Credit Opinion: Banque Fédérative du Crédit Mutuel

Transcription

1 Credit Opinion: Banque Fédérative du Crédit Mutuel Global Credit Research - 24 Jul 2013 Strasbourg, France Ratings Category Moody's Rating Outlook Negative(m) Bank Deposits Aa3/P-1 Bank Financial Strength C- Baseline Credit Assessment (baa2) Adjusted Baseline Credit Assessment (a3) Senior Unsecured -Fgn Curr Senior Unsecured -Dom Curr Aa3 Aa3 Subordinate -Dom Curr Baa1 Pref. Stock Non-cumulative -Dom Curr Commercial Paper -Dom Curr Baa3 (hyb) P-1 Other Short Term -Dom Curr (P)P-1 Banque Europeenne du Credit Mutuel Outlook Negative Bkd Bank Deposits Aa3/P-1 Credit Industriel et Commercial Outlook Negative(m) Bank Deposits Bank Financial Strength Aa3/P-1 C- Baseline Credit Assessment (baa2) Adjusted Baseline Credit Assessment Senior Unsecured -Dom Curr (a3) Aa3 Subordinate -Dom Curr Other Short Term Baa1 (P)P-1 Contacts Analyst Phone Stephane Herndl/Paris Guillaume Lucien-Baugas/Paris Carola Schuler/Frankfurt am Main Guillaume Leglise/Paris Key Indicators Banque Federative du Credit Mutuel (Consolidated Financials)[1] [2]12-12 [2]12-11 [2]12-10 [2]12-09 [2]12-08 Avg. Total Assets (EUR million) 397, , , , ,281.0 [3]-1.6 Total Assets (USD million) 523, , , , ,770.6 [3]-2.9 Tangible Common Equity (EUR million) 8, , , , ,849.0[3]14.1 Tangible Common Equity (USD million) 10, , , , ,740.3[3]12.6 Net Interest Margin (%) [4]1.0 PPI / Average RWA (%) [5]1.8 Net Income / Average RWA (%) [5]0.8 (Market Funds - Liquid Assets) / Total Assets (%) [4]4.7 Core Deposits / Average Gross Loans (%) [4]71.2 Tier 1 Ratio (%) [5]12.0

2 Tangible Common Equity / RWA (%) [5]4.2 Cost / Income Ratio (%) [4]68.8 Problem Loans / Gross Loans (%) [4]5.3 Problem Loans / (Equity + Loan Loss Reserves) (%) [4]52.1 Source: Moody's [1] All figures and ratios are adjusted using Moody's standard adjustments [2] Basel II; IFRS [3] Compound Annual Growth Rate based on IFRS reporting periods [4] IFRS reporting periods have been used for average calculation [5] Basel II & IFRS reporting periods have been used for average calculation Opinion SUMMARY RATING RATIONALE We rate the long-term senior unsecured and deposit ratings of Banque Federative du Credit Mutuel (BFCM) Aa3 with a negative outlook. BFCM is the refinancing vehicle and holding company of non-cooperative entities of the CM11-CIC group, which itself is part of the Credit Mutuel Group. These ratings are underpinned by the institution's sound standalone financial strength (reflected by a standalone baseline credit assessment (BCA) of baa2, with a stable outlook). They are also underpinned by our assessment of the very high probability of support from the Groupe Credit Mutuel and expected systemic support in case of need, which result in two and three notches of uplift, respectively. The bank's baa2 BCA reflects the strong retail franchise of BFCM's subsidiaries (Credit Industriel et Commercial - - CIC; Aa3 deposit rating, negative; C-/baa2 stable and Groupe des Assurances du Credit Mutuel, GACM unrated) which results in resilient and predictable earnings. It also incorporates the institution's low risk profile, strong loss absorption capacity and high reliance on market funding. Rating Drivers - We expect that BFCM's solid domestic activities will continue to generate resilient earnings, although profitability is likely to remain under pressure in the current environment - BFCM has a low risk profile, despite our expectation of an increase in cost of risk on domestic exposures and material exposure to the Italian government. - The CM11-CIC group's high capital adequacy results in a solid loss absorption capacity - High reliance on wholesale funding exposes the bank to a loss in investor confidence, despite significant improvements in the funding structure and liquidity buffer composition - While not a cooperative member of the Credit Mutuel group, we expect BFCM to benefit from a very high probability of support from Credit Mutuel group, because of its central role within the CM11-CIC group Rating Outlook The outlook on the standalone BFSR is stable, reflecting (1) the relatively resilient domestic operating environment which result in predictable earnings, (2) its moderate risk profile, and (3) the CM11-CIC group's sound capitalisation. BFCM 's long-term deposit and debt ratings carry a negative outlook, reflecting our view that if France's financial strength deteriorates further, the benefit to the banks' senior unsecured creditors - from potential systemic support to the Credit Mutuel group - may diminish. As such, the outlook reflects the negative outlook on the sovereign rating. What Could Change the Rating - Up A continued reduction of wholesale funding needs and an improvement of the size and quality of the liquidity buffer, coupled with a reduction of the concentration on single large exposures, could be positive for the institution's standalone BCA. An upgrade of the bank's long-term ratings is unlikely in the near term, given the current negative outlook.

3 What Could Change the Rating - Down The main factors that would exert pressure on the bank's standalone BCA include (1) a material weakening of the bank's profitability, chiefly as a result of asset-quality deterioration or an increase in the cost of funding beyond our current expectation; (2) a significant deterioration in the performance of its loan portfolio, chiefly the French housing, SME and consumer markets; or (3) a weakening liquidity position or funding profile. BFCM's long-term creditworthiness could be negatively affected by (1) lower systemic support for the Credit Mutuel group, notably in the event that the creditworthiness of the government of France deteriorates further; or (2) a deterioration of BFCM's BCA, the CM11-CIC group or of the Credit Mutuel group. DETAILED RATING CONSIDERATIONS WE EXPECT THAT BFCM'S SOLID DOMESTIC ACTIVITIES WILL CONTINUE TO GENERATE RESILIENT EARNINGS, ALTHOUGH PROFITABILITY IS LIKELY TO REMAIN UNDER PRESSURE IN THE CURRENT ENVIRONMENT The BFCM group's strong domestic retail-oriented franchise as well as that of the CM11-CIC group (*) is credit positive as it enables the institution to deliver resilient earnings. However, the economic environment remains challenging and will constrain BFCM's profitability in the short to medium term. BFCM does not pursue any commercial activity on its own. Instead, its franchise is made up of that of its subsidiaries, chiefly CIC and its insurance business GACM. CIC has a solid franchise in the domestic retail, SME and corporate sectors and has market shares of approximately 7% for both domestic home loans and deposits. CIC's insurance arm also has a strong franchise, and has a leading position in non-life and life insurance, domestically. Retail banking and insurance activities account for the vast majority of the BFCM group's net profit and provide the group with predictable earnings through the cycle. In recent years the bank expanded into the European consumer credit market and the Spanish retail market through acquisitions (e.g., Targobank Germany and Spain and Cofidis). We expect that these acquisitions will be positive in terms of geographical and business diversification in the long term, although they will likely result in short-term earnings volatility, because of their exposure to stressed economies (e.g. Spain) or loan exposures (e.g. consumer loans). CM11-CIC group's profitability is modest in our view, reflecting its moderate risk profile, which is geared toward retail banking and insurance activities. On a risk-weighted basis, pre-provision income to risk-weighted assets was up at 2.6% in 2012, from 2.2% in 2011, mainly driven by the growth of insurance activities. Although relatively stable, retail activities suffered from increasing cost of funding, as illustrated by the drop of net interest margin to 1.1% in 2012 from 1.4% in Nevertheless, with a net income group share of EUR1.6 billion in 2012, the group's bottom line profitability remains relatively resilient and predictable (EUR1.6 billion in 2011 and EUR1.9 billion in 2010). Although resilient, we expect that the profits from BFCM's banking activities will remain under pressure reflecting (1) the higher cost of wholesale funding for financial institutions - although this is offset by the absence of any significant competition on domestic deposits; and (2) the potential rise in cost of risk, especially in the SME segment, as a result of the weakening domestic economy. In parallel, the weak performance of stock markets and uncertainty on fiscal regimes of French life insurance contracts will continue to weigh on the profitability of the bank's insurance division. However, we note that the CM11-CIC group has developed alternative services (e.g., mobile phones, home telemonitoring), which are sold through its banking networks. While still marginal, these activities provide BFCM with alternative earnings sources and contribute to its cost efficiency (reflected in a cost-to-income ratio of 63% at end-2012). At the group level, CM11-CIC's efficiency is comparable to that of its domestic peers despite its large retail network (cost-to-income ratio of 64% at end-2012), reflecting the centralised and highly integrated systems in place at the group. Over the longer term, we expect that efficiency will further improve as the group continues its expansion and leverages existing systems. (*) BFCM is part of the CM11-CIC group, one of the main French bancassurance groups with market share of approximately 13% and 14% in domestic housing loans and deposits, respectively (our own estimates). In turn, CM11-CIC is a sub-group of Crédit Mutuel group, the third largest domestic retail banking group by outstanding home loans and deposit balances. For more details on the CM11-CIC group structure, business activities and market shares, please refer to our Credit Analysis on BFCM, published in December 2011.

4 BFCM HAS AN ADEQUATE RISK PROFILE, DESPITE OUR EXPECTATION OF AN INCREASE IN COST OF RISK ON DOMESTIC EXPOSURES AND SOME CONCENTRATION ON ITALIAN GOVERNMENT BONDS BFCM's risk profile is characterized by its large exposure to the domestic residential market (39% of gross loans in 2012). We expect that this portfolio will continue to incur low default rates because of (1) the highly supportive social safety net; (2) the cap imposed on debt to income gearing; and (3) the limited proportion of variable rate mortgages. However, the plunge in the new loan origination, lowered number of transactions and stagnating property prices are indicative of a slowdown. This slowdown, if persistent, could increase the loss severity on defaulted loans, especially for most recent vintages, where there has been limited amortisation to date. Although BFCM's cost of risk remains low (52 bps of gross loans reported in 2012), it has the potential to rise on loans to SMEs, which are particularly vulnerable to the current downturn. In addition, we expect asset quality on consumer loans - which account for 14% of BFCM's loan book - will remain weak in the foreseeable future as a result of the weak environment and the recent implementation of more stringent domestic regulations. In 2012, the cost of risk for Cofidis was 392 basis points of gross loans. As refinancing vehicle of the CM11-CIC group, BFCM has large interbank and government bond exposures. This, together with the financial markets activities of BFCM's subsidiary CIC, result in a high concentration on a limited number of counterparties. However, given BFCM's high integration within the CM11-CIC group and its role of refinancing vehicle, it is more appropriate to consider concentration at the level of CM11-CIC, which we view as adequate. BFCM is also exposed to GIIPS government bonds and economies (mostly to private individuals and corporates). In 2012, the CM11-CIC group had a single exposure to Italian government bonds amounting to EUR3.5 billion, most of which booked on CIC balance sheet. While this exposure does not currently constrain BFCM's standalone creditworthiness, it may do so in the future, in the event of any further deterioration of Italy's creditworthiness. THE CM11-CIC GROUP'S HIGH CAPITAL ADEQUACY RESULTS IN A SOLID LOSS ABSORPTION CAPACITY Given the high level of integration between BFCM and CM11-CIC, the French regulator focuses on CM11-CIC's consolidated capital adequacy levels and hence, BFCM is not required to comply with a capital adequacy ratio. The CM11-CIC group has sound capital adequacy, as reflected by its Core Tier 1 ratio of 14.1% in This provides the institution with strong buffers to absorb potential credit losses on the bank's exposures under our central scenario. However, a sharper deterioration of the macroeconomic outlook in France or the other economies to which BFCM is exposed (Spain and Italy) would have a more pronounced impact on the bank's stressed capital levels and potentially, on its intrinsic creditworthiness. In recent years, the group's capital adequacy has materially improved, notably through the issuance of cooperative shares, which we view as high quality capital and which qualify as Core Capital under EU regulation (Capital Requirement Regulation). The capital ratios have also improved as a result of the transition to the Internal Rating Based approach on the corporate loan portfolio, which had a positive impact estimated at 80 basis points. HIGH RELIANCE ON WHOLESALE FUNDING EXPOSES THE BANK TO A LOSS OF INVESTOR CONFIDENCE, DESPITE SIGNIFICANT IMPROVEMENTS IN THE FUNDING STRUCTURE AND LIQUIDITY BUFFER COMPOSITION Our analysis focuses on the liquidity and funding of CM11-CIC's banking activities, which are managed centrally by BFCM for the whole group. Despite significantly improvements in its funding mix, the CM11-CIC group remains largely reliant on wholesale funding and hence exposed to a loss of investor confidence. Historically, CM11-CIC has only financed part of its loan portfolio through deposits. As is the case with other French banking groups, CM11-CIC was able to attract a higher proportion of customers' savings, but these were collected as off-balance sheet life insurance policies. CM11-CIC's loan-to-deposit ratio peaked at 173% at end- March 2009, following the acquisition of Cofidis but has since dramatically declined (end-2012: 126%), reflecting efforts to re-intermediate off-balance sheet customers' savings, and the introduction of a group policy requiring loan growth to be matched by new deposits. In April 2013, market funds for CM11-CIC totalled EUR95 billion (excluding repos). While this figure has declined

5 only modestly in recent years, since 2009 the reliance on short-term wholesale funding has materially reduced, and now accounts for 29% of wholesale funding (excluding repos), down from more than 60% in In addition, in April 2013, the group only had a limited amount of medium- to long-term debt maturing in the next 12 months (EUR13.4 billion), around half of which had already been raised in the same period, thereby reducing liquidity risk in case of sudden market disruption. We also consider the bank's limited foreign-currency long-term and shortterm wholesale funding (5% at end-2012) to be credit positive. ECB-eligible assets reported by the group in April 2013 amounted to EUR56.6 billion, equivalent to 133% of the sum of short- and medium-term funding maturing by April However, the publicly reported liquidity buffer includes a large portion of private loans which could be used for future covered bond issuances or securitisations. These loans are excluded from our own analysis as we believe new issuances of secured funding may take time and its benefits for liquidity depends on the haircuts applied by the central bank. The liquidity buffer also comprises loans to the corporate sector or own securitised assets, both repo-able at the central bank, but which cannot be sold on a private market, or could be sold only with a significant discount. We therefore view the quality of the liquidity buffer as weaker than if it were made up of highly liquid and high-quality bonds. Based on our analysis, in the event of a severe market disruption, the CM11-CIC group would have to resort to a moderate reduction in its loan production, which would likely be detrimental to its franchise. This, together with the size and quality of the liquidity buffer, represents the primary driver for our analysis of the bank's high exposure to loss of investor confidence. NOTE ON DATA Unless noted otherwise, data in this report is sourced from company reports and out Banking Financial Metrics. All figures are based on our own chart of account, and are adjusted for analytical purposed. Please refer to the document entitled "Moody's Approach to Global Standard Adjustments in the Analysis of the Financial Statements of Banks, Securities Firms and Finance Companies" and "Frequently Asked Questions: Moody's Approach to Global Standard Adjustments in the Analysis of the Financial Statements of Banks, Securities Firms and Finance Companies", both published on 19 July Global Local Currency Deposit Rating (Joint Default Analysis) BFCM's senior debt and deposit ratings are of Aa3, negative/prime-1. Although BFCM does not fall under the legal scope of the Credit Mutuel group's solidarity mechanisms, BFCM is fully integrated within CM11-CIC both strategically and operationally, and fulfils a key role as (1) liquidity provider to the group members; and (2) the holding company for the group's specialised subsidiaries. We therefore consider that a stress situation affecting BFCM would likely exert negative pressure onto the credit strength of the CM11-CIC group and by extension to the Credit Mutuel group. Hence, our ratings incorporate a very high probability of support from the CM11-CIC group and, in turn, from Confédération Nationale du Crédit Mutuel (CNCM), the central body of the Crédit Mutuel group. We also assess the probability of systemic support to be very high for the Crédit Mutuel group, given its very large domestic retail and SME market shares and its importance to the local systems of payment. This results in a five-notch uplift from BFCM's standalone BFSR (two notches from group support and three notches from systemic support). For more details on the structure of the CM11-CIC group and its relationship with the wider Crédit Mutuel group, please refer to our Credit Analysis on BFCM and CM10-CIC, published December 2011 on Notching Considerations BFCM's dated subordinated debt instruments are rated Baa1 stable, one notch below the adjusted BCA of a3. BFCM's undated deeply subordinated instruments are rated Baa3 (hyb) stable, three notches below its adjusted BCA, reflecting (1) their deeply subordinated liquidation claim; (2) the option to skip coupon payments on a noncumulative basis; and (3) the mandatory coupon skip mechanism in case of a breach of minimum regulatory capital requirements. Foreign Currency Deposit Rating BFCM's long- and short-term foreign currency deposit ratings are Aa3, negative/prime-1.

6 Foreign Currency Debt Rating BFCM's long- and short-term foreign currency debt ratings are Aa3, negative/prime-1. ABOUT MOODY'S BANK RATINGS Bank Financial Strength Rating Moody's Bank Financial Strength Ratings (BFSRs) represent Moody's opinion of a bank's intrinsic safety and soundness and, as such, exclude certain external credit risks and credit support elements that are addressed by Moody's Bank Deposit Ratings. Bank Financial Strength Ratings do not take into account the probability that the bank will receive such external support, nor do they address risks arising from sovereign actions that may interfere with a bank's ability to honor its domestic or foreign currency obligations. Factors considered in the assignment of Bank Financial Strength Ratings include bank-specific elements such as financial fundamentals, franchise value, and business and asset diversification. Although Bank Financial Strength Ratings exclude the external factors specified above, they do take into account other risk factors in the bank's operating environment, including the strength and prospective performance of the economy, as well as the structure and relative fragility of the financial system, and the quality of banking regulation and supervision. Moody's uses the Baseline Credit Assessment (BCA) to map BFSRs onto the 21-point Aaa-C rating scale and like the BFSR, it reflects a bank stand- alone default risk. Each point on the Aaa-C scale represents a specific probability of default and therefore allows Moody's to use the BCA as an input to Moody's Joint Default Analysis (JDA), described below. The baseline credit assessment reflects what the local currency deposit rating of the bank with the given BFSR would be without any assumed external support from a government or third party Global Local Currency Deposit Rating A deposit rating, as an opinion of relative credit risk, incorporates the Bank Financial Strength Rating as well as Moody's opinion of any external support. Specifically, Moody's Bank Deposit Ratings are opinions of a bank's ability to repay punctually its deposit obligations. As such, Moody's Bank Deposit Ratings are intended to incorporate those aspects of credit risk relevant to the prospective payment performance of rated banks with respect to deposit obligations, and includes: intrinsic financial strength, sovereign transfer risk (in the case of foreign currency deposit ratings), and both implicit and explicit external support elements. Moody's Bank Deposit Ratings do not take into account the benefit of deposit insurance schemes which make payments to depositors, but they do recognize the potential support from schemes that may provide assistance to banks directly. According to Moody's joint default analysis (JDA) methodology, the global local currency deposit rating of a bank is determined by the incorporation of any external elements of support into the bank's Baseline Credit Assessment. In assigning the local currency deposit rating to a bank, the JDA methodology also factors in the rating of the various potential support providers (parent company, cooperative group, regional or national governments), as well as the degree of dependence that may exist between each one of them and the bank. Moody's assessment of the probability of systemic support (by a national government) is derived from the analysis of the capacity of a government and its central bank to provide support on a system-wide basis. The systemic support indicator is determined for a particular country and serves as an input for all bank ratings in that country. The support indicator can be set at, above or, in rare cases, below the government's local currency bond rating for that country. National Scale Rating National scale ratings are intended primarily for use by domestic investors and are not comparable to Moody's globally applicable ratings; rather they address relative credit risk within a given country. A Aaa rating on Moody's National Scale indicates an issuer or issue with the strongest creditworthiness and the lowest likelihood of credit loss relative to other domestic issuers. National Scale Ratings, therefore, rank domestic issuers relative to each other and not relative to absolute default risks. National ratings isolate systemic risks; they do not address loss expectation associated with systemic events that could affect all issuers, even those that receive the highest ratings on the National Scale. Foreign Currency Deposit Rating Moody's ratings on foreign currency bank obligations derive from the bank's local currency rating for the same class of obligation. The implementation of JDA for banks can lead to high local currency ratings for certain banks, which could also produce high foreign currency ratings. Nevertheless, it should be noted that foreign currency deposit ratings are in all cases constrained by the country ceiling for foreign currency bank deposits. This may

7 deposit ratings are in all cases constrained by the country ceiling for foreign currency bank deposits. This may result in the assignment of a different, and typically lower, rating for the foreign currency deposits relative to the bank's rating for local currency obligations. Foreign Currency Debt Rating Foreign currency debt ratings are derived from the bank's local currency debt rating. In a similar way to foreign currency deposit ratings, foreign currency debt ratings may also be constrained by the country ceiling for foreign currency bonds and notes; however, in some cases the ratings on foreign currency debt obligations may be allowed to pierce the foreign currency ceiling. A particular mix of rating factors are taken into consideration in order to assess whether a foreign currency bond rating pierces the country ceiling. They include the issuer's global local currency rating, the foreign currency government bond rating, the country ceiling for bonds and the debt's eligibility to pierce that ceiling. About Moody's bank financial strength scorecard Moody's bank financial strength model (see scorecard below) is a strategic input in the assessment of the financial strength of a bank, used as a key tool by Moody's analysts to ensure consistency of approach across banks and regions. The model output and the individual scores are discussed in rating committees and may be adjusted up or down to reflect conditions specific to each rated entity. Rating Factors Banque Federative du Credit Mutuel Rating Factors [1] A B C D E Total Score Trend Qualitative Factors (50%) C Factor: Franchise Value C Neutral Market share and sustainability x Geographical diversification x Earnings stability x Earnings Diversification [2] Factor: Risk Positioning D Neutral Corporate Governance [2] - Ownership and Organizational Complexity - Key Man Risk - Insider and Related-Party Risks Controls and Risk Management x - Risk Management x - Controls x Financial Reporting Transparency x - Global Comparability x - Frequency and Timeliness x - Quality of Financial Information x Credit Risk Concentration x - Borrower Concentration x - Industry Concentration x Liquidity Management x Market Risk Appetite x Factor: Operating Environment B- Weakening Economic Stability x Integrity and Corruption x Legal System x Financial Factors (50%) D+ Factor: Profitability D+ Neutral PPI % Average RWA (Basel II) 1.77%

8 Net Income % Average RWA (Basel II) 0.76% Factor: Liquidity D+ Neutral (Market Funds - Liquid Assets) % Total Assets 3.56% Liquidity Management x Factor: Capital Adequacy B Neutral Tier 1 Ratio (%) (Basel II) 11.97% Tangible Common Equity % RWA (Basel II) 4.24% Factor: Efficiency C Neutral Cost / Income Ratio 61.04% Factor: Asset Quality E+ Neutral Problem Loans % Gross Loans 5.53% Problem Loans % (Equity + LLR) 51.00% Lowest Combined Financial Factor Score (15%) E+ Economic Insolvency Override Neutral Aggregate BFSR Score C- Aggregate BCA Score baa1/baa2 Assigned BFSR C- Assigned BCA baa2 [1] - Where dashes are shown for a particular factor (or sub-factor), the score is based on non-public information. [2] - A blank score under Earnings Diversification or Corporate Governance indicates the risk is neutral Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved. CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. ("MIS") AND ITS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND CREDIT RATINGS AND RESEARCH PUBLICATIONS PUBLISHED BY MOODY'S ("MOODY'S PUBLICATIONS") MAY INCLUDE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY'S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY'S OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS AND MOODY'S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY'S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY'S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY'S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

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