Recipient email addresses will not be used in mailing lists or redistributed.
Use semicolon to separate each address, limit to 20 addresses.
characters you see
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
Don't want to see this again?
Accept our to continue to Moodys.com:
AND SCROLL DOWN!
By clicking “I AGREE” [at the end of this document],
you indicate that you understand and intend these terms and conditions to be
the legal equivalent of a signed, written contract and equally binding, and
that you accept such terms and conditions as a condition of viewing any and all
Moody’s information that becomes accessible to you [after clicking “I AGREE”] (the
“Information”). References herein to “Moody’s” include Moody’s
Corporation, Inc. and each of its subsidiaries and affiliates.
Terms of One-Time Website Use
you have entered into an express written contract with Moody’s to the contrary,
you agree that you have no right to use the Information in a commercial or
public setting and no right to copy it, save it, print it, sell it, or publish
or distribute any portion of it in any form.
acknowledge and agree that Moody’s credit ratings: (i) are current opinions of
the future relative creditworthiness of securities and address no other risk; and
(ii) are not statements of current
or historical fact or recommendations to purchase, hold or sell particular
securities. Moody’s credit ratings and
publications are not intended for retail investors, and it would be reckless
and inappropriate for retail investors to use Moody’s credit ratings and
publications when making an investment decision. No
warranty, express or implied, as the accuracy, timeliness, completeness,
merchantability or fitness for any particular purpose of any Moody’s credit
rating is given or made by Moody’s in any form whatsoever.
3. To the extent permitted by law, Moody’s and its directors,
officers, employees, representatives, licensors and suppliers disclaim
liability for: (i) any indirect, special, consequential, or incidental losses
or damages whatsoever arising from or in connection with use of the
Information; and (ii) any direct or compensatory damages caused to any person
or entity, including but not limited to by any negligence (but excluding fraud
or any other type of liability that by law cannot be excluded) on the part of
Moody’s or any of its directors, officers, employees, agents, representatives,
licensors or suppliers, arising from or in connection with use of the
4. You agree to read [and
be bound by] the more detailed disclosures regarding Moody’s ratings and the
limitations of Moody’s liability included in the Information.
5. You agree that any disputes relating to this agreement or your use of
the Information, whether sounding in contract, tort, statute or otherwise,
shall be governed by the laws of the State of New York and shall be subject to
the exclusive jurisdiction of the courts of the State of New York located in
the City and County of New York, Borough of Manhattan.
16 May 2013
Mexico, May 16, 2013 -- Moody's de México S.A. de C.V. (Moody's)
announced today that the loan modification program to be implemented by
ABC Capital, S.A. Institución de Banca Múltiple
(ABC) in connection with the CREYCB 06 and 06-2U certificates could
have a credit positive impact on the transaction, because it could
turn highly delinquent loans into performing, cash flowing collateral.
However, depending on how the servicer implements the program and
on the future performance of the modified loans, the effect on the
transaction could be negative, increasing severity of the loss.
Moody's will continue to monitor the transaction's performance
to assess impact of the loan modification program once implemented.
Currently, Moody's rates the senior certificate (CREYC 06U)
B3 (sf) (Global Scale, Local Currency) and B1.mx (sf) (National
Rating Scale), and the subordinated certificate (CREYCB 06-2U)
Ca (sf) (Global Scale, Local Currency) and Ca.mx (sf) (National
Rating Scale). The ratings were placed on review for possible downgrade
based on rising concerns about the potential for high severity of loss
on defaulted loans. Please refer to the press release published
on February 22, 2013 titled "Moody's places ratings of 18
Mexican Sofol RMBS certificates on review for downgrade".
Investors in this transaction have approved the loan modification program
to be implemented by the servicer, ABC. This program intends
to have some of the loans start cash flowing again by providing loan modifications
that may entail principal haircuts of up to 30%. Given that
43% of the current pool was more than 180 days past due as of February
2013, and the timing of the foreclosure process and sale in Mexico
is anticipated to be protracted, the implementation of the loan
modification program is expected to improve the credit profile of the
transaction. However, if the program is not implemented judiciously,
or if the re-default rate of modified loans is high, loan
severities could increase above the severities currently expected if the
loan goes through the judicial process, and above the current severity
used by Moody's to rate this transaction. This would be credit-negative
for the transaction, and may lead to a downgrade.
Moody's based its analysis on preliminary information that the servicer
provided about this future modification program. Moody's
notes that the transaction agreements are not yet finalized to reflect
these loan modification guidelines.
Based on information provided by the servicer, Moody's identified
credit-positive aspects that include:
-- The servicer cannot modify current loans. In order
to qualify for a loan modification, the borrower has to be delinquent
(at least 12 installments past due in the case of the two products that
offer more significant haircuts, while for the third product the
servicer can offer a loan modification to a borrower with a lower delinquency
but subject to detailed analysis). As of February 2013, 39%
of the current pool was 360+ days past due. In addition,
the servicer must perform sufficient and effective collecting actions
before offering a modification product.
-- Although the loan modification may entail a principal
haircut, this haircut cannot be higher than 30% of the outstanding
balance of the loan. This limits the servicer's discretion
when negotiating the haircuts. In general, principal and
interest are forgiven if the borrower continues to be current on the loan
during a certain period of time.
-- Recoveries on the modified loan must be higher than recoveries
through the judicial foreclosure process. The servicer must perform
a net present value analysis to satisfy this condition on a case by case
basis in order to maximize collections from collateral.
-- Modifications must be negotiated on an individual basis,
rather than as part of a general program. This is positive because
it means that the servicer should understand the borrower's financial
situation and evaluate causes of default and the borrower's willingness
to pay, which in turn would determine the modification product to
-- When granting a modification, the servicer must
first obtain from the borrower a pre-consent to either a died-in-lieu
of foreclosure, or an expedited foreclosure process, both
expected to reduce the time of repossession of the collateral if the borrower
re-defaults under the modified terms.
-- The servicer cannot provide more than one modification
to a borrower.
-- Modified loans will only be considered "current"
for purposes of overcollateralization (OC) calculation if they have been
current for at least 3 consecutive months after being modified,
and should be current for the same number of months to be considered as
"current" for purposes of servicer fee calculation.
However, from an industry perspective, loan modification programs
generally also entail risks:
-- The servicing fee structure may not fully align the interests
of investors with those of the servicer in some cases. By charging
a higher fee for current loans, the servicer may be tempted to provide
modifications to borrowers who do not deserve them, or to extend
another modification to an already modified loan.
-- The servicer may offer a loan modification without pursuing
adequate collection actions against the borrower, or may offer loan
modifications to a large number of obligors, increasing the risk
of moral hazard.
-- If the loan modifications are not documented properly,
the servicer may not be able to repossess the collateral as fast as expected.
-- General discretion of the servicer to implement the loan
modification program within the guidelines. For example,
the servicer will have discretion in determining the key assumptions to
calculate the net present value of the loss of a modified loan,
when compared to the severity of the loss of a foreclosure process.
-- Lack of transparent and complete reporting of loan modifications,
which may make it difficult to assess the full impact of the loan modification
program on the credit quality of the pool.
Before any implementation of the loan modification program, Moody's
assumed a loan severity of 50% of the pool's outstanding
balance. Moody's notes that it is reviewing this assumption
as part of the actions taken over the ratings of this transaction announced
on February 22, 2013.
Moody's analyzed what would be the potential severity of the loss
if the servicer implements the proposed modification program. In
performing this calculation, Moody's considered a principal
forgiveness of 30% of the loan's outstanding balance (the
maximum that can be provided to a borrower), a re-default
rate of 55% (which indicates the proportion of loans that re-default
after being modified), and loss given default of 50%.
Under those assumptions, the severity of the loss after implementing
the modification products would be 49%, which is very similar
to the severity of the loss Moody's currently assumes for the pool
(50%). As a result, the risks of a negative impact
on the transaction as of today seem mitigated. However, if
Moody's assumes a loan re-default rate of 58%,
the severity associated with the loan modification programs would be slightly
higher than the current assumption, which would be credit negative.
Moody's notes that the assumptions regarding modifications are subject
to high volatility due to the limited reliable data available on loan
severities and re-defaults. There is a limited number of
cases that have gone through the judicial foreclosure process, with
the corresponding sale of the guarantee. In addition, there
is very limited historical data on actual performance of modified loans
and modified loans' re-default rates. As a result,
these assumptions could change as more data points become available.
Moody's does not express an opinion as to whether the proposed modification
products could have other, non credit-related effects.
Moody's opinion was based in part on the servicer's description of how
it expects to implement these loan modification products. Further,
Moody's opinion does not preclude the possible future downgrade or withdrawal
of the current ratings for any reason, including Moody's opinion
with respect to the implementation and effectiveness of these loan modification
products and any adverse effect they may have on the credit quality and
performance of the affected transaction.
The modification products to be implemented over the collateral,
consist mainly of: i) the deferral of a percentage of past due installments,
with the possibility of forgiving a portion of this amount, ii)
a discount applied to the outstanding balance of a delinquent loan,
reducing the monthly payment permanently, and iii) a discount on
the outstanding balance, if the loan is liquidated in full.
According to the product implementation guidelines, the maximum
discount to be granted over a loan's balance can be of up to 30%
of the outstanding principal amount of the loan. In the first two
loan modification products described, principal will only be forgiven
if the borrower continues to be current after the loan is modified.
Structured Finance Group
Moody's de Mexico S.A. de C.V
Ave. Paseo de las Palmas
No. 405 - 502
Col. Lomas de Chapultepec
Mexico, DF 11000
Senior Vice President/Manager
Structured Finance Group
Moody's: Loan modification program to be executed by ABC Capital in Mexican RMBS CREYCB 06U and 06 -- 2U could be credit positive or negative, depending on implementation
Moody's de Mexico S.A. de C.V
Ave. Paseo de las Palmas
No. 405 - 502
Col. Lomas de Chapultepec
Mexico, DF 11000
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.
CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.
MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.
ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.
CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.
All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s publications.
To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.
To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.
NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.
Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com
under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”
Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.
Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.
MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.
MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.