Buenos Aires, January 20, 2011 -- Moody's Investors Service has assigned a bank financial strength rating
(BFSR) of E+ (plus) to Caja de Crédito Cuenca Coop.
Ltda. (Cuenca). Moody's has also assigned long- and
short-term global local-currency deposit ratings of B3 and
Not Prime, respectively, as well as long- and short-term
foreign-currency deposit ratings of Caa1 and Not Prime, respectively.
At the same time, Moody's has assigned an A3.ar local-currency
deposit rating and a Ba1.ar foreign-currency deposit rating
to the bank on the Argentine national scale.
The outlook on all the ratings is stable.
The following ratings have been assigned to Caja de Crédito Cuenca
Coop. Ltda.:
Bank Financial Strength Rating: E+, stable outlook
Long- and short-term global local-currency deposit
rating: B3 and Not Prime, stable outlook
Long- and short-term global foreign-currency deposit
rating: Caa1 and Not Prime, stable outlook
Long-term national scale local-currency deposit rating:
A3.ar
Long-term national scale foreign-currency deposit rating:
Ba1.ar
Ar$50 million global short-term note multicurrency program:
Long-term global foreign-currency debt rating: (P)B3,
stable outlook
Long-term global local-currency debt rating: (P)B3,
stable outlook
National scale rating foreign-currency debt rating: A3.ar
National scale rating local-currency debt rating: A3.ar
Ar$20 million senior notes
Global local-currency debt rating: B3, stable outlook
National scale rating for local currency debt: A3.ar
RATINGS RATIONALE
Moody's noted that the BFSR derives from the financial entity's
specialized business, which is focused on consumer lending to a
captive market, namely pensioners from Argentina's social
security system (ANSES) and payroll loans to employees of government-related
companies. Cuenca's business model is based on the origination
and recurrent sale of a large portion of its loans to third parties or
to trusts in the local market, and for which it retains servicing
capabilities. Because of the off-balance sheet nature of
most of its loans, Cuenca reports high capitalization levels;
Moody's notes that even on a managed-asset basis, the
capital ratio appears sufficient to withstand further potential asset
quality stress.
Moody's also assessed Cuenca's liquidity and profitability
strategies, both driven by the recurrent portfolio sales and trusts
origination. While the origination-and-sell model
results in robust profitability, Moody's noted that it also
exposes Cuenca to a high level of dependence on the securitization market
as the source of funding for portfolio growth. Such dynamics adds
potential volatility to the banks' balance sheet and to its ultimate
ability to generate earnings.
Because of its niche operation and target market, Cuenca's
loan book has a high granularity, which is positive for its financial
strength. Nevertheless, the ratings also incorporates the
entity's modest asset quality, with an impaired loan portfolio
of 6.1%.
The B3 global local-currency deposit rating is derived from Cuenca's
unsupported baseline credit assessment of B3. Because we assess
a low probability of systemic support as a consequence of its very modest
market share in terms of deposits, the bank's deposit rating does
not benefit from any systemic uplift.
Moody's has also assigned (P)B3 local-and foreign- currency
debt ratings to Cuenca Ar$50 million global short-term note
program. The program allows for multi-currency debt issuances.
Local- and foreign-currency debt ratings of A3.ar
were assigned to the program on the national scale.
Additionally, Moody's has assigned B3 global local-currency
and A3.ar national scale local-currency debt ratings to
the proposed Ar$20 million senior short-term bonds due in
270 days, to be issued under the program.
Moody's National Scale 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 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 ".mx"
for Mexico. For further information on Moody's approach to national
scale ratings, please refer to Moody's Rating Implementation Guidance
published in August 2010 entitled "Mapping Moody's National Scale
Ratings to Global Scale Ratings."
Cuenca is located in Villa Lynch, Buenos Aires, Argentina,
and currently has Ar$107.4 million in assets, Ar$17.9
million in deposits and a net worth of Ar$58.9 million.
REGULATORY DISCLOSURES
Information sources used to prepare the credit rating are the following:
parties involved in the ratings, parties not involved in the ratings,
public information, confidential and proprietary Moody's Investors
Service information.
Moody's Investors Service considers the quality of information available
on the issuer or obligation satisfactory for the purposes of assigning
a credit rating.
Moody's adopts all necessary measures so that the information it uses
in assigning a credit 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 ratings tab on the issuer/entity page on Moodys.com
for the last rating action and the rating history.
The date on which some Credit Ratings were first released goes back to
a time before Moody's Investors Service's Credit Ratings were fully digitized
and accurate data may not be available. Consequently, Moody's
Investors Service 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
for further information.
Please see the Credit Policy page on Moodys.com for the methodologies
used in determining ratings, further information on the meaning
of each rating category and the definition of default and recovery.
Buenos Aires
Maria Valeria Azconegui
Analyst
Financial Institutions Group
Moody's Latin America, Calificadora de Riesgo
JOURNALISTS: (800) 666 -3506
SUBSCRIBERS: (5411) 4816-2332
New York
M. Celina Vansetti
Senior Vice President
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's Latin America, Calificadora de Riesgo
Cerrito 1186, 11th fl
Buenos Aires C1010AAX
Argentina
JOURNALISTS: (800) 666 -3506
SUBSCRIBERS: (5411) 4816-2332
Moody's rates Caja de Crédito Cuenca Coop. Ltda.