NOTE: On July 17, 2019, the press release was corrected as follows: In the list of affected ratings for Tarjeta Naranja S.A., the first line was changed to: “Global Foreign Currency Senior Unsecured Debt Rating of B2.” Revised release follows.
New York, July 16, 2019 -- Moody's Investors Service ("Moody's") has today affirmed the
senior unsecured debt ratings of Banco Macro S.A.,
Banco Hipotecario S.A., Banco Supervielle S.A.,
Banco de la Ciudad de Buenos Aires and Tarjeta Naranja S.A.,
as well as Tarjeta Naranja's corporate family rating, and Banco
de Galicia y Buenos Aires S.A.U. ("Banco Galicia")
and Banco Macro's senior unsecured MTN program. Moody's also
affirmed the B3 foreign currency subordinated debt ratings assigned to
Banco Macro and Banco de Galicia y Buenos Aires.
At the same time, Moody's changed to negative, from
stable, the outlook on these ratings, following the announcement
by Moody's Latin America A.C.R. S.A.
that it has taken a similar action on the banks' local currency deposit
ratings (see press release "Moody's Latin America affirms ratings and
changes outlook to negative on multiple Argentine banks, finance
companies and securities firms; downgrades three entities'
ratings", https://www.moodys.com/viewresearchdoc.aspx?docid=PR_404577).
Both rating actions follow Moody's decision on July 12 to change to negative,
from stable, the outlook on Argentina's B2 government bond rating.
For additional information, please refer to the related announcement:
"Moody's changes Argentina's outlook to negative from stable;
affirms B2 ratings, https://www.moodys.com/viewresearchdoc.aspx?docid=PR_403831
".
In addition, Moody's has withdrawn the outlooks on Tarjeta Naranja
S.A.'s existing debt instrument and corporate family ratings
for its own business reasons. Please refer to Moody's Investors
Service's Policy for Withdrawal of Credit Ratings, available on
its website, www.moodys.com.
This has no impact on the outlook on Tarjeta Naranja's rating, which
has been changed to negative from stable.
The following debt ratings of Banco Macro S.A. were affirmed:
..Global Local Currency Senior Unsecured MTN Rating of (P)B2
..Global Foreign Currency Senior Unsecured MTN Rating of
(P)B2
..Global Foreign Currency Subordinated Debt Rating of B3
..Global Foreign Currency Senior Unsecured Debt Rating of
B2; outlook changed to negative from stable
....Outlook, Changed To Negative from
Stable
The following debt ratings of Banco de Galicia y Buenos Aires S.A.U.
were affirmed:
..Global Local Currency Senior Unsecured MTN Rating of (P)B2
..Global Foreign Currency Senior Unsecured MTN Rating of
(P)B2
..Global Foreign Currency Subordinated Debt Rating of B3
....Outlook, Changed To Negative from
Stable
The following debt ratings of Banco Hipotecario S.A. were
affirmed:
..Global Foreign Currency Senior Unsecured Debt Rating of
B2; negative outlook
....Outlook, Negative
The following debt ratings of Banco Supervielle S.A. were
affirmed:
..Global Foreign Currency Senior Unsecured Debt Rating of
B2; outlook changed to negative from stable
....Outlook, Changed To Negative from
Stable
The following debt ratings of Banco de la Ciudad de Buenos Aires were
affirmed:
..Global Foreign Currency Senior Unsecured Debt Rating of
B2; outlook changed to negative from stable
....Outlook, Changed To Negative from
Stable
The following ratings of Tarjeta Naranja S.A. were affirmed:
..Global Foreign Currency Senior Unsecured Debt Rating of B2;
..Long-Term Corporate Family Rating of B2;
....Outlook, Changed To Negative from
Stable
RATINGS RATIONALE
The rating actions were prompted by the change in outlook to negative,
from stable, on Argentina's B2 bond rating, which reflects
the increased uncertainty regarding continued fiscal consolidation needed
to restore access to international capital markets and reduce the potential
for currency shocks, and the risk of policy shifts which would trigger
strong market volatility, either before or after the upcoming elections,
causing exchange rate pressures that would further stress Argentina's
credit metrics.
The exchange rate shocks have pushed inflation close to 60%,
while interest rates have spiked, and will result in two consecutive
years of falling economic output. Another sudden depreciation would
impact credit metrics, push inflation higher and potentially affect
economic recovery prospects, which would in turn continue to weaken
the banks' asset quality, profitability, capitalization
and business prospects.
In line with the affirmation and negative outlook on the sovereign ratings,
Moody's has changed to negative, from stable, the outlook
on debt ratings of above-listed banks, following the affirmation
of these ratings. Banco Hipotecario S.A.'s
debt ratings already carried a negative outlook. The rating actions
take into account the high underlying inter-linkages between the
banks' standalone credit risk profiles and that of the sovereign,
in light of their direct and indirect exposure to the sovereign through
sizable government and central bank securities holdings, and the
fact that they remain highly exposed to a challenging operating environment.
Current economic conditions, including recession, high inflation
and extraordinarily high interest rates are significantly reducing banks'
business prospects, affecting their asset quality, increasing
their funding costs and reducing their inflation-adjusted profitability,
while subdued loan growth has prevented a larger drop on their capital
metrics.
Partially offsetting these weaknesses and supporting the ratings affirmations,
are the banks' ample liquidity buffers and a funding profile based
on relatively stable, predominantly domestic currency core deposits.
Additionally, capital buffers of most rated banks will likely be
enough to withstand projected loan losses till year-end 2019 despite
adverse market conditions. Also, large banks with well-established
businesses have the advantages of more creditworthy customers and large
retail core deposit balances that will help keep their funding comparatively
affordable. However, potential adverse macroeconomic developments,
which underpin the negative outlook on the sovereign and include potential
continued economic recession, high inflation and pressure on the
sovereign's funding profile, would in turn negatively affect
banks' operating environment and therefore their credit profile.
FACTORS THAT COULD LEAD TO AN UPGRADE/DOWNGRADE
An upgrade is unlikely for most of the banks in Argentina, given
the current negative outlook. However, the outlook could
be changed to stable following a similar stabilization of Argentina's
sovereign ratings outlook.
A downgrade could be driven by a downgrade of the Argentine sovereign
rating, further deterioration in the country's operating environment,
and/or a higher-than-expected deterioration of the entities'
asset quality, that could lead to material decline in profitability
levels, and thus, capital ratios, reducing their loss-absorption
capacity during a negative credit cycle.
The principal methodology used in rating Banco de Galicia y Buenos Aires
S.A.U., Banco Hipotecario S.A.,
Banco Macro S.A., Banco de la Ciudad de Buenos Aires
and Banco Supervielle S.A. was Banks published in August
2018. The principal methodology used in rating Tarjeta Naranja
S.A. was Finance Companies published in December 2018.
Please see the Rating Methodologies page on www.moodys.com
for a copy of these methodologies.
REGULATORY DISCLOSURES
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.
Maria Valeria Azconegui
Vice President - Senior Analyst
Financial Institutions Group
Moody's Latin America ACR
Ing. Butty 240
16th Floor
Buenos Aires City C1001AFB
Argentina
JOURNALISTS: 1 800 666 3506
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
