OREANDA-NEWS. Fitch Ratings has affirmed Union Finances Grains' (UFG) commercial paper (CP) programme rating at 'F1'. A full list of rating actions is at the end of this rating action commentary.

KEY RATING DRIVERS
UFG's French CP programme's Short-term rating reflects Fitch's view that the four banks guaranteeing the CP would be extremely likely to timely honour their commitment, if required. The four banks are Credit Agricole Corporate and Investment Bank (A/Positive/F1), Le Credit Lyonnais (A/Positive/F1), Credit Cooperatif (A/Stable/F1) and Banque Europeenne du Credit Mutuel. Banque Europeenne du Credit Mutuel 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 CP, subject to limits on the total volume of CP:
EUR96m for Credit Agricole Corporate and Investment Bank
EUR138.5m for Le Credit Lyonnais
EUR83m for Credit Cooperatif
EUR160m for Banque Europeenne du Credit Mutuel

The banks' guarantees are not joint, and each bank is only exposed to the CP it guarantees. Fitch considers that the banks' guarantees are extremely likely to be honoured, given the huge reputational damage the banks would face if they failed to repay the CP and the small amounts guaranteed in absolute terms. The guarantees are renewed annually, but are grandfathered (i.e. guaranteed CP benefit from the guarantee until it matures).

RATING SENSITIVITIES
The Short-term ratings assigned to the CP individually would move in tandem with the Short-term Issuer Default Ratings of the banks guaranteeing the related CP.

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 (with variable capital) authorised by the French Ministry of Agriculture. Currently, 31 French cereal cooperatives are members of the union. UFG's sole purpose is to provide its members with alternative forms of financing; UFG finances part of the cooperatives' cereal inventories by issuing CPs. UFG has no funding needs for itself and its overheads are paid by the member cooperatives.

The rating actions are as follows:

UFG's Commercial paper programme guaranteed by Credit Agricole Corporate and Investment Bank: affirmed at 'F1'
UFG's Commercial paper programme guaranteed by Le Credit Lyonnais: affirmed at 'F1'
UFG's Commercial paper programme guaranteed by Credit Cooperatif: affirmed at 'F1'
UFG's Commercial paper programme guaranteed by Banque Europeeenne du Credit Mutuel: affirmed at 'F1'