Moody's rates Hipotecaria Su Casita note B3

Moody's Investors Service said it assigned a Ba3 rating to Mexico-based Hipotecaria Su Casita, SA de CV Sofol's proposed $150 million 10-year senior notes, being issued in the United States. Moody's also assigned a Ba3 global local-currency corporate family rating to the company and affirmed its A3.mx national scale issuer rating and Ba3 global local-currency issuer rating.

The notes will be callable after five years and will rank pari passu with other unsecured debt. The notes have various covenants including limitations on the incurrence of additional debt, guarantees and restricted payments. The company will hedge against foreign exchange risk. The agency said most of the proceeds will be used to fund the origination of new mortgages, thus providing Su Casita with funding diversification benefits.

The ratings reflect Su Casita's strong competitive position and low operating costs, good profitability and experienced management, Moody's said. The company is the largest mortgage Sofol in Mexico, controlling 23% of the market based on total loan portfolio, and has a diversified shareholder group with the most independent board among its peers.

The agency said these strengths are attenuated by the fact that the company historically has relied heavily on Sociedad Hipotecaria Federal for funding and is subject to regulatory and political changes.

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