Fitch Downgrades MTROCB 07U and MTROCB 08U to 'CCCsf'

MONTERREY, Mexico--()--Fitch Ratings has downgraded and removed from Rating Watch Negative the following Metrofinanciera, S.A.P.I. de C.V., SOFOM, E.N.R. (Metro) residential mortgage back securities (RMBS) as follows:

MTROCB 07U

--UDI indexed notes due 2033 downgraded to 'CCCsf' from 'B+sf' and to 'CCC(mex)vra' from 'BBB(mex)vra'; removed from Rating Watch Negative.

MTROCB 08U

--UDI indexed notes due 2033 downgraded to 'CCCsf' from 'B+sf' and to 'CCC(mex)vra' from 'BBB(mex)vra'; removed from Rating Watch Negative.

KEY RATING DRIVERS

The rating actions reflect the transactions' exposure to liquidity risk given Metro's inability to transfer collections from its banking accounts to the trust accounts in order to cover near term coupon payments. This rating action also considers the consistent deterioration of the underlying loan collateral which results in weaker credit protection for both notes.

As of the April 2013 distribution date, overcollateralization (excluding +90 days delinquent loans) for MTROCB 07U and MTROCB 08U stands at -45.1% and -46.1%, respectively. Both levels negatively compare with those observed twelve months ago which were -34.7% and -33.4%, respectively.

Metro is the primary servicer on these transactions, and its collection accounts are temporarily frozen following a lawsuit filed by an unsecured investor. Metro is leading different alternatives to redirect borrowers' payments to the issuer trust accounts in order to stabilize cash-flows.

RATING SENSITIVITIES

Further downgrades could occur if, despite paying the next coupons, Metro's banking accounts continue to be frozen in the coming months and its servicing abilities remain challenged worsening asset quality metrics and expected losses.

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

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (June 6, 2012);

--'Rating Criteria for RMBS in Latin America' (Feb. 15, 2013);

--'RMBS Latin America Criteria Addendum - Mexico' (Aug. 2, 2012).

Applicable Criteria and Related Research

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679923

Rating Criteria for RMBS in Latin America

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=701131

RMBS Latin America Criteria Addendum - Mexico (Mortgage Loss and Cash Flow Assumptions)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=683811

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=789740

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.

Contacts

Fitch Ratings
Primary Analyst
Elsa Segura, +52 (81) 8399 9100
Analyst
Fitch Mexico S.A. de C.V.
or
Secondary Analyst
Rene Ibarra, +52 (81) 8399 9130
Senior Director
or
Committee Chairperson
Greg Kabance, +1-312-368-2052
Managing Director
or
Media Relations:
Elizabeth Fogerty, New York, +1-212-908-0526
elizabeth.fogerty@fitchratings.com

Sharing

Contacts

Fitch Ratings
Primary Analyst
Elsa Segura, +52 (81) 8399 9100
Analyst
Fitch Mexico S.A. de C.V.
or
Secondary Analyst
Rene Ibarra, +52 (81) 8399 9130
Senior Director
or
Committee Chairperson
Greg Kabance, +1-312-368-2052
Managing Director
or
Media Relations:
Elizabeth Fogerty, New York, +1-212-908-0526
elizabeth.fogerty@fitchratings.com