Fitch Assigns Initial 'BBB+' IDRs to Corficolombiana; Outlook Stable

NEW YORK--()--Fitch Ratings has assigned initial 'BBB+' Issuer Default Ratings (IDRs) to Corporacion Financiera Colombiana S.A. (Corficolombiana). The Rating Outlook is Stable. A full list of rating actions follows at the end of this release.

KEY RATING DRIVERS: IDRS AND NATIONAL RATINGS

Corficolombiana's ratings reflect the potential support it would receive from its main shareholder, Banco de Bogota, should it be required. In Fitch's opinion, Corficolombiana's long-term equity investments and active treasury activity make it a core part of Banco de Bogota and the wider Grupo Aval businesses. As such, the entity allows Colombia's largest financial conglomerate to have a foothold in the real sector and a key gauge in the local capital market.

Corficolombiana is an investment holding company that controls or holds significant interests in various companies in Colombia and abroad. Its investments are largely concentrated in the gas, energy and mining sectors (54% of its dividend flows at December 2014), and in infrastructure (34%). In addition, Corficolombiana has invested in agribusiness and hospitality, but these activities do not produce significant dividends yet as they are in the investment/growth phase.

As a market maker in the local capital markets, Corficolombiana has an important treasury activity that can, at times, use close to 50% of the entity's balance sheet. Treasury investments are in the form of fixed income securities from the government and Colombia's top issuers. Corficolombiana has a conservative investment policy and ranks as one of the most active players in the secondary market and liquidity operations.

The entity's equity investment policy is focused on low risk, consistent dividend generating companies. Corficolombiana invests for the long term. Accordingly, its investment portfolio includes utility companies (gas, energy) and road concessions. Future growth is expected to come mostly from the infrastructure sector as the country launches an ambitious infrastructure plan for the next few years.

Given the nature and level of maturity of its investments, Corficolombiana's performance has been consistent and its profitability remains sound with very little volatility. Stable, recurrent revenues, a nimble operating structure, adequate access to funding and very low risk assets contribute to limit costs and underpin the entity's performance. In addition, the company's leverage is quite moderate as its equity to assets ratio remains consistently around 40%.

Funding for Corficolombiana's treasury operations comes from institutional investors and the local capital markets while the equity portfolio is largely funded by its own equity. Accordingly, funding is concentrated but has shown remarkable stability that reflects the entity's long track record in the capital markets and, the clout of Banco de Bogota and Grupo Aval.

RATING SENSITIVITIES: IDRS AND NATIONAL RATINGS

Corficolombiana's ratings generally should move in line with those of Banco de Bogota. Should Fitch's assessment of the importance of Corficolombiana to its main shareholder change, its ratings could be affected negatively.

Fitch has assigned the following rating:

--Long-Term Foreign Currency IDR 'BBB+'; Outlook Stable;

--Long-Term Local Currency IDR 'BBB+'; Outlook Stable;

--Short-Term Foreign Currency IDR 'F2';

--Short-Term Local Currency IDR 'F2';

--Support Rating '2';

--National Scale Long-Term Rating 'AAA(col)'; Outlook Stable;

--National Scale Short-Term Rating 'F1+(col)'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Non-Bank Financial Institutions Rating Criteria' (March 20, 2015).

Applicable Criteria and Related Research:

Global Non-Bank Financial Institutions Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=863584

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=983218

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Contacts

Fitch Ratings
Primary Analyst
Diego Alcazar
Director
+1-212-908-0396
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Andres Marquez
Director
+ 57 1 307-8150
or
Committee Chairperson
Theresa Paiz-Fredel
Senior Director
+1-212-908-0534
or
Elizabeth Fogerty, New York, +1-212-908-0526
elizabeth.fogerty@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Diego Alcazar
Director
+1-212-908-0396
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Andres Marquez
Director
+ 57 1 307-8150
or
Committee Chairperson
Theresa Paiz-Fredel
Senior Director
+1-212-908-0534
or
Elizabeth Fogerty, New York, +1-212-908-0526
elizabeth.fogerty@fitchratings.com