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Fitch Affirms La Hipotecaria's El Salvadorian Transactions

CHICAGO--(BUSINESS WIRE)--Fitch Ratings has affirmed the following ratings:

La Hipotecaria Eleventh Mortgage-Backed Notes Trust

--$37.8 million series A senior notes at 'BB+sf', Outlook Negative.

La Hipotecaria El Salvadorian Mortgage Trust 2013-1

--$33.75 million series 2013-1 certificates at 'AAAsf', Outlook Stable.

KEY RATING DRIVERS

The affirmations of the ratings reflect; (i) the stable and growing credit enhancement (CE) benefiting the series A notes; (ii) the underlying mortgage portfolio's low level of delinquencies; and (iii) the credit quality of El Salvador. In addition, the rating of the series 2013-1 certificates reflects the credit quality of the guaranty provider, Overseas Private Investment Corporation (OPIC), which is backed by the full faith and credit of the U.S. government ('AAA'/Outlook Stable).

CE to the series A senior notes has built slowly during the last year due to the sequential nature of the transaction structure. As of May 2014, it stood at 17.47%, up from 16% at transaction closing.

During the last 12 months, delinquencies within the underlying portfolio have performed in line with Fitch's expectations. Cumulative +180-day delinquencies represent 0.18% of the original pool balance. The vast majority of the securitized loans benefit from a direct deduction payment mechanism, which helps mitigate willingness to pay risk.

Fitch rates El Salvador's Issuer Default Ratings (IDRs) 'BB-', Outlook Negative and its country ceiling (CC) 'BB+' (the two notch difference is partially explained by El Salvador's official dollarization regime). As a result of the macroeconomic environment, Fitch applies higher multiples to the underlying portfolio's expected frequency of foreclosure (FOF) to ensure that the structure can withstand significant periods of stress. The rating assigned to the series A notes is capped by El Salvador's CC.

RATING SENSITIVITIES

The rating of series A 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 FOF and prepayments as well as reductions in recovery rates could lead to a downgrade of the notes.

The rating of series 2013-1 is sensitive to changes in the credit quality of the U.S. sovereign as OPIC is an agency of the U.S.

TRANSACTION SUMMARY

The $37.8 million series A senior notes are backed by residential mortgages made to lower-middle-income borrowers in El Salvador by La Hipotecaria. In addition, the Eleventh Mortgage Trust issued $5.4 million in series B notes and $1.8 million in series C notes, which have not been rated.

Approximately $33.75 million of the $37.8 million series A senior notes have been transferred to a U.S. grantor trust (La Hipotecaria El Salvadorian Mortgage Trust 2013-1). The U.S. trust has issued $33.75 million in 2013-1 certificates, which are pass-through certificates. The 2013-1 certificates benefit from a guaranty by OPIC.

The series 2013-1 certificates are a pass-through of 89% of the series A senior notes and benefit from a financial guaranty by OPIC guaranteeing timely payment of interest and ultimate payment of principal on the certificates.

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

Applicable Criteria and Related Research:

--'Rating Criteria for RMBS in Latin America' (Feb. 13, 2014);

--'Criteria for Rating Securitizations in Emerging Markets' (June 18, 2014);

--'Global Structured Finance Rating Criteria' (June 2, 2014);

--'Counterparty Criteria for Structured Finance and Covered Bonds' (May 14, 2014).

Applicable Criteria and Related Research:

Rating Criteria for RMBS in Latin America

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=732815

Criteria for Rating Securitizations in Emerging Markets

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=749927

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748821

Counterparty Criteria for Structured Finance and Covered Bonds

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=837196

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
Andres de la Cuesta, +1 312-606-2330
Associate Director
Fitch Ratings, Inc.
70 W. Madison St.
Chicago, IL 60602
or
Secondary Analyst
Santiago Toro, +57-1-326-9999
Analyst
or
Committee Chairperson
Juan Pablo Gil, +56 2 2499 3306
Senior Director
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com