OREANDA-NEWS. December 15, 2015. Fitch Ratings has affirmed South Africa-based Sanlam Capital Markets (Pty) Limited's (SCM) National Long- and Short-term Ratings at 'A+(zaf)' and 'F1(zaf)' respectively. The Outlook on the National Long-term Rating is Stable.

Fitch has also affirmed the National Ratings of SCM's immediate parent company, Genbel Securities (Pty) Limited (Gensec), at Long-term 'A+(zaf) with Stable Outlook and Short-term 'F1(zaf)'. A full list of rating actions is available at the end of this rating action commentary.

SCM is a non-bank financial institution ultimately owned by Sanlam Limited (Sanlam; rated AA-(zaf)/Stable), the holding company of one of South Africa's largest life insurance companies. SCM primarily acts as one of Sanlam's treasury functions but also offers capital markets products, brokerage and advisory services to third-parties outside the Sanlam group.

KEY RATING DRIVERS
NATIONAL AND SUPPORT RATINGS, GUARANTEED OBLIGATIONS
SCM's and Gensec's ratings are based on our assessment of institutional support available from Sanlam, which considers both Sanlam's propensity and ability to support. We assess SCM and Gensec as strategically important but not core subsidiaries of Sanlam. This results in a one-notch differential between SCM's/Gensec's and Sanlam's National Ratings. We do not consider SCM and Gensec core subsidiaries because they do not perform exclusive functions for Sanlam (eg they are not the only treasury functions) and SCM also provides financing and other services to unrelated institutional clients.

Sanlam's ability to support SCM and Gensec is largely driven by its other operating subsidiaries including Sanlam Life Insurance Limited (SLI; rated AA(zaf)/Stable). Given the small size of SCM relative to the consolidated Sanlam group and Sanlam's strong capital position, Sanlam's ability to support SCM and Gensec is, in our view, very strong.

SCM's guaranteed obligations cover most of SCM's trading creditors and benefit from a direct guarantee from Sanlam. The guaranteed obligations are equalised with Sanlam's National Ratings.

RATING SENSITIVITIES
NATIONAL AND SUPPORT RATINGS, GUARANTEED OBLIGATIONS
SCM's and Gensec's ratings are primarily sensitive to a change in Sanlam's and/or SLI's ratings. In addition, they are also sensitive to a material change to the functions they perform for the wider Sanlam group. Should for instance SCM and Gensec cease to be key treasury entities for Sanlam, then the notching between SCM's/Gensec's and Sanlam's ratings could widen.

Conversely, an increasingly important role of SCM/Gensec in the wider Sanlam group could lead us to equalise their ratings. The rating of the obligations guaranteed by Sanlam is sensitive to a change in Sanlam's ratings.

The rating actions are as follows:

Sanlam Capital Markets (Pty) Limited
National Long-term Rating: affirmed at 'A+(zaf)'; Outlook Stable
National Short-term Rating: affirmed at 'F1(zaf)'
Support Rating: affirmed at '2'

SCM obligations guaranteed by Sanlam Limited
National Long-term Rating: affirmed at 'AA-(zaf)'
National Shor-term Rating: affirmed at 'F1+(zaf)'

Genbel Securities (Pty) Limited
National Long-term Rating: affirmed at 'A+(zaf)'; Outlook Stable
National Short-term Rating: affirmed at 'F1(zaf)'
Support Rating: affirmed at '2'