Mexico, June 18, 2020 -- Moody's de México ("Moody's") has today
confirmed NR Finance México, S.A. de C.V.'s
(NR Finance México) backed long-term global local currency
senior unsecured debt ratings of Baa3, and its backed long-term
Mexican National Scale senior unsecured debt ratings of Aa3.mx.
The issuer outlook for NR Finance was changed to negative.
The rating agency also confirmed the backed short-term global local
currency program rating of Prime-3.
The short-term Mexican national scale rating of MX-1 remains
unchanged.
These rating actions conclude the review period initiated on 27 March
2020.
The rating agency changed the outlooks on the debt ratings to negative
from ratings under review. Subsequently, Moody's has also
withdrawn the outlooks on the debt ratings for its own business reasons.
Please refer to the Moody's de México Policy for Withdrawal of
Credit Ratings, available on its website, www.moodys.com.mx.
The following ratings were confirmed:
NR Finance México, S.A. de C.V.
(807947991)
. Backed long-term global local currency senior unsecured
debt ratings of Baa3, outlook changed to negative from ratings under
review (NRF 17, NRF 18, NRF 19)
. Backed long-term Mexican National scale senior unsecured
ratings of Aa3.mx (NRF 17, NRF 18, NRF 19)
. Backed short-term global local currency program rating
of Prime-3
Outlook action:
NR Finance México, S.A. de C.V.
(807947991)
Outlook changed to negative from ratings under review.
RATINGS RATIONALE
The confirmation of NR Finance México's ratings follows a
similar action taken by Moody's on the ratings of Nissan Motor Acceptance
Corporation (NMAC, senior unsecured debt rating of Baa3, negative
outlook) which in turn, follows a similar action on Nissan Motor
Co., Ltd. (Nissan, issuer rating of Baa3,
negative outlook), both on 16 June 2020.
For more information on the actions on NMAC and Nissan, please see
the press releases "Moody's confirms Nissan Motor Acceptance's long-term
senior unsecured ratings at Baa3, concluding review; outlook
is negative" ( https://www.moodys.com/research/Moodys-confirms-Nissan-Motor-Acceptances-long-term-senior-unsecured-ratings--PR_426171)
and "Moody's confirms Nissan's Baa3 ratings; Outlook negative"
(https://www.moodys.com/research/Moodys-confirms-Nissans-Baa3-ratings-outlook-negative--PR_426087),
respectively.
The ratings of NR Finance México reflect a full irrevocable and
unconditional guarantee from NMAC, which applies to the rated NR
Finance México debts issued under its MXN13 billion program.
The guarantee meets eight out of nine of Moody's core principles for credit
substitution, namely it: (1) is irrevocable and unconditional;
(2) promises full and timely payment of the underlying obligations;
(3) covers payment -- not merely collection; (4) covers
preference payments, fraudulent conveyance charges, and other
payments that have been rescinded, repudiated, or "clawed
back;" (5) states that the guarantor waives all defenses; (6)
states that its term extends as long as the term of the underlying obligation;
(7) is enforceable against the guarantor; and (8) is governed under
New York law, a jurisdiction hospitable to the enforcement of guarantees.
The guarantee does not satisfy one of Moody's core principles of Credit
Substitution, specifically that the transfer, assignment or
amendment of the guarantee by the guarantor does not result in a deterioration
of the credit support provided by the guarantee. Nevertheless,
this weakness is offset by (i) the strategic fit and importance of NR
Finance México's operation for NMAC and Nissan, the fact
that NR Finance México commonly refers to itself as CrediNissan
and consequently is widely known to be an affiliate of/closely related
to Nissan; and (iii) the reputational risk that a default by NR Finance
México would represent for NMAC and Nissan. We note that
NR Finance México is a leader in car financing in Mexico,
with a market share of 18% as of March 2020. This primarily
derives from Nissan's top position in terms of car sales, with a
market share of 21%, according to the Mexican Association
of Car Dealers (AMDA). Taken together with the terms of the guarantee,
these considerations are sufficient to qualify NR Finance México's
rated debt issuances for credit substitution. Consequently,
NR Finance México's ratings and outlooks are aligned with those
of NMAC.
NMAC's Baa3 long-term senior unsecured ratings continue to incorporate
one notch of affiliate support from its ultimate parent Nissan.
The negative outlook on NMAC was prompted by similar actions taken on
the ratings for its ultimate parent Nissan. Nissan's weaker credit
profile will have negative implications for NMAC's access to funding and
its financing volumes. Nissan's support to NMAC is signified by
a support agreement that, though not a guarantee, enhances
the expectation that NMAC will have sufficient resources available to
timely meet its financial obligations.
Moody's regards the coronavirus pandemic as a social risk under its ESG
framework, given the substantial implications for public health
and safety. Please see Moody's Environmental risks and Social risks
heatmaps for further information.
NR Finance México's Aa3.mx national scale rating is the
sole Mexican national scale rating corresponding to its Baa3 global scale
rating.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings of NR Finance México are unlikely to be upgraded given
its negative outlook. In turn, NR Finance México's
ratings will be downgraded if the senior unsecured ratings of NMAC were
to be downgraded, in line with its negative outlook.
The principal methodology used in these ratings was Rating Transactions
Based on the Credit Substitution Approach: Letter of Credit-backed,
Insured and Guaranteed Debts published in May 2017 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1068154.
Alternatively, please see the Rating Methodologies page on www.moodys.com.mx
for a copy of this methodology.
The period of time covered in the financial information used to determine
NR Finance México, S.A. de C.V.'s
rating is between 01 January 2016 and 31 March 2020 (source: Financial
Audited Statements 2017, 2018, 2019, Interim Financials
Q1 2020).
Moody's National Scale Credit Ratings (NSRs) are intended as relative
measures of creditworthiness among debt issues and issuers within a country,
enabling market participants to better differentiate relative risks.
NSRs differ from Moody's global scale credit ratings in that they are
not globally comparable with the full universe of Moody's rated entities,
but only with NSRs for other rated debt issues and issuers within the
same country. NSRs are designated by a ".nn"
country modifier signifying the relevant country, as in ".za"
for South Africa. For further information on Moody's approach to
national scale credit ratings, please refer to Moody's Credit rating
Methodology published in May 2016 entitled "Mapping National Scale Ratings
from Global Scale Ratings". While NSRs have no inherent absolute
meaning in terms of default risk or expected loss, a historical
probability of default consistent with a given NSR can be inferred from
the GSR to which it maps back at that particular point in time.
For information on the historical default rates associated with different
global scale rating categories over different investment horizons,
please see https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1216309.
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.
Information sources used to prepare the rating are the following:
parties involved in the ratings, public information, and confidential
and proprietary Moody's information.
The ratings have been disclosed to the rated entity prior to public dissemination.
A general listing of the sources of information used in the rating process,
and the structure and voting process for the rating committees responsible
for the assignment and monitoring of ratings can be found in the Disclosure
tab in www.moodys.com.mx.
The date of the last Credit Rating Action was 27 March 2020.
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 further information please see the ratings tab
on the issuer/entity page for the respective issuer on www.moodys.com.mx.
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.
This credit rating is subject to upgrade or downgrade based on future
changes in the financial condition of the Issuer/Security, and said
modifications will be made without Moody's de México, S.A.
de C.V accepting any liability as a result.
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://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.
At least one ESG consideration was material to the credit rating action(s)
announced and described above.
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 Moody's Rating Symbols and Definitions on www.moodys.com.mx
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.mx
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 that is available to it.
Please see our website www.moodys.com.mx for further
information.
Please see www.moodys.com.mx for any updates on changes
to the lead rating analyst and to the Moody's legal entity that has issued
the rating.
The ratings issued by Moody's de Mexico are opinions regarding the credit
quality of securities and/or their issuers and not a recommendation to
invest in any such security and/or issuer.
Please see the ratings tab on the issuer/entity page on www.moodys.com.mx
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
M. Celina Vansetti-Hutchins
MD - Banking
Financial Institutions Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Releasing Office:
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