TEXT-S&P Lowers Rtgs On Caisse centrale Desjardins To 'A+/A-1'
-- We believe that the Canadian banking sector is encountering incremental pressure from headwinds facing the Canadian economy, which is heightening economic risk in the banking system.
-- We also believe that industry risk for the Canadian banking sector is increasing. We expect that intensifying competition for loans and deposits will lead to pressure on profitability growth, especially in banks' retail businesses.
-- We are lowering our long- and short-term issuer credit ratings on Caisse centrale Desjardins to 'A+/A-1' from 'AA-/A-1+', following our revision of the stand-alone credit profile on the bank to 'a' from 'aa-'. The outlook is stable.
-- The stable outlook reflects our expectation that Caisse centrale Desjardins' credit fundamentals will remain consistent with current ratings over the next 24 months.
On Dec. 13, 2012, Standard & Poor's Ratings Services downgraded its long- and short-term issuer credit ratings on Caisse centrale Desjardins to 'A+/A-1' from 'AA-/A-1+' and assigned a stable outlook. In addition, Standard & Poor's lowered its issue ratings on Caisse centrale Desjardins' senior unsecured debt to 'A+' and nondeferrable subordinated debt to 'A-' from 'A+'. The group's treasury and funding needs are met through Caisse centrale Desjardins and Capital Desjardins.
Both companies are wholly owned subsidiaries of the Federation des caisses Desjardins du Quebec (not rated). We view both companies as vital, integrated, and strategic units within the group and believe both are "core" entities. Continued...