MONTERREY, Mexico & NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed the local currency long-term Issuer Default Rating (IDR) of Mexico's deposit insurance agency, Instituto para la Proteccion al Ahorro Bancario (IPAB), at 'BBB+' and its long- and shor-term national scale ratings at 'AAA/F1(mex)'.
Fitch has also assigned various other international scale ratings to IPAB which are aligned with Mexico's sovereign ratings. The Rating Outlook is Stable. A full list of rating actions follows at the end of this release.
The local currency IDR assigned to IPAB is in line with the long-term local currency rating of the United Mexican States and reflects the legal framework for the fulfillment of its financial obligations as well as its systemic importance to the Mexican financial sector in its character of deposit insurance agency. While IPAB's liabilities do not have a specific federal government guarantee, its Organic Law contemplates that if IPAB is not in a condition to face its financial obligations, the Mexican Congress will dictate the measures for the payment of the guaranteed obligations and financing of supported financial institutions. It also states that Congress will provide, in a specific item of the Expenditures Decree, the corresponding budgetary resources required by IPAB to face its financial obligations.
IPAB's local currency IDR would mirror any potential change in the respective Mexico's sovereign rating, which currently has a stable outlook. IPAB's ratings could be also negatively affected by changes in its legal framework or a large reduction in the transfers of budgetary resources from the sovereign.
In addition to federal transfers and potential liquidity support, IPAB's bond issues launched since 2000 (Bonos de Proteccion al Ahorro or BPAs) benefit from a contingent payment mechanism. In accordance with the Revenues Law for 2011, Mexico's Central bank, IPAB's financial agent, can temporarily debit the accounts from the Treasury to honor these bonds. While this mechanism has to be renewed annually, it has been included in every single Annual Revenues Law since 2000 and is applicable for all BPAs already placed until their maturity. As of September 2011, BPAs amounted to MXP822.5 billion, or 94.8% of IPAB's gross liabilities. Fitch believes this mechanism further strengthens IPAB's ability to honor these liabilities. Net liabilities have declined to 5.44% of GDP as of September 2011, from 11.70% at end-1999, when IPAB was created (based on adjusted historical figures for GDP).
IPAB replaced former deposit insurer, Fondo Bancario de Proteccion al Ahorro (FOBAPROA). In addition to the deposit insurance, it also manages liabilities inherited from FOBAPROA related to support programs for banks after the 1995 financial crisis. Unlike FOBAPROA, the IPAB only guarantees deposits per customer per bank for up to UDIs 400,000 (inflation-linked units, equivalent to roughly USD135,000 at present).
Fitch has affirmed the following ratings for IPAB:
--Long-term local currency IDR at 'BBB+';
--Long-term national-scale rating at 'AAA(mex)';
--Short-term national-scale rating at 'F1+(mex)'
In addition, Fitch has assigned the following ratings to IPAB:
--Long-term IDR 'BBB';
--Short-term IDR 'F2';
--Short-term local currency IDR 'F2';
--Support rating '2';
--Support rating floor 'BBB'.
The Rating Outlook is Stable.
Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Global Financial Institutions Rating Criteria', dated Aug. 16, 2011;
--'National Ratings Criteria', dated Jan. 19, 2011.
Applicable Criteria and Related Research:
Global Financial Institutions Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=649171
National Ratings Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=595885
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