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Rating Action:

MOODY'S AMERICA LATINA HAS ASSIGNED A PROVISIONAL RATING OF (P)Aa3.br TO THE FIRST SERIES OF CERTIFICATES TO BE ISSUED BY BETA SECURITIZADORA

 The document has been translated in other languages

14 Jun 2005
MOODY'S AMERICA LATINA HAS ASSIGNED A PROVISIONAL RATING OF (P)Aa3.br TO THE FIRST SERIES OF CERTIFICATES TO BE ISSUED BY BETA SECURITIZADORA

Approximately R$7.1 Million of Certificates Affected.

Sao Paulo, June 14, 2005 -- Moody's America Latina has assigned provisional ratings of (P)Aa3.br on its Brazilian National Scale and of (P)Ba2 on its Global Local Currency Scale to the first series of Certificados de Recebiveis Imobiliarios (the certificates or the CRIs) to be issued by Beta Securitizadora S.A. (Beta, the issuer or the lessor).

The issuer is an entity ultimately owned by Banif Investimentos SGPS S.A., which was established for the sole purpose of acquiring real estate-related assets in Brazil and issuing certificates backed by those assets. Through an equity capitalization from Banif Multi-Fund, Ltd. (a mutual fund domiciled in the Cayman Islands and ultimately sponsored by Banif Investimentos SGPS S.A.), Beta acquired an office property in Brazil that will be leased by Banco Banif Primus S.A. (Banco Banif, the tenant or the lessee).

The certificates are backed by: (i) an unconditional and irrevocable obligation of Banco Banif as lessee to pay rent in an amount sufficient to make timely payments of interest and to fully amortize the principal of the loan, and (ii) the ownership of the office property as collateral.

According to Roberto Watanabe, an Assistant Vice President at Moody's, the provisional ratings are based on the following factors:

• The promise to investors, which is: (i) the timely payment of interest on the certificates and (ii) the ultimate payment of principal on the scheduled final maturity date;

• The relatively fast amortization period of 12 years;

• The "go dark" value available to investors, in the event of default of Banco Banif as lessee;

• The cash reserve account, to be funded at closing, replenishable if used and in an amount equal to one year of interest and trust expense payments;

• The ability of Banco Itaú S.A (bank deposit ratings of Aaa.br on the national scale) to act as servicer;

• Well-established Brazilian law and regulations for real estate securitization; and

• The legal structure of the transaction, including the bankruptcy remoteness of the issuer.

TRANSACTION OVERVIEW

Beta Securitizadora will issue R$7.1 million in one class of fixed-rate certificates indexed to the IGP-M/FGV. The deal will have a 12-year tenor, and amortizations are scheduled to occur in 12 equal, annual principal and interest payments. On each payment date, all cash flows collected will be used to pay the certificates.

The lessee will occupy three floors of the Plaza JK building, a Class A building located in the Itaim submarket of Sao Paulo City, adjacent to the Faria Lima financial district. The floors to be occupied are the 15th, 16th, and 17th floors of this building, with each floor having 575.22 square meters (6,189 square feet), which represents about 28% of the total area. Garage space assigned to BANIF totals 72 spaces, or 24% of the total garage volume.

CASH FLOW ANALYSIS

In determining the transaction's "go dark" value, Moody's took into account rents, vacancy allowance, and operational expense ratios consistent with market parameters. Moody's also took into consideration capital items such as leasing commissions and tenant improvement costs that would be necessary to resell a dark property. Capitalization rates are also adjusted upwards to reflect that the property may be leased to a below investment grade tenant.

Moody's calculated a go-dark LTV of 74% at the beginning of the transaction. This implies that the property can lose 26% of its value and the loan would still have a 100% recovery if there was a default on day one. This stress is consistent with a Ba2 rating. The LTV ratio declines during the loan term due to the fast 12 year amortization period.

A liquidity reserve will be funded at closing, representing approximately 11% of the original issuance amount. This amount represents approximately 12 months of interest on the certificates, in addition to fees and expenses for the same period. The liquidity reserve, replenishable if used, allows for the timely payment of interest on the certificates in case the lessee defaults and the property needs to be sold.

In addition to obtaining recovery from the disposition of the property, it is Moody's understanding that under Brazilian law, noteholders also have the right to sue the tenant for any remaining unpaid rents. This can further increase recovery on the certificates.

Details of Moody's analysis can be found in the forthcoming Beta Securitizadora presale report.

RATING SUMMARY

CRI Certificates -- Beta Securitizadora S.A. -- Series 2005-1 -- (P)Aa3.br (National Scale) & (P)Ba2 (GLCR).

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.
55-11-3043-7300

No Related Data.
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