Fitch Downgrades Uruguay's COFAC to 'D' After Central Bank Suspension.

NEW YORK -- Fitch Ratings, the international ratings agency, has today downgraded the international long-term foreign currency debt ratings of Uruguay's Cooperativa Nacional de Ahorro y Credito (COFAC) to 'D' from 'CCC'. At the same time, Fitch also downgraded the bank's national long-term rating to 'D(uy)' from 'B(uy)'.

The downgrade of COFAC's international and national debt ratings to Default follows the preventive suspension of COFAC's activities by the Central Bank of Uruguay (BCU) due to its insufficient capital position. As a result, COFAC will be unable to pay any of its creditors, including depositors, for an undefined period. The suspension of the institution's activities will last until the BCU has evaluated the alternatives presented by COFAC's management and has decided upon the best outcome for the institution and its creditors.

The suspension of COFAC's activities is the result of well-defined weaknesses in the institution's capital and liquidity position and, in Fitch's opinion, is not indicative of a more widespread problem in the Uruguayan financial system. Fitch has noted severe weaknesses in COFAC's liquidity and capital position since 2002. In 2003, COFAC was required to present a capital adequacy plan to the regulators, which it has been unable to fulfill, and had received several extensions from the BCU.