacity to
provide extraordinary financial support to financial institutions in an
event of stress. All the affected issuers' ratings benefit
from an implicit expectation or explicit promise of support from the government.
The stabilization of Mexico's sovereign outlook reflects (1) the
receding risks to growth stemming from the NAFTA renegotiation; (2)
a resilient economy supported by reforms, contributing to favorable
fiscal outcomes and a moderate decline in debt ratios; and (3) an
only low probability of an election outcome that undermines positive fiscal
and economic trends and reduces the government's capacity to provide
support. The same considerations also suggest lower tail risks
that could have potentially impaired the affected banks' financial
performance.
In addition to its capacity, the likelihood of government support
is also a function of its willingness to provide such support.
Moody's continues to assess a very high willingness from the government
to provide support to the affected issuers. In the cases of BBVA
Bancomer and Santander México, this is based on its importance
to the country's payment system and considerable deposit market shares
of 22% and 14%, respectively, as of February
2018. In addition, this assessment considers the authorities'
history of providing support when needed and the relatively small size
of the banking system relative to GDP, which would make bailing
out the banking system, should it ever be necessary, more
affordable for the government.
For Nafin and Bancomext, the assessment of the government's
willingness to provide support as very high takes into account the Organic
Laws of each development bank, which commit the government to fulfil
the banks' financial obligations at all times. This statutory
support reflects the banks' status as arms of the government and
important public policy roles. The statutes do not represent blanket
guarantees, and hence do not qualify as credit substitution according
to Moody's methodology because they (i) only benefit Mexican and foreign
institutions and Mexican individuals, but not non-Mexican
individuals; and (ii) do not explicitly commit the government to
timely payment. Notwithstanding these carve outs to its legal obligations,
however, Moody's nevertheless believes the government is very
likely to support all of the banks' creditors, including foreign
individuals should there be any, and to ensure timely payment of
the banks' obligations.
WHAT COULD CHANGE THE RATING -- DOWN/UP
Because of the very high willingness of the government to provide support
to them, the cross border ratings of the affected banks could face
upward pressure if Mexico's government bond rating is upgraded.
On the other hand, if Mexico's government bond rating faces downward
pressures again in the future, the affected cross border ratings
would be negatively pressured as well.
ENTITIES AFFECTED
1. Banco Nacional de Comercio Exterior, SNC (CI)
2. Nacional Financiera, S.N.C.
3. Banco Santander (México), S.A.
4. BBVA Bancomer, S.A. Texas Agency
REGULATORY DISCLOSURES
Please click on this link : http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_199062
for the List of Affected Credit Ratings. This list is an integral
part of this Press Release and provides, for each of the credit
ratings covered, Moody's disclosures on the following items:
• [Lead Analyst]
• [Releasing Office]
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 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.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
The below contact information is provided for information purposes only.
Please see the ratings tab of the issuer page at www.moodys.com,
for each of the ratings covered, Moody's disclosures on the
lead rating analyst and the Moody's legal entity that has issued
the ratings.
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
Vice President - 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
M. Celina Vansetti-Hutchins
MD - Banking
Financial Institutions Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
