Rating Action: Moody’s affirms PEFCO’s Aaa/Prime-1 ratings; maintains stable outlook
Global Credit Research – 21 Jul 2020
New York, July 21, 2020 — Moody’s Investors Service, (“Moody’s”) has affirmed all of the ratings of Private Export Funding Corporation (PEFCO). The outlook remains at stable. This rating action follows the affirmation of the Aaa rating for the Government of United States of America that Moody’s announced in a separate press release on 19 June 2020.
As part of the same rating action, Moody’s has withdrawn the rating outlooks on PEFCO’s senior secured regular bond/debenture, senior unsecured regular bond/debenture and senior secured collateralized notes for its own business reasons. Please refer to the Moody’s Investors Service Policy for Withdrawal of Credit Ratings, available on its website, www.moodys.com.
..Issuer: Private Export Funding Corporation
…. Senior Secured Collateralized Note, Affirmed Aaa
…. Commercial Paper, Affirmed P-1
…. Backed Senior Secured Regular Bond/Debenture, Affirmed Aaa
…. Senior Unsecured Medium-Term Note Program, Affirmed (P)Aaa
…. Senior Secured Medium-Term Note Program, Affirmed (P)Aaa
…. Senior Unsecured Regular Bond/Debenture, Affirmed Aaa
..Issuer: Private Export Funding Corporation
….Outlook, Remains Stable
PEFCO’s Aaa long-term ratings reflect the company’s close relationship with Export-Import Bank of the United States (Ex-Im Bank), its very strong asset quality and solid liquidity, as well as the notes’ senior priority and the strength of the notes’ asset coverage. PEFCO’s secured debt programs are over-collateralized by loans guaranteed by Export-Import Bank of the US (Ex-Im Bank) and other US Agencies, Full Faith and Credit investment securities, and cash.
PEFCO makes US dollar loans to foreign companies for the purpose of financing purchases of US goods and services from Ex-Im Bank. PEFCO was established as a Delaware corporation with the support of the US Department of Treasury, Ex-Im Bank, and The Bankers Association for Finance and Trade (BAFT), among others, to supplement to the financing available through Ex-Im Bank, commercial banks and other financial institutions. Furthermore, pursuant to the Guarantee and Credit Agreement between Ex-Im Bank and PEFCO, Ex-Im Bank guarantees the timely payment of interest on PEFCO’s Senior Secured Notes. Nearly all of PEFCO’s loans and securities are guaranteed by or are obligations of the US Government.
Moody’s utilizes a top-down approach in assigning ratings to PEFCO focusing the ratings’ assessment primarily upon the strength of the US government, since the level of integration between the issuer and the US government is so strong that a standalone credit analysis would provide little additional value. Moody’s rating approach for PEFCO is supported by PEFCO’s close and enduring alignment of interest and objectives with Ex-Im, with a clear mandate to carry out a set of public interest objectives.
Additionally, the Guarantee and Credit Agreement between Ex-Im and PEFCO contains covenants, which require Ex-Im approval for PEFCO to engage in certain activities including the issuance of senior debt and for PEFCO to report its financial results in a timely manner to Ex-Im. Ex-Im is also entitled to have two non-voting representatives at PEFCO’s Board of Directors meetings.
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
At Aaa/Prime-1, PEFCO’s ratings cannot be upgraded.
PEFCO’s ratings could be downgraded if Moody’s were to assess a weaker support for PEFCO from Ex-Im Bank, if PEFCO invests in any loans or securities that are not guaranteed by the US government, expands its currently strictly limited set of public interest functions, or its liquidity profile deteriorates. The Aaa long-terms ratings could also be downgraded following a downgrade of the rating for the US government.
PEFCO is a private corporation based in New York City, NY and is closely held by major, mostly US financial and industrial institutions. It is engaged in financing export loans guaranteed by Ex-Im Bank by raising funds in the capital markets. As of 31 March 2020, PEFCO had assets of approximately $5.1 billion and equity of approximately $126.8 million.
The principal methodology used in these ratings was Government-Related Issuers Methodology published in February 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1186207. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.
For further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody’s Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider’s credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.
The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.
These ratings are solicited. Please refer to Moody’s Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.
Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.
Moody’s general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.
The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s affiliates outside the EU and is endorsed by Moody’s Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody’s office that issued the credit rating is available on www.moodys.com.
Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody’s legal entity that has issued the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.
Gene Berman Asst Vice President - Analyst Financial Institutions Group Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Ana Arsov MD - Financial Institutions Financial Institutions Group JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Releasing Office: Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653
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