Run-off now most likely CIF outcome, says Moody’s
Monday, 10 September 2012
Moody’s has said that it considers a run-off scenario the most likely outcome for the Crédit Immobilier de France group after the French ministry of finance announced the provision of a guarantee for CIF.
The French government on 1 September announced the provision of a guarantee with the aim of allowing the CIF group to meet all of its obligations, noted Moody’s in a statement on Thursday, with the ministry also stating that attempts to find a merger partner for CIF have not succeeded.
“Moody’s now considers a run-off scenario, in which CIF would reduce its balance sheet over time with the aid of state support, the most likely outcome for the bank,” said the rating agency. “In recent weeks, the likelihood of this scenario has been increasing, in Moody’s view, which led to the 28 August downgrade to the long term debt and deposit ratings on Caisse Centrale du Crédit Immobilier de France (3CIF) to Baa1 (E/caa1), which remain on review with direction uncertain.”
Moody’s said that in its review it will consider: the time horizon of the guarantee scheme; whether it will cover existing obligations and/or newly issued debt; and the potential for 3CIF’s debt to receive the ratings of the French government based on effective credit substitution.
“The conclusion of the review will depend on the details of this guarantee and thus the extent to which they benefit unsecured creditors,” it said.
Moody’s noted that under EU procedures, such guarantees are commonly authorised for six months while the case is investigated, before a permanent arrangement is reached, and that its ratings will take into account any conditions the European Commission might impose.
Moody’s expects to conclude the review after details of the initial guarantee are finalised. The rating agency expects the French ministry to publish these in a forthcoming draft finance bill due around the end of September.