OREANDA-NEWS. Fitch Ratings has affirmed Union Finances Grains' (UFG) commercial paper (CP) programme rating at 'F1'.

KEY RATING DRIVERS

UFG's French CP programme's Short-Term rating of 'F1' reflects Fitch's view that the four banks guaranteeing the CPs would be extremely likely to honour their commitment if required, as the guarantees are unconditional, irrevocable and timely.

The four banks guaranteeing UFG's CPs are Credit Agricole Corporate and Investment Bank (CACIB; A/Positive/F1), Le Credit Lyonnais (LCL; A/Positive/F1), Credit Cooperatif (A/Stable/F1) and Banque Europeenne du Credit Mutuel (BECM). BECM is a wholly-owned subsidiary of Banque Federative du Credit Mutuel (BFCM; A+/Stable/F1) and its debt ratings are aligned with those of BFCM based on an extremely high probability of support from the latter if required.

The banks guarantee the repayment of individual tranches of UFG's CPs, subject to a total limit of EUR497.5m split as follows between the guarantors:

EUR96m for CACIB

EUR138.5m for LCL

EUR83m for Credit Cooperatif

EUR180m for BECM

The banks' guarantees are not joint and each bank is only exposed to the CPs it guarantees. Each guarantee is renewed annually on 1 July and covers CPs issued up to 30 June of the following year maturing before 30 September of that year.

Fitch does not assign a rating to UFG as an entity, as it is purely an issuing vehicle. UFG is a union of agricultural cooperatives gathering 31 members at end-January 2016. UFG's sole purpose is to fund part of the cooperatives' cereal inventories by the issuance of CPs. UFG has no individual funding needs and its overhead costs are paid by a contribution of its cooperative members.

RATING SENSITIVITIES

The Short-Term rating of 'F1' assigned to the CP programme would move in tandem with the Short-Term Issuer Default Ratings of the guarantors, which currently have the same Short-Term ratings. Should one of them be downgraded or upgraded, Fitch would assign a different rating to each of the four sub-programmes.