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TEXT-Fitch affirms COFIDE's IDR at 'BBB', outlook stable
November 14, 2012 / 5:13 PM / 5 years ago

TEXT-Fitch affirms COFIDE's IDR at 'BBB', outlook stable

Nov 14 - Fitch Ratings has affirmed Corporacion Financiera de Desarrollo's
(COFIDE) Issuer Default Rating (IDR) at 'BBB'. The Rating Outlook is Stable. A
detailed list of Cofide's ratings is provided at the end of this release.

COFIDE's IDRs reflect the support it would receive from its majority owner, the
Republic of Peru, should it be required. Given COFIDE's key role in implementing
economic development policy, the government has - in Fitch's opinion - a vested
interest in supporting COFIDE. Peru's ability to support COFIDE is reflected in
its sovereign rating ('BBB'/Stable Outlook).

COFIDE's IDRs would be upgraded if Peru's sovereign ratings are upgraded, and
they would generally move in line with sovereign ratings. Downward risk for
COFIDE's IDRs is limited given its parent support and Peru's sound economic

COFIDE has an increasingly important role in the implementation of policies to
develop infrastructure and promote economic growth by funding sectors that have
little access to funding (SME's, micro-credit) or funding requirements that
cannot be served by commercial banks (infrastructure).

Conservative policies, adequate risk management and a positive economic
background underpin COFIDE's sound asset quality; past due loan (PDL) ratios
remain below 2% since 2009. In addition, loan loss reserves amply cover the
troubled portfolio and constitute a strong cushion in case of unexpected losses.

Moderate performance, relatively slow asset growth and the usage of innovative
financing structures helped COFIDE maintain robust capital ratios. COFIDE's
Fitch core capital ratio has consistently been above 45% in the past years and
should be considered in the light of its ample reserves.

Beyond wholesale funding to selected sectors/segments, COFIDE is gradually
adding services and products to its lineup with a consistent focus on promoting
development by improving SME's access to credit and technical cooperation.

COFIDE's role is slowly evolving into a more diversified financial entity but
most of the services it provides generate modest revenues; hence the corporation
remains dependent on revenues from loans.

Declining margins, modest cross-selling and a clear development focus result in
a moderate yet consistent performance. Profitability ratios are below those of
commercial banks but not that far from those of state-owned development banks.

COFIDE's wholesale banking role results in a significant concentration on the
loan portfolio while the limited sources of funding create a similar profile on
the liability side. Underlying collateral and sound asset quality limit the loan
concentration risk while adequate liquidity policies and its improving debt
profile limit funding concentration.

Fitch affirms COFIDE's ratings as follows:

--Long-term Issuer Default Rating (IDR) at 'BBB'; Outlook Stable;
--Short-term IDR at 'F2';
--Long-term local currency IDR at 'BBB+'; Outlook Stable;
--Short-term local currency IDR at 'F2';
--Support rating at '2';
--Support rating floor at 'BBB';
--Senior unsecured debt at 'BBB'.

Additional information is available at ''. 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. 15, 2012.

Applicable Criteria and Related Research:
Global Financial Institutions Rating Criteria

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