Fitch Rates Grupo de Inversiones Suramericana’s IDRs ‘BBB-‘

BOGOTA, Columbia--(BUSINESS WIRE)-- Fitch Ratings has assigned 'BBB-' foreign and local currency Issuer Default Ratings (IDRs) to Grupo de Inversiones Suramericana S.A (GIS). The Rating Outlook is Stable.

The ratings of GIS are supported by the credit profile of its investments, the adequate diversification of its portfolio and the significant role of GIS in the results and dividend policy of its main investments. These elements have a fundamental influence on the divided income received by GIS that is expected to maintain a positive and robust behavior. Fitch also considered the consistent and successful corporate strategy, GIS' current and projected low leverage levels and strong credit protection metrics, as well as its diversified and reliable liquidity sources.

Diversified Portfolio, with high Quality Assets and Robust Performance:

GIS' portfolio of investments presents high quality assets and solid diversification. The companies included in this portfolio have historically sound and consistent financial performance, wide experience in their business and strong competitive positions in Colombia as well as in the regional markets where they have presence. Investments in sectors such as banking, insurance, energy, cement and concrete, processed food and pension funds, amongst others, allow GIS' portfolio an adequate degree of diversification. These characteristics have allowed for a robust and growing flow of incoming dividends available to meet its financial obligations. GIS' rating is closely linked to the credit profile of the most representative companies which generate the dividends received by this industrial investment holding company.

Active Participation in Strategic Direction and Dividend Policy of its Main Investments:

GIS plays an active role in the strategic management of its primary investments, as well as in the determination of their dividend policies. As one of the three pillars of the 'Grupo Empresarial Antioqueno' (GEA), GIS is a significant part of one of Colombia's most important industrial conglomerates. The member companies are among the controlling shareholders of the leading companies whose dividend flows have historically provided GIS with solid financial flexibility. Together with the other two pillars (Grupo Nacional de Chocolates and Inversiones Argos), GIS has significant influence over the results and dividend policy of the companies that comprise its portfolio. This has a consequence over the behavior of the dividend flow received. This active participation in the management of the conglomerate's companies and their financial practices, together with the quality, diversification and high liquidity its investments mitigates the structural subordination holding companies are often subject of.

Consistent Corporate Results:

A qualified and experienced management team, a consistent corporate strategy and prudent financial policies have played an important role in GIS' successful results. GIS applies strong corporate governance standards, following polices and principles shown throughout the most important companies of GEA. The group has for some years followed a strategy of broader participation in markets beyond Colombia, while seeking to work to international standards in terms of corporate governance.

During recent years, GIS has continued to present robust financial results, evidenced by the positive behavior of the dividend income (CAGR 2007-2010 15 %), net income (CAGR 2007-2010 40%) and dividends paid (CAGR 2007-2010 16 %). The high demand for GIS' stock on the local market, the positive trend of its price during the last years and the participation of international funds as shareholders of the company show an important degree of confidence in GIS' future performance.

Low Leverage and Strong Debt Protection Metrics:

GIS presents low leverage levels and comfortable debt protection metrics. Indicators such as the Total Debt/EBITDA of less than 1 time (x) and EBITDA/Interest expense above 10x illustrate GIS's financial flexibility and ability to meet its financial obligations. Cash flow metrics such as Total Debt / Dividend Income of around 1x and Dividend Income/Interest Expenses above 6x further demonstrate the company's low leverage and capacity to meet it s its debt service obligations without important liquidity pressures. It is likely that GIS will increase its debt to finance current expansion strategy. However, Fitch expects that leverage and credit protection measures should remain in line with the rating assigned and not exceed a peak 2.5 to 3.0x Total Debt/Dividend Income.

Alternative Liquidity Sources are Reliable, Sizable and Diversified:

Besides its own cash generation, GIS has reliable, robust and diversified sources of liquidity that provide additional support to the current and future financial obligations. GIS has wide access to non committed credit facilities from local and foreign financial institutions (currently for up to $1.3 trillion/US$854 million). GIS also has the ability to raise important resources through repo operations and trading of its portfolio of investments, currently valued at more than US$10 billion. In addition, GIS has a long track record in the local debt and stock market. Given this and the important demand showed for both GIS' debt and stocks, it is expected that the company would find no difficulties in raising resources in the local markets, if needed.

Additional information is available at 'www.fitchratings.com'.

Applicable Critera and Related Research:

--'Corporate Rating Methodology' (Aug. 13, 2010);

--'Liquidity Considerations for Corporate Issuers' (June 12, 2007);

--'Rating Industrial Investment Holding Companies' (May. 22, 2008);

--'Parent and Subsidiary Rating Linkage' (June 19, 2007).

Applicable Criteria and Related Research:

Corporate Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=546646

Liquidity Considerations for Corporate Issuers

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=328666

Rating Industrial Investment Holding Companies

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=387412

Parent and Subsidiary Rating Linkage Criteria Report

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=534826

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Fitch RatingsFelipe Vargas, +57-1-3269999 ext. 1120
Senior Analyst
Fitch, Calle 69A No. 9 -85, Bogota, Colombia
orJose Vertiz, +1-212-908-0641
Director
or
Committee ChairpersonPeter Shaw, +1-212-908-0553
Managing Director
or
Media RelationsCindy Stoller, +1-212-908-0526
[email protected]

Source: Fitch Ratings