Buenos Aires City, May 27, 2016 -- Moody's Latin America, Agente de Calificación de Riesgo,
has confirmed the national scale ratings of 60 Argentine bond funds following
the publication of Moody's updated methodology "Mapping National Scale
Rating from Global Scale Ratings". This concludes the reviews direction
uncertain initiated on these funds on 25 April 2016.
RATING RATIONALE
Moody's noted that the bond funds, whose national scale ratings
were confirmed, have a global bond fund scale ratings that correspond
to the equivalent national scale rating they did previously.
NSRs, which provide a measure of relative creditworthiness within
a single country, are derived from global scale ratings (GSRs) using
country-specific maps. The adoption of a revised correspondence
between Moody's GSRs and the Argentinean national scale follows the publication
of Moody's updated methodology "Mapping National Scale Ratings from Global
Scale Ratings" http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_189032
. For more information, please see "Moody's publishes updated
methodology for national scale ratings" https://www.moodys.com/research/Moodys-publishes-updated-methodology-for-national-scale-ratings--PR_348579
.
With nearly 100 rated fundamental issuers in Argentina, the new
map has been designed using the modified approach, whereby the map
design is adjusted to reflect the distribution of fundamental ratings
in the country in order to ensure adequate opportunity for differentiation
where ratings are most highly concentrated. Because more than 10%
of fundamental issuers are rated above Argentina's B3 sovereign rating,
as well as the previous anchor point of B1, the anchor point,
or the lowest global scale rating that can map to a Aaa.ar,
has been raised to Ba3, the level of the local currency country
ceiling. All GSRs from B1 to Caa3 now map to three NSRs each.
This provides adequate opportunity for differentiation on the national
scale among the more than 50% of Argentine fundamental issuers
rated B3 on the global scale.
As a result of these changes, GSRs will generally correspond to
lower NSRs on the Argentine national scale than they did previously.
Consequently, the large majority of Argentine NSRs that are currently
under review direction uncertain are being placed under review for upgrade
or downgrade notwithstanding the recent upgrades of their corresponding
GSRs.
As a result of the recalibration, the level of risk associated with
a particular Argentine national scale rating level (e.g.
Baa2.ar) has changed in many cases. NSRs have no inherent
absolute meaning in terms of default risk or expected loss; they
are ordinal rankings of creditworthiness relative to other domestic issuers
within a given country. A historical probability of default and/or
expected loss consistent with a given NSR can be inferred from the GSR
to which it maps back at that particular point in time. However,
both the probability of default and the expected loss of an NSR may change
if and when a country's national scale is remapped.
ISSUERS AND RATINGS AFFECTED
Please click on this link http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_190091
for the list of affected credit ratings. This list is an integral
part of this press release and identifies each affected issuer.
National scale ratings are assigned by applying the published correspondence
from global scale ratings. Where a single global scale rating maps
to multiple global scale ratings, rating committees assigned higher
or lower national scale ratings to individual issuers and debts depending
on their relative credit position within the same global scale rating
category, using the same methodologies as were used to determine
the GSRs themselves.
WHAT COULD CHANGE THE RATINGS -- UP AND DOWN
The NSRs would face upward or downward pressure if their corresponding
GSRs are upgraded or downgraded, unless this is in conjunction with
a sovereign rating action that results in another recalibration of the
Argentine national scale with an offsetting impact on NSRs. In
addition, the NSRs may face upward (downward) pressure if Argentina's
sovereign is downgraded (upgraded) and the map is revised accordingly,
but the corresponding GSRs have not changed as a result of the sovereign
action. Because of the higher granularity of national scales,
NSRs may also face pressure due to changes in creditworthiness that are
not sufficient to cause a change in the corresponding GSR, measured
using the same methodologies used to determine the GSR.
METHODOLOGIES USED
The principal methodology used in rating the funds was Moody's Bond Fund
Rating Methodology published in May 2013. Please see the Rating
Methodologies page on www.moodys.com for a copy of these
methodologies.
Other methodologies and factors that may have been considered in the process
of rating this fund can also be found under Rating Methodologies on Moody's
website.
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_189530.
REGULATORY DISCLOSURES
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.
Please see Moody's Rating Symbols and Definitions on the Rating Process
page on www.moodys.com.ar for further information
on the meaning of each rating category and the definition of default and
recovery.
Please see Moody's Ratings Symbols and Definitions on the Rating Process
page on www.moodys.com.ar for further information
on the time horizon in which a credit rating action may be after a review
or outlook action took place.
Please see ratings tab on the issuer/entity page on www.moodys.com.ar
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 the ratings disclosure page on our website www.moodys.com.ar
for further information
Please see the ratings disclosure page on www.moodys.com.ar
for disclosures on significant Moody's shareholders and on certain relationships
between Moody's, its shareholders and/or rated issuers.
Please see www.moodys.com.ar for any updates on changes
to the lead rating analyst and to the Moody's legal entity that has issued
the rating.
For issuers domiciled in Argentina, the regulatory report related
to this rating action is available on www.moodys.com.ar.
This publication does not announce a credit rating action. For
any credit ratings referenced in this publication, please see the
ratings tab on the issuer/entity page on www.moodys.com
for the most updated credit rating action information and rating history.
Carlos de Nevares
Asst Vice President - Analyst
Managed Investments Group
Moody's Latin America ACR
Ing. Butty 240
16th Floor
Buenos Aires City C1001AFB
Argentina
JOURNALISTS: (800) 666 -3506
SUBSCRIBERS: (5411) 5129 2600
Marc R. Pinto, CFA
MD - Managed Investments
Managed Investments Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's Latin America ACR
Ing. Butty 240
16th Floor
Buenos Aires City C1001AFB
Argentina
JOURNALISTS: (800) 666 -3506
SUBSCRIBERS: (5411) 5129 2600
Moody's confirms the national scale ratings of 60 Argentine bond funds
