Following today's downgrade of Mexico's sovereign ratings, Fitch Ratings has downgraded the three state-owned development banks, as follows:
Nacional Financiera (Nafin)
--Long-term (L-T) local currency rating to 'BBB+' from 'A-'
--Foreign currency rating to 'BBB' from 'BBB+'.
Banco Nacional de Obras y Servicios Publicos (Banobras)
--L-T local currency rating to 'BBB+' from 'A-'
--Foreign currency rating to 'BBB' from 'BBB+'.
Banco Nacional de Comercio Exterior (Bancomext)
--L-T local to 'BBB+' from 'A-'
--Foreign currency rating to 'BBB' from 'BBB+'.
The local currency rating of the deposit insurance entity Instituto para la Proteccion al Ahorro Bancario (IPAB) was also downgraded to 'BBB+' from 'A-'.
HSBC Mexico's local currency rating was downgraded to 'A' from 'A+'. In addition the ratings of BBVA Bancomer, Banco Nacional de Mexico (Banamex) and Banco Santander Mexico (SanMex) were affirmed at 'A'. The foreign currency ratings of these four foreign-owned banks were downgraded to 'A-' from 'A', since these are capped by the downgraded country ceiling. The rating outlook for all eight entities is Stable. A detailed list of all rating actions follows the end of the press release.
The long-term foreign and local currency Issuer Default Ratings (IDRs) of the development banks Nafin, Banobras and Bancomext are aligned to the sovereign, since these three entities are wholly owned by the federal government and they enjoy an explicit sovereign guarantee as established in their respective Organic Laws. Their Support Rating floors were also downgraded to 'BBB'. While the IPAB does not have an explicit sovereign guarantee, Fitch considers that government support will continue to be forthcoming in order to preserve its solvency and the confidence on the financial sector, which underpins the fact that its local currency IDR remains aligned with the respective sovereign rating at 'BBB+'.
The ratings of BBVA Bancomer, Banamex, SanMex and HSBC are support-driven and are predominantly supported by the relatively high credit quality of their parents. As Fitch has previously stated (see the release "Fitch Revises Outlook for 8 Mexican Financial Institutions to Negative", released on Nov. 10, 2008), HSBC Mexico's local currency IDR was downgraded given its relatively high level -remaining two notches above the respective sovereign IDR.
In turn, rating stabilization at the parent companies of BBVA Bancomer, Banamex and SanMex prevented downward pressure on their local currency IDRs despite the sovereign downgrade, which supports the affirmation of these IDRs at 'A'. The foreign currency IDRs of these four banks were downgraded to 'A-' from 'A', the same level as Mexico's revised country ceiling, and are now constrained by the ceiling. No action has been taken on the Individual rating of these four foreign-owned banks.
The rating actions are as follows, with all long-term ratings having a Stable Outlook:
BBVA Bancomer:
--L-T foreign currency IDR downgraded to 'A-' from 'A';
--Short-term (S-T) foreign currency IDR affirmed at 'F1';
--L-T local currency IDR affirmed at 'A';
--S-T local currency IDR affirmed at 'F1';
--Individual rating unchanged at 'B/C';
--Support rating affirmed at '1';
--US$500 million 6.008% non-cumulative fixed/floating-rate subordinated non-preferred notes due 2022 affirmed at 'A-';
--EUR600 million 4.799% cumulative fixed-/floating-rate subordinated preferred notes due 2017 affirmed at 'A-';
--L-T national-scale rating affirmed at 'AAA(mex)';
--S-T national-scale rating affirmed at 'F1+(mex)';
--National scale rating for local senior debt issues affirmed at 'AAA(mex)';
--National scale rating for local subordinated debt issues affirmed at 'AAA(mex)'.
Banco Nacional de Mexico (Banamex):
--L-T foreign currency IDR downgraded to 'A-' from 'A';
--S-T foreign currency IDR affirmed at 'F1';
--L-T local currency IDR affirmed at 'A';
--S-T local currency IDR affirmed at 'F1';
--Individual rating unchanged at 'B/C';
--Support rating affirmed at '1';
--L-T national-scale rating affirmed at 'AAA(mex)';
--S-T national-scale rating affirmed at 'F1+(mex)'.
Banco Santander Mexico (SanMex):
--L-T foreign currency IDR downgraded to 'A-' from 'A';
--S-T foreign currency IDR affirmed at 'F1';
--L-T local currency IDR affirmed at 'A';
--S-T local currency IDR affirmed at 'F1';
--Individual rating unchanged at 'C';
--Support rating affirmed at '1';
--L-T national-scale rating affirmed at 'AAA(mex)';
--Short-term national-scale rating affirmed at 'F1+(mex)'.
--National scale rating for local senior debt issues affirmed at 'AAA(mex)'.
HSBC Mexico:
--L-T foreign currency IDR downgraded to 'A-' from 'A';
--S-T foreign currency IDR affirmed at 'F1';
--L-T local currency IDR downgraded to 'A' from 'A+';
--S-T local currency IDR affirmed at 'F1';
--Individual rating unchanged at 'C';
--Support rating affirmed at '1';
--L-T national-scale rating affirmed at 'AAA(mex)';
--Short-term national-scale rating affirmed at 'F1+(mex)';
--National-scale rating for local senior debt issues affirmed at 'AAA(mex)';
--National-scale rating for local subordinated debt issues affirmed at 'AAA(mex)'.
Nacional Financiera (Nafin):
--L-T foreign currency IDR downgraded to 'BBB' from 'BBB+';
--S-T foreign currency IDR affirmed at 'F2';
--L-T local currency IDR downgraded to 'BBB+' from 'A-';
--S-T local currency IDR affirmed at 'F2';
--Support rating affirmed at '2';
--Support rating floor downgraded to 'BBB' from 'BBB+';
--L-T national-scale rating affirmed at 'AAA(mex)';
--S-T national-scale rating affirmed at 'F1+(mex)';
--National-scale rating for local senior debt issues affirmed at 'AAA(mex)'.
Banco Nacional de Obras y Servicios Publicos (Banobras):
--L-T foreign currency IDR downgraded to 'BBB' from 'BBB+';
--Short-term foreign currency IDR affirmed at 'F2';
--L-T local currency IDR downgraded to 'BBB+' from 'A-';
--S-T local currency IDR affirmed at 'F2';
--Support rating affirmed at '2';
--Support rating floor downgraded to 'BBB' from 'BBB+';
--L-T national-scale rating affirmed at 'AAA(mex)';
--S-T national-scale rating affirmed at 'F1+(mex)';
--National-scale rating for local senior debt issues affirmed at 'AAA(mex)'.
Banco Nacional de Comercio Exterior (Bancomext):
--L-T foreign currency IDR downgraded to 'BBB' from 'BBB+';
--S-T foreign currency IDR affirmed at 'F2';
--L-T local currency IDR downgraded to 'BBB+' from 'A-';
--S-T local currency IDR affirmed at 'F2';
--Support rating affirmed at '2';
--Support rating floor downgraded to 'BBB' from 'BBB+';
--L-T national-scale rating affirmed at 'AAA(mex)';
--S-T national-scale rating affirmed at 'F1+(mex)';
--National-scale rating for local senior debt issues affirmed at 'AAA(mex)'.
Instituto para la Proteccion al Ahorro Bancario (IPAB):
--L-T local currency IDR downgraded to 'BBB+' from 'A-';
--L-T national-scale rating affirmed at 'AAA(mex)';
--S-T national-scale rating affirmed at 'F1+(mex)'.
Note to Editors: Fitch's National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated 'AAA' and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as 'AAA(mex)' for National ratings in Mexico. Specific letter grades are not therefore internationally comparable.
Additional information is available in the sovereign press release published earlier today (" Fitch Downgrades Mexico's Foreign Currency Rating to 'BBB': Outlook Stable"), which is available at 'www.fitchratings.com'.
Additional information is available at 'www.fitchratings.com'.
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Contacts:
Fitch Ratings
Alejandro Garcia, CFA, +5281-8399-9146 (Monterrey)
Peter
Shaw, +1-212-908-0553 (New York) (Financial Institutions)
Shelly
Shetty +1-212-908-0324 (New York) (Sovereigns)
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Bertsch, +1-212-908-0549 (New York)
brian.bertsch@fitchratings.com