Research Update: RCI Banque Outlook Revised To Negative Following Similar Action On Parent; 'BBB/A-2' Ratings Affirmed

On Feb. 20, 2019, we revised our outlook on Renault S.A. to negative from stable due to headwinds in the automotive industry and company specific problems that could slow its operating profit generation. We consider RCI Banque (RCI) to be a core subsidiary of its 100% parent Renault, and currently incorporate one notch of uplift for potential extraordinary group support into our rating on RCI. However, because we consider RCI as insulated from Renault, its issuer credit rating could remain above that of the parent if the strength of its stand-alone credit profile further insulated it from any distress at the parent company level. We are revising the outlook on RCI to negative from stable and affirming the 'BBB/A-2' ratings

...+ On Feb. 20, 2019, we revised our outlook on Renault S.A. to negative from stable due to headwinds in the automotive industry and company specific problems that could slow its operating profit generation. + We consider RCI Banque (RCI) to be a core subsidiary of its 100% parent Renault, and currently incorporate one notch of uplift for potential extraordinary group support into our rating on RCI. + However, because we consider RCI as insulated from Renault, its issuer credit rating could remain above that of the parent if the strength of its stand-alone credit profile further insulated it from any distress at the parent company level. + We are revising the outlook on RCI to negative from stable and affirming the '###/A-2' ratings on the bank. + The negative outlook primarily reflects that on Renault, but also our view that the strategic and governance challenges facing the Renault group could also have a negative effect on RCI's captive finance business....

Research Update