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Rating Action:

Moody's assigns definitive ratings to Chemical VI - FIDC Indústria Petroquímica senior and mezzanine shares, a Brazilian trade receivables securitization

 The document has been translated in other languages

Global Credit Research - 08 Feb 2011

BRL544.8 million of senior shares and BRL43.2 million of mezzanine shares rated

Sao Paulo, February 08, 2011 -- Moody's America Latina (Moody's) has assigned definitive ratings of Aaa.br (sf) (Brazilian National Scale) and Baa3 (sf) (Global Scale, Local Currency) to the Senior Shares, and Ba1.br (sf) (Brazilian National Scale) and B2 (sf) (Global Scale, Local Currency) to the Mezzanine Shares issued by Chemical VI - FIDC Indústria Petroquímica ("Chemical VI - FIDC"), a securitized transaction backed by a pool of trade receivables originated by Braskem Group.

Issuer: Chemical VI - FIDC Indústria Petroquimica

Senior Shares - Aaa.br (sf) (National Scale) & Baa3 (sf) (Global Scale, Local Currency)

Mezzanine Shares -- Ba1.br (sf) (National Scale) & B2 (sf) (Global Scale, Local Currency)

RATINGS RATIONALE

The ratings are based on the following factors, among others:

- Overcollateralization ratio (O/C) ranging from a minimum of 110% to a maximum of 115% for the benefit of the Senior Shares outstanding, and 102.041% for the Mezzanine Shares, to mitigate losses, dilution and potential interest rate mismatches;

- The eligibility parameters of the trade receivables acquired by the issuer, which include concentration limits by client, delinquency by client, and maximum term of the trade receivables;

- Maximum individual concentration limit of 3% for all obligors;

- The ability of Banco Bradesco S.A. (A1 Long-term Bank Deposit Rating in the Global Local Currency Scale & Aaa.br in the Brazilian National Scale) to act as master and back-up servicer for the transaction; and

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

The originators of the securitized receivables are Braskem S.A., Quattor Participacoes S.A., Quattor Petroquímica S.A. and Rio Polímeros S.A. (Braskem Group). Braskem S.A. is a large Brazilian manufacturer of petrochemical products rated Aa2.br (Brazilian National Scale) and Ba1 (Global Local, Currency Scale).

The transfer of receivables from the originators to the issuer is structured as a true sale and a definitive assignment of the contracts as set forth in the assignment of transferred credits under the Brazilian civil code.

Chemical VI - FIDC has a tenor of 48 months. The senior and subordinated mezzanine shares will be amortized in 6 equal monthly installments following the revolving period of 42 months.

During the 42 month revolving period, the senior and mezzanine shares will receive seven semi-annual payments of interest, and following the revolving period, will receive monthly interest payments together with the scheduled principal amortizations of senior and subordinated mezzanine shares.

In order to rate the transaction, Moody´s received pool performance data audited by KPMG covering the time period July 2007 through June 2010 from Braskem. Key data reviewed by Moody´s included dilutions, delinquencies, losses, receivable turnover and volume of eligible receivables. For Moody´s modeling assumptions, Moody´s has assumed 0.22% monthly dilutions, 0,25% monthly losses on outstanding balance and an average turnover of 35 days.

The main uncertainties of the transaction relate to the loss levels and dilution levels of the securitized pool. Although Moody´s analyzed the historical performance data of previous transactions and historical performance data of trade receivables originated by Braskem Group, the actual performance of the securitized pool may be affected, among others, by the economic activity in the petrochemical industry.

Moody's parameter sensitivities provide a quantitative/model-indicated calculation of how the rating of a Moody's-rated structured finance security may vary if certain input parameters used in the initial rating process differed. Qualitative factors are also taken into consideration in the ratings process, so the actual ratings that would be assigned in each case could vary from the information presented in the parameter sensitivity analysis. The results generated by rating models are one of many inputs to the rating process. Ratings are determined collectively through the exercise of judgment by rating committees, which evaluate many quantitative and qualitative factors.

Moody's key ratings-model assumptions for this transaction are Braskem's rating, loss rate and dilution rate. If Braskem´s rating is downgraded to Ba3 from Ba1 and the loss rate and dilution rate are doubled, the transaction ratings would remain unchanged.

The principal methodology used in rating the certificates was Moody´s Approach to Rating Trade Receivables Backed Transactions published in July 2002.

Moody's Investors Service received and took into account a third party due diligence report prepared by KPMG on the underlying assets or financial instruments in this transaction and the due diligence report had a positive impact on the rating.

REGULATORY DISCLOSURES

Information source(s) used to prepare the credit rating are the following: parties involved in the ratings and public information.

Moody's Investors Service considers the quality of information available on the certificates satisfactory for the purposes of assigning a credit rating.

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.

Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.

Sao Paulo
Johann Grieneisen
Vice President - Senior Analyst
Structured Finance Group
Moody's America Latina Ltda.
JOURNALISTS: 800-891-2518
SUBSCRIBERS: 55-11-3043-7300

New York
Maria Muller
Senior Vice President
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's America Latina Ltda.
Avenida Nacoes Unidas, 12.551
16th Floor, Room 1601
Sao Paulo, SP 04578-903
Brazil
JOURNALISTS: 800-891-2518
SUBSCRIBERS: 55-11-3043-7300

Moody's assigns definitive ratings to Chemical VI - FIDC Indústria Petroquímica senior and mezzanine shares, a Brazilian trade receivables securitization
No Related Data.
© 2018 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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