OREANDA-NEWS. Fitch Ratings has revised Agos Ducato's (Agos) Outlook to Positive from Stable and affirmed its Long-term Issuer Default Rating (IDR) at 'BBB+', Short-term IDR at 'F2' and Support Rating (SR) at '2'.

The revision of the Outlook follows the revision of the Outlook on Credit Agricole Consumer Finance's (CACF) and its ultimate parent Credit Agricole's (CA) Long-term IDR (see "Fitch Revises Credit Agricole's Outlook to Positive; Affirms at 'A'" dated 23 June 2015 on www.fitchratings.com).

KEY RATING DRIVERS - IDRS AND SUPPORT RATING
Agos's ratings are driven by support from its majority shareholder, CACF (A/Positive), and ultimately from CA (A/Positive). CACF holds a 61% stake in Agos, with the remaining 39% owned by Banco Popolare (BB/Stable). Fitch does not factor potential support from the minority shareholder into Agos's ratings. CACF provides the largest part of Agos's funding and has sustained the subsidiary's capitalisation through capital increases in the recent past.

The two-notch difference between CACF and Agos's Long-term IDRs reflects that Agos is majority, but not fully owned by CACF. It also reflects Fitch's view that Agos is an important subsidiary, given its profile as one of the largest consumer finance companies in Italy, a strategically important country for the CA group. The notching also reflects Agos's mixed performance track record in recent years, with high reported losses, which required two capital increases in 2012 and 2013, although Agos's profitability returned to positive in 2014.

RATING SENSITIVITIES
IDRS AND SUPPORT RATING
Agos's ratings are sensitive to changes in CA's and CACF's propensity and ability to provide support.

An upgrade of CA and CACF's IDRs could result in an upgrade of Agos's Long-term IDR above Italy's sovereign rating (BBB+/Stable). Similarly, a downgrade of CA and CACF's Long-term IDRs, would likely result in a downgrade of Agos's Long-term IDR as it would reflect a weakening of their ability to provide support.

The ratings would also come under pressure if Italy became a less strategically important market for CA, which could arise if the operating environment materially deteriorated.

Fitch could reduce the notching difference between Agos and CACF's Long-term IDRs if CACF significantly increased its stake in Agos above the 61% it currently holds, which Fitch does not expect to happen.