Fitch Affirms HSBC Finance Corporation's L-T IDR at 'AA-'; Outlook Negative

NEW YORK--(BUSINESS WIRE)--

Fitch Ratings has affirmed HSBC Finance Corporation's (HBIO) long-term Issuer Default Ratings (IDR) at 'AA-'. The Rating Outlook is Negative. A complete list of ratings follows at the end of this release.

The affirmation of HBIO's IDRs reflect the strength and support of HBIO's ultimate parent, HSBC Holdings plc (HSBC), whose long-term and short-term IDRs were affirmed by Fitch at 'AA' and 'F1+' respectively with a Negative Outlook (please see release 'Fitch Affirms HSBC at 'AA'; Outlook Revised To Negative'; March 1, 2012). HSBC has demonstrated a high level of support to HBIO, specifically capital infusions of $690 million in fiscal year (FY) 2011, and cumulative support in excess of $6 billion since FY 2008. Fitch continues to be of the opinion that HSBC will continue to provide capital and liquidity support to HBIO, a significant subsidiary of HSBC, as necessary.

With that said, any changes in the rating of HSBC would similarly result in a change in the ratings of HBIO. Importantly, one aspect that could put pressure on overall ratings is HBIO's ability to continue to wind-down its $42.7 billion first and second lien mortgage portfolio over time without incurring higher losses than what it has already experienced. Fitch expects that HBIO will continue to be a drag on the overall performance of North American operations.

Fitch has withdrawn HBIO's Viability Rating of 'ccc', as the agency no longer views HBIO as a stand-alone entity.

Additionally, Fitch has applied its updated global criteria with regards to rating bank regulatory capital (subordinated and hybrid debt) which has resulted in the downgrade and removal from Rating Watch Negative of HBIO's preferred stock instruments. Fitch has notched the ratings of subordinated and preferred instruments from HBIO's IDR as support from HSBC is presumed for these instruments.

Fitch has taken the following rating actions:

HSBC Finance Corporation Inc.

--Long-term IDR affirmed at 'AA-'; Negative Outlook;

--Short-term IDR affirmed at 'F1+';

--Viability rating of 'ccc' withdrawn;

--Support rating affirmed at '1';

--Commercial paper affirmed at 'F1+';

--Senior debt affirmed at 'AA-';

--Subordinated debt affirmed at 'A+'.

Beneficial Corporation

--Senior debt affirmed at 'AA-'.

HSBC Bank (Nevada) N.A

--Long-term IDR affirmed at 'AA-';

--Short-term IDR affirmed at 'F1+';

--Viability rating affirmed at 'a-'

--Support rating affirmed at '1'.

HSBC Finance Capital Trust IX

--Preferred stock downgraded to 'BBB+' from 'A' and removed from Rating Watch Negative.

HSBC Financial Corporation Limited

--Long-term IDR affirmed at 'AA-';

--Senior shelf registration affirmed at 'AA-';

--Senior debt affirmed at 'AA-'.

Household Bank International Netherlands B.V

--Long-term IDR affirmed at 'AA-';

--Senior debt affirmed at 'AA-'.

HFC Bank Limited

--Long-term IDR affirmed at 'AA-';

--Short-term IDR affirmed at 'F1+'

--Support rating affirmed at '1';

--Senior debt affirmed at 'AA-';

--Senior debt E-medium term notes affirmed at 'AA-';

--Senior debt medium term notes affirmed at 'AA-'.

Additional information is available at www.fitchratings.com. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Global Financial Institutions Rating Criteria' (Aug. 16, 2011);

--'Fitch Core Capital: The Primary Measure of Bank Capitalisation' (Jan. 19, 2012);

--'Rating Bank Regulatory Capital and Similar Securities' (Dec. 15, 2011).

Applicable Criteria and Related Research:

Global Financial Institutions Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=649171

Fitch Core Capital: The Primary Measure of Bank Capitalisation

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=650111

Rating Bank Regulatory Capital and Similar Securities

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=656371

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