OREANDA-NEWS. Fitch Ratings has upgraded Wifack International Bank's (WIB) National Long-term Rating to 'AA+(tun)' from 'BBB-(tun)'. It has also affirmed the ratings of seven other Tunisian leasing companies: Tunisie Leasing (TL), Arab Tunisian Lease (ATL), Attijari Leasing (AL), Compagnie Internationale de Leasing (CIL), Hannibal Lease (HL), Arab International Lease (AIL), and Modern Leasing (ML). The Outlook on CIL's National Long-term Rating has also been revised to Stable from Negative. A full list of rating actions is available at the end of this rating action commentary.

The upgrade of WIB's National Long-term and senior debt ratings reflects Fitch's opinion of the moderate probability of support that the financial entity could expect to receive from its new main strategic shareholder, the Islamic Corporation for the Development of the Private Sector (ICD; AA/Stable/F1+). El Wifack Leasing (since renamed 'WIB') was placed on Rating Watch Positive in April 2015 following the announcement of ICD's 30% equity stake in WIB to facilitate the conversion of the leasing entity into a universal Islamic bank. The ratings are now driven by ICD's institutional support rather than by the standalone risk profile of the entity.

The revision of the Outlook to Stable from Negative on CIL reflects Fitch's expectations of stable creditworthiness of the leasing entity relative to peers in the country given resilient asset quality and capital ratios in line with peers.

The rating actions follow a periodic review of Tunisian leasing companies' National Ratings. National Ratings reflect the creditworthiness of an issuer relative to the best credit and to peers in the country. Fitch will shortly publish the main findings of this review in a report "Peer Review: Tunisian Leasing Companies".

KEY RATING DRIVERS - NATIONAL RATINGS AND SENIOR DEBT
ATL's, AL's, AIL's, ML's and WIB's National Ratings are support-driven while those of TL, HL and CIL reflect their standalone creditworthiness.

WIB's National Ratings reflect moderate support from ICD in case of need. Fitch believes that ICD's ability 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%).

ATL's National Ratings reflect Fitch's opinion of a limited probability of support from its ultimate shareholder, Jordan-based Arab Bank Plc (AB, BBB-/Negative/bbb-), if needed, through its Tunisian subsidiary, Arab Tunisian Bank (ATB, BB/Stable/b). ATL's capital is 33% held by ATB, which in turn is 64.2%-controlled by AB. Although AB has sufficient capacity to support ATL, Fitch believes that given AB's modest interest in ATL's capital as a non-direct shareholder, the probability of support is limited. The Negative Outlook on ATL's National Long-term Rating reflects that on AB's Long-term IDR.

AL's National Ratings reflect Fitch's opinion of a limited probability of support it is likely to receive from its ultimate shareholder, the Moroccan group Attijariwafa Bank (AWB, BB+/Stable/bb-), if needed. AL's capital is 65.2%-held by AWB's Tunisian subsidiary, Attijari Bank Tunisie (ABT), which in turn is 59%-controlled by the holding company Andalucarthage, which is almost exclusively owned by AWB. Fitch believes there is a high propensity of support for AL from ABT and, ultimately, AWB, if needed. However, the probability of support is limited by AWB's creditworthiness as indicated by its 'bb-' Viability Rating.

Fitch considers that the Moroccan government would provide extraordinary support to AWB if needed, given that it is a domestic systemically important bank. Nevertheless, Fitch believes that cross-border support (i.e. support from the Moroccan government flowing through AWB to AL) is uncertain. Therefore, Fitch assesses AWB's capacity to support AL based on its standalone financial strength. ABT is not rated by Fitch.

AIL's ratings reflect Fitch's opinion of the support that the company could expect to receive, if required, from its main direct shareholder, Banque Tuniso-Koweitienne (BTK), and from its 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 its '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 AIL's National Long-term Rating reflects that on GBPCE's Long-term IDR.

ML's ratings reflect Fitch's opinion of the high propensity of support from its majority shareholder, Banque de l'Habitat (BH), if required. In Fitch's view, this 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-/ Stable).

TL's National Ratings reflect the company's leading position in the Tunisian leasing and factoring market, a diversified business profile, its sustained profitability, capital ratios and asset quality ratios that compare well to peers and overall risk management procedures that are appropriate to the operating environment. The ratings also take into account the company's reliance on short-term funding and tight liquidity, in common with other domestic leasing companies.

HL's National Ratings reflect the company's modest tier 1 ratio (10.8% at end-1H15) compared with peers' given its asset quality (impaired loans ratio of 6.7% at end-1H15) and significant concentration in its loan portfolio. HL's profitability is lower than the industry average, although Fitch estimates profitability to have improved in 2015 on further cost efficiencies. Fitch considers HL's liquidity as limited by its reliance on the domestic bond market for funding as per the rest of the sector - and the absence of a strong bank shareholder that could provide liquidity support, if needed.

CIL's National Ratings reflect the company's stable profitability and asset quality, which remains vulnerable to deterioration in the domestic economy. Fitch believes that its impaired loans ratio at end-2015 will be in line with 2014 figures (at around 8%). Capital and leverage ratios are broadly in line with peers. Reliance on wholesale funding and liquidity is tight, as with peers, making CIL potentially vulnerable to economic downturns.

The Stable Outlook on AL's, ML's and WIB's National Ratings reflect Fitch's opinion of probability of stable support from their ultimate shareholders. The Stable Outlook on TL's and HL's reflects the stable creditworthiness of the leasing entities relative to peers in the country.

RATING SENSITIVITIES - NATIONAL RATINGS AND SENIOR DEBT
A material deterioration in ICD's ability and/or propensity 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.

A significant increase in ATB's stake in ATL and closer integration could lead to an upgrade of the company's National Ratings. An upgrade of AB's Long-term IDR could also lead to an upgrade of ATL's ratings although this is highly unlikely given the current Negative Outlook on AB's Long-term IDR. Conversely, ATL's National Ratings could be downgraded if ATB reduces its ownership in ATL, or if AB materially reduces its interests in ATB (and consequently in ATL). A downgrade of AB's ratings would also lead to a downgrade of ATL's National Ratings.

AL's National Ratings could benefit from a significant increase in AWB's stake in the company and closer integration with AWB. Conversely, AL's National Ratings could be downgraded if AWB materially reduces its interests in ABT (and consequently in AL) or following a one-notch downgrade of AWB's Viability Rating.

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.

A material deterioration in BH's and/or the Tunisian state's ability and/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.

The National Ratings of TL, HL, and CIL are sensitive to a material deterioration in asset quality leading to capital levels being depleted. Any significant diversification into higher-risk markets that would endanger the credit fundamentals of those companies could also trigger a rating downgrade. Constrained liquidity due to limited access to capital markets or bank credit lines could also result in downgrades.

Upgrade potential is unlikely in the near future.

KEY RATING DRIVERS AND SENSITIVITIES - SUBORDINATED DEBT (TL, ATL, AL, CIL, HL)

TL's, ATL's, AL's, CIL's and HL's rated subordinated debt issues are lower Tier 2 issues. Subordinated debt ratings are notched down by three notches from the respective companies' National Long-term Ratings to reflect poor recovery prospects on this type of debt in an event of default. The debt is subordinated to senior issues. It counts as Tier 2 capital in accordance with Tunisian prudential regulation. The subordinated debt is not subject to early redemption or coupon deferral.

The subordinated debt ratings are sensitive to changes of their respective issuers' Long-term National Ratings.
The rating actions are as follows:
Wifack International Leasing
National Long-term Rating: upgraded to 'AA+(tun)' from 'BBB-(tun)'; Outlook Stable
National Short-term Rating: upgraded to 'F1+(tun)' from 'F3(tun)'
National senior unsecured debt rating: upgraded to 'AA+(tun)' 'BBB-(tun)'

Compagnie Internationale de Leasing
National Long-term Rating: affirmed at 'BBB-(tun)'; Outlook revised to Stable from Negative
National Short-term Rating: affirmed at 'F3(tun)'
National senior unsecured debt rating: affirmed at 'BBB-(tun)'
National subordinated debt rating: affirmed at BB-(tun)'

Tunisie Leasing
National Long-term Rating: affirmed at 'BBB+(tun)'; Outlook Stable
National Short-term Rating: affirmed at 'F2(tun)'
National senior unsecured debt rating: affirmed at 'BBB+(tun)'
National subordinated debt rating: affirmed at 'BB+(tun)'

Arab Tunisian Lease
National Long-term Rating: affirmed at 'BBB(tun)'; Outlook Negative
National Short-term Rating: affirmed at 'F3(tun)'
National senior unsecured debt rating: affirmed at 'BBB(tun)'
National subordinated debt rating: affirmed at 'BB(tun)'

Attijari Leasing
National Long-term Rating: affirmed at 'BB+(tun)'; Outlook Stable
National Short-term Rating: affirmed at 'B(tun)'
National senior unsecured debt rating: affirmed at 'BB+(tun)'
National subordinated debt rating: affirmed at 'B+(tun)'

Hannibal Lease
National Long-term Rating: affirmed at 'BB(tun)'; Outlook Stable
National Short-term Rating: affirmed at 'B(tun)'
National senior unsecured debt rating: affirmed at 'BB(tun)'
National subordinated debt rating: assigned at B(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)'

Modern Leasing
National Long-term Rating: affirmed at 'BBB(tun)'; Outlook Stable
National Short-term Rating: affirmed at 'F3(tun)'.