application for registration as a … ratings annual...hr ratings annual certification 2016 created...

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FORM NRSRO OMB APPROVAL

OMB Number: 3235-0625

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APPLICATION FOR REGISTRATION AS A NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION (NRSRO)

SEC 1541 (1-15) Persons who respond to the collection of information contained in this

form are not required to respond unless the form displays a currently valid OMB control number.

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APPLICATION FOR REGISTRATION AS A NATIONALLY RECOGNIZED

STATISTICAL RATING ORGANIZATION (NRSRO)

Ƒ INITIAL APPLICATION Ƒ ANNUAL CERTIFICATION

Ƒ APPLICATION TO ADD CLASS Ƒ UPDATE OF REGISTRATION OF CREDIT RATINGS Items and/or Exhibits Amended:

Ƒ APPLICATION SUPPLEMENT _ Items and/or Exhibits Supplemented:

_ Ƒ WITHDRAWAL FROM REGISTRATION

Important: Refer to Form NRSRO Instructions for General Instructions, Item-by-Item Instructions, an Explanation of Terms, and the Disclosure Reporting Page (NRSRO). “You” and “your” mean the person filing or furnishing, as applicable, this Form NRSRO. “Applicant” and “NRSRO” mean the person filing or furnishing, as applicable, this Form NRSRO and any credit rating affiliate identified in Item 3.

1. A. Your full name:

B. (i) Name under which your credit rating business is primarily conducted, if different from Item 1A:

(ii) Any other name under which your credit rating business is conducted and where it is used (other than the name of a credit rating affiliate identified in Item 3):

C. Address of your principal office (do not use a P.O. Box):

(Number and Street) (City) (State/Country) (Zip/Postal Code)

D. Mailing address, if different:


E. Contact person (See Instructions):

(Name and Title)


CERTIFICATION:

The undersigned has executed this Form NRSRO on behalf of, and on the authority of, the Applicant/NRSRO. The undersigned, on behalf of the Applicant/NRSRO, represents that the information and statements contained in this Form, including Exhibits and attachments, all of which are part of this Form, are accurate in all significant respects. If

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Item 9, exhibits 1,3,4,5,6,7,8

HR Ratings de México, S.A. de C.V.

HR Ratings

None

Av. Prolongación Paseo de la Reforma1015, Torre A, Piso 3 Mexico DF 01210

Claudia Ramírez Mingramm Head Compliance Officer

Av. Prolongación Paseo de la Reforma1015, Torre A, Piso 3 Mexico DF 01210

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this is an ANNUAL CERTIFICATION, the undersigned, on behalf of the NRSRO, represents that the NRSRO’s application on Form NRSRO, as amended, is accurate in all significant respects.

(Date) (Name of the Applicant/NRSRO)

By: (Signature) (Print Name and Title)

2. A. Your legal status:

Ƒ Corporation Ƒ Limited Liability Company Ƒ Partnership Ƒ Other (specify)

B. Month and day of your fiscal year end:

C. Place and date of your formation (i.e., state or country where you were incorporated, where your partnership agreement was filed, or where you otherwise were formed):

State/Country of formation: Date of formation:

3. Your credit rating affiliates (See Instructions):

(Name) (Address)

(Name) (Address)

(Name) (Address)

(Name) (Address)

(Name) (Address)

4. The designated compliance officer of the Applicant/NRSRO (See Instructions):

(Name and Title)

(Number and Street) (City) (State/Country) (Postal Code)

5. Describe in detail how this Form NRSRO and Exhibits 1 through 9 to this Form NRSRO will be made publicly and freely available on an easily accessible portion of the corporate Internet website of the Applicant/NRSRO (See Instructions):

6. COMPLETE ITEM 6 ONLY IF THIS IS AN INITIAL APPLICATION, APPLICATION

SUPPLEMENT, OR APPLICATION TO ADD A CLASS OF CREDIT RATINGS.

A. Indicate below the classes of credit ratings for which the Applicant/NRSRO is applying to be registered. For each class, indicate the approximate number of obligors, securities, and money market instruments in that class as of the date of this application for which the Applicant/NRSRO has an outstanding credit rating and the approximate date the Applicant/NRSRO began issuing credit ratings as a “credit rating agency” in that class on a continuous basis through the present (See Instructions):

3/29/2016

Fernando Montes de Oca

Digitally signed by Fernando Montes de Oca DN: cn=Fernando Montes de Oca, o=HR Ratings, ou=HR Ratings, [email protected], c=MX Date: 2015.02.10 12:38:23 -06'00'

HR Ratings

Fernando Montes de Oca Gatica

December, 31

Mexico June 22, 2007

Claudia Ramírez Mingramm, Head Compliance Officer

Av. Prolongación Paseo de la Reforma1015, Torre A, Piso 3Mexico D.F 01210

Form NRSRO Item 9 Exhibits 1, 3,4,5,6,7 and 8 will be publicly and freely available at www.hrratings.com

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Class of credit ratings

Applying for registration

Approximate number currently

outstanding

Approximate date

issuance commenced

financial institutions as that term is defined in section 3(a)(46) of the Exchange Act (15 U.S.C. 78c(a)(46)), brokers as that term is defined in section 3(a)(4) of the Exchange Act (15 U.S.C. 78c(a)(4)), and dealers as that term is defined in section 3(a)(5) of the Exchange Act (15 U.S.C. 78c(a)(5))

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insurance companies as that term is defined in section 3(a)(19) of the Exchange Act (15 U.S.C. 78c(a)(19))

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corporate issuers Ƒ

issuers of asset-backed securities as that term is defined in 17 CFR 229.1101(c)

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issuers of government securities as that term is defined in section 3(a)(42) of the Exchange Act (15 U.S.C. 78c(a)(42)), municipal securities as that term is defined in section 3(a)(29) of the Exchange Act (15 U.S.C. 78c(a)(29)), and foreign government securities

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B. Briefly describe how the Applicant/NRSRO makes the credit ratings in the classes indicated in Item 6A readily accessible for free or for a reasonable fee (See Instructions):

C. Check the applicable box and attach certifications from qualified institutional buyers, if required (See Instructions):

Ƒ The Applicant/NRSRO is attaching certifications from qualified institutional buyers to this application. Each is marked “Certification from Qualified Institutional Buyer.”

Ƒ The Applicant/NRSRO is exempt from the requirement to file certifications from qualified institutional buyers pursuant to section 15E(a)(1)(D) of the Exchange Act.

Note: You are not required to make a Certification from a Qualified Institutional Buyer filed with this Form NRSRO publicly available on your corporate Internet website pursuant to Exchange Act Rule 17g-1(i). You may request that the Commission keep these certifications confidential by marking each page “Confidential Treatment” and complying with Commission rules governing confidential treatment. The Commission will keep the certifications confidential upon request to the extent permitted by law.

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7. DO NOT COMPLETE ITEM 7 IF THIS IS AN INITIAL APPLICATION. A. Indicate below the classes of credit ratings for which the NRSRO is currently registered. For each class, indicate

the approximate number of obligors, securities, and money market instruments in that class for which the NRSRO had an outstanding credit rating as of the most recent calendar year end and the approximate date the NRSRO began issuing credit ratings as a “credit rating agency” in that class on a continuous basis through the present (See Instructions):

Class of credit rating

Currently registered

Approximate number outstanding

as of the most recent calendar

year end

Approximate date issuance

commenced

financial institutions as that term is defined in section 3(a)(46) of the Exchange Act (15 U.S.C. 78c(a)(46)), brokers as that term is defined in section 3(a)(4) of the Exchange Act (15 U.S.C. 78c(a)(4)), and dealers as that term is defined in section 3(a)(5) of the Exchange Act (15 U.S.C. 78c(a)(5))

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insurance companies as that term is defined in section 3(a)(19) of the Exchange Act (15 U.S.C. 78c(a)(19))

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corporate issuers Ƒ

issuers of asset-backed securities as that term is defined in 17 CFR 229.1101(c)

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issuers of government securities as that term is defined in section 3(a)(42) of the Act (15 U.S.C. 78c(a)(42)), municipal securities as that term is defined in section 3(a)(29) of the Exchange Act (15 U.S.C. 78c(a)(29)), and foreign government securities

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B. Briefly describe how the NRSRO makes the credit ratings in the classes indicated in Item 7A readily accessible for free or for a reasonable fee (See Instructions):

8. Answer each question. Provide information that relates to a “Yes” answer on a Disclosure Reporting Page (NRSRO) and submit the Disclosure Reporting Page with this Form NRSRO (See Instructions). You are not required to make any disclosure reporting pages submitted with this Form publicly available on your corporate Internet website pursuant to Exchange Act Rule 17g-1(i). You may request that the Commission keep any disclosure reporting pages confidential by marking each page “Confidential Treatment” and complying with Commission rules governing confidential treatment. The Commission will keep the disclosure reporting pages confidential upon request to the extent permitted by law.

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Credit ratings in item 7A are made available by press release and electronic notification to subscribers and are accessible for free at HR Ratings website www.hrratings.com

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YES NO

A. Has the Applicant/NRSRO or any person within the Applicant/NRSRO committed or omitted any act, or been subject to an order or finding, enumerated in subparagraphs (A), (D), (E), (G), or (H) of section 15(b)(4) of the Securities Exchange Act of 1934, been convicted of any offense specified in section 15(b)(4)(B) of the Securities Exchange Act of 1934, or been enjoined from any action, conduct, or practice specified in section 15(b)(4)(C) of the Securities Exchange Act of 1934 in the ten years preceding the date of the initial application of the Applicant/NRSRO for registration as an NRSRO or at any time thereafter?

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B. Has the Applicant/NRSRO or any person within the Applicant/NRSRO been convicted of any crime that is punishable by imprisonment for 1 or more years, and that is not described in section 15(b)(4) of the Securities Exchange Act of 1934, or been convicted of a substantially equivalent crime by a foreign court of competent jurisdiction in the ten years preceding the date of the initial application of the Applicant/NRSRO for registration as an NRSRO or at any time thereafter?

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C. Is any person within the Applicant/NRSRO subject to any order of the Commission barring or suspending the right of the person to be associated with an NRSRO?

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9. Exhibits (See Instructions).

Exhibit 1. Credit ratings performance measurement statistics.

Ƒ Exhibit 1 is attached and made a part of this Form NRSRO.

Exhibit 2. A description of the procedures and methodologies used in determining credit ratings.

Ƒ Exhibit 2 is attached and made a part of Form NRSRO.

Exhibit 3. Policies or procedures adopted and implemented to prevent the misuse of material, nonpublic information.


Exhibit 4. Organizational structure.

Ƒ Exhibit 4 is attached to and made a part of this Form NRSRO.

Exhibit 5. The code of ethics or a statement of the reasons why a code of ethics is not in effect.


Exhibit 6. Identification of conflicts of interests relating to the issuance of credit ratings.


Exhibit 7. Policies and procedures to address and manage conflicts of interest.


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Exhibit 8. Certain information regarding the credit rating agency’s credit analysts and credit analyst supervisors.


Exhibit 9. Certain information regarding the credit rating agency’s designated compliance officer.


Exhibit 10. A list of the largest users of credit rating services by the amount of net revenue earned from the user during the fiscal year ending immediately before the date of the initial application.


Note: You are not required to make this Exhibit publicly available on your corporate Internet website pursuant to Exchange Act Rule 17g-1(i). You may request that the Commission keep this Exhibit confidential by marking each page “Confidential Treatment” and complying with Commission rules governing confidential treatment. The Commission will keep the information and documents in the Exhibit confidential upon request to the extent permitted by law.

Exhibit 11. Audited financial statements for each of the three fiscal or calendar years ending immediately before the date of the initial application.



Exhibit 12. Information regarding revenues for the fiscal or calendar year ending immediately before the date of the initial application.



Exhibit 13. The total and median annual compensation of credit analysts.



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Av. Prolongación Paseo de la Reforma # 1015 Piso 3, Col. Santa Fe, C.P. 01210 México, D.F.

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List of Material changes to the application for registration as an NRSRO that occurred during 2015

1. Methodologies and procedures used in determining credit ratings (Exhibit 2) During 2015 the following Methodologies were included to Exhibit 2: • Charter Schools Credit Risk Evaluation, dated February 13, 2015. Included in

NRSRO Form of April 17, 2015. • General Methodological Criteria, dated February 13, 2015. Included in NRSRO Form

of April 17, 2015. • Unsecured debt ratings for Mexican municipalities. Methodology addendum, dated

July 31, 2015. Included in NRSRO Form of September 30, 2015. • General Methodological Criteria, dated September 17, 2015. Included in NRSRO

Form of November 5, 2015. • Rating for debt backed by revenue from the operation of highways, tunnels and

bridges dated November 6, 2015. Included in NRSRO Form of December 21, 2015. • Charter Schools Credit Risk Evaluation. Included in NRSRO Form of December 18,

2015. The procedure for determining credit ratings, contained in exhibit 2, was updated to reflect the amendments made to the Operations Manual on February 2015, to establish better practices in the operation of the Analysis Committee, such as: • The lead Analyst must confirm with the client by email that the people indicated as

contacts for sending and receiving information when the service level agreement is signed remain the same and this list must be kept up-to-date on the Company’s internal electronic system.

• Whenever possible, the client should be informed of the rating determined by the Analysis Committee the same day as the rating is determined.

• When the rating takes into account influential ratings assigned by another ratings agency, the analysis team must monitor these influential ratings on a weekly basis. For the purposes of the above, each area of the Analysis Office must update the datasheet corresponding to the information on the influential rating in question on the last working day of each week at the latest.

• As applicable, a datasheet containing information on the influential rating and updated on the day of the Committee meeting shall form part of the Analysis Committee package.

• The Officer responsible for Analysis must have at least 3 years' experience. • When dealing with clients or operations that are significantly different to those usually

rated or with exotic or special organizations, issues or instruments, the Chief Operating Officer, together with the Chief Credit Officer and the Chief Risk Officer, must analyze the feasibility of the Company being able to perform the corresponding analysis. To do so, they must analyze whether there is sufficient capacity, access to the necessary information and sufficient resources to carry out this kind of rating.

• A review of methodology shall be carried out when practice requires specifying the suitability of processes and terms set forth in any ratings methodology.

• Once a methodology or criterion has been published, the Chief Operating Officer


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shall inform the analysis area of the modifications performed on the same day as they are published.

• HR Ratings may publish a rating or modification to a rating without informing the client beforehand, when there is a relevant event that directly affects the rating and that market investors must be made aware of immediately, due to the possible risks that said investors could face.

• It has been specified in the manuals that the only ratings that cannot be held as private are those regarding issues.

2. Description of changes in senior management (Exhibit 4). During 2015, the following changes in senior management positions were effected:

a) On December 9, 2014, the Board of Directors approved the following changes:

Approved the following positions, with effects on January 1, 2015:

• José Fernando Montes de Oca Gatica as Chief Executive Officer, who at that time was still holding the position of Chief Operating Officer.

• Pedro Latapí Angellini as Chief Operating Officer, who at that moment was still holding the position of Deputy Chief Operating Officer.

• María Fernanda Guzmán del Valle as Vice-president of Human Resources. • Betsua Alfaro González as Vice-president of Administration. • Fernando Sandoval Oseguera as Vice-president of Financial Institutions

/ABS, who at that time was holding the position of Associate Financial Institutions.

Likewise approved the elimination of the following positions, with effects until January 1, 2015:

• Deputy CEO, which was held by José Anibal Habeica Villanueva. • Deputy Chief Operating Officer.

b) On May 1st, 2015, Rafael Colado Ibarreche joined HR Ratings as VP of

Compliance. The Board ratified Rafael Colado’s appointment on July 8, 2015.

c) On July 27, 2015, Francisco Valle Montaño joined HR Ratings as Business Development Director. The Board ratified Francisco Valle’s appointment on September 24, 2015.

3. Code of Conduct (Exhibit 5).

• A new paragraph was included to Section VIII. “Technical quality and upstanding character”, of the Code of Conduct, to establish that the Risk Officer, will conduct at least once a year, evaluations to determine the knowledge of the analysts in terms of the procedures and rating methodologies of the Company they use to determine


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ratings, in the classes or sub-classes of credit ratings in which each analyst participates.

• A new paragraph was added to Section II. “General Principles” of the Code of Conduct, in order to establish that The Compliance Department will conduct, at least once a year, evaluations of HR Ratings employees to verify the knowledge of said employees with regards to the Company rules and the regulations applicable to HR Ratings as a credit rating agency. Even though these evaluations have been conducted since 2013, there was not evidence of this practice in the internal regulation.

• A new paragraph was included to Section VIII. “Technical quality and upstanding character”, of the Code of Conduct, to establish that the Senior Analyst on the rating process for an entity, issuer, or transaction must have at least three years experience in credit analysis.

• A new quality was added in Appendix 7 of the Code of Conduct “Technical Quality” to establish that the Officer responsible for Analysis must have at least 3 years' experience. Likewise, the following new qualities were introduced to the junior Analysts: - Knowledge and understanding of the methodologies, given the type of ratings in

which they participate. - Necessary knowledge to evaluate and effectively process relevant information

related to the credit quality of an entity or issuer (Qualitative analysis) - Experience or knowledge needed to understand the models and inputs contained in

the models that are part of the methodologies (Quantitative analysis) - Understanding of factors such as: geographic localization, sector, industry, and

regulatory framework for the ratings in which they participate. • An existing paragraph was amended in Section III. “Quality in the provision of rating

services”, of the Code of Conduct, to add that the transition matrices, which are published on the HR webpage, must be made available to anyone who requests them in writing.

• It was incorporated a new paragraph in Section VI.1 “Transparency” of the Code of Conduct, to establish that HR will publish the following information on its website free of charge and non-selectively: Comments received from the market, in general, through the HR Ratings website, regarding draft methodologies or their modifications, and also those received related to a current methodology.

• It was detailed in the Code of Conduct, Section III. “Quality in the provision of rating services”, that when dealing with clients or operations that are significantly different to those usually rated or with exotic or special organizations, issues or instruments, the Chief Operating Officer, together with the Chief Credit Officer and the Chief Risk Officer, must analyze the feasibility of the Company being able to perform the corresponding analysis. To do so, they must analyze whether there is sufficient capacity, access to the necessary information and sufficient resources to carry out this kind of rating.

• A new paragraph was incorporated to section XII. “Sanctions applicable” of the Code of Conduct, to establish that the Compliance Officer will ensure the offender fully understands the rule violated and the seriousness their conduct represents for the Company, in order to avoid future recurrences.


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Operations with Securities A new definition of operations with securities was included in the Code of Conduct. • Operations with Securities are those performed with:

a) Securities listed in the National Securities Register (RNV for its initials in Spanish).

b) Depositary receipts commonly referred to as “American Depositary Receipts” (ADRs) or similar instruments in foreign markets that represent the Securities listed in the RNV, or instruments that are analogous or similar to the above.

c) Derivative financial instruments, provided that they have Securities listed in the RNV as an underlying asset.

d) Bank securities representing a debt with a term equal to or less than one year payable by a Credit Institution.

e) Operations performed with the following are not Operations with Securities: f) Investment fund shares. g) Securities issued by the federal government. h) Index-linked fiduciary stock exchange certificates. i) Securities that refer to a share or price index group or basket.

• The following people are prohibited from performing or holding Operations with Securities regarding any organization or issuing company that is an HR client: - HR Ratings. - Analysts who participate in the ratings procedure of the organization or issuing

company. - Members of the Analysis Committee that participates in rating the organization or

issuing company. - People who have access to privileged information due to their position.

• All new employees and new Board Members must present a statement of Securities

Operations that they directly or indirectly hold with any organization or issuing company rated by HR, as well as those of their spouses, partners or children who are minors, when joining the company or appointed to the board through the “Securities Operations Report” from the Code of Conduct (Annex 2).

• Moreover, all Company Board Members, directors and employees who carry out

Securities Operations with an organization or company rated by HR must inform the Head Compliance Officer of said situation within a period of 10 working days following execution of the Operation in question.

Use of Privileged Information • A definition of Privileged Information was include to the Code of Conduct: “Any

relevant event that has not been disclosed to the public by any issuing company through the stock market that could influence the price of securities listed in the RNV is privileged information”.

• HR Ratings board members, directors and employees are strictly prohibited from: a) Obtaining any benefit derived from any Securities Operation due to the use of


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privileged information obtained from having participated in the rating procedure of those securities or performance of their duties.

b) Providing or sending privileged information to other people. c) Issuing recommendations on any kind of securities issued by an issuing company or

negotiable instruments representing these whose listing or price may be influenced by the use of privileged information.

d) The Compliance Office shall be the area in charge of following up on policies in the area of operations with securities and use of privileged information. Misuse of privileged information shall be deemed a severe breach that shall be penalized under the terms of the criteria set forth in Annex 12 of the Code of Conduct.

Conflicts of Interest The following policies were included to the Code of Conduct to avoid and manage conflicts of interest: • The steps for resolving possible conflicts of interest shall be decided by the Chief

Compliance Officer, together with the Chief Executive Officer and the Chief Risk Officer.

• Before each Analysis Committee meeting is held, the members of the Committee must certify through HTRON that they have no conflict of interest regarding the organization, issuing company or operation whose rating shall be submitted to a vote of the Committee. The system shall send notification to the Head Compliance Officer, in the event that it reports a conflict of interest.

• The Chief Risk Officer shall randomly check that people who have participated in Analysis Committee meetings have certified the lack of any conflict of interest to hear the matters discussed at sessions they were present for as part of the audits of compliance with ratings methodologies and procedures.

• People who are influenced by sales or market considerations may not participate in the Analysis Committee.

Look Back Review (in the event of an analyst or analytics director leaving)

• It was specified in the Code of Conduct, Section VII.2.7.2 “Look-Back Review of former employees”, that if during the look back review conducted by the Chief Risk Officer, there are elements that suggest the existence of a conflict of interest, that motivate a re-rating process, the rating change or rating confirmation, as applicable, must be published within 15 calendar days following the date on which it was detected that the rating could have been influenced by a conflict of interest.

• Likewise, a new paragraph was included to state that if the rating change or

confirmation is not published within the 15-day period, a press release shall be published indicating that the rating is under review or observation, as evidence has been found that the rating could have been influenced by a conflict of interest.


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Complaints The following policies were included to the Code of Conduct to avoid and manage conflicts of interest:

• The person in charge of receiving complaints is the Head Compliance Officer, rather

than the Chief Credit Officer. • HR employees who receive any complaints from third parties by any medium,

whether oral or written, must send said complaint to the Head Compliance Officer by email with a copy to the Chief Credit, Risk and Operating Officers.

• Moreover, HR Ratings employees must inform the Head Compliance Officer by email

when they become aware of any complaint about the Company or its employees mentioned in any newspaper, news program or any another mass communications media.

• All complaints will be documented in a follow-up log on the HTRON, together with the

attention given, both externally and internally.

Penalties The following policies were included to the Code of Conduct to avoid and manage conflicts of interest:

• Penalties are imposed by the Head Compliance Officer. In the event of serious

violations of the internal regulations, penalties shall be imposed by the Compliance Office and the Risk Office, having previously heard the opinion of independent board members.

• Penalties shall be applied taking into account the “Criteria for Determining the

Severity of Breaches or Violations of the Regulations” approved by the Board of Directors.

• When the Head Compliance Officer detects breaches or serious violations of HR

Ratings guidelines, policies and control mechanisms that he or she believes could be violations of the Securities Market Law, he or she must inform the CNBV of said acts within two business days following on which he or she became aware of said violations.

4. Policies to address and Manage Conflicts of Interest (Exhibit 7) The following measures to manage conflicts of interest were included in Exhibit 7: • A 10 business day period was established to notify the Compliance Officer once a

Board member or employee has operated a securities transaction with any company rated by HR Ratings. This nothwithstanding, all Company emplyees and board members must complit the “Securities Operations Report” every six months.


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• Regarding the post employment follow-up, it was included that the Administrative

and Human Resources Department will make every effort to ascertain the future employment of management and employees that have participated in ratings actions. To this effect, a search will be conducted each month through google, LinkedIn, Facebook, and other search media, maintaining a monitoring log for this purpose.

• With regards to the look back review process, it was incorporated that in the event that a detected possible conflict of interest motivates a re-ratings process, HR HR Ratings will publish the change of rating or the confirmation of the rating, accordingly, within fifteen calendar days following the date on which it was found that the rating could have been influenced by a conflict of interest.

• If the change of rating or the confirmation of the rating is not published within the time indicated in the previous paragraph, HR Ratings will publish a press release indicating that the rating is under review or observation, as evidence was found that the rating could have been influenced by a conflict of interest.

• The following policies were included in the section “Sanctions applicable”:

- The Compliance Officer, together with the Company CEO and the Risk Officer, will determine the measures to resolve possible conflicts of interest.

- The sanctions will be applied taking into consideration the “Criteria for determining the severity of faults or violations of Company rules” approved by the HR Ratings Board of Directors, in the terms of what is stated in HR Ratings Code of Conduct.

- The Compliance Officer, together with the Risk Officer, will impose the sanctions for serious violations of the Company rules, on hearing the opinion of the independent members of the Board of Directors.

- In this case, the alleged offender may challenge the sanction imposed before the independent members of the Board of Directors within 10 business days of receiving notice of the sanction.

5. Exhibit 8. Credit Analysis and Supervisor Information. • It was specified in Exhibit 8, regarding the “Technical quality and upstanding

character”, that the Senior Analyst on the rating process for an entity, issuer, or transaction must have at least three years experience in credit analysis.

• Likewise, the following new qualities were introduced to the junior Analysts:

- Knowledge and understanding of the methodologies, given the type of ratings in

which they participate. - Necessary knowledge to evaluate and effectively process relevant information

related to the credit quality of an entity or issuer (Qualitative analysis) - Experience or knowledge needed to understand the models and inputs contained in

the models that are part of the methodologies (Quantitative analysis) - Understanding of factors such as: geographic localization, sector, industry, and


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regulatory framework for the ratings in which they participate.

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Credit Ratings Performance Measurement Statistics

NRSRO Ratings

HR Ratings Credit Ratings Performance Measurement Statistics NRSRO Credit Ratings Transition Matrices.

Transition/ Default Matrices of NRSRO ratings are composed in the following subclasses:

a) Sovereign Issuers. b) U.S. Public Finance. c) International Public Finance.

*Our ratings range from HR AAA to HR D, a plus or minus sign may be included in the range from AA to C, to indicate strength or weakness within a general rating category.

ExhibiEEExhibit 1

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NRSRO Ratings

- One- Year Sovereign Issuers, Long Term Transition Matrix – 2014-2015

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NRSRO Ratings

- One- Year Sovereign Issuers, Short Term Transition Matrix – 2014-2015

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NRSRO Ratings

- Three- Year Sovereign Issuers, Long Term Transition Matrix – 2012-2015

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NRSRO Ratings

- Three- Year Sovereign Issuers, Short Term Transition Matrix – 2012-2015

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NRSRO Ratings

- Ten- Year Sovereign Issuers Transition Matrix – 2005-2015 *The ten year Sovereign Issuer Transition Matrix cannot be calculated due to the fact that HR Ratings started issuing Sovereign ratings as of 2012.

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NRSRO Ratings

- One- Year U.S. Public Finance Transition Matrix – 2014-2015

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NRSRO Ratings

-Three- Year U.S. Public Finance Transition Matrix – 2012-2015

*The three year U.S. Public Finance Transition Matrix cannot be calculated due to the fact that HR Ratings started issuing U.S. Public Finance ratings as of 2014.

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NRSRO Ratings

- Ten- Year U.S. Public Finance Transition Matrix – 2005-2015

*The ten year U.S. Public Finance Transition Matrix cannot be calculated due to the fact that HR Ratings started issuing U.S. Public Finance ratings as of 2014.

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NRSRO Ratings - One- Year International Public Finance Transition Matrix – 2014-2015

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NRSRO Ratings - Three- Year International Public Finance Transition Matrix – 2012-2015

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NRSRO Ratings - Ten- Year International Public Finance Transition Matrix – 2005-2015 *The ten year International Public Finance Transition Matrix cannot be calculated due to the fact that HR Ratings started issuing International Public Finance ratings as of 2008.

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NRSRO Ratings

Long Term Global Rating Scale

Symbol Definition of the Rating

HR AAA (G) The issuer or offering given this rating has the highest credit quality, offering strong security for prompt payment on debt obligations. Minimum credit risk on the global scale.

HR AA (G) The issuer or offering given this rating has a high credit quality and offers strong security for prompt payment on debt obligations. Very low credit risk on the global scale under adverse economic conditions.

HR A (G) The issuer or offering given this rating offers acceptable security for prompt payment on debt obligations. Low credit risk on the global scale.

HR BBB (G) The issuer or offering given this rating offers moderate security for prompt payment on debt obligations. Moderate credit risk on the global scale, with weakness in its ability to pay under adverse economic conditions.

HR BB (G) The issuer or offering given this rating offers insufficient security for prompt payment on debt obligations. High credit risk on the global scale.

HR B (G) The issuer or offering given this rating offers low security for prompt payment on obligations. High credit risk on the global scale. Susceptible to fall into default.

HR C (G) The issuer or offering given this rating offers a high probability of falling into default on the payment of debt obligations.

HR D (G) The issuer or offering given this rating has the lowest credit rating on the global scale. They are already in default or it is highly likely they will fall into default on payment of their debt obligations in the short term.

NOTE: As there is a wide range of possible characteristics specific to issuers or instruments and considering the ratings are expressed based on a limited number of symbols, HR Ratings assigns “+” or “-“ to the positions of relative strength (where necessary) within each rating scale.

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NRSRO Ratings

Short Term Global Rating Scale

Symbol Definition of the Rating

HR1 (G) The issuer or offering given this rating offers a high ability to make prompt payment on short-term debt obligations and maintains the lowest credit risk. Instruments with relative superiority in this category in terms of credit characteristics are assigned the rating HR+1 (G).

HR2 (G) The issuer or offering given this rating offers a reasonable ability to make prompt payment on short-term debt obligations and maintains a higher credit risk compared to instruments with a higher credit rating.

HR3 (G) The issuer or offering given this rating offers a moderate ability to make prompt payment on short-term debt obligations and maintains a greater credit risk compared to instruments with a higher credit rating.

HR4 (G) The issuer or offering given this rating offers an insufficient ability to make prompt payment on short-term debt obligations and maintains a very high credit risk. These instruments are susceptible to fall into default.

HR5 (G) The issuer or offering is highly probable they will fall into default on the payment of debt obligations.

HR D (G) The issuer or offering given this rating has the lowest credit rating and they are already in default.

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NRSRO Ratings

Long Term Local Rating Scale

Symbol Definition of the Rating HR AAA The issuer or offering given this rating is considered to have the highest credit quality,

offering strong certainty for the prompt payment of debt obligations. They maintain a minimum credit risk.

HR AA The issuer or offering given this rating is considered to have a high credit quality, offering

strong certainty for the prompt payment of debt obligations. They maintain a very low credit risk under adverse economic scenarios.

HR A The issuer or offering given this rating offers reasonable certainty for the prompt payment

of debt obligations. They maintain a low credit risk under adverse economic scenarios.

HR BBB The issuer or offering given this rating offers moderate certainty for the prompt payment of

debt obligations. They maintain a moderate credit risk, with weakness in the ability to pay against adverse economic changes.

HR BB The issuer or offering given this rating offers insufficient certainty for the prompt payment

of debt obligations. They maintain a high credit risk.

HR B The issuer or offering given this rating offers low certainty for the prompt payment of

obligations and maintains a high credit risk. They are susceptible to falling into default.

HR C The issuer or offering given this rating offers a high probability of falling into default on the

payment of debt obligations.

HR D The issuer or offering given this rating has the lowest credit rating. They are either already in

default or it is highly probable they will fall into default on the payment of debt obligations in the short term.

NOTE: As there is a wide range of possible specific characteristics for issuers or instruments and considering that the ratings are expressed based on a limited number of symbols, HR assigns "+" or "-" up to and including HR AA as positions of relative strength (if necessary) within each rating scale.

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NRSRO Ratings

Default Criteria HR Ratings’ Default Criteria is as follows:

a) HR Ratings defines ¨non-compliance¨ or ¨default¨ (HR D) as the failure to comply with the obligatory interest and principal payments according to the original agreed terms. In the context of the responsible entity of complying with the payment, the determination of the credit rating depends on the degree of compliance of its set payment obligations. When the default of an entity covers the ¨predominant¨ part of its debt, the rating would be HR D.

b) When the default extends to a ¨significant¨ part of its debt but it is not necessarily predominant, the rating would be HR DS (selective default).

c) In several cases, an entity may be in difficult conditions that damage its will and/or capacity of complying with its payment obligations according to the original agreed conditions. This may result in a renegotiation of the payment terms between the entity and its creditors. HR Ratings considers a restructure in which the creditors agree to accept the new payment terms knowing that the alternative is to receive inferior payments to the ones originally agreed (or no payment whatsoever), as a ¨forced restructure¨. This restructure may represent a ¨technical default¨ due to the fact that the entity wouldn´t be complying with the original agreed payment terms. The result would be the assignment of a rating of HR DT (technical default) for the instrument(s) in matter, in the moment in which the determined payment is made in the forced restructure.

The definition of default was last updated on November 3rd, 2015, and applies to all asset classes that HR Ratings analyses.

URL HR Ratings Uniform Resource Locator (URL) of its corporate Internet website where the credit rating histories are disclosed is the following:

x http://hrratings.com/en/ratings

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NRSRO Ratings

HR Ratings de Mexico SA de CV (HR Ratings) ratings and/or opinions are opinions of credit quality and/or regarding the ability of management to administer assets; or opinions regarding the efficacy of activities to meet the nature or purpose of the business, on the part of issuers, other entities or sectors, And are based exclusively on the characteristics of the entity, issuer or operation, with independence from whatever activity or business between HR Ratings and the entity or issuer. The ratings and/or opinions assigned or issued do not constitute an investment recommendation to buy, sell or hold any instrument nor to perform any business, investment or other operation. The assigned ratings and/or opinions issued may be subject to updates at any time, in accordance with HR Ratings methodologies as per the terms of Article 7, Section II and/or III, as may be the case, of the “General Provisions Applicable to Securities Issuers and other Participants of the Securities Market”1.

HR Ratings bases its ratings and/or opinions on information obtained from sources that are believed to be accurate and reliable. HR Ratings, however, does not validate, guarantee or certify the accuracy, correctness or completeness of any information and is not responsible for any errors or omissions or for results obtained from the use of such information. Most issuers of debt securities rated by HR Ratings have paid a fee for the credit rating based on the amount and type issued by each debt instrument. The degree of creditworthiness of an issue or issuer, opinions regarding asset manager quality or ratings related to an entity’s performance of its business purpose are subject to change, such as to produce a rating upgrade or downgrade, without implying any responsibility on the part of HR Ratings. The ratings issued by HR Ratings are derived in an ethical manner, in accordance with healthy market practices and in compliance with applicable regulations found in the www.hrratings.com rating agency webpage. There one can view documents Code of Conduct, methodologies, rating criteria and current ratings.

Ratings and/or opinions assigned by HR Ratings are based on an analysis of the creditworthiness of an entity, issue or issuer, and do not necessarily imply a statistical likelihood of default, which we define as the inability or unwillingness to satisfy the contractually stipulated payment terms of an obligation, such that creditors and/or bondholders are forced to take action in order to recover their investment or to restructure the debt due to a situation of stress faced by the debtor. Without disregard to the aforementioned point, in order to validate our ratings our methodologies consider stress scenarios as a complement to the analysis derived from a base case scenario.

The rating fee that HR Ratings receives from issuers generally ranges from $1,000 to $1,000,000 USD (or the foreign currency equivalent) per issue. In some instances, HR Ratings will rate all or some of the issues of a particular issuer for an annual fee. It is estimated that the annual fees range from $5,000 to $2,000,00 USD (or the foreign currency equivalent).


EXHIBIT 3: POLICIES AND PROCEDURES TO PREVENT THE MISUSE OF MATERIAL NON-PUBLIC INFORMATION

HR Ratings treats all information it receives from an issuer, or member of the issuer's business group, or their accountants, attorneys, or other agents as “Material Non Public Information” or “Confidential information”.1 HR Ratings signs confidentiality agreements with all its clients, employees, and vendors (with access to this type of information), to ensure a confidential treatment off the information received.

The Head Compliance Officer is responsible for following up on the signing of these

agreements and for overseeing ongoing compliance. The confidential information that clients provide to the company cannot be used for any purpose other than the credit quality analysis for the client and the offering in question. Likewise, client information will be sent solely to the person or persons the client has designed as responsible for communication with HR Ratings and must be marked confidential.

In order to further protect private, non-public material information received from issuers in

hard copy are delivered in a sealed folder with the name of the recipient person or area marked, also marked with a stamp indicating the confidentiality of its contents. Likewise, nformation received by e-mail is marked confidential and directed only to the persons authorized for this purpose.

As further described below, preventive and protective measures for files of all confidential

information pertaining to each client will be treated according to the regulations established by the company in the Internal Control Manual, Code of Conduct, and the General Operating Plan. Paper and hard copy information will be scanned and stored in protected files shared on the Company's analysis network and/or in the internal electronic system for the control and follow-up of Company affairs, as well as the information received by e-mail.

Only the Senior Analyst, the Lead Analyst and the support analysts designated will have

access to a specific client’s file in order to complete their respective tasks, in accordance with the procedure established in the Company’s Operations Manual, through the internal electronic system and the shared files on the Agency’s internal server for the control and follow-up of affairs.

Access to Client files that are stored on the internal electronic system for the control and

follow-up of Company affairs will be via codes provided to the persons authorized to this effect. The access codes for the internal electronic system are provided and held by the Chief Operating Officer. Such codes provided to the analysts are individual, nontransferable, and confidential; therefore, will not, under any circumstance, be shared.

1 Information is not considered confidential when it was widely known to HR Ratings at the time of its publication, or was public knowledge at the time of its revelation, or becomes public knowledge upon publication (due to an action not imputable to HR Ratings), or is approved in writing by the client for public disclosure, or whose disclosure is required by government agency or authority.


Likewise, the Company has a system of restricted access to files containing information shared on the internal network, allowing employees to access only those files and folders for which they are authorized, therefore no employee will access information that is not related to the matters in which they are involved.

The Chief Operating Officer, with the support of the IT department, will replicate the

permissions established for the Agency’s internal electronic system to the shared files on the Agency’s internal server.

The members of the Compliance and Risk Departments will have full access to the client

files on the Agency’s internal electronic control and monitoring system, and also to the information contained in the shared folders of the credit analysis department on the Agency’s internal server in order to correctly and effectively perform their respective duties.

In addition, the files corresponding to the analysis reports, press releases, or rating letter

will be sent to the persons authorized by the client to send and receive information, through the system the Company defines to protect non-public or confidential information.

The company maintains a clean desk policy and is strictly prohibited to remove files from the office. Employees are strictly prohibited from sending information for internal use to their personal email outside the Agency.

As part of the control measures to prevent the misuse of material non-public or confidential

information, the computers of HR Ratings employees will be blocked from extracting information and introducing information via portable storage devices, such as removable hard drives, CDs, USBs, etc.

In the event any information contained on the Agency’s internal server is required to be

extracted to be stored on a portable device, or the extraction of information contained on a portable device to be introduced onto the internal server, the technical support team will be asked to intervene and perform this action using a computer thusly enabled. The technical support team may place the information extracted from a portable device on the internal server, after performing a security check.

Any extraction of information from the internal server or introduction of information onto the server will be duly documented in an information input/output log, indicating the name of the person, the type of file and information, and the date of the extraction (download) or introduction (upload). The Compliance Officer, with the support of the Chief Operating Officer, may audit these activities.

In addition, the Agency has a firewall in place to block access to personal email accounts

by employees via public websites, therefore employees will only have access to email contained on the Agency’s Outlook.

The Compliance Officer may conduct audits of the IT infrastructure to verify the firewall and blocking for the extraction of information on the Agency’s computers are correctly implemented.

The analysis area is perfectly separated from the area of administration and business development. Additionally there is a separate area for visitors; this visitors area is an isolated area from analysis and the administration and business development areas.

Security for Electronic and Digital Information


Every employee of HR Ratings has a laptop computer setup with hardware and software to ensure security. As a consequence, all information regarding issuers, authorities, clients etc., is located in a “Secure Server” inside HR Ratings facilities with a full secure lock and only authorized personal can access.

The information stored in the internal electronic control and surveillance system and in the

electronic folders of the HR Ratings’ internal server will be backed up daily. The backup and custody will be executed under the strictest conditions of security and confidentiality, in adherence of the disaster prevention procedure for electronic information, which is included in the Technological Infrastructure Protocol.

The Agency maintains the technological controls necessary to ensure the correct employee

usage of the Internet and other means of communication. This includes prohibiting access to personal email and/or Internet sites that could present a risk to the Agency’s technological infrastructure.

These controls do not affect the sanctions that may be applied on the violation of the policies contained in this document.

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Exhibit 4

Exhibit 5

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Identification of conflicts of interest relating to the issuance of ratings

EXHIBT 6: DESCRIPTION OF CONFLICTS OF INTEREST There is a conflict of interest when: (1) Being paid by issuers or underwriters to determine credit ratings with respect to securities or money market instruments they issue or underwrite. (2) Being paid by obligors to determine credit ratings of the obligors. (3) Being paid by investors to determine a credit rating with respect to securities or money market instruments, where their investments transactions could be favorably or adversely impacted by the credit rating issued by the Nationally Recognized Statistical Rating Organization.

(4) Allowing persons within the nationally recognized statistical ratings organization to directly own securities or money market instruments of, or having other direct ownership interests in, issuers or obligors subject to a credit rating determined by the nationally recognized statistical rating organization.

(5) Allowing persons within the nationally recognized statistical ratings organization to receive a loan, credit, good, interest rate, service, or any business relationship from issuers or obligors subject to a credit rating determined by the Nationally Recognized Statistical Rating Organization, on more than an arms length ordinary course of business relationship. (6) When the director of analysis or the analyst, in the 12 months prior to the start of the rating process, has served as board member, management, or employee of the entity or issuer to be rated, or at any entity member of the same business group as the entity or issuer to be rated, or has had any business dealings that could create a conflict of interest with said entities or issuers. (7) Their spouse, partner, or any blood relative to the second degree of the director of analysis or the analyst, holds any management or senior management position in the entity or issuer to be rated. The familiar relationship to the second degree includes the parents, children, grandparents, siblings, and grandchildren of the employee.

(8) A credit management personnel or analyst terminates their employment with HR Ratings and takes a position within the 12 months after the termination date with an issuer or entity rated by the credit rating agency, when the analyst has participated in the rating process as Credit Officer, Lead Analyst or part of the analysis team, or when the analyst takes a position with an structuring agent for a security, instrument or operation in whose ratings process such person has participated.

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Policies and procedures to address and manage conflicts of interest

EXHIBIT 7: POLICIES TO ADDRESS AND MANAGE CONFLICTS OF INTEREST

Detailed policies may be found in the “Internal Control Manual”, the “Code of Conduct”, the “Operating Manual”, the “General Operating Program”, and in the “Human and Material Resources Manual”. Separation of Analysis and Marketing To avoid conflicts of interest between the areas responsible for the rating process and the collection of fees and charges, the Administration Department is responsible for handling and collecting fees and charges for the services that HR Ratings provides, maintaining this process independent from the areas responsible for credit analysis and ratings. This separation of functions is implemented through the procedure established in the Operating Manual where the Departments of Business Development, and Administration do not participate in the decisions of the Analysis Department and the Analysis Department is not involved in the process whereby the issuers contract company services or for the handling and collection of fees and charges.

Furthermore, secured electronic card access for every side of the office has been implemented to avoid any conflict of interest. Analysts’ electronic access cards do not open the administrative or business development office door and administrative or business development electronic access cards do not open the analysis office door.

The Compliance Officer will be responsible for monitoring and overseeing compliance with the foregoing by the two Departments and if any fault is detected, this will be evaluated and analyzed according to the policies and mechanisms to identify, eliminate, or properly manage the conflicts of interest described subsequently.

Income Dependency To avoid conflicts of interest regarding being paid by issuers, underwriters, obligors to determine credit ratings with respect to securities or money market instruments they issue or underwrite; or being paid by investors to determine a credit rating regarding their investments or transactions that could be favorably or adversely impacted by a credit rating issued by the Nationally Recognized Statistical Rating Organization, HR Ratings will refrain from providing its services when: 1. The revenues that would be received from an entity, issuer, or investor that intends to contract these

services, or from members of the same business group or consortium, would represent ten percent or more of HR Ratings’ total revenues received the prior fiscal year.

2. The revenues that would be received from each state or municipality would represent five percent or

more of HR Ratings' total revenues received the previous year.

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3. The sum of the revenues received from a state and its municipalities would represent ten percent or more of HR Ratings' total revenues received the previous year. This condition will only apply when the state acts as guarantor on the operations of the municipalities. The calculation of the revenues mentioned above will consider all the revenues that HR Ratings would receive from said states or municipalities, including those for credit quality assessment services for securities issued by trusts on which the state or municipality is the settlor.

Investor Paid Credit Ratings To avoid conflicts of interest in the event that an investor hires HR Ratings to determine a credit rating:

1. The investor must not inform to HR Ratings its trading position regarding the rated security or entity. 2. The right to provide comments or additional information after the Analysis Committee has assigned the

rating will be granted to the issuer or rated entity, and not to the investor. Analysts’ previous employment To avoid conflicts of interest regarding analysts’ previous employments, when a director of analysis or an analyst, in the 12 months prior to the start of the rating process, has served as board member, management, or employee of an entity or issuer rated, or at any entity member of the same business group as the entity or issuer rated, or has had any business dealings that could create a conflict of interest with said entities or issuers, the human resources personnel within the selection process of a new employee, will deliver a copy of the CV´s for the selected candidates, to the Head Compliance Officer, in order that this officer be able to investigate the possibility of conflict of interest. In the event the Head Compliance Officer detects a possible conflict of interest, this officer will inform the company CEO to this effect, and also the Human Resources Director, for the relevant decision to be made. Personal Investments and Loans, Credits, Goods, Yields, Services, or any Business Relationship To avoid conflict of interest regarding any personal investments that could generate conflicts of interest, all new Company employees, shareholders and board members will present, on their starting date, using the form contained in Appendix 3 to the Code of Conduct, a statement of the Securities Transactions they hold directly or indirectly in any entity or issuer rated by HR Ratings; and also those of their spouse, partner, or minor-aged children.

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In addition, all Company Board Members, management, and employees who operate a Securities Transaction with any entity or company rated by HR Ratings will notify the Compliance Officer using the form contained in Appendix 3 of the Code of Conduct, within 10 business days following the operation of the Transaction in question.

The foregoing notwithstanding, all Company employees and board members must complete and submit Appendix 3 every six months.

Appendix 3 must be accompanied by a brokerage or bank statement in which the referred securities transaction could be verifiable. The aforementioned statements must be not older than 3 months of the date of the appendix submission, and the information non relevant to the disclosed securities transactions may be crossed out. HR Ratings will maintain on the Agency’s electronic system a list of the entities or issuers rated by HR Ratings and which are public (the “Public Ratings List”) for HR Ratings employees and board members to consult in order to meet compliance with this section. All Agency employees and board members will have access to this list.

In addition, the Agency will maintain a list of entities or issuers who request privacy or whose initial rating process has been completed, but their rating has not yet been released (the “Private Ratings List”), to which only the Agency Chief Executive Officer, the members of the Compliance, Risk and Operations Departments, the members of the Business Development Department, the senior analysts, and the members of the Board of Directors will have access. Both client lists will be maintained current on the Agency’s electronic system. This system will send biweekly updates of the private ratings list or notifications of newly added clients to the Compliance, Risk and Operations Departments and also to the senior analysts and members of the Board of Directors. If the employee holds such investment prior to being an HR Ratings employee, will be prohibited from transacting the investment, and the employee will also be prohibited from participating in the credit quality evaluation process (rating process) for the issuer and or offering. In the event that any technical or management personnel holds such investments, the personnel will be prohibited from participating in the evaluation process given the conflict of interest that may be held for company employees or HR Ratings in accordance with the applicable regulations. Any investments sought prior to a rating process and which are related to any issuer or offering where the employee is involved in the corresponding rating process, must be reported in writing to the Compliance Officer.

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On the other hand, management and technical personnel are required to report the loans, credits, goods, interest rates1, services or any business relationship that are in the process of obtaining or were obtained from a client, prior to starting any participation in the rating process involving that client, when the loan, credit, good, interest rate, business relationship or service, or business relationship obtained or in the process of obtaining, is on more than an arms length ordinary course of business relationship with clients. Loans, credits, goods, interest rates, services, or business relationships obtained, will be reported using the form contained in Appendix 4 of the Code of Conduct.

Management and technical personnel that have received or are in the process of receiving a loan, credit, good, interest rate, service, or business relationship, which is more than an arms length ordinary course of business relationship with clients, will not participate in the rating process involving said client.

The above notwithstanding, all Company analysts will sign Appendix 4 every six months, disclosing every loan, credit, good, interest rate, service, or business relationship obtained or in the process of obtaining, on more than an arms length ordinary course of business relationship, currently kept with clients, independently of its previous disclosure.

Gifts, Entertainment, and Preferential Treatment

In the event any entity or issuer with which HR Ratings holds a business or services relationship, or any employee of same or of any financial authority, political party, or government or state-involved institution solicits or offers Company technical or management personnel, or any other employee, explicitly or implicitly, any type of remuneration, goods, donation, gift, gratification, or entertainment, the person in question will report this to the Compliance Officer immediately, in writing, regardless whether they have accepted the item or not. Gifts will be reported using the form contained in Appendix 5 to this Code of Conduct.

The Company, its employees, management, and board members are only permitted to accept or receive from any person with which HR Ratings holds a business relationship, or from any of their employees, goods, other than cash, whose value does not exceed US$25 (twenty-five US dollars).

Any offering that would lead to a conflict of interest for the Company or would violate HR Ratings’ standards of ethics, the entity, issuer, or person in question will be asked, in writing, by the Business Development Department, to terminate the business relationship informing them of the reasons for such action.

1Aninterestratereferringtoabankaccount

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Outside activities It is strictly prohibited to engage in any activity outside the Company that could interfere with or create conflict with the interests of the Company. Company employees, management, board members, and shareholders will need to be authorized by the Compliance Officer, using the form contained in Appendix 13 to the Code of Conduct, before enter the employ and/or engage in any activity outside HR Ratings.

Furthermore, company employees, shareholders, and board members will use the form contained in Appendix 8 to the Code of Conduct in the event that their spouse, partner, or any blood relative to the second degree holds any management or senior management position in any entity or issuer rated by HR Ratings. The family relationship to the second degree includes the parents, children, grandparents, siblings, and grandchildren of the employee. The foregoing notwithstanding, all Company employees, shareholders, and board members will sign this form every six months.

Disclosure of conflicts of interest

Notwithstanding the above, all HR Ratings employees, shareholders, management, and board members are required to disclose to the Compliance Officer, in writing and with copy to the Company Chief Executive Officer and Chief Risk Officer, any personal or financial relationship, either their own or that of any other employee of which they have knowledge, that could generate a conflict of interest regarding any entity, issuer, and/or operation. Conflicts of interest must be disclosed using the form contained in Appendix 7 to the Code of Conduct. The Compliance Officer, together with the Company CEO and Risk Officer, and, where necessary, a legal advisor, will discuss and analyze real and potential conflicts of interest to determine the appropriate measures to be taken to handle such conflicts, which may include:

• Prohibiting the individual involved in the conflict or potential conflict from participating in any manner in

the analysis process for the entity, issuer, and/or operation with which they have the conflict of interest, until such time as the conflict is resolved or confirmed; assigning a different person to take their place in the analysis process.

• Suspending the person’s access to all material non-public or confidential information for the entity or

issuer with which they have the conflict of interest.

The above is without prejudice of any sanctions that may be applicable.

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Post-employment follow-up

HR Ratings will make the best effort to collect as much information as possible of the future employment of any employee that may have participated in the Company's rating processes so as to inform the Securities and Exchange Commission to this effect, in the event that within five years from the end of their service with HR Ratings, the former employee enters the employ of an entity or issuer rated by HR Ratings or any structuring agent with which HR Ratings has or has had a relationship, provided the former employee has held a management position in the company or has been an analyst participating, in any manner, in the rating process for the entity, issuer, or the rating for the instruments or operations of the structuring agent. The policies for following up on the future employment of former HR Ratings employees are contained in the Human and Material Resources Manual. Back review of the former employee When any credit management personnel or analyst terminates their employment with HR Ratings and takes a position with an issuer or entity rated by the Company, when the analyst in question has participated in the rating process, as Credit Officer, Lead Analyst, or part of the analysis team, or with a structuring agent for a security, instrument, or operation in whose rating process such person has participated, HR Ratings will take the following measures:

- When the company have knowledge of the former employee entering the employ of the entity, issuer, or

structuring agent, HR Ratings will review the performance of the analyst over the 12 months previous from the date of the termination of their employment with HR Ratings, in terms of the entity or issuer in question.

- The Chief Risk Officer, who reports directly to independent members of the Board of Directors, will

perform the post employment follow up review process on the analytical side, with the support of the previous immediate supervisor of the analyst in question, in the terms of what is stated in HR Ratings Code of Conduct.

If any elements are detected that would presume the rating or ratings had been influenced by a conflict of interest or that these had not been assigned correctly, the Chief Risk Officer will report such situation to the Company's Compliance Officer and the COO, and the latter will be asked to start a re-rating process according to the procedure contained in the HR Ratings Operations Manual for the assignment of the ratings.

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In such case, HR Ratings will publish the change of rating or the confirmation of the rating, accordingly, within fifteen calendar days following the date on which it was found that the rating could have been influenced by a conflict of interest.

If the change of rating or the confirmation of the rating is not published within the time indicated in the previous paragraph, HR Ratings will publish a press release indicating that the rating is under review or observation, as evidence was found that the rating could have been influenced by a conflict of interest.

Sanctions applicable In the event any employee, management, or board member fails to disclose any situation that could generate a conflict of interest in a timely manner, or attempts to hide any such situation, the Compliance Officer, together with the Company CEO and Chief Risk Officer, will analyze the case and determine the measures and/or sanctions to be levied considering the impact on the continuity of the operations of HR Ratings. The Head Compliance Officer will be responsible for examining and determining infractions committed and for imposing sanctions according to the breach in question, which may be: 1. Verbal reprimand 2. Written reprimand 3. 3 to 10 day suspension without pay 4. Termination of employment

The Compliance Officer, together with the Risk Officer, will impose the sanctions for serious violations of the Company rules, on hearing the opinion of the independent members of the Board of Directors. In this case, the alleged offender may challenge the sanction imposed before the independent members of the Board of Directors within 10 business days of receiving notice of the sanction.

The sanction may be reduced if the offender recognizes the commission of the violation and makes amends.

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Analyst Information Exhibit 8

EXHIBIT 8: CREDIT ANALYST AND SUPERVISOR INFORMATION

Total number of analysts The total number of Credit Analysts (Including Supervisors) as of March 11th, 2016 is 44, of which 8 are Credit Analysts-Supervisors, 31 are Analysts, and 5 are Interns. A Supervisor means any Credit Analyst holding a title of Vice-president or above. Detailed Information of Minimum Qualifications Required for Credit Analysts and Credit Analyst Supervisors Credit Analysts and Associate Analysts must have the appropriate knowledge, preparation and experience in order to be employed by HR Ratings. Analysts must exhibit several years of experience in a specific sector, or debt or credit markets, show analytical skills such as the ability to critically review any information received, determine and identify relevant quantitative and qualitative data and must exhibit other skills such as the ability to correctly apply rating methodologies. Additionally, a Credit Analyst level must show a full understanding of the rating methodology and criteria. All Credit Analysts, including Supervisors, have a university degree; some of them have earned a Master’s Degree, PHD, and one has the Chartered Financial Analyst degree. A Credit Analyst and Associate Analyst must comply with the following criteria: Credit Analyst -Hold a degree in Engineering, Finance, Economics or similar -Technical expertise of the position -Knowledge and understanding of the methodologies, given the type of ratings in which they participate, that apply

-Necessary knowledge to evaluate and effectively process relevant information related to the credit quality of an entity or issuer (Qualitative analysis)

-Experience or knowledge needed to understand the models and inputs contained in the models that are part of the methodologies (Quantitative analysis)

-Understanding of factors such as: geographic localization, sector, industry, and regulatory framework for the ratings in which they participate -Analytical thinker -Basic understanding of the principal methodological areas to evaluate -Proactive -Attention to detail, precision, able to follow up on processes -Problem solving -Ability to think like an analyst -Teamwork -Discretion with delicate information -Ability to communicate effectively both verbally and in writing -Active participation and collaboration in teams

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Analyst Information Exhibit 8

Associate Analyst All of criteria required for Credit Analyst and: -Ability to anticipate problems and prevent or minimize their impact -Time and self-management -Ability to multitask -Ability to develop and foster effective and professional work relationships -Leadership and initiative -Ability to work with minimum supervision -Ability to delegate -Ability to analyze, understand, evaluate and form opinions on relevant topics A Credit Analyst Supervisor must have a proven expertise and analytical knowledge of sector and must show evidence of strong knowledge of the dynamics of credit risk. Also, he or she must exhibit an analytical ability, problem solving and decision making capacity and conflict management skills must be confirmed by this level. A Credit Analyst Supervisor or above level must guarantee consistency and effective application of methodologies and criteria and must exhibit strong team management skills in order to take a lead role in Ratings Committees and any other supervisory roles. All HR Ratings’ Analysts Supervisors are Credit Analysts with at least four years of proven experience in credit and risk analysis. The Department of Administration and Human Resources confirms this experience through the hiring process. The Credit Analyst Supervisors must comply with the following criteria: Director (Vice President) All of the required criteria for Analyst and Associate Analyst and: -At least three years experience in credit analysis -Full understanding of the principal methodological areas to evaluate -Problem solving -Ability to manage projects assigned and to meet deadlines -Ability to share and express opinions -Ability to supervise the work of others on assigned projects -Ability to provide orientation and support for lower level personnel Associate Director (Executive Director and Senior Executive Director) All of the above and: -Strong experience and analytical expertise in the sector -Ability to set priorities -Decision making -Conflict resolution -Ability to coordinate and ensure the project/work/product is completed -Ability to manage and foster relations, both in and outside the Company -Ability to train and develop personnel to take on responsibilities

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