Mexican Mortgage Lender Infonavit #BBB+/A-2# Foreign And A-/A-2 Local Currency Ratings Affirmed, Outlook Remains Stable

Stocks and Financial Services Press Releases Wednesday July 26, 2017 09:06
MEXICO CITY--26 Jul--S&P Global Ratings

MEXICO CITY (S&P Global Ratings) July 25, 2017--S&P Global Ratings affirmed its 'BBB+/A-2' foreign currency and 'A-/A-2' local currency global scale ratings on Instituto del Fondo Nacional de la Vivienda para los Trabajadores (Infonavit). We also affirmed our 'mxAAA/mxA-1+' national scale issuer credit ratings on the entity. The outlook on both scale ratings remains stable.

The ratings on Infonavit reflect its solid business stability as the largest mortgage lender in the country, and its status as the government's financial arm in promoting and developing the housing sector. The ratings also reflect Infonavit's sound capitalization levels, given that our projected RAC ratio will be about 12.8% in 2017 and 2018 thanks to internal capital generation and manageable loan growth rates. Infonavit's asset quality metrics remain higher than those of Mexican mortgage lenders given its low income client orientation; however, its loan loss provisions cover more than 2x its nonperforming assets (NPAS; nonperforming loans [NPLs] and foreclosed assets).

Finally, the ratings incorporate Infonavit's stable long-term funding--which mostly consists of the mandatory contributions from private-sector employees--and its solid liquidity. The ratings incorporate our view that there's an extremely high likelihood that Mexico (foreign currency: BBB+/Stable/A-2; local currency: A/Stable/A-1) would provide extraordinary and timely support to Infonavit in the event of financial distress.

Due to this support, the long-term issuer credit ratings on the entity are one notch higher than its 'bbb' stand-alone credit profile (SACP).

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