CHICAGO--(BUSINESS WIRE)--Fitch Ratings has upgraded the ratings for the series A notes on La Hipotecaria's Eight Mortgage-Backed Notes Trust and La Hipotecaria Panamanian Mortgage Trust 2007-1 certificates to 'Asf' from 'BBB+sf'. 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 1.75% of the original pool balance.
Credit Enhancement: The series A notes continue to benefit from increasing 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 33.4% up from 28.8% observed during the same month of last year. Stability on excess spread provides additional enhancement.
Recoveries: As of April 2016, 69 loans reached 180+ days. Of these, 48 have been foreclosed showing recoveries of 95.9%.
Credit Quality of the Sovereign: Fitch rates Panama's Long-Term Foreign-Currency (FC) and Local-Currency (LC) Issuer Default Ratings (IDRs) 'BBB'/Stable Outlook and 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 assigns to Panama is CF3, which allows the transaction to reach a maximum rating up to the 'CC' level.
Severe increases in delinquencies and prepayments, as well as reductions in recovery rates, could lead to a downgrade on the series A notes on La Hipotecaria's Eight Mortgage-Backed Notes as well as on La Hipotecaria Panamanian Mortgage Trust 2007-1 certificates. In addition, these ratings are sensitive to changes in Panama's credit quality.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action
Fitch has upgraded the following ratings:
La Hipotecaria Eight Mortgage-Backed Notes Trust
--$76.05 million series A notes to 'Asf' from 'BBB+sf'; Outlook Stable
La Hipotecaria Panamanian Mortgage Trust 2007-1
--S73.05 million 2007-1 certificates to 'Asf' from 'BBB+sf'; Outlook Stable;
--Unenhanced Long-Term Rating to 'Asf' from 'BBB+sf'; 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.
Criteria for Rating Securitizations in Emerging Markets (pub. 06 Nov 2014)
Exposure Draft: Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 Apr 2016)
Global Structured Finance Rating Criteria (pub. 06 Jul 2015)
Latin America RMBS Rating Criteria (pub. 17 Dec 2015)
Dodd-Frank Rating Information Disclosure Form