Credito Real was downgraded to BB- from BB driven by heightened refinancing risk and worsened funding conditions. Credito Real has a high proportion of unsecured funding sources at 80.8% of total debt and are highly reliant on financial market-driven sources. Debt issuances represented 63.3% of total funding as of September 2021 and Fitch sees increased refinancing risk as the maturity of its unsecured debt due February 2022 nears. Fitch highlights that some of Credito Real’s previous strategies to address its CHF 170mn ($184mn) bond maturity February 2022 have not fully materialized since Fitch’s last rated them two months ago. Besides, a negative factor for Credito Real is the execution risk regarding how it would address its dues given its modest profitability as compared to peers and weak asset quality. As of end-September 2021, its adjusted NPL ratio stood at 11%.

Credito Real’s dollar bonds were stable with its 9.125% Perp at 58.25 cents on the dollar.

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