On September 4, 2019, the press release was corrected as follows. In the first and second paragraph of the press release, the ticker for the fourth issuance of Certificados Bursátiles Bancarios was corrected to HSBC 19-2D. Revised release follows.
On September 3, 2019, the press release was corrected as follows. In the List of Affected Ratings, the ticker for the fourth issuance of Certificados Bursátiles Bancarios was corrected to HSBC 19-2D. Revised release follows.
Mexico, August 29, 2019 -- Moody's de México ("Moody's") assigned A3 and Aaa.mx
long-term global and Mexican National Scale senior unsecured debt
ratings to HSBC México, S.A., Institución
de Banca Múltiple, Grupo Financiero HSBC's (HSBC México)
proposed third (HSBC 19-2) and fourth (HSBC 19-2D) issuances
of Certificados Bursátiles Bancarios. The outlook on the
A3 ratings is negative.
Both debt issuances will mature in 2023. HSBC 19-2 will
be denominated in Mexican pesos, while HSBC 19-2D will be
denominated in US dollars. The issuances will be executed in parallel
and the combined amount will total up to MXN8 billion or its equivalent
in US dollars. HSBC 19-2 and HSBC 19-2D are the third
and fourth issuances of Certificados Bursátiles Bancarios under
the bank's revolving debt program (Programa de Certificados Bursátiles
Bancarios con Carácter Revolvente) of up to MXN40 billion or its
equivalent in inflation-indexed investment units (UDIs) or other
currencies, registered in March 2019.
LIST OF AFFECTED RATINGS
The following ratings were assigned:
HSBC México, S.A. (6700)
The third issuance of Certificados Bursátiles Bancarios (HSBC 19-2)
Long-term global local currency senior unsecured debt rating of
A3, negative outlook
Long-term Mexican National Scale local currency senior unsecured
debt rating of Aaa.mx
The fourth issuance of Certificados Bursátiles Bancarios (HSBC
19-2D)
Long-term global foreign currency senior unsecured debt rating
of A3, negative outlook
Long-term Mexican National Scale foreign currency senior unsecured
debt rating of Aaa.mx
RATINGS RATIONALE
Moody's A3 ratings on HSBC México's proposed debt issuances
incorporate its fundamental credit strength, as reflected in a baseline
credit assessment of ba1 and the very high likelihood that the bank will
benefit from extraordinary financial support from its parent, HSBC
Holdings plc (debt A2 stable, BCA a2), in an event of stress.
The ratings also incorporate Moody's assessment of a high probability
that the bank would benefit from support from the Mexican government.
Our affiliate and government support assessments reflect HSBC Mexico's
strategic importance to the group as well as its significant 8%
market share of the system's deposits, as of June 2019, and
the risks to the stability of the Mexican banking system that an unsupported
failure of the bank could represent.
In addition, the ratings reflect the bank's improved profitability,
which benefited from continuing enhancement to asset quality as it cleaned
its loan book of legacy problem loans and shifted its composition toward
lower-risk asset classes, reducing provisioning needs.
HSBC México's ample access to core deposits ensures it has one
of the lowest funding costs in the Mexican banking system, boosting
margins. HSBC México's ratings also incorporate the risks
posed by above-peer loan expansion amidst a low growth environment
in Mexico as the bank seeks to recapture market share, and its only
moderate capitalization.
WHAT COULD CHANGE THE RATINGS UP OR DOWN
HSBC México's negative outlook on the global scale assigned ratings,
which is aligned to the outlook on Mexico's sovereign rating could be
stabilized if (i) Mexico's sovereign rating outlook changes to stable;
or if (ii) HSBC México's profitability continues to improve as
the bank manages to grow its balance sheet without further pressures on
asset quality and capital.
In the event that Mexico's government bond rating faces additional downward
pressures, HSBC México's global scale ratings would be negatively
affected as well. Negative pressures on the assigned ratings could
accumulate if in line with HSBC México's rapid loan growth and
higher single borrower concentrations, there is a material deterioration
of its asset quality or capitalization.
The long-term Mexican National Scale rating of Aaa.mx indicates
issuers or issues with the strongest creditworthiness relative to other
domestic issuers.
The principal methodology used in these ratings was Banks published in
August 2018. 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
HSBC México, S.A. rating is between 01 January
2014 and 30 June 2019 (source: Moody's, as well as issuer's
annual audited and quarterly unaudited financial statements).
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 http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1174796.
REGULATORY DISCLOSURES
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 23 July 2019.
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.
In compliance with regulatory requirements, Moody's de México
has been informed by HSBC México, S.A. that
during the two-month period prior to the date hereof, no
other credit rating agency has assigned a rating on the same securities
referred to in this press release.
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 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
