Corporacion Financiera de Desarrollo S.A. 'BBB+/A-2' Ratings Affirmed, Outlook Remains Stable

Peru-based development bank COFIDE has maintained its significant role in providing finance for domestic infrastructure projects and to small and medium enterprises (SMEs) in key sectors for the Peruvian government with ongoing capital support from the latter. Nevertheless, we see increasing credit risk due to the hold in construction of Peru's large infrastructure projects stemming from a corruption scandal involving construction firms, along with COFIDE's increasing risk concentration in the infrastructure lending segment, which could weaken its asset quality. We're affirming our 'BBB+/A-2' issuer credit ratings on COFIDE and lowering its stand-alone credit profile (SACP) to 'bbb-' from 'bbb'. As a result of the latter, we're lowering our subordinated debt rating to 'BB+' from 'BBB-'. The stable outlook reflects our

...+ Peru-based development bank COFIDE has maintained its significant role in providing finance for domestic infrastructure projects and to small and medium enterprises (SMEs) in key sectors for the Peruvian government with ongoing capital support from the latter. + Nevertheless, we see increasing credit risk due to the hold in construction of Peru's large infrastructure projects stemming from a corruption scandal involving construction firms, along with COFIDE's increasing risk concentration in the infrastructure lending segment, which could weaken its asset quality. + We're affirming our '###+/A-2' issuer credit ratings on COFIDE and lowering its stand-alone credit profile (SACP) to '###-' from '###'. As a result of the latter, we're lowering our subordinated debt rating to '##+' from '###-'. + The stable outlook reflects our view that the bank will maintain risk-adjusted capitalization levels slightly above 7% for the next two years and that lending should gradually rebound in the next...

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