Fitch Affirms Nacional Financiera's IDRs at 'BBB+'/'A-'; Outlook Stable

MONTERREY, Mexico--()--Fitch Ratings has affirmed the Long-Term foreign and local currency Issuer Default Ratings (IDRs) of Nacional Financiera, S.N.C. (Nafin) at 'BBB+' / 'A-'. In addition, Fitch affirms Nafin'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)' and 'F1+(mex)', respectively.

Fitch also affirmed Nafin's global long-term and short-term senior unsecured debt issuances at 'BBB+' /'F2'. Nafin's local long-term senior unsecured debt issuances were also 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

Nafin's IDRs and Rating Outlook are aligned with Mexico's sovereign ratings and reflect both the high ability and propensity of the sovereign to support Nafin, if needed. Mexico's ability to provide support is reflected in its 'BBB+' investment-grade rating. The propensity of support relies on Nafin's explicit guarantee as stated in its Organic Law (Article 10) which says that the Mexican government is responsible for domestic or foreign operations carried out by Nafin. Specifically, the Mexican Government shall be responsible, at all times, for transactions entered into by Nafin with Mexican individuals and companies, and non/Mexican private, governmental and intergovernmental institutions, among others.

The propensity of support also considers Nafin's strategic role and high relevance in the Mexican federal government's execution of its economic objectives. 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 lesser, but gradually growing extent, '1st floor' loans. However, the entity has become an important player in providing loan guarantees, complemented by a menu of products including factoring, derivatives and fiduciary services.

Nafin's importance in the Mexican energy sector has grown since issuing a green bond of USD500 million in international markets in late 2015. Among the bank's projects are the growth and funding of current and future renewable energy projects and issuing credit through financial inclusion programs in Mexico.

Nafin'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 AND SUPPORT RATING FLOOR

Fitch affirmed Nafin's Support Rating and Support Rating floor at '2' and 'BBB+', respectively, given its important policy role as the second 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

The Rating Outlook is Stable and is in line with the Rating Outlook of Mexico's ratings; therefore, no changes are expected to Nafin's ratings in the short- or medium-term. Nafin's ratings would reflect any change to 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.

SUPPORT AND SUPPORT RATING FLOOR

A potential upgrade or downgrade of Nafin'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 likelihood of support from the Mexican government; both events are unlikely at present.

Fitch has affirmed Nafin'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)';

--Long-term senior unsecured debt issuances at 'BBB+'

--Short-term senior unsecured debt issuances at 'F2'

--Local 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=1004115

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1004115

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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Contacts

Fitch Ratings
Primary Analyst
Diego Garcia
Analyst
+52 818 399 9100
Fitch Mexico S.A. de C.V.
Prol. Alfonso Reyes 2612
64920 Monterrey, Mexico
or
Secondary Analyst
Alejandro Tapia
Director
+52 818 399 9156
or
Committee Chairperson
Alejandro Garcia, CFA
Managing Director
+52 818 399 9146
or
Media Relations
Elizabeth Fogerty, +1 212-908-0526
elizabeth.fogerty@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Diego Garcia
Analyst
+52 818 399 9100
Fitch Mexico S.A. de C.V.
Prol. Alfonso Reyes 2612
64920 Monterrey, Mexico
or
Secondary Analyst
Alejandro Tapia
Director
+52 818 399 9156
or
Committee Chairperson
Alejandro Garcia, CFA
Managing Director
+52 818 399 9146
or
Media Relations
Elizabeth Fogerty, +1 212-908-0526
elizabeth.fogerty@fitchratings.com