Fitch Upgrades Metrofinanciera's IDRs to 'CCC'

MONTERREY, Mexico--(BUSINESS WIRE)-- Fitch Ratings has upgraded Metrofinanciera, S.A.P.I. de C.V. Sofom E.R.'s (Metro) foreign and local currency Issuer Default Ratings (IDRs) to 'CCC' from 'RD' (long-term) and to 'C' from 'RD' (short-term). Fitch has also upgraded Metro's long-term and short-term national scale ratings to 'CCC(mex)' and 'C(mex)', respectively, from 'RD(mex)'.

A full list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The upgrade of Metro's IDRs and National scale ratings is driven by the effects of the debt restructuring that took place at the end of 2014. The entity exchanged the Metrofi 12 debt certificates and certain bank liabilities (granted by the government agencies SHF and FOVI) for series A and B, Class II, equity shares, respectively.

This improved materially Metro's capital adequacy and, more importantly, fully eliminated the liquidity and refinancing risk previously arising from the Metrofi 12 bonds. As of December 2014, 97.3% of Metrofinanciera's total debt (on-balance) came from credit lines granted by SHF, now its main shareholder; only 2.5% of it was classified as short term liability.

The upgrade also factors in Fitch's opinion that Metro remains able to rebuild its competitive position and to gradually grow its portfolio of commercial loans, although the company remains heavily challenged to demonstrate its ability to become a recurring profitable company.

RATING SENSITIVITIES

The ratings could be upgraded to the Single-B category over time, as long as Metro demonstrates ability to continuously generate positive cash flows, while also improving its profitability metrics, its asset quality and reducing the exposure to further non-recurring charges that materially affect earnings. Steady rebuilding of its competitive and commercial positioning could also be a positive rating factor.

In turn, Metro's IDRs and national scale ratings could be downgraded if the company is unable to deliver results in line with its financial plan. Continued material losses or negative cash flows that jeopardize Metro's capital position and/or liquidity position would likely result in negative ratings actions.

Fitch has upgraded the following ratings:

Metrofinanciera, S.A.P.I. de C.V. Sofom, E.R.:

--Long-term foreign and local currency IDRs to 'CCC' from 'RD';

--Short-term foreign and local currency IDRs to 'C' from 'RD';

--National scale long term rating to 'CCC(mex)' from 'RD(mex)';

--National scale short term rating to 'C(mex)' from 'RD(mex)'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Non-Bank Financial Institutions Rating Criteria', (Mar. 20, 2015);

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

--'Distressed Debt Exchange Rating Criteria' (Jun. 30, 2014).

Applicable Criteria and Related Research:

Global Non-Bank Financial Institutions Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=863584

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=982147

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Fitch Ratings
Primary Analyst
Gilda de la Garza
Associate Director
+52 818 399 9160
Fitch Mexico, S.A. de C.V.
Prol. Alfonso Reyes 2612, Edificio Connexity Piso 8
Col. Del Paseo Residencial
64920 Monterrey, N.L., Mexico
or
Secondary Analyst
Alejandro Garcia, CFA
Senior Director
+52 818 399 9146
or
Committee Chairperson
Franklin Santarelli
Managing Director
+1-212-908 0739
or
Media Relations
Elizabeth Fogerty, +1-212-908-0526
[email protected]

Source: Fitch Ratings

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