Fitch Affirms La Hipotecaria's Twelfth Mortgage-Backed Notes Trust & Panamanian Mtg Trust 2014-1

CHICAGO--()--Fitch Ratings has affirmed the ratings for La Hipotecaria's Twelfth Mortgage-Backed Notes Trust and La Hipotecaria Panamanian Mortgage Trust 2014-1 transactions. A full list of rating actions follows at the end of this release.

KEY RATING DRIVERS

Performance of the Underlying Assets: Delinquencies within the underlying portfolio have performed better than Fitch's expectations. Such low delinquency levels can be partly explained by the fact that the vast majority of the securitized loans benefit from a direct deduction payment mechanism, which helps mitigate willingness to pay risk. Cumulative +180-day delinquencies represent 0.4% of the original pool balance.

Credit Enhancement: The series A notes benefit from a 8.4% credit enhancement. The decrease from its initial 9% level observed in the credit enhancement is due to the delay in fiscal credits payments. It is expected the credit enhancement level will increase as of the payment date in June, because of the fiscal credits from previous periods.

Credit Quality of the Sovereign: Fitch rates Panama's Long-Term Foreign- and Local-Currency (LC) Issuer Default Ratings (IDRs) 'BBB'/Stable Outlook its country ceiling (CC) 'A'. Fitch believes Panama's stable macroeconomic performance has a positive impact on the transactions. The challenge factor (CF) the agency assign to Panama is CF3, which allows the transaction to reach a maximum potential rating up to the 'CC' level.

Credit Quality of Guaranty Provider: The class A-1 certificates on La Hipotecaria Panamanian Mortgage Trust 2014-1 benefit from a payment guarantee by Overseas Private Investment Corporation (OPIC) in the event funds are insufficient to cover the monthly interest and final principal payment of the notes. OPIC is backed by the full faith and credit of the United States of America (U.S.; rated 'AAA'/Outlook Stable).

RATING SENSITIVITIES

In Fitch's view, future improvement in credit enhancement, stability in delinquencies, prepayment rates, recoveries and excess spread, could lead to an upgrade of the rating of the series A notes on La Hipotecaria's Twelfth Mortgage-Backed Notes as well as an upgrade of the rating on the class A-2 certificates on La Hipotecaria Panamanian Mortgage Trust 2014-1.

Severe increases in delinquencies and prepayments, as well as reductions in recovery rates, could lead to a downgrade of the series A notes on La Hipotecaria's Twelfth Mortgage-Backed Notes as well as of the class A-2 certificates on La Hipotecaria Panamanian Mortgage Trust 2014-1. In addition, these ratings are sensitive to changes in the credit quality of Panama.

The rating of the class A-1 certificates is sensitive to changes in the credit quality of the U.S. sovereign as OPIC is an agency of the U.S.

DUE DILIGENCE USAGE

No third party due diligence was provided or reviewed in relation to this rating action

Fitch has affirmed the following ratings:

La Hipotecaria Twelfth Mortgage-Backed Notes Trust

--$68.25 million series A notes at 'BBBsf'; Outlook Stable.

La Hipotecaria Panamanian Mortgage Trust 2014-1

--S56.25 million class A-1 certificates at 'AAAsf; Outlook Stable;

--S4.5 million class A-2 certificates at 'BBBsf; Outlook Stable.

Additional information is available at www.fitchratings.com.

Sources of Information:

Fitch has checked the consistency and plausibility of the information published by La Hipotecaria and no material discrepancies were noted that would impact Fitch's rating analysis.

Applicable Criteria

Criteria for Rating Securitizations in Emerging Markets (pub. 06 Nov 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=809588

Exposure Draft: Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 Apr 2016)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=878412

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

Latin America RMBS Rating Criteria (pub. 17 Dec 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=874906

Related Research

La Hipotecaria Panamanian Mortgage Trust 2014-1 - Appendix

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=759347

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1006024

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1006024

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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Contacts

Fitch Ratings
Primary Analyst
Juan Pablo Gil
Senior Director
+1-312-606-2301
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Committee Chairperson
Greg Kabance
Managing Director
+1-312-368-2052
or
Media Relations:
Elizabeth Fogerty, New York, +1 212-908-0526
Email: elizabeth.fogerty@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Juan Pablo Gil
Senior Director
+1-312-606-2301
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Committee Chairperson
Greg Kabance
Managing Director
+1-312-368-2052
or
Media Relations:
Elizabeth Fogerty, New York, +1 212-908-0526
Email: elizabeth.fogerty@fitchratings.com