News Column

Fitch Affirms Inversiones CrediQ Business' IDR at 'B'

April 25, 2014

MONTERREY, Mexico--(BUSINESS WIRE)-- Fitch Ratings has affirmed Inversiones CrediQ Business' (ICQB) long-term Issuer Default Ratings (IDR) at 'B' with a Stable Rating Outlook. Fitch also affirmed ICQB's short-term IDR at 'B'. A complete list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

ICQB's IDR reflects the operating subsidiaries' risk profiles, which operate as captive financial companies related to GrupoQ's auto dealers in Honduras, Costa Rica and El Salvador. The holding company ratings balance the sensitivity of the main subsidiaries to changes in business cycle, with the holding company's low double leverage, and improved financial flexibility.

Double leverage at the holding company improved in 2013 to a lower 105% (2012:115%) and is expected to remain at manageable levels. Fitch expects that the group's capital position will remain at a comfortable level over the medium term. In Fitch's opinion, ICQB's subsidiaries will maintain their capacity to pay dividends and stream liquidity to the holding company, if needed.

Asset quality is sound across all operations. Past due loans to total loans ratios are likely to remain manageable. Reserves coverage, although improved, compares below banking peers and regulated operations. Consolidated asset quality reflects a portfolio well-diversified by country and by individual borrower. Asset quality also benefits the group's adequate underwriting standards, a well-structured and effective collection process, and deep knowledge of the product that allows the effective management and resale of repossessed vehicles.

ICQB's consolidating subsidiaries benefit from its parent strong franchise and from the popularity of its auto brands in Central America. ICQB's main shareholder, GrupoQ, is a leading auto dealer in Central America that maintains relevant market shares in the countries where it operates. In Fitch's opinion, ICQB's focus on auto financing loans implies significant correlation with the business cycle. Negative changes in the economic environment may have a relevant effect on the financial performance of all subsidiaries.

Fitch believes the financial flexibility of the operation has improved. With a larger and more diversified number of fund providers, the subsidiaries' capacity to control funding costs under challenging market conditions has increased. Such capacity is still limited by their small size and by the significant percentage of encumbered assets. Tenure mismatches at the subsidiaries' level have improved with the longer term, and more diversified funding that has been negotiated; however, there is room for further improvement.

RATING SENSITIVITIES

The Stable Outlook reflects that operating performance and asset quality metrics are likely to remain stable at the subsidiaries level. Changes in the subsidiaries' financial, funding and liquidity profiles could affect ICBQ's ratings.

Fitch has affirmed ICBQ's ratings as follows:

--Long-term IDR at 'B'; Outlook Stable;

--Short-term IDR at 'B';

--Long-term senior unsecured bonds at 'B'.

Additional information is available on www.fitchratings.com.

Applicable Criteria and Related Research:

--'Global Financial Institutions Rating Criteria' (Jan. 31, 2013);

--'Rating FI Subsidiaries and Holding Companies' (Aug. 10, 2012).

Applicable Criteria and Related Research:

Global Financial Institutions Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=732397

Rating FI Subsidiaries and Holding Companies

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679209

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=827794

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.



Fitch Ratings

Primary Analyst

Veronica Chau, +52 81-8399-9169

Director

Fitch Mexico S.A. de C.V.

Prol. Alfonso Reyes 2612

64920 Monterrey, Mexico

or

Secondary Analyst

Marcela Galicia, +503 25166616

Director

or

Committee Chairperson

Alejandro Garcia, +52-81-8399-9146

Senior Director

or

Media Relations:

Brian Bertsch, +1 212-908-0549

brian.bertsch@fitchratings.com

Source: Fitch Ratings


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