Fitch Affirms La Hipotecaria's El Salvadorian Cross-Border Transactions; Outlook Stable

CHICAGO--()--Fitch Ratings has affirmed the ratings for La Hipotecaria's El Salvadorian

cross-border 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 0.9% of the original pool balance.

Increased Credit Enhancement: Credit enhancement has built during the last year due to the sequential nature of the structure. As of April 2016, it has increased to 22.8% up from 19.1% observed during the same month of last year. Stability on excess spread provides additional enhancement.

Recoveries: As of April 2016, 20 loans reached 180+ days. Nonetheless, only one has been foreclosed with a recovery of 100%.

Credit Quality of the Sovereign: Fitch rates El Salvador's Long-Term Issuer-Default Ratings (IDRs) 'B+'/Stable Outlook and country ceiling (CC) 'BB'. As a result of the macroeconomic environment, Fitch applies higher multiples to the underlying portfolio's expected foreclosure frequency to ensure that the structure can withstand significant periods of stress. The challenge factor (CF) the agency assign to El Salvador is CF3, which allows the transaction to reach a maximum rating up to the 'CC' level.

Credit Quality of Guaranty Provider: La Hipotecaria El Salvadorian Mortgage Trust 2013-1 certificates 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

The rating of the series A notes is sensitive to changes in the credit quality of El Salvador. A downgrade of El Salvador's ratings, specifically its CC, would lead to a downgrade on the notes. In addition, severe increases in foreclosure frequency and prepayments as well as reductions in recovery rates could lead to a downgrade of the notes.

The rating of series 2013-1 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 Eleventh Mortgage-Backed Notes Trust

--$37.8 million series A notes at 'BBsf'; Outlook Stable

La Hipotecaria El Salvadorian Mortgage Trust 2013-1

--S33.75 million series 2013-1 certificates at 'AAAsf; 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 El Salvadorian Mortgage Trust 2013-1 -- Appendix

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=707244

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1006025

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1006025

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