Rating action

Scope Ratings GmbH (Scope) has today downgraded its issuer ratings on Crédit Foncier de France (CFF) and its covered bond issuing subsidiary, Compagnie de Financement Foncier (CoFF), to A+ from AA-. The Outlooks were revised to Stable from Negative.

The AAA debt ratings with a Stable Outlook on the covered bonds issued by CoFF are unaffected.

Rating rationale

The ratings of CFF and its wholly owned subsidiary CoFF reflect the credit quality of CFF’s parent, BPCE S.A. CFF and CoFF have the status of affiliates within Groupe BPCE and therefore benefit from the intra-group solidarity mechanism under French law.

The A+ issuer ratings on CFF and CoFF reflect the following credit considerations:

• CFF and CoFF benefit from the strong internal solidarity system within Groupe BPCE. Any change in the credit quality of BPCE S.A., the central body of Groupe BPCE, entails a similar rating impact for CFF and CoFF. In Scope’s opinion, the strength of intra-group support is ultimately sensitive to the group’s ability to improve its structural efficiency.
   
• CFF’s and CoFF’s importance to Groupe BPCE is likely to decrease over time following the redeployment of some Crédit Foncier activities across Groupe BPCE. However, CoFF continues to operate as a refinancing tool for the group and remains a strategically important issuer of covered bonds for the group.
   
• Risk management is fully aligned with Groupe BPCE’s framework, allowing creditors of CFF and CoFF to benefit from the group’s strong risk control culture.

Outlook and rating-change drivers

The Outlook is Stable, reflecting Scope’s view that CFF will retain its strategic importance for the group’s funding strategy and its access to the intra-group solidarity mechanisms.

Scope would downgrade the rating in case of:

• A weakening of CFF’s and CoFF’s strategic importance
   
• A downgrade of BPCE S.A.’s issuer rating

Scope would upgrade the rating in case of:

• An upgrade of BPCE S.A.’s issuer rating

Overview of the rating construct

Operating environment: not applicable

Business model: not applicable

Initial mapping refinement: not applicable

Initial mapping: not applicable

Long-term sustainability: not applicable

Adjusted anchor: not applicable

Earnings capacity and risk exposures: not applicable

Financial viability management: not applicable

Additional rating factors: not applicable

Standalone assessment: not applicable

External support: ratings aligned with the parent

Issuer rating: A+

Stress testing & cash flow analysis
No stress testing was performed. No cash flow analysis was performed.

Methodology
The methodology used for these Credit Ratings and Outlooks (Bank Rating Methodology, 26 January 2021) is available on https://www.scoperatings.com/#!methodology/list.
Scope Ratings GmbH and Scope Ratings UK Limited apply the same methodologies/models and key rating assumptions for their credit rating services, while Scope Hamburg GmbH’s methodologies/models and key rating assumptions are different from those of Scope Ratings GmbH and Scope Ratings UK Limited.
Information on the meaning of each Credit Rating category, including definitions of default, recoveries, Outlooks and Under Review, can be viewed in ‘Rating Definitions – Credit Ratings, Ancillary and Other Services’, published on https://www.scoperatings.com/#!governance-and-policies/rating-scale. Historical default rates of the entities rated by Scope Ratings can be viewed in the Credit Rating performance report at https://www.scoperatings.com/#governance-and-policies/regulatory-ESMA. Also refer to 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 Ratings’ definitions of default and Credit Rating notations can be found at https://www.scoperatings.com/#governance-and-policies/rating-scale. Guidance and information on how environmental, social or governance factors (ESG factors) are incorporated into the Credit Rating can be found in the respective sections of the methodologies or guidance documents provided on https://www.scoperatings.com/#!methodology/list.
The Outlook indicates the most likely direction of the Credit Ratings if the Credit Ratings were to change within the next 12 to 18 months.

Solicitation, key sources and quality of information
The Rated Entity and/or its Related Third Parties participated in the Credit Rating process.
The following substantially material sources of information were used to prepare the Credit Ratings: public domain, the Rated Entity, and Scope Ratings’ internal sources.
Scope Ratings considers the quality of information available to Scope Ratings on the Rated Entity or instrument to be satisfactory. The information and data supporting these Credit Ratings originate from sources Scope Ratings considers to be reliable and accurate. Scope Ratings does not, however, independently verify the reliability and accuracy of the information and data. Prior to the issuance of the Credit Rating action, the Rated Entity was given the opportunity to review the Credit Ratings and Outlooks and the principal grounds on which the Credit Ratings and Outlooks are based. Following that review, the Credit Ratings were not amended before being issued.

Regulatory disclosures
These Credit Ratings and Outlooks are issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. The Credit Ratings and Outlooks are UK-endorsed.
Lead analyst: Nicolas Hardy, Executive Director
Person responsible for approval of the Credit Ratings: Dierk Brandenburg, Managing Director
Crédit Foncier de France and Compagnie de Financement Foncier’s issuer Credit Ratings/Outlooks were first released by Scope on 7 February 2017. The Credit Ratings/Outlooks were last updated on 7 December 2020.

Potential conflicts
See www.scoperatings.com under Governance & Policies/EU Regulation/Disclosures for a list of potential conflicts of interest related to the issuance of Credit Ratings.

Conditions of use / exclusion of liability
© 2021 Scope SE & Co. KGaA and all its subsidiaries including Scope Ratings GmbH, Scope Ratings UK Limited, Scope Analysis GmbH, Scope Investor Services GmbH, and Scope ESG Analysis GmbH (collectively, Scope). All rights reserved. The information and data supporting Scope’s ratings, rating reports, rating opinions and related research and credit opinions originate from sources Scope considers to be reliable and accurate. Scope does not, however, independently verify the reliability and accuracy of the information and data. Scope’s ratings, rating reports, rating opinions, or related research and credit opinions are provided ‘as is’ without any representation or warranty of any kind. In no circumstance shall Scope or its directors, officers, employees and other representatives be liable to any party for any direct, indirect, incidental or other damages, expenses of any kind, or losses arising from any use of Scope’s ratings, rating reports, rating opinions, related research or credit opinions. Ratings and other related credit opinions issued by Scope are, and have to be viewed by any party as, opinions on relative credit risk and not a statement of fact or recommendation to purchase, hold or sell securities. Past performance does not necessarily predict future results. Any report issued by Scope is not a prospectus or similar document related to a debt security or issuing entity. Scope issues credit ratings and related research and opinions with the understanding and expectation that parties using them will assess independently the suitability of each security for investment or transaction purposes. Scope’s credit ratings address relative credit risk, they do not address other risks such as market, liquidity, legal, or volatility. The information and data included herein is protected by copyright and other laws. To reproduce, transmit, transfer, disseminate, translate, resell, or store for subsequent use for any such purpose the information and data contained herein, contact Scope Ratings GmbH at Lennéstraße 5 D-10785 Berlin.