Fitch Assigns 'BBB+(exp)' and 'AAA(mex)' Ratings to Nafin's Senior Unsecured Notes
OREANDA-NEWS. Fitch Ratings has assigned Nacional Financiera S.N.C.'s (Nafin) proposed senior unsecured notes an expected rating of 'BBB+(exp)' and 'AAA(mex)' to NAFF 260925 (BMV ticker symbol: 26925) and 'AAA(mex)' to NAFR 190417.
Because this new notes are senior unsecured debt and rank at least equally with all of the bank's other present and future unsecured and unsubordinated external debt, the ratings assigned to this debt class are the same as Nafin's long-term Issuer Default Ratings (IDRs) of 'BBB+'. The proceeds from the offering are expected to be used for general corporate purposes.
The NAFF 260925 will be issued at fixed rate; it may have a tenor of 3,803 day (10.4 years) with irregular interest payments and a single payment of the principal at maturity day. These notes will be issued through Euroclear and the Mexican local stock exchange.
The NAFR 190417 will be issued at floating rate referenced to the TIIE 28 interest rate, it may have a tenor of 1,087 days (three years) with interest payments every 28 days and a single payment of the principal at maturity day. This issuance will be listed in the Mexican local stock exchange.
The target amount of these two issuances together should not exceed MXN6.000 billion. The maximum and minimum amounts of each issue will be MXN5.000 billion and MXN1.000 billion, respectively.
The assignment of the final rating is contingent upon the receipt of the final terms and documentation to confirm the preliminary information received.
KEY RATING DRIVERS
Nafin's IDRs and Rating Outlook are aligned with Mexico's sovereign ratings and reflect the high ability and willingness of the country's federal government to support the enterprise at all times if needed. The ability to support is reflected in Mexico's investment-grade rating of 'BBB+' while the willingness of support relies on Nafin's explicit guarantee stated in its Organic Law (Article 10).
Under this law, the Mexican government is explicitly responsible for the operations held by Nafin with domestic or foreign institutions, as well as for its deposits. The willingness of support also considers the high importance of Nafin as the second-largest development bank in Mexico in terms of total assets and loan portfolio and that the Mexican federal government is its major shareholder (99.99%).
Nafin's key role is to encourage the development of private-sector micro, small and medium enterprises (MSMEs) by providing financing options and general services. Its credit activities are mainly '2nd floor' loans (financial intermediaries) and to a less extent, but gradually growing, '1st floor' loans; however, the entity has become an important player in providing loans guarantees, complemented by a menu of products including factoring, derivatives and fiduciary services.
Changes on the rating of this issue would come from any potential change in Nafin's ratings, which generally would move in the same magnitude and direction.
In turn, Nafin's ratings would reflect any change in Mexico's sovereign ratings, given that the bank's IDRs are driven by the explicit support granted by the Mexican federal government in its organic law.
Fitch currently rates Nafin as follows:
--Long-term foreign currency IDR 'BBB+'; Outlook Stable;
--Short-term foreign currency IDR 'F2';
--Long-term local currency IDR 'A-'; Outlook Stable;
--Short-term local currency IDR 'F2';
--Support Rating '2';
--Support Rating Floor 'BBB+'.