OREANDA-NEWS. Fitch Ratings has upgraded the National Long-Term Ratings of Investec Limited (IL), Investec Bank Limited (IBL) and RCS Investment Holdings Limited (RCS). Fitch has also affirmed the National Long-Term Rating of Development Bank of Southern Africa (DBSA).

A full list of rating actions is available at the end of this rating action commentary.

The rating actions follow Fitch's downgrade of South Africa's Long-Term Local Currency (LTLC) Issuer Default Rating (IDR) to 'BBB-' from 'BBB' as a result of which it is now equalised with South Africa's Long-Term Foreign Currency IDR. This was driven by the change in Fitch's sovereign rating criteria (for more details see 'Fitch Applies Criteria Changes to Global Sovereign Ratings' dated 22 July 2016 at www. fitchratings. com).

The National Long-Term Ratings of IL and IBL have been upgraded to 'AA(zaf)' from 'AA-(zaf)' following the recalibration of the South Africa National Rating scale due to the sovereign's LTLC downgrade. This reflects our view that the bank's business model may be resilient in a downturn on a relative basis to other banks and its creditworthiness is in line with other large domestic banks. Following the upgrade of IBL's National Rating, its Basel 3-compliant subordinated debt has been upgraded to 'AA-(zaf)' from 'A+(zaf)'.

RCS's National Long-Term Rating, which is driven by potential support from the ultimate parent, BNP Paribas (BNPP; A+/Stable), and from BNP Paribas Personal Finance, has been upgraded to 'AAA(zaf)' from 'AA(zaf)' following the recalibration of the South Africa National Rating scale. The ratings on RCS's domestic medium term note (DMTN) programme and notes have also been upgraded to 'AAA(zaf)' from 'AA(zaf)'.

DBSA's National Long-term Rating has been affirmed at 'AA+(zaf)' as it creditworthiness relative to the best credit in the country has not changed following the downgrade of the sovereign LTLC IDR and the recalibration of South Africa's National Rating scale.

KEY RATING DRIVERS

IDRs (IL, IBL, RCS), SENIOR DEBT (RCS) AND NATIONAL RATINGS

IBL's and IL's IDRs are driven by their standalone creditworthiness and are capped by the South African sovereign Long-Term IDRs of 'BBB-', because of their strong links with South Africa. Their National Ratings reflect their creditworthiness relative to the best credit in the country.

The National Ratings of DBSA reflect the high probability of support it would receive from the South African authorities, if required, as a state-owned development finance institution, incorporated by Acts of Parliament. On the National scale DBSA's Long-Term rating of 'AA+(zaf)' reflects lower perceived creditworthiness relative to the sovereign.

The IDRs and National Ratings of RCS reflect a high probability of support available from its ultimate parent, BNP Paribas, and from BNP Paribas Personal Finance, if required. RCS's IDRs are notched down four times from BNPP's 'A+' IDR.

The notching takes into account the increasing operational integration of RCS into BNPP's sizeable personal finance division and our expectation that BNPP will remain a majority owner of RCS (currently at 100%) in the medium term. In addition, the ratings factor in sizeable undrawn funding and liquidity facilities in place with the parent. However, the ratings also reflect RCS's small size in terms of assets and earnings compared with BNPP and that RCS is based in a different jurisdiction and a market that we do not view as core for BNPP.

RCS's domestic medium term note (DMTN) programme and notes are rated in line with RCS's National Ratings, reflecting our view that non-payment of these senior unsecured obligations would reflect the uncured failure of the entity in accordance with Fitch's rating definitions.

SUBORDINATED DEBT (IBL)

The instrument is notched once from IBL's National Long-Term Rating, reflecting the greater loss severity of subordinated obligations than senior unsecured obligations.

RATING SENSITIVITIES

IDRs (IL, IBL, RCS), SENIOR DEBT (RCS) AND NATIONAL RATINGS

The IDRs of IL and IBL could be upgraded if the operating environment improves, as reflected by an upgrade of the sovereign rating. Their IDRs and National Ratings are sensitive to weaker financial metrics, particularly signs of higher risk appetite or deterioration of asset quality or capital.

The IDRs of IBL and IL and the senior debt ratings of IBL would be downgraded by one notch if South Africa is downgraded by one notch.

DBSA's National Ratings would be sensitive to a change in Fitch's perception of the South African authorities' willingness to support, if required. This could include public statements of a decrease in willingness to support or potentially an increase in willingness to support including explicit, formalised support such as guarantees or callable capital facilities.

RCS's IDRs and National Ratings are sensitive to a reduction in the perceived ability or willingness of BNP to provide support to RCS. RCS's IDRs are also sensitive to a downward revision of South Africa's Country Ceiling.

RCS's DMTN and senior debt ratings are primarily sensitive to a change in RCS's National Ratings.

SUBORDINATED DEBT (IBL)

IBL's subordinated debt ratings are primarily sensitive to a change in the bank's National Long-Term Rating (the anchor rating for domestic subordinated debt issuance).

The rating actions are as follows:

Investec Limited

Long-Term Foreign Currency IDR unaffected at 'BBB-'; Stable Outlook

Short-Term Foreign Currency IDR unaffected at 'F3'

Long-Term Local Currency IDR affirmed at 'BBB-'; Outlook Stable

National Long-Term Rating upgraded to 'AA(zaf)' from 'AA-(zaf)'; Outlook Stable

National Short-Term Rating affirmed at 'F1+(zaf)'

Viability Rating unaffected at 'bbb-'

Support Rating unaffected at '5'

Support Rating Floor unaffected at 'No Floor'

Investec Bank Limited

Long-Term Foreign Currency IDR unaffected at 'BBB-'; Stable Outlook

Short-Term Foreign Currency IDR unaffected at 'F3'

Long-Term Local Currency IDR affirmed at 'BBB-'; Outlook Stable

National Long-Term Rating upgraded to 'AA(zaf)' from 'AA-(zaf)'; Outlook Stable

National Short-Term Rating affirmed at 'F1+(zaf)'

Viability Rating unaffected at 'bbb-'

Support Rating unaffected at '3'

Support Rating Floor unaffected at 'BB-'

Senior unsecured debt unaffected at 'BBB-'/F3

Basel 3-compliant Tier 2 subordinated debt: upgraded to 'AA-(zaf)' from 'A+(zaf)'

Development Bank of Southern Africa

National Long-Term Rating affirmed at 'AA+(zaf)'; Outlook Stable

National Short-Term Rating affirmed at 'F1+(zaf)'

Support Rating unaffected at '2'

RCS Investment Holdings Limited

Long-Term Foreign Currency IDR unaffected at 'BBB'; Stable Outlook

Short-Term Foreign Currency IDR unaffected at 'F2'

Long-Term Local Currency IDR affirmed at 'BBB'; Outlook Stable

National Long-Term Rating upgraded to 'AAA(zaf)' from 'AA(zaf)'; Outlook Stable

National Short-Term Rating affirmed at 'F1+(zaf)'

Support Rating unaffected at '2'

DMTN programme's National Long-term rating: upgraded to 'AAA(zaf)' from 'AA(zaf)' National Short-Term Rating: affirmed at 'F1+(zaf)'

Senior unsecured debt's National long-term rating: upgraded to 'AAA(zaf)' from 'AA(zaf)'