OREANDA-NEWS. Fitch Ratings has downgraded Modern Leasing's (ML) National Long-Term Rating to 'BBB-(tun)' from 'BBB(tun)'. It has also affirmed the National Ratings of Wifack International Bank (WIB) and Arab International Lease (AIL). The Outlooks on all National Long-Term Ratings are Stable.

The rating actions follow the recalibration of the Fitch's National Rating scale for Tunisia after the downgrade of Tunisia's Long-Tem Local Currency Issuer Default Rating (LTLC IDR) to 'BB-' from 'BB', as a result of which it is now equalised with Tunisia's Long-Term Foreign Currency (LT FC) IDR. The latter was driven by a change in Fitch's sovereign rating criteria (for more details see 'Fitch Applies Criteria Changes to Tunisia's Ratings' dated 22 July 2016 at www. fitchratings. com).

The downgrade of ML's National Long-Term Rating mirrors the downgrade of the sovereign's LTLC IDR, implying somewhat reduced creditworthiness of ML, whose ratings are driven by state support, relative to local peers. WIB's and AIL's ratings have been affirmed, as their creditworthiness relative to local credits has not changed as a result of the sovereign rating action.

KEY RATING DRIVERS - NATIONAL RATINGS AND SENIOR DEBT

ML's National Ratings reflect Fitch's opinion of the high propensity of support from the institution's majority shareholder, Banque de l'Habitat (BH), if required. In Fitch's view, support would ultimately be provided by the state and flow through BH, given BH's weak creditworthiness on a standalone basis. ML is 70.4%-owned (directly and indirectly) by BH, which in turn is 57%-controlled by the Tunisian state (BB-/Negative).

WIB's National Ratings reflect Fitch's opinion of the moderate support from the institution's main strategic shareholder, the Islamic Corporation for the Development of the Private Sector (ICD, AA/ Stable) in case of need. Fitch believes that the ability of ICD to support would be high given its strong creditworthiness as indicated by its 'AA' IDR, although its propensity to do so may be more limited due to WIB's limited strategic importance to ICD, ICD's limited equity stake in WIB and the significant influence of WIB's other minority shareholders - the state-owned Societe Tunisienne de Banques (STB, 18.8%) and the Tunisian Caisse des Depots et Consignations (CDC, 10%).

AIL's National Ratings reflect Fitch's opinion of the support that the company could expect to receive, if required, from the institution's main direct shareholder, Banque Tuniso-Koweitienne (BTK), and from the ultimate parent, France's Groupe BPCE (GBPCE, A/Stable). AIL is 95%-owned by BTK, which in turn is 60%-owned by GBPCE. Although GBPCE's capacity to support AIL is strong (as reflected by the institution's 'a' Viability Rating), Fitch views the propensity to support as moderate given that: a) GBPCE is not a direct majority shareholder, b) AIL is of limited strategic importance to GBPCE and c) integration within the French banking group is weak.

The Stable Outlook on ML's, WIB's and AIL's National Ratings reflect Fitch's opinion of probability of stable support from their ultimate shareholders.

RATING SENSITIVITIES - NATIONAL RATINGS AND SENIOR DEBT

A material deterioration in either BH's or the Tunisian state's ability or propensity to support ML, resulting in lower creditworthiness relative to the best credit in the country, could result in a downgrade of ML's ratings.

A material deterioration in the ability or propensity of ICD to support WIB, or a significant decrease in its WIB stake could result in a downgrade of WIB's ratings. WIB's National Ratings would be sensitive to a multi-notch downgrade of ICD's Long-Term IDR due to Tunisia's Country Ceiling currently acting as a constraint.

AIL's National Ratings would benefit from closer ties with GBPCE through increasing integration within BTK. The Tunisian bank mainly controls AIL's commercial strategy, credit, liquidity and interest rate risks through board and senior committees. A decrease in BTK's control of AIL, or if GBPCE materially reduces its interest in BTK, could trigger a downgrade of AIL's National Ratings. The same would apply if GBPCE's IDR is downgraded.

The rating actions are as follows:

Modern Leasing

National Long-term Rating: downgraded to 'BBB-(tun)' from 'BBB(tun)'; Outlook Stable

National Short-term Rating: affirmed at 'F3(tun)'

Wifack International Bank

National Long-term Rating: affirmed at 'AA+(tun)'; Outlook Stable

National Short-term Rating: affirmed at 'F1+(tun)'

National senior unsecured debt rating: affirmed at 'AA+(tun)'

Arab International Lease

National Long-term Rating: affirmed at 'AA+(tun)'; Outlook Stable

National Short-term Rating: affirmed at 'F1+(tun)'

National senior unsecured debt rating: affirmed at 'AA+(tun)'