MONTERREY, Mexico--(BUSINESS WIRE)--Fitch Ratings has affirmed the Long-Term foreign and local currency Issuer Default Ratings (IDRs) of Instituto del Fondo Nacional de la Vivienda para los Trabajadores (Infonavit) at 'BBB+' / 'A-'. In addition, Fitch affirms Infonavit's Short-Term IDRs at 'F2', its Support Rating at '2', Support Rating Floor at 'BBB+', and its long- and short-term National Scale ratings at 'AAA(mex)' / 'F1+(mex)'. The Rating Outlook on the Long-term ratings is Stable. A full list of rating actions follows at the end of this release.
KEY RATING DRIVERS
IDRs and NATIONAL RATINGS
Infonavit's IDRs and Rating Outlook are aligned with the Mexican sovereign ratings and reflect the high ability and propensity of support from the country's federal government if needed. The ability to support is reflected in Mexico's investment-grade rating of 'BBB+'. Fitch believes that even though Infonavit does not rely on a specific sovereign guarantee, the Federal Government propensity of support is high due to Infonavit's high strategic importance for the government and the social role that the financial institution plays in providing housing need solutions to the private sector's workers in Mexico, especially the low-income segments, as well as its role in strengthening the heritage of the workers through providing adequate financing options for housing and retirement savings.
Infonavit's main function is to grant low-cost and sufficient financing to workers - to ensure their access to decent housing, as well as to manage the resources of the National Housing Fund and give any profits to workers' retirement savings. Since its creation in 1972, Infonavit has granted roughly nine million mortgage loans; one in four Mexicans live in a house financed by Infonavit. Infonavit is the largest mortgage financial institution of the Latam region as measured by its loan portfolio.
In 2015, roughly 67% of the total mortgage loans granted by public institutions and the commercial banks were granted by the Infonavit. In the last three years, the Federal Government has channelled roughly 95% of the subsidies for the development of housing in Mexico through Infonavit.
Infonavit's national ratings are at the highest grade in the ratings scale, since National Scale ratings are relative ratings of creditworthiness within a particular jurisdiction.
SUPPORT RATING AND SUPPORT RATING FLOOR
Infonavit's Support Rating and Support Rating Floor were affirmed at '2' and 'BBB+', respectively, given the bank's important policy role as the largest mortgage lender in Mexico and Latin America. Fitch's Support Rating Floors indicate a level below which the agency will not lower the bank's long-term IDRs, as long as assessment of the support factors does not change.
RATING SENSITIVITIES
IDRs and NATIONAL RATINGS
The Rating Outlook is Stable and is in line with the Rating Outlook on Mexico's ratings, so no changes are expected to Infonavit's ratings in the short- or medium-term. Infonavit's ratings would reflect any change in Mexico's sovereign ratings. Its ratings could also change if Fitch perceives a decrease in the company's strategic importance to the federal government, but this scenario is unlikely in the short term.
SUPPORT RATING AND SUPPORT RATING FLOOR
Potential changes in Infonavit's Support Rating And Support Rating Floor would be driven by a change in Mexico's sovereign rating and/or a change in the expected propensity of support from the Mexican government.
Fitch has affirmed Infonavit's ratings as follows:
--Long-term foreign currency IDR at 'BBB+';
--Long-term local currency IDR at 'A-';
--Short-term foreign currency IDR at 'F2';
--Short-term local currency IDR at 'F2';
--Support Rating at '2';
--Support Rating Floor at 'BBB+';
--National Scale long-term rating at 'AAA(mex)';
--National Scale short-term rating at 'F1+(mex)'.
The Rating Outlook is Stable.
Additional information is available on www.fitchratings.com
Applicable Criteria
Global Non-Bank Financial Institutions Rating Criteria (pub. 28 Apr 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=865351
National Scale Ratings Criteria (pub. 30 Oct 2013)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=720082
Additional Disclosures
Dodd-Frank Rating Information Disclosure Form
https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1004109
Solicitation Status
https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1004109
Endorsement Policy
https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31
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