Fitch Affirms Banobras' IDRs at 'BBB+'/'A-'; Outlook Stable

MONTERREY, Mexico--()--Fitch Ratings has affirmed the Long-term foreign currency and local currency Issuer Default Ratings (IDRs) of Banco Nacional de Obras y Servicios Publicos, S.N.C. (Banobras) at 'BBB+' and 'A-', respectively. In addition, Fitch affirms Banobras'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. An issuance of local 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 press release.

KEY RATING DRIVERS - IDRs and National Scale Ratings

Banobras' IDRs and Outlook are aligned with Mexico's sovereign ratings and reflect the high ability and propensity of support from the country's federal government if needed. The ability of support is reflected in the investment grade rating of 'BBB+' of Mexico while the propensity of support relies on Banobras' explicit guarantee stated in its Organic Law (Article 11). Banobras' national ratings are at the highest grade in the ratings scale andalso reflect support.

Under this law, the Mexican government is explicitly responsible for Banobras' liabilities with domestic or foreign institutions. The propensity of support also considers the high importance of Banobras as the largest development bank in Mexico and its strategic role providing financing for public infrastructure and services, and regional development projects underwritten by the federal and local governments, state-owned and private companies.

RATING SENSITIVITIES

The outlook for Banobras' IDRs is Stable and is in line with Fitch's Outlook for Mexico's ratings, so no changes are expected in the banks ratings in the short or medium term. Rating actions on Banobras' IDRs 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. 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.

KEY RATING DRIVERS - Support 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. Banobras' main objective is to finance or refinance public and private projects in infrastructure and utilities investment. Fitch's support rating floors indicate a level below which the agency will not lower the bank's Long-term IDRs as long as the assessment of the support factors does not change.

RATING SENSITIVITIES

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 and local currency IDRs 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)';

--Local senior unsecured debt issues at 'AAA(mex)'.

The Rating Outlook is Stable.

Additional information is available on www.fitchratings.com

Applicable Criteria and Related Research:

--'Global Financial Institutions Rating Criteria' (Jan. 31, 2014);

--'National Scale Ratings Criteria' (Oct. 30, 2013).

Applicable Criteria and Related Research:

Global Bank Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=819048

National Scale Ratings Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=720082

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=984280

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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
Bertha Perez
Director
+52 818 399 9161
or
Committee Chairperson
Theresa Paiz
Senior Director
+1 212-908-0534
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
Bertha Perez
Director
+52 818 399 9161
or
Committee Chairperson
Theresa Paiz
Senior Director
+1 212-908-0534
or
Media Relations:
Elizabeth Fogerty, +1 212-908-0526
elizabeth.fogerty@fitchratings.com