MONTERREY, Mexico--(BUSINESS WIRE)--Fitch Ratings has affirmed the Long-Term foreign and local currency Issuer Default Ratings (IDRs) of Banco Nacional de Obras y Servicios Publicos, S.N.C. (Banobras) at 'BBB+'/'A-'. In addition, Fitch affirms Banobras' 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 long-term national senior unsecured debt was affirmed at 'AAA(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
Banobras' IDRs and Rating Outlook are aligned with Mexico's ratings and reflect both the high ability and propensity of the sovereign to support Banobras, if needed. The bank's IDRs are driven by the explicit support granted by the Mexican federal government that is expressed in Banobras' organic law (Article 11) which says that the Mexican government is responsible for domestic or foreign operations carried out by Banobras. Specifically, the Mexican Government shall be responsible, at all times, for transactions entered into by Banobras with Mexican individuals and companies, and non/Mexican private, governmental and intergovernmental institutions, among others.
Mexico's ability to provide support is reflected in its 'BBB+' investment-grade rating. The high propensity of support also considers Banobras' role as a key player in fulfilling some of Mexico's major economic policy goals: to finance public and private projects in infrastructure, public services and regional development projects proposed by the federal and local governments, in order to contribute to sustainable development in Mexico. Banobras has a relevant role in lending resources to infrastructure projects and municipalities underserved by commercial banks. Banobras, in line with the National Development Plan, is focusing its efforts on increasing the financial inclusion trying to support more municipalities by promoting the participation of commercial banks in its projects, through both syndicated loans or by offering guarantees. As of the close of 2015, Banobras served 632 municipalities with its different banking products, representing more than 25% of all municipalities in the country. In 2015, it increased by 17% the number of new municipalities financed. Additionally, the bank has satisfactorily achieved its growth goals in terms of loans originated and guarantees.
Banobras's national ratings are at the highest grade on the ratings scale, since National Scale ratings are relative ratings of creditworthiness within a particular jurisdiction.
SUPPORT RATING AND SUPPORT RATING FLOOR
Fitch affirmed Banobras' Support Rating and Support Rating Floor at '2' and 'BBB+', respectively, given the bank's important policy role as the largest development bank in Mexico and the full guarantee it has from the sovereign. 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
Banobras' ratings will mirror any potential change in the sovereign ratings, which currently have a Stable Outlook. Although not a baseline scenario, the ratings could change if Fitch perceives a decrease in the bank's strategic importance to the federal government.
SUPPORT RATING AND SUPPORT RATING FLOOR
A potential upgrade or downgrade of Banobras' Support Rating and Support Rating Floor will be driven by a change in Mexico's sovereign rating and/or a change in the expected propensity of support from the Mexican government; both unlikely factors at present.
Fitch has affirmed Banobras' 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)';
--Long-term national senior unsecured debt issues at 'AAA(mex)'.
The Rating Outlook is Stable.
Additional information is available on www.fitchratings.com
Applicable Criteria
Global Bank Rating Criteria (pub. 20 Mar 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=863501
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=1004112
Solicitation Status
https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1004112
Endorsement Policy
https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31
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