C- BFSR confirmed, mapping changed to baa2 from baa1 on the long-term scale
London, 25 May 2012 -- Moody's Investors Service has today downgraded the long-term debt
and bank deposit ratings of Banque PSA Finance (BPF) to Baa2 from Baa1.
Whilst the C- standalone Bank Financial Strength Rating (BFSR)
has been confirmed, its mapping to the long-term scale Baseline
Credit Assessment (BCA) was lowered to baa2 from baa1. A negative
outlook was assigned to both the long-term and bank deposit ratings
and the BFSR. The P-2 short-term rating has been
confirmed.
Similarly, the backed long-term debt ratings of Peugeot Finance
International N.V. have been downgraded to Baa2, negative
outlook, from Baa1, on review for downgrade, while the
P-2 backed commercial paper rating of SOFIRA SNC has been confirmed.
The downgrade of the ratings of BPF and Peugeot Finance International
N.V. concludes the review initiated on 16th February 2012
further to the review on the Baa3 long-term ratings of BPF's parent,
PSA Peugeot Citroën (PSA). The review on BPF was extended
subsequent to the downgrade of PSA to Ba1 from Baa3 on 1st March 2012
(for further details, please refer to the press release, "Moody's
downgrades Peugeot to Ba1, outlook negative ", published on
1st March 2012).
RATING RATIONALE
Given the intricate strategic, commercial and financial ties to
its parent, Moody's remains of the view that BPF's creditworthiness
is inherently linked to that of PSA, even though its short-run
financial performance displays low correlation with that of the manufacturer.
For this reason, BPF's long-term debt ratings are unlikely
to exceed the long-term ratings of PSA by more than two notches,
as outlined in our prior research.
In particular, during the review on BPF's ratings, Moody's
concluded that :
(1) The C- BFSR is an appropriate standalone credit assessment
for BPF, given its narrow business focus, its policy of maintaining
a positive liquidity gap, its strong capitalization and good profitability
track record.
(2) An inverse rating gap between the bank and its parent remains appropriate
given that (i) BPF has a stronger credit profile than its parent and (ii)
there is a lower estimated loss severity for creditors of BPF than for
those of PSA. Moody's also believes that BPF's status
as a credit institution with accompanying regulatory requirements also
affords a certain protection to creditors and hence a lower default probability
compared to a non-regulated affiliate in the case of the default
of its parent.
(3) BPF's standalone rating should not exceed its parent's
long-term rating by more than two notches, given its strategic
and financial ties to PSA.
WHAT COULD CHANGE THE RATING UP
Moody's believes there is little likelihood of any upward rating pressure
on BPF, given the current negative outlook on PSA. Even in
the case of an upgrade of PSA's long-term ratings, BPF's
narrow business focus and funding profile would nonetheless suggest a
standalone rating in the baa category.
WHAT COULD CHANGE THE RATING DOWN
A downgrade of PSA's long-term ratings would likely result in a
downgrade of those of BPF, absent any factors which in Moody's view
would justify a long-term debt rating for BPF more than two notches
higher than that of PSA.
The methodologies used in this rating were Bank Financial Strength Ratings:
Global Methodology published in February 2007, and Incorporation
of Joint-Default Analysis into Moody's Bank Ratings: Global
Methodology, published on 30 March 2012. Please see the Credit
Policy 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 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
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Andrea Usai
Vice President - Senior Analyst
Financial Institutions Group
Moody's Investors Service Ltd.
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Carola Schuler
MD - Banking
Financial Institutions Group
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Moody's downgrades Banque PSA Finance's long-term ratings to Baa2, outlook negative, concluding review
