MOODY'S LATIN AMERICA HAS ASSIGNED A PROVISIONAL NATIONAL SCALE RATING OF (P)Aa2.ar, (P)Baa1.arAND (P)B1.ar TO THE CLASS A, CLASS B AND CLASS C DEBT SECURITIES RESPECTIVELY ISSUED BY BANCO SOCIETE GENERALE (AS TRUSTEE).
Approximately AR $30.0 Million of Debt Securities Affected.
Buenos Aires, March 10, 2004 -- Moody's Latin America has assigned a provisional national scale rating
of (P)Aa2.ar to the Class A debt securities (VDFA) issued by Banco
Societe Generale (acting solely in its capacity as Trustee) and a global
local currency rating of (P)B1.
Moody's also assigned a provisional rating of (P)Baa1.ar,
on the national rating scale, and a global local currency rating
of (P)B3 to the VDF Class B (VDFB) subordinated debt securities and a
provisional rating of (P)B1.ar, on the national rating scale,
and a global local currency rating of (P)Caa2 to the Class C Certificates
The VDFA, VDFB, and CP will by backed by a pool of personal
loans originated by Banco Banex S.A. and granted to pensioners
that receive their monthly pensions through ANSES (Argentine National
Government Agency of Social Security) and to public employees of the San
Luis provincial government. In both cases, Banco Banex is
the payment agent for these government agencies and deducts the monthly
installment directly from the borrower's paycheck. Interest and
principal on the VDFA and VDFB are payable from the cash flow on the loans.
There are three main credit risks in this transaction that are explained
further in this press release. Although there is a pool of personal
loans backing the securities, the ultimate source of payment is
ANSES (Argentine National Government Agency of Social Security) and the
Government of the Province of San Luis in Argentina. In addition,
Moody's evaluated the commingling of funds risk at the Banex level.
Banex was founded in 1996 after a merger between Exprinter Banco S.A.
and Banco San Luis S.A. with the objective of becoming a
leading player in the regional market.
The bank provides financial services to pensioners and government employees.
Banex is the largest private bank in the country focused on these specific
The Bank is contracted to be the financial agent for the provincial government
of San Luis until 2011.
Originator: Banco Banex S.A.
Up to 30 Million Pesos Fixed Rate Securities - "Fideicomiso Financiero
Banex IV", Class A rated Aa2.ar, Class B rated Baa1.ar
and Class C rated B1.ar
Banco Societe Generale (Issuer and Trustee) will issue two classes of
debt securities (VDFA and VDFB) and a residual piece, all denominated
in Argentine pesos and payable from payments on personal loans originated
by Banex. VDFA and VDFB constitute 70% and 20% of
the original bond balance respectively.
At closing, the bonds will be backed by a pool of [44,300]
loans that account for a total amount of Argentine pesos [30.01]
VDFA and VDFB will bear fixed annual interest rates of [5.5%]
and [8%] respectively.
The assets of the Trust consist of Argentine peso-denominated,
fixed rate personal loans originated by Banex and settled on promissory
notes signed by the borrowers.
At closing, total reserves account for approximately 14%
of the original VDFA balance. These funds mitigate commingling
risk with Banex because they can be used to cover liquidity shortfalls
in case the servicer should be replaced.
Class A and Class B investors are promised timely interest and ultimate
principal at legal final, February 2007. Promise to Class
C investors is only ultimate principal at legal final.
85% of the cash flow collected, principal and interest,
after paying expenses and replenish reserve funds, is used to amortize
Class A. The same procedure applies to Class B, which is
entitled to 10% of any cash flow collected.
If an early amortization event occurs, the structure becomes fully
sequential and 100% of the remaining cash flow after paying expenses
and interest on Class A and Class B is used to pay Class A.
Any voluntary prepayments on the loans will be allocated to prepay Class
The securitized pool is composed by three different types of loans:
A. Loans granted to pensioners of the Argentine National Government
Agency of Social Security (ANSES).
ANSES is an agency in charge of centralized payments of social security
in Argentina, namely: pensions, retirement pensions,
subsidies, unemployment insurance, etc.
Since 1997, ANSES has established a system based on a network of
11 banks that act as payment agents for pensions throughout the country.
ANSES transfers the funds and database containing the appropriate information
on each pensioner's account to selected payment agents, which are
entitled to pay monthly pensions and to provide financial services such
as personal loans. These personal loans to ANSES pensioners' make
up [67.02%] of the securitized pool.
Banex is the largest private bank within the ANSES system centralizing
payments for about 15% of the total ANSES pensioners (450,000
B. Loans granted to pensioners of ANSES through Gala Cooperative.
Approximately a [23.08%] of the pool will be granted
to ANSES national pensioners, who do not receive their monthly pensions
through Banex. Gala Cooperative originates the loans according
to Banex's criteria.
Gala is a cooperative created with the sole purpose of providing financial
services to pensioners.
ANSES deducts the monthly payments on the loans and deposits the funds
in a separate account at Banex. After deducting the amounts assigned
to the Trust, the remainder is released to the cooperative,
thus mitigating commingling risk, says Moody's.
C. Loans granted to current public employees of San Luis Province
that receive their salaries through Banex.
The legal framework for these loans is settled in the agreement between
the Province of San Luis and Banex (former Banco San Luis) according to
which the latter has agreed to be the payment/financial agent of the Province
until 2011. As a financial agent, Banex is responsibile for
collecting taxes and, as a payment agent, for making payments
to public employees.
Banex deducts the monthly payment of the loans directly from the employee's
account. These loans make up [9.90%] of the
The origination and underwriting standards of Banex were also considered
in Moody's analysis. In Moody's opinion, procedures employed
by Banex and the breadth of the documents reviewed in the loan approval
process are satisfactory.
Given that the provisional rating for the transaction of (P)Aa2.ar
is higher than the rating of the Originator and Servicer, Moody's
evaluates the effectiveness of back-up servicer arrangements and
the effect that the introduction of a backup servicer would have in the
performance of the assets.
The transaction documents do not specify a particular backup servicer,
but there are currently 11 banks working as payment agents for ANSES.
In Moody's opinion, the process of changing the payment agent (servicer)
should be simple since ANSES provides a standard system across its payment
Moreover, Moody's believes that the 3% servicing fee that
the trustee is allowed to offer to a successor backup servicer is far
beyond current market fees (0.5%), making this service
attractive to other potential payment agents.
Also, the expected final for Class A and Class B is 10 and 15 months
respectively thus the likelihood that backup servicer arrangements will
be activated is low.
About 90.1% of the pool will be backed by loans granted
to ANSES's pensioners, thus it is highly probable that a disruption
in the flow of payments from ANSES to pensioners would severely affect
the performance of the pool.
If ANSES stops making payments on pensions, the obligation of repayment
of the loans will rely solely upon borrowers which in turn will have to
make payments voluntarily as opposed to direct deductions. Moreover,
borrowers would have to make these payments from other resources than
their pension payments, which in Moody's opinion is very unlikely
As a result, the risk of non-payment under this type of credit
is associated with the ability and willingness of ANSES of making payment
About 9.9% of the pool is linked to the ability of the government
of the province of San Luis to make payments on salaries. An interruption
in this flow may also affect the performance of the pool, because
the Servicer will not be able to deduct monthly loan payments directly
from the borrowers' accounts. Nevertheless, even if San Luis
stops making payments, the cash flow from ANSES is sufficient to
pay Class A holders. Another source of risk for this asset type
is if the employees lose their positions within the government of San
Luis. However, in Moody's opinion, government employment
is characterized by its stability.
Moody's calculated the joint probability of default of the two entities
using a high correlation case and concluded that maximum rating the transaction
could achieve is a global local currency rating of B1. The joint
probability of default was based on the credit quality of ANSES and San
Moreover to determine the appropriate credit enhancement level to sustain
the rating level on the transaction, Moody's considered factors
related to the Argentinean markets, such as decrease of the monthly
payment rate and changes in the macroeconomic scenario.
The expected loss was analyzed together with other subjective factors
related to the transaction to determine the appropriate rating.
Moody's concluded that the credit enhancement, which includes 30%
subordination, 14% reserves and the 41% of net excess
spread are sufficient to pay Class A investors in full and on time.
More details about the transaction will be published in our upcoming Pre
Sale Report, which will be available in Moody's website, www.moodys.com.
Please use Quick Search, found in the upper right corner of the
home page, to locate the issuer and associate research.
Structured Finance Group
Moody's Investors Service
Martin Fernandez Romero
Structured Finance Group
Moody's Investors Service