News Column

Fitch Assigns 'BB-(EXP)' Rating to Consubanco's Bond Issuance

July 21, 2014



MONTERREY, Mexico--(BUSINESS WIRE)-- Fitch has assigned Consubanco S.A., Institucion de Banca Multiple's (Consubanco) upcoming senior unsecured notes an expected Long-term rating of 'BB-(EXP)' and a New National Long-Term rating of 'A-(mex)'.

The intended issue of MXN1,400 million 3.5 years senior unsecured notes will trade on the Mexican Stock Exchange under the ticker 'CSBANCO 14', with monthly variable interest payments; principal will be payable at maturity, with an early redemption option. Consubanco plans to use the proceeds of the issuance to pay outstanding debt and general corporate purposes.

This is the second bond that Consubanco issues under an existing Long-Term Debt program for up to MXN2,000 million and 5-year term.

KEY RATING DRIVERS

These ratings are in line with Consubanco's Long-term Issuer Default Rating (IDR), which is driven by its Viability Rating (VR), and National Scale Rating, reflecting its senior unsecured nature.

Consubanco's IDRs, VR, and national scale ratings are driven by its strong capitalization, sound and recurring profitability driven by ample margins, well-contained provisions and strong efficiency levels, and reasonably sound asset quality and loan loss reserve coverage, which Fitch expects will remain roughly unchanged. However, the ratings also factor in the limited flexibility of its funding structure, though this is gradually improving, the challenging operating and competitive environment in this sector, and the relatively high, though declining, portfolio concentrations by region and employer.

RATING SENSITIVITIES

The notes expected rating is sensitive to changes in Consubanco's IDR, which in turn is driven by its viability rating.

For a detailed description of Consubanco's Key Rating Drivers and Rating Sensitivities, please refer to the Rating Action Commentary named 'Fitch Affirms Consubanco's IDRs at 'BB-'/'B'; Outlook Stable' published on March 10, 2014 on www.fitchratings.com.

Additional information is available on www.fitchratings.com

Applicable Criteria and Related Research:

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

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

Applicable Criteria and Related Research:

Global Financial Institutions Rating Criteria

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

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=840725

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

Alejandro Garcia, CFA

Senior Director

+52 818 399 9146

Fitch Mexico S.A. de C.V.

Prol. Alfonso Reyes 2612

64920 Monterrey, Mexico

or

Secondary Analyst

Alba Maria Zavala

Analyst

+52 818 399 9137

or

Committee Chairperson

Rene Medrano

Senior Director

+503 2516 6610

or

Media Relations:

Elizabeth Fogerty, +1-212-908-0526 (New York)

elizabeth.fogerty@fitchratings.com


Source: Fitch Ratings


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