Fitch Affirms Mexico's Bancomext's IDR at 'BBB' and LC IDR at 'BBB+'; Outlook Stable

MONTERREY, Mexico & NEW YORK--()--Fitch Ratings has affirmed Mexican development bank Banco Nacional de Comercio Exterior's (Bancomext) ratings as follows:

--Long-term Issuer Default Rating (IDR) at 'BBB';

--Short-term IDR at 'F2';

--Long-term local currency IDR at 'BBB+';

--Short-term local currency IDR at 'F2';

--Support rating at '2';

--Support rating floor at 'BBB';

--Long-term national-scale rating at 'AAA(mex)';

--Short-term national-scale rating at 'F1+(mex)';

--Local senior unsecured debt issues at 'AAA(mex)'.

The Rating Outlook is Stable.

Bancomext's ratings reflect the strength of the explicit support that the bank would receive from the Mexican government, if required. Fitch also notes Bancomext's importance as the country's export-import bank. Under article 10 of Bancomext's organic law, the federal government is explicitly responsible for all of the transactions entered into by the bank, either with domestic or foreign, private or public institutions. Given Mexico's investment grade rating, there is a high probability that support from the authorities would be forthcoming, if required.

Given that the bank's IDRs are driven by the explicit support granted by the Mexican government, Bancomext's ratings would mirror any potential change in Mexico's Sovereign ratings, which currently have a Stable Outlook.

The performance of Bancomext has historically lagged that of its larger peers, although it has improved significantly, as the expenses related to export-promoting activities and an onerous international network are no longer absorbed by Bancomext since 2008. However, the limited business scale continues to affect efficiency, which results in relatively low and less stable core profitability metrics. Asset quality improved markedly in 2008, when a large troubled loan granted to a foreign government was restructured and recovered. However, the delinquency ratio (2.37% as of September 2011) remains higher than those of larger development banks, which somewhat constrains Bancomext's loss absorption capacity (reserve coverage ratio at 243% of impaired loans). Capital ratios, although stable and standing at comfortable levels, are also lower than those of larger peers. Funding is in the form of bond issues in international capital markets, lines of credit from foreign financial institutions, and securities issuance in the local debt market. Despite the potential challenges to access wholesale funds under adverse market conditions, the sovereign guarantee and its base of liquid assets provide comfort.

Bancomext was founded in 1937. Its main function is the financing of foreign trade.

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:

National Ratings Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=595885

Global Financial Institutions Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=649171

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Contacts

Fitch Ratings
Primary Analyst
Alejandro Garcia, CFA
Senior Director
Fitch Mexico S.A. de C.V.
+52 (81) 8399-9146
Prol. Alfonso Reyes 2612, Edificio Connexity, Monterrey N.L.
or
Secondary Analyst
Alejandro Tapia
Associate Director
+52 (81) 8399-9156
or
Committee Chair
Franklin Santarelli
Managing Director
+1 212 908 0739
or
Media Relations:
Brian Bertsch, +1-212-908-0549 (New York)
brian.bertsch@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Alejandro Garcia, CFA
Senior Director
Fitch Mexico S.A. de C.V.
+52 (81) 8399-9146
Prol. Alfonso Reyes 2612, Edificio Connexity, Monterrey N.L.
or
Secondary Analyst
Alejandro Tapia
Associate Director
+52 (81) 8399-9156
or
Committee Chair
Franklin Santarelli
Managing Director
+1 212 908 0739
or
Media Relations:
Brian Bertsch, +1-212-908-0549 (New York)
brian.bertsch@fitchratings.com