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Rating Action:

MOODY'S AMERICA LATINA ASSIGNS Aaa.br AND Baa2 RATINGS TO THE SENIOR SHARES ISSUED BY FUNDO BONSUCESSO, SERIES 2004-1, A SECURITIZED TRANSACTION BACKED BY PERSONAL LOANS ORIGINATED BY BANCO BONSUCESSO, A BRAZILIAN BANK

15 Dec 2004
MOODY'S AMERICA LATINA ASSIGNS Aaa.br AND Baa2 RATINGS TO THE SENIOR SHARES ISSUED BY FUNDO BONSUCESSO, SERIES 2004-1, A SECURITIZED TRANSACTION BACKED BY PERSONAL LOANS ORIGINATED BY BANCO BONSUCESSO, A BRAZILIAN BANK

Approximately R$38.5 Million of Debt Securities Affected.

Sao Paulo, December 15, 2004 -- Moody's America Latina (Moody's) has assigned ratings of Aaa.br on its Brazilian National Scale and of Baa2 on its Global Local Currency Scale to the senior shares issued by Fundo Bonsucesso de Direitos Creditórios -- Emprestimos com Consignacão em Folha -- Series 2004-1 (Fund or the Issuer), a securitized transaction backed by a pool of personal loans originated by Banco Bonsucesso, a Brazilian bank.

Moody's ratings are primarily based on the following factors:

(i) minimum credit enhancement level of 23% provided through subordination;

(ii) minimum factor of 2.63x (weighted average asset interest rate divided by the weighted average liability interest rate);

(iii) cash reserve of approximately one month of payments to mitigate commingling risks, in an event of bankruptcy of Banco Bonsucesso as primary servicer;

(iv) strict eligibility criteria for the purchase of assets, including geographic concentration and delinquency levels, origination criteria, and maximum loan tenor;

(v) the credit quality of the assets supporting the senior shares, which is 100% comprised of personal loans to government employees that enjoy job stability mandated by law (cannot be fired unless for cause); and

(vi) the legal structure of the transaction, including the bankruptcy remoteness of the Fund.

The personal loans included in the securitized pool were extended by Banco Bonsucesso solely to government employees that enjoy job stability mandated by law. The bank collects its funds primarily through a method of consignment of payroll deductions, under which loan installments are deducted by a government agency from the employee's paycheck and sent directly to Banco Bonsucesso. Interest and principal on the senior shares are payable from the cash flows stemming from these personal loans.

THE ORIGINATOR

Headquartered in Belo Horizonte, in the Brazilian state of Minas Gerias, Banco Bonsucesso S.A. (Bonsucesso) is a regional, "niche" financial institution specializing in providing personal loans to public service employees at the state and municipal levels. The bank ranks fourth in asset size among regional banks headquartered in the state. Founded in 1992, Bonsucesso is 100.0% controlled by the Bonsucesso Participacões e Empreendimentos S.A. (BPE), a closely-held, family-owned group founded in the 1970s. The bank as of June 30, 2004, had an asset size of R$215 million (equivalent to US$ 72 million), ranking it among the 120th largest financial institutions in Brazil. The bank's loan portfolio represents 66% of the bank's asset base, of which 70% are composed by personal loans.

STRUCTURE

Fundo Bonsucesso is a Master Program, closed-end FIDC allowed to issue different series of senior and subordinated shares, backed by a common pool of personal loans. While the legal final maturity date of the Master Program is October 2014, each series issued under the Master Program may have different legal final maturity dates. Series 2004-1 was the first series to be issued from the Master Program; it has a 36-month tenor, with redemptions occurring in eight quarterly equal amortizations, following a 15-month grace period. Proceeds of the Series 2004-1 were used to make revolving purchases of personal loan receivables originated by Banco Bonsucesso. Fundo Bonsucesso is offering senior shareholders a total return equivalent to 109% of the spot CDI (the Brazilian Interbank Rate).

Subordinated shares were purchased by the originator, and subordination level was set at a minimum of 23%. The shares are backed by monthly cash flows in Reais derived from approximately 61,139 active obligors at closing. It is important to note that, because CDI is a floating rate, this transaction was analyzed by Moody's assuming that, under a stress scenario, the maximum return offered to investors is 120% of the future CDI rate plus spread, says Watanabe.

The personal loan receivables must comply with certain characteristics in order to be eligible to the Fund. For example, the borrower must be a government employee enjoying job stability granted by law. In addition, concentration levels per Jurisdiction (defined as the federal, state, or municipality responsible for making salary payments) are limited according to that Jurisdiction's ability to make timely payments of salaries, and transfer those funds to Fundo Bonsucesso on a timely basis. Finally, the personal loan should be originated under a secured, automated payroll system to avoid fraud and errors in calculating the payroll deductions.

Details of Moody's analysis can be found in the Fundo Bonsucesso -- Series 2004-1 New Issue Report.

RATING SUMMARY

Fundo Bonsucesso de Direitos Creditórios -- Emprestimos com Consignacão em Folha -- Series 2004-1 -- Senior Shares -- Aaa.br (Brazilian National Scale); Baa2 (Global Local Currency Scale)

New York
Susan Knapp
Managing Director
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Sao Paulo
Roberto Watanabe
Asst Vice President - Analyst
Structured Finance Group
Moody's America Latina Ltda.
55-11-3443-7444

No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

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