CHICAGO--(BUSINESS WIRE)--Fitch Ratings affirms the following senior secured notes issued by MAEXIM Secured Funding Limited (MAEXIM) Series 1-2013:
--Class A1 notes at 'AAA'; Outlook Stable;
--Class A2 notes at 'BB+'; Outlook revised to Positive from Stable.
The transaction is backed by euro-denominated notes (collateral securities) issued by the Hungarian Export-Import Bank (Eximbank) under its EUR2 billion Global Medium Term Note Programme (MTN Programme). The collateral securities are unconditionally and irrevocably guaranteed by the government of Hungary.
The Multilateral Investment Guarantee Agency (MIGA) has provided a guarantee to MAEXIM for 95% of the scheduled payments due under the collateral securities. The MIGA contract of guarantee only relates to the collateral securities, but as the scheduled coupon and principal payments on the class A1 notes represent 95% of the scheduled payments of the collateral securities, the class A1 notes are fully covered by the payments received under the MIGA contract of guarantee.
The ratings address timely payment of interest on a semi-annual basis and payment of principal at legal maturity.
KEY RATING DRIVERS
Guarantee of Sovereign Nonpayment: The MIGA contract of guarantee only relates to the collateral securities, but, as the scheduled coupon and principal payments on the class A1 notes represent 95% of the scheduled payments of the collateral securities, the class A1 notes are fully covered by the payments received under the MIGA contract of guarantee. The rating assigned to the class A1 notes is consistent with the credit quality of the guarantee provider, MIGA. A member of the World Bank Group (WBG), MIGA has access to private- and public-sector players and has considerable experience and expertise in situation involving political risk.
Rating of Collateral Securities: The rating assigned to the class A2 notes is linked to the 'BB+'; Outlook Positive rating assigned to the collateral securities, which benefit from an irrevocable guarantee by Hungary. On May 6, 2015, Fitch affirmed the ratings of both Hungary and the collateral securities at 'BB+' and revised the Outlook to Positive from Stable.
Sovereign Ties to Eximbank: On May 28, 2015, Fitch affirmed Eximbank's long-term Issuer Default Rating (IDR) at 'BB+'; and revised the Outlook to Positive from Stable. Eximbank's IDRs are equalized with those of the Hungarian sovereign, reflecting Fitch's view of a moderate probability of state support if required. The agency believes that the government's propensity to support Eximbank is strong. However, its ability to provide support is moderate, as reflected in the sovereign ratings.
Adequate Liquidity: An additional six months liquidity is in place due to the fact that the collateral securities pay interest in advance, while the series 1-2013 notes pay coupons in arrears. As of August 2015, the expense reserve account balance was approximately EUR1.99 million.
RATING SENSITIVITIES
The rating of the class A1 notes is directly linked to the credit quality of MIGA, the guarantee provider. A change in Fitch's assessment of the credit quality of MIGA would automatically result in a change in the rating on the class A1 notes. Any change in Fitch's view on the contract of guarantee, or deterioration on the credit quality of the counterparties may result in a downgrade to the notes.
The rating of the class A2 notes reflects the credit quality of the collateral securities. Any change to the IDR of Hungary and as a consequence to Eximbank's IDR or the notes issued under Eximbank's MTN program would cause a change to the rating of the class A2 notes.
DUE DILIGENCE USAGE
No third-party due diligence was provided to or reviewed by Fitch in relation to this rating action.
Additional information is available at www.fitchratings.com.
Sources of Information:
In addition to the sources of information identified in the master criteria, this action was additionally informed by information from Eximbank.
Applicable Criteria
Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158
Criteria for Rating Caps and Limitations in Global Structured Finance Transactions (pub. 28 May 2014)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748781
Global Structured Finance Rating Criteria (pub. 06 Jul 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952
Additional Disclosures
Dodd-Frank Rating Information Disclosure Form
https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=991014
Solicitation Status
https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=991014
Endorsement Policy
https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31
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