Deutsche Forfait (“DFAG”) announced last Friday that its auditor, BDO AG Wirtschaftsprüfungsgesellschaft, expressed an adverse audit opinion on DFAG’s 2013 financial statements. The announcement is line with Scope’s expectations, following the postponement of the annual report publication announced by Deutsche Forfait on 28 April 2014 and the continued listing on the black list of the US-American Office of Foreign Assets Control (“OFAC”).

The auditor’s adverse opinion is based on the uncertainty regarding the appropriateness of the accounts under the going concern assumption given that DFAG continues to be on the blacklist of the OFAC. This blacklisting significantly restricts DFAG’s operational activity. In due course, DFAG’s Supervisory Board will decide on the further procedure for the approval and the endorsement of DFAG’s financial statements for 2013.

Scope downgraded DFAG’s Corporate Issuer Credit Rating to CCC from B- on 21 July 2014. The CCC rating reflects the uncertainty regarding DFAG’s going concern assumptions, given the persisting cash burn rate caused by the restrictions on its operations. DFAG is pursuing its efforts to be removed from the OFAC blacklist so as to resume the business activities that involve forfaiting transactions denominated in US dollars or involve US companies, banks or US citizens. However, achieving this may take several more months and might not necessarily be successful. As a result, the CCC Corporate Issuer Credit Rating remains on review for a negative rating action in view of the doubts arising on the short and medium term impact of the OFAC blacklisting and the associated existential risks.

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Important information
Information pursuant to Regulation (EC) No 1060/2009 on credit rating agencies, as amended by Regulations (EU) No. 513/2011 and (EU) No. 462/2013

Responsibility
The party responsible for the dissemination of the financial analysis is Scope Ratings GmbH, Berlin, District Court for Berlin (Charlottenburg) HRB 145472, directors: Florian Schoeller.
The rating analysis has been prepared by Sebastian Zank, Lead Analyst
Responsible for approving the rating: Dr. Britta Holt, Committee Chair

Rating history
21.07.2014 CCC under review for possible downgrade
26.03.2014 B- under review for possible downgrade
14.02.2014 BB+ under review for possible downgrade
02.05.2013 BB+ outlook Positive

Information on interests and conflicts of interest
The rating was prepared independently by Scope Ratings but for a fee based on a mandate of the rated entity.

As at the time of the analysis, neither Scope Ratings GmbH nor companies affiliated with it hold any interests in the rated entity or in companies directly or indirectly affiliated to it. Likewise, neither the rated entity nor companies directly or indirectly affiliated with it hold any interests in Scope Ratings GmbH or any companies affiliated to it. Neither the rating agency, the rating analysts who participated in this rating, nor any other persons who participated in the provision of the rating and/or its approval hold, either directly or indirectly, any shares in the rated entity or in third parties affiliated to it. Notwithstanding this, it is permitted for the above-mentioned persons to hold interests through shares in diversified undertakings for collective investment, including managed funds such as pension funds or life insurance companies, pursuant to EU Rating Regulation (EC) No 1060/2009. Neither Scope Ratings nor companies affiliated with it are involved in the brokering or distribution of capital investment products. In principle, there is a possibility that family relationships may exist between the personnel of Scope Ratings and that of the rated entity. However, no persons for whom a conflict of interests could exist due to family relationships or other close relationships will participate in the preparation or approval of a rating.

Examination of the rating by the rated entity prior to publication
The rated entities have been given the opportunity to examine the rating action prior to publication. Following that examination, the rating was not modified.

Methodology
The methodology applicable for this rating (Corporate Rating Methodology published in March 2014) is available on www.scoperatings.com. The historical default rates of Scope Ratings can be viewed on the central platform (CEREP) of the European Securities and Markets Authority (ESMA): http://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml. A comprehensive clarification of Scope’s default rating, definitions of rating notations and further information on the analysis components of a rating can be found in the documents on methodologies on the rating agency’s website.
 
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