Fitch Updates Criteria for Rating Non-Financial Corporates
This report replaces "the Corporate Rating Methodology" dated 17 August 2015. It also replaces the "Evaluating Corporate Governance" criteria dated 12 December 2015 and the Short-Term Ratings Criteria for Non-Financial Corporates dated 13 August 2015, which are retired.
The report now includes the main financial adjustments performed by Fitch when analysing Non-Financial Corporates previously included in several special reports, which are now superseded. The criteria also includes a section on how Fitch adjust financial statements of non-financial corporates for debt related to Financial Services operations (vendor financing for example).
There have been no material changes to our corporate criteria. The only non-material change affects our Short-Term ratings, which are typically assigned on a correspondence relationship to Long-Term ratings. The criteria clarify that since even higher-rated corporates do not typically possess the kinds of additional liquidity options (e. g. fiat currency creation, discount window access) available to the strongest sovereign and bank issuers, Fitch's corporate ratings will commonly opt for the lower option between the Short-Term ratings consistent with 'A+' and 'A-'. Thus, 'A+' Long-Term ratings have a 'F1' Short-Term rating and 'A-' Long-Term ratings have a 'F2' Short-Term rating. Fewer than 10 ratings may be impacted by this clarification.
A sustained weak operating environment, indicated by a sovereign downgrade, would result in a downgrade. Conversely, a revision of the sovereign Rating Outlook to Stable could result in a similar action for Nossa.
A downgrade could also result from a failure by Nossa to successfully implement its growth strategy, indicated by a sustained inflation-adjusted decline in gross premiums or a significant decline in profitability.