CHICAGO --
Fitch Ratings has affirmed the ratings of the following notes issued by Industrial DPR Funding Ltd.:
--$300 million series 2007-1 due 2014 at 'BBB';
--$50 million series 2011-1 due 2018 at 'BBB':
--$40 million series 2011-2 due 2018 at 'BBB';
--$60 million series 2011-3 due 2021 at 'BBB';
--$30 million series 2011-4 due 2021 at 'BBB'.
The Rating Outlook is maintained at Stable.
The underlying issuance is a securitization of existing and future U.S. dollar-denominated diversified payment rights (DPR) originated by Banco Industrial S.A. (BI; 'BB'; Outlook Stable). The collateral includes MT 100 series payment orders and check remittances intended for third-party beneficiaries via BI. DPRs arise from transactions related to exports, capital flows and family remittances.
KEY RATING DRIVERS
The rating action reflects (i) BI's credit quality and strategic importance to Guatemala; (ii) the strength of BI's DPR business line; (iii) solid transaction performance; (iv) level of future flow debt relative to the bank's total liabilities, and (v) sovereign stability.
On July 19, 2013, Fitch affirmed BI's local currency (LC) Issuer Default Rating (IDR) at 'BB' and revised the Rating Outlook to Stable from Positive. The action follows a revision to Guatemala's sovereign Rating Outlook to Negative from Stable. Fitch assigns a going assessment score of 'GC1' to BI based on its position as the largest bank in the Guatemalan financial system. A GC1 reflects the almost certain or very likely ability of the bank to continue operating even under financial difficulties.
Total DPR flows through BI grew to $8.4 billion in 2012 from $7.5 billion in 2011, a 12% compound annual growth rate. Fitch's quarterly debt service coverage ratio (DSCR), which considers total DPR collections and maximum quarterly debt service, averaged 73.6x during the last 12 months.
As of today, the outstanding balance of the program is $274 million, about 4.1% of total bank liabilities.
On July 11, 2013, Fitch affirmed Guatemala's foreign currency (FC) and LC IDRs at 'BB+' and revised the Rating Outlook to Negative from Stable. The revision of the Outlook to Negative reflects Guatemala's slow progress in addressing longstanding structural weaknesses that continue to hinder growth potential and limit per capita income convergence to similarly rated peers. Despite a track record of macroeconomic stability buttressed by a culture of conservative policy-making, the country's structural shortcomings are likely to cap Guatemala's rating to the 'BB' category in the medium term.
RATING SENSITIVITIES
The transaction is sensitive to changes in the credit quality of BI or its GCA score, the performance of the DPR business line, a significant increase in the size of the DPR program as a percentage of the bank's total liabilities, and changes in the sovereign environment.
Although coverage levels are also a key input, the DSCRs have been consistently high, and therefore the transaction should be able to withstand a significant decline in cash flows without affecting the ratings. Nevertheless, a change in any of these variables will be analyzed in a rating committee to assess the possible impact on the transaction's rating.
Additional information is available at www.fitchratings.com.
Applicable Criteria and Related Research:
--'Future Flow Securitization Rating Criteria' (June 18, 2013);
--'Global Structured Finance Rating Criteria' (May 24, 2013);
--'Banco Industrial, S.A.' (Oct. 30, 2012);
from Lima to Istanbul' (Feb. 6, 2013).
Applicable Criteria and Related Research:
DPR Securitizations from Lima to Istanbul (A Comparative Perspective)
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=700111
Banco Industrial, S.A.
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=691215
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=800397
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.
Fitch Ratings has affirmed the ratings of the following notes issued by Industrial DPR Funding Ltd.:
--$300 million series 2007-1 due 2014 at 'BBB';
--$50 million series 2011-1 due 2018 at 'BBB':
--$40 million series 2011-2 due 2018 at 'BBB';
--$60 million series 2011-3 due 2021 at 'BBB';
--$30 million series 2011-4 due 2021 at 'BBB'.
The Rating Outlook is maintained at Stable.
The underlying issuance is a securitization of existing and future U.S. dollar-denominated diversified payment rights (DPR) originated by Banco Industrial S.A. (BI; 'BB'; Outlook Stable). The collateral includes MT 100 series payment orders and check remittances intended for third-party beneficiaries via BI. DPRs arise from transactions related to exports, capital flows and family remittances.
KEY RATING DRIVERS
The rating action reflects (i) BI's credit quality and strategic importance to Guatemala; (ii) the strength of BI's DPR business line; (iii) solid transaction performance; (iv) level of future flow debt relative to the bank's total liabilities, and (v) sovereign stability.
On July 19, 2013, Fitch affirmed BI's local currency (LC) Issuer Default Rating (IDR) at 'BB' and revised the Rating Outlook to Stable from Positive. The action follows a revision to Guatemala's sovereign Rating Outlook to Negative from Stable. Fitch assigns a going assessment score of 'GC1' to BI based on its position as the largest bank in the Guatemalan financial system. A GC1 reflects the almost certain or very likely ability of the bank to continue operating even under financial difficulties.
Total DPR flows through BI grew to $8.4 billion in 2012 from $7.5 billion in 2011, a 12% compound annual growth rate. Fitch's quarterly debt service coverage ratio (DSCR), which considers total DPR collections and maximum quarterly debt service, averaged 73.6x during the last 12 months.
As of today, the outstanding balance of the program is $274 million, about 4.1% of total bank liabilities.
On July 11, 2013, Fitch affirmed Guatemala's foreign currency (FC) and LC IDRs at 'BB+' and revised the Rating Outlook to Negative from Stable. The revision of the Outlook to Negative reflects Guatemala's slow progress in addressing longstanding structural weaknesses that continue to hinder growth potential and limit per capita income convergence to similarly rated peers. Despite a track record of macroeconomic stability buttressed by a culture of conservative policy-making, the country's structural shortcomings are likely to cap Guatemala's rating to the 'BB' category in the medium term.
RATING SENSITIVITIES
The transaction is sensitive to changes in the credit quality of BI or its GCA score, the performance of the DPR business line, a significant increase in the size of the DPR program as a percentage of the bank's total liabilities, and changes in the sovereign environment.
Although coverage levels are also a key input, the DSCRs have been consistently high, and therefore the transaction should be able to withstand a significant decline in cash flows without affecting the ratings. Nevertheless, a change in any of these variables will be analyzed in a rating committee to assess the possible impact on the transaction's rating.
Additional information is available at www.fitchratings.com.
Applicable Criteria and Related Research:
--'Future Flow Securitization Rating Criteria' (June 18, 2013);
--'Global Structured Finance Rating Criteria' (May 24, 2013);
--'Banco Industrial, S.A.' (Oct. 30, 2012);
from Lima to Istanbul' (Feb. 6, 2013).
Applicable Criteria and Related Research:
DPR Securitizations from Lima to Istanbul (A Comparative Perspective)
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=700111
Banco Industrial, S.A.
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=691215
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=800397
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.
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