CFG Holdings, Ltd. 'B' Rating Affirmed And Removed From CreditWatch Negative; Outlook Stable


  • On Dec. 21, 2018, nonbank financial institution (NBFI) CFGLTD announced the leveraged acquisition of the group by BayBoston, leading us to place CFGLTD on CreditWatch with negative implications
  • We have concluded our analysis of the leveraged buyout (LBO). As a result, we're affirming our rating on CFGLTD and removing it from CreditWatch. The outlook is stable.
  • The higher leverage resulting from this LBO reduced the group's capital base by one category, resulting in the negative scenario we expected in our CreditWatch designation.
  • We determined that diversified income sources by geography and the absence of regulatory restrictions for upstreaming debt servicing cash flows from operating subsidiaries under the new corporate structure would support the nonoperating holding company (NOHC)'s debt payment ability. As a result, we're equalizing the group creditworthiness with that of the rating on the NOHC.
MEXICO CITY (S&P Global Ratings) March 15, 2019--S&P Global Ratings affirmed 
its 'B' long-term issuer credit rating on CFG Holdings Ltd. (CFGLTD). We 
removed the rating from CreditWatch with negative implications, where we 
placed it on Dec. 21, 2018. The outlook is stable.

The rating action follows the conclusion of our analysis of the impact of the 
LBO for CFGLTD. After leveraging the group with mezzanine debt issued at the 
NOHC level, the group's debt to equity proportion shifted and the capital base 
decreased significantly. This transaction also generated substantial goodwill, 
which we deduct from the group's capital base to arrive at our total adjusted 
capital (TAC). Both these factors decreased the company's TAC to $104 million 
from $230 million year-on-year as of December 2018. This translated into a 
decrease in our risk-adjusted capital (RAC) ratio to 10.3% from 24.6% as of 
the same date. Even after this decrease, we still consider CFGLTD's capital 
base to be strong enough to support any future credit growth from the group. 
We forecast our RAC ratio to be around 10.5% for the next 12-14 months. 
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