Moody's upgrades Coopeuch

Moody's Investors Service said it upgraded Coopeuch's long-term senior unsecured debt and deposit ratings to Baa1 from Baa2, and assigned a stable outlook.

Coopeuch's long-term counterparty risk ratings were upgraded to A3 from Baa1 and assessment to A3(cr) from Baa1(cr).

Moody's also affirmed Coopeuch's short-term deposit ratings and short-term counterparty risk ratings and assessment at prime-2 and prime-2(cr).

The upgrades conclude a review for possible upgrade that began in November 2018.

The outlook is stable.

The upgrades reflect a view that Coopeuch's risk governance and moderate risk appetite will allow the cooperative to maintain good asset quality, ample profitability and high capitalization, Moody's said.

While the cooperative faces inherent risks related to its consumer lending business to lower-income individuals, it benefits from a preferential claim on salaries relative to traditional banks for up to 25% of salaries, the agency said.

Coopeuch further limits these risks through a relevant focus on lending to civil servants, who enjoy job stability, Moody's added.

The upgrades also are supported by Coopeuch's solid capital base and strong profitability, the agency said.

But Coopeuch's ratings are constrained by the high correlation of its funding and asset risk due to its dependence on the same client base, Moody's said.

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