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Rating Action:

Moody's rates Compañía Financiera Argentina S.A.

11 Mar 2011

Buenos Aires, March 11, 2011 -- Moody's Investors Service has assigned a bank financial strength rating (BFSR) of E+ (plus) to Compañía Financiera Argentina S.A. (CFA). Moody's has also assigned the entity long- and short-term global local-currency deposit ratings of Ba3 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 Aa2.ar local-currency deposit rating and a Ba1.ar foreign-currency deposit rating to the bank on the Argentine national scale.

Moody's has also assigned (P)Ba3 and (P) B2 local-and foreign- currency debt ratings to CFA's US$ 250 million global medium-term note program. The program allows for multi-currency debt issuances. Local- and foreign-currency debt ratings of Aa2.ar and Aa3.ar were assigned to the program on the national scale.

In addition, local currency debt ratings of Ba3 and Aa2.ar were assigned to the expected the third issuance of the program, amounting up to Ar$ 100 million and to be split in to tranches.

The outlook on all the ratings is stable, with the exception of the local currency deposits and debt ratings which were placed on positive outlook, in line with Banco Galicia's outlook for local currency deposits.

The following ratings have been assigned to Compañía Financiera Argentina S.A.:

Bank Financial Strength Rating: E+, stable outlook

Long- and short-term global local-currency deposit rating: Ba3 and Not Prime, positive outlook

Long- and short-term global foreign-currency deposit rating: Caa1 and Not Prime, stable outlook

Long-term national scale local-currency deposit rating: Aa2.ar

Long-term national scale foreign-currency deposit rating: Ba1.ar

US$ 250 million global medium-term note multicurrency program:

Long-term global local-currency debt rating: (P)Ba3, positive outlook

Long-term global foreign-currency debt rating: (P)B2, stable outlook

National scale rating local-currency debt rating: Aa2.ar

National scale rating foreign-currency debt rating: Aa3.ar

Third Issuance: up to Ar$ 100 million issued in two tranches

Ba3 Global Local Currency Debt Rating, with stable outlook

Aa2.ar Argentina National Scale Local Currency Debt Rating

RATINGS RATIONALE

The ratings derive from CFA's very modest franchise, which is reflected in the small size of its balance sheet, limited earnings diversification, as well as its small participation in Argentina's loan and deposit market (0.6% and 0.1% share respectively). CFA is a consumer finance operation of Argentina-based Banco de Galicia y Buenos Aires, acquired from AIG Consumer Finance Group in mid 2009, which targets the low income segments with predominantly unsecured personal loans and other consumer financing products.

Moody's noted that CFA's funding is mainly short-term and sourced from a limited number of wholesale depositors, particularly mutual funds and other banks, including Grupo Galicia, which provides about 20% of its total deposits. Aside from poor diversification, its funding profile exposes CFA to substantial tenor mismatch, which management intends to improve by issuing debt in the near future and by boosting its retail deposits base.

The ratings also incorporate the bank's weak asset quality, as indicated by a high non-performing loan ratio of 9.1% as of December 2010. This performance is chiefly explained by the segment in which CFA operates, which tends to be more vulnerable to economic shocks.. We note, however, the substantial improvement observed in CFA's non-performing loan ratio over the past two years as a result of Galicia's active credit management and write off, aligned with Banco Galicia's own risk management practices.

Moody's noted, on the other hand, CFA's solid capitalization, with its equity representing 44.5% of total assets, which is adequate to withstand credit losses even in a stress scenario. This sizable capital base derives, in part, from the US$ 175 million capital that was injected by AIG in late 2008, in order to deal with the then strained domestic liquidity market.

The Ba3 global local-currency deposit rating is derived from CFA's unsupported baseline credit assessment of B1. The uplift yields from Moody's assessment of a high probability of support from Banco Galicia to its finance company and a moderate probability of systemic support as a consequence of its small market share in terms of deposits.

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 ".ar" for Argentina. 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."

Compañía Financiera Argentina S.A. is headquartered in Buenos Aires, Argentina, and had Ar$ 1,727 million in assets, Ar$ 385.3 million in deposits and a net worth of Ar$ 768.7 million as of December 2010.

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 Andrea Manavella
VP - Senior Credit Officer
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 Compañía Financiera Argentina S.A.
No Related Data.
© 2022 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

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MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY100,000 to approximately JPY550,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​
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