Fitch rates Tanner notes BBB-

Fitch Ratings said it expects to assign a BBB- rating to Tanner Servicios Financieros SA’s upcoming $300 million senior unsecured fixed-rate notes.

The notes will mature in 2020 and carry a fixed annual interest, Fitch said.

The notes will initially be guaranteed on a senior unsecured basis by Tanner Leasing SA.

The notes will rank equally with other senior unsecured debt, the agency said.

But the notes will be effectively subordinated to all of the secured indebtedness and certain other obligations that are granted preferential treatment under Chilean law, such as labor and tax claims, Fitch said.

The notes also will be effectively subordinated to all indebtedness and other liabilities of the subsidiaries that do not guarantee the notes, the agency said.

The rating assigned to the new debt issuance is the same level as the company’s long-term issuer default rating, Fitch said.

The ratings reflect the company’s consistent performance throughout the economic cycles characterized by an adequate profitability relative to its business niche, adequate albeit deteriorating portfolio quality and sound management of its wholesale funding, the agency said.

The ratings also consider the challenges associated with its relative smaller size and its higher business concentration when compared to other financial institutions of a universal nature, Fitch said.

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