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Moody's withdraws RCI Brasil's ratings


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According to Market Intelligence, April 2023

Moody's withdraws RCI Brasil's ratings

Moody's on March 31 withdrew its long-term issuer andcorporate family ratings of Ba1 on Companhia de Crédito Financiamento e Investimento RCI do BrasilSA.

The rating agency also withdrew RCI Brasil's long-termBrazilian national scale issuer rating of

Moody's, meanwhile, assigned first-time ratings to Banco RCIBrasil SA, including long- and short-term global local currency deposit ratingsof Ba1 and Not-Prime, respectively, with a stable outlook. It also assigned thebank long- and short-term foreign currency deposit ratings of Ba3 andNot-Prime, with a negative outlook, as well as long- and short-term Braziliannational scale deposit ratings of and BR-1, respectively. A stand-alonebaseline credit assessment, or BCA, of "ba3," an adjusted BCA of"ba1," as well as long- and short-term counterparty risk assessmentsof Baa3(cr) and Prime-3(cr), respectively, were also assigned.

The withdrawal of RCI Brasil's ratings and the ratingsassignment to Banco RCI Brasil follow the bank's incorporation of the financecompany on Jan. 29, after which the bank ceased to exist as a stand-aloneentity, Moody's noted. About 80% of the bank's assets were transferred from RCIBrasil.

The bank's ratings reflect its franchise as a captivefinance operation of automakers Renault and Nissan, the strong credit riskprofile of its loan book, Fitch's expectation of below-average loan delinquencyas well as comfortable capitalization and reserves.

However, the credit strengths are offset by risks associatedwith the bank's monoline operation, resulting in low earnings diversificationas well as profitability metrics closely tied to the sales volumes of Renaultand Nissan. Banco RCI is also expected to continue to depend heavily onundiversified sources of wholesale market funding, Moody's noted.

The bank's long-term global local currency deposit rating ofBa1 is two notches above the bank's stand-alone BCA, which incorporates Moody'sassessment of a high willingness by the bank's France-based affiliateRCI Banque SA toprovide support in the event that the Brazilian bank faces financial stress.