MONTERREY, Mexico--(BUSINESS WIRE)--Fitch Ratings expects to assign a 'B' rating to Banca Mifel's (Mifel) upcoming issue of cumulative subordinated preferred notes due 2022. The final amount will range between US$150 -US$ 200 million.
The expected rating is two notches below Mifel's viability rating of 'bb-', according to Fitch's Dec. 15, 2011 criteria report for such securities ('Rating Bank Regulatory Capital and Similar Securities'). The notching indicates the higher expected loss for more junior debt instruments.
In the event of bankruptcy (concurso mercantil), liquidation or dissolution, the Notes will rank junior to all of Mifel's present and future senior indebtedness. The notes will rank pari passu with all other present or future unsecured subordinated preferred liabilities, and senior only to subordinated non-preferred indebtedness and common equity. The proposed notes will rank senior to the outstanding US$100 million perpetual non-cumulative junior subordinated callable notes that were placed in 2007 and Fitch rated it 'B-', which explains the rating difference among these securities.
While the proposed notes are dated instruments, these will likely receive a 50% equity credit during the first five years outstanding. This is given its subordination and coupon omission features, but mainly as a result of Fitch's perception of certain permanence. Coupons and even principal could be deferred well before the bank reaches a non-viability condition. This is in accordance to the relatively high regulatory trigger for such deferrals.
Established in 1993, Mifel is the largest entity of Grupo Financiero Mifel. Mifel also has factoring, leasing and mutual fund management companies. Mifel has traditionally targeted SMEs and medium-sized real estate developers, and more recently government related entities.
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' (Aug 16, 2011);
--'Rating Bank Regulatory Capital and Similar Securities' (Dec. 15, 2011);
--'Treatment of Hybrids in Bank Capital Analysis' (July 11, 2011).
Applicable Criteria and Related Research:
Global Financial Institutions Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=649171
Rating Bank Regulatory Capital and Similar Securities
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=656371
Treatment of Hybrids in Bank Capital Analysis
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=641269
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