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Fitch Affirms Fondo Mivivienda's IDR at 'BBB+'; Outlook Stable
September 29, 2016 / 8:41 PM / a year ago

Fitch Affirms Fondo Mivivienda's IDR at 'BBB+'; Outlook Stable

(The following statement was released by the rating agency) NEW YORK, September 29 (Fitch) Fitch Ratings has affirmed the Long-Term Foreign Currency Issuer Default Ratings (IDRs) of Fondo Mivivienda (FMV) at 'BBB+'. Fitch has also upgraded FMV's Local Currency (LC) Short-Term (ST) IDR to 'F1' from 'F2', in line with the sovereign's recently assigned LC ST IDR. The Rating Outlook is Stable. See the full list of rating actions at the end of this release. KEY RATING DRIVERS IDRS, SUPPORT RATINGS AND SENIOR DEBT FMV's IDRs, Support Rating and senior debt ratings reflect Fitch's perception that FMV would likely receive support from its owner, the Government of Peru, should it be required. Although there is no an explicit guarantee, FMV plays a key role in implementing economic development policies, is fully owned by the state, and has many operational and financial synergies with the public administration. Peru's ability to support FMV is reflected in its sovereign rating ('BBB+'/Outlook Stable). The ratings consider the high strategic importance of FMV in promoting and financing housing in Peru (especially in the social interest segment), and its critical role in the government's public policies to reduce the still elevated housing deficit in the country. The company is the largest provider of social housing financing in Peru. At year-end 2015, FMV's loans accounted for almost 25% of the residential mortgage loans outstanding in the Peruvian market. FMV's financial performance remains limited by its low margins. Profitability has declined from 2014 due to increased funding cost, loan impairment charges, and hedging costs related to its funding exposure to the CHF and USD. FMV is a wholesale development bank which structures general obligation loans to supervised financial institutions. Its loan portfolio has historically exhibited near 0% delinquency, benefitting from exposure to the largest commercial banks in the country. However, FMV bears part of the final debtors' credit risk through its credit risk coverage (CRC). Considering final borrowers, 2.9% of the loans were impaired at June 2016, greater than the impaired loans as of December 2015, due to one specific small financial institution that failed. FMV's wholesale role, the size of the market and the relatively limited number of entities in the local financial sector has resulted in relatively elevated concentrations per borrower, with the four main exposures accounting for 1.2x equity. The risk is somewhat mitigated by the sound credit standings of the main debtor banks. Over the last four years, the company has made significant strides in diversifying this funding base. FMV relies on local and international issuances to diversify and on better matching its assets and liabilities; however, additional funding facilities and providers would be desirable in order to avoid the risks of currency and full concentration in public debt market. Capital robustness continues to be one of its main strengths, comparing favorably to other peers. FMV's Fitch core capital ratio equalled 113% (at June16), a level that is deemed adequate given its limited profitability and its ample concentrations. Government influence manifests directly in the appointment of board members and indirectly through the selection of the executive officers by the board. RATING SENSITIVITIES IDRS, SUPPORT RATINGS AND SENIOR DEBT FMV's ratings will mirror any potential change in Peru's sovereign ratings, which currently have a Stable Outlook. Although not a baseline scenario, FMV's ratings could change if Fitch perceives a decrease in the bank's strategic importance to the government's public policies. The rating actions are as follows: --Long-Term Foreign Currency IDR affirmed at 'BBB+'; Outlook Stable --Short-Term Foreign Currency IDR affirmed at 'F2'; --Long-Term Local Currency IDR affirmed at 'A-'; Stable Outlook; --Short-term Local Currency IDR upgraded to 'F1' from 'F2'; --Support rating affirmed at '2'; --Support floor affirmed at 'BBB+'; --Senior unsecured debt affirmed at 'BBB+'. Contact: Primary Analyst Mark Narron Director +1-212-612-7898 Fitch Ratings, Inc. 33 Whitehall Street New York, NY 10004 Secondary Analyst Sergio Pena Associate Director + 571 307 5180 Committee Chairperson Veronica Chau Senior Director + 503 2516 6610 Media Relations: Elizabeth Fogerty, New York, Tel: +1 (212) 908 0526, Email: Additional information is available on Applicable Criteria Global Bank Rating Criteria (pub. 15 Jul 2016) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here _id=1012422 Solicitation Status here Endorsement Policy here ail=31 ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT 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. Copyright © 2016 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch's factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch's ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided "as is" without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. 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Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

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