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Rating Action:

Moody's assigns ratings to second senior issuance of FIDC Global TR, a Brazilian trade receivables securitization

 The document has been translated in other languages

29 Nov 2018

Approximately BRL400 million of senior shares rated

NOTE: On November 30, 2018, the press release was corrected as follows: The first sentence of the fourth paragraph in the Ratings Rationale section was changed to: “Limited commingling risk, as obligor payments will be directed to an escrow account domiciled in Itaú Unibanco (Ba2 long-term bank deposit rating, Global Scale, Local Currency), which is in the name of the originator and is controlled by the master servicer.” Revised release follows.

Sao Paulo, November 29, 2018 -- Moody's America Latina Ltda has assigned ratings of A3 (sf) (global scale rating, local currency) and Aaa.br (sf) (Brazilian national scale) to the second senior shares issuance of Fundo de Investimento em Direitos Creditórios Global TR (FIDC), a securitization backed by a pool of electricity bills for individuals and businesses that have energy distributed through the low voltage grid, originated by Enel Distribuição RIO, former Ampla Energia e Serviços S.A. (Enel RIO, not rated).

Issuer: FIDC Global TR

Second issuance of senior shares, rated A3 (sf) (global scale rating, local currency) and Aaa.br (sf) (Brazilian national scale)

RATINGS RATIONALE

The ratings reflect the following factors:

- Credit enhancement in the form of a first demand, irrevocable and unconditional guarantee from Crédit Agricole Corporate and Investment Bank (CA-CIB, Aa3 Long Term Counterparty Risk Rating - Forgein Currency) in favor of the FIDC, denominated in euros, covering certain losses related to the securitized assets, including credit losses, dilutions, yield, counterparty risk, commingling risk and other payment obligations of Enel RIO under the assignment agreement. The guarantee maximum amount will be equal to the euro equivalent of BRL408 million, updated every three months to the then current spot-exchange rate and grossed up by a stress factor to cover for the risk of the real appreciating against the euro. CA-CIB, as guarantor, may transfer its rights and obligations under the guarantee agreement to any other related institution that is rated at least A3 by Moody's.

- Mitigated foreign-exchange risk on the first demand guarantee. To mitigate foreign-exchange risk on the guarantee, the euro equivalent of the BRL408 million maximum guarantee amount will be recalculated on a quarterly basis, and then grossed up by the aforementioned stress factor. In addition, on the first day of the four-month guarantee amortization period, the stressed euro equivalent to the maximum guarantee amount will be updated by the current exchange rate, limiting the maximum foreign-exchange exposure window of the guarantee to four months. In its analysis, Moody's applied a haircut on the guarantee amount to address the impact of any potential appreciation of the real on the ultimate amount available under the guarantee.

- Adequate historical performance of the seller' electricity invoices portfolio.

- Limited commingling risk, as obligor payments will be directed to an escrow account domiciled in Itaú Unibanco (Ba2 long-term bank deposit rating, Global Scale, Local Currency), which is in the name of the originator and is controlled by the master servicer. The collections should be transferred to fund's account domiciled in Banco Santander (Brasil) S.A. within three business days.

The FIDC Global TR is a close-ended FIDC and senior shares have a final legal maturity two years after the revolving period ends. The fund's net worth is capped at BRL400 million. The shares accrue, on a daily basis, a floating interest rate equivalent to the Brazilian interbank, or DI rate, plus a variable cost of funds, a fixed rate of 1.10% and an availability fee calculated on a monthly basis by CA Indosuez Wealth (Brazil) S.A. (CA Brazil).

Although the transaction's revolving period ends in november 2019, investors can decide to renew the revolving period for an additional 364 day period. The time between the end of the revolving period and the transaction's legal final maturity is sufficient to collect any outstanding payments on the receivables and to draw on the guarantee from CA-CIB as needed.

The key eligibility criteria to be verified by the maáster servicer include: (1) receivables are not past due; (2) the obligor does not owe any other receivable that is more than 90 days past due to the fund (3) the acquisition of receivables do not exceed the maximum concentration limit per obligor (BRL 40 thounsad) and (4) the receivables have a one-day minimum and 60-day maximum maturity.

The main source of credit enhancement in the transaction is the first demand guarantee provided by CA-CIB.

Moody's has analyzed the seller's receivables pool together with the performance of the FIDC. As modeling input assumptions, Moody's assumed a central mean of 0.7% in monthly dilutions and 1.5% in monthly losses as a percent of outstanding balance and an average portfolio turnover of 32.3 days. In arriving at loss assumptions, Moody's considered delinquencies from 91 to 120 days past due as a proxy. The historical performance has been consistently within trigger levels.

The principal methodology used in these ratings was "Moody's Approach to Rating Trade Receivables-Backed Transactions," published in May 2015. Please see the Rating Methodologies page on www.moodys.com.br for a copy of this methodology.

The Credit Ratings for FIDC Global TR issuances were assigned in accordance with Moody's existing Methodology entitled "Moody's Approach to Rating Trade Receivables-Backed Transactions" published in May 2015. Please note that on November 14, 2018, Moody's released a Request for Comment, in which it has requested market feedback on potential revisions to its Methodology for Trade Receivables-Backed Transactions. If the revised Methodology is implemented as proposed, the Credit Ratings on FIDC Global TR issuances may be Neutral. Please refer to Moody's Request for Comment, titled Proposed Update to Moody's Approach to Rating Trade Receivables-Backed Transactions, for further details regarding the implications of the proposed Methodology revisions on certain Credit Ratings.

Factors that would lead to an upgrade or downgrade of the ratings:

Factors that may lead to an upgrade of the ratings include an upgrade to Brazil's local currency country ceiling.

Factors that may lead to a downgrade of the ratings include a downgrade in the rating of CA-CIB and failure to transfer the rights and obligations of the guarantor to a related institution rated at least A3 by Moody's, a downgrade to Brazil's local currency country ceiling and an increase in defaults and dilution levels beyond the level that Moody's assumed when rating this transaction.

More information on Moody's analysis of the FIDC Global TR is available in the new issue report to be published on Moody's website, www.moodys.com.br.

Moody's National Scale Credit Ratings (NSRs) are intended as relative measures of creditworthiness among debt issues and issuers within a country, enabling market participants to better differentiate relative risks. NSRs differ from Moody's global scale credit ratings in that they are not globally comparable with the full universe of Moody's rated entities, but only with NSRs for other rated debt issues and issuers within the same country. NSRs are designated by a ".nn" country modifier signifying the relevant country, as in ".za" for South Africa. For further information on Moody's approach to national scale credit ratings, please refer to Moody's Credit rating Methodology published in May 2016 entitled "Mapping National Scale Ratings from Global Scale Ratings". While NSRs have no inherent absolute meaning in terms of default risk or expected loss, a historical probability of default consistent with a given NSR can be inferred from the GSR to which it maps back at that particular point in time. For information on the historical default rates associated with different global scale rating categories over different investment horizons, please see https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1113601.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions of the disclosure form.

This transaction is considered as structured finance product in accordance with Instrução CVM nº 521.

Moody's took into account one or more third party due diligence assessment(s) regarding the underlying assets or financial instruments (the "Due Diligence Assessment(s)") in this credit rating action and used the Due Diligence Assessment(s) in preparing the ratings. This had a neutral impact on the ratings.

The Due Diligence Assessment(s) referenced herein were prepared and produced solely by parties other than Moody's. While Moody's uses Due Diligence Assessment(s) only to the extent that Moody's believes them to be reliable for purposes of the intended use, Moody's does not independently audit or verify the information or procedures used by third-party due-diligence providers in the preparation of the Due Diligence Assessment(s) and makes no representation or warranty, express or implied, as to the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of the Due Diligence Assessment(s).

The analysis relies on a Monte Carlo simulation that generates a large number of collateral loss or cash flow scenarios, which on average meet key metrics Moody's determines based on its assessment of the collateral characteristics. Moody's then evaluates each simulated scenario using model that replicates the relevant structural features and payment allocation rules of the transaction, to derive losses or payments for each rated instrument. The average loss a rated instrument incurs in all of the simulated collateral loss or cash flow scenarios, which Moody's weights based on its assumptions about the likelihood of events in such scenarios actually occurring, results in the expected loss of the rated instrument.

Moody's quantitative analysis entails an evaluation of scenarios that stress factors contributing to sensitivity of ratings and take into account the likelihood of severe collateral losses or impaired cash flows.

Information sources used to prepare the rating are the following: parties involved in the ratings, public information, and confidential and proprietary Moody's information.

Information types used to prepare the rating are the following: financial data, debt documentations, legislation, by-laws and legal documents, operating data, historical performance data, and public information.

Sources of Public Information: Moody's considers public information from many third party sources as part of the rating process. These sources may include, but are not limited to, the list available in the link http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_193459.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

Moody's adopts all necessary measures so that the information it uses in assigning a 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.

The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

Please see the ratings disclosure page on www.moodys.com.br for general disclosure on potential conflicts of interests.

Moody's America Latina Ltda. may have provided Other Permissible Service(s) to the rated entity or its related third parties within the 12 months preceding the credit rating action. Please go to the report "Ancillary or Other Permissible Services Provided to Entities Rated by Moody's America Latina Ltda." in the link http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1147430 for detailed information.

Entities rated by Moody's America Latina Ltda. and the rated entities' related parties may also receive products/services provided by parties related to Moody's America Latina Ltda. engaging in credit ratings activities within the 12 months preceding the credit rating action. Please go to the link http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1147431 for a list of entities receiving products/services from these related entities and the products/services received.

The date of the last Credit Rating Action was 25/11/16.

Moody's ratings are constantly monitored, unless designated as point-in-time ratings in the initial press release. All Moody's ratings are reviewed at least once during every 12-month period.

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.br.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Please see ratings tab on the issuer/entity page on www.moodys.com.br for the last rating action and the rating history. The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's 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.br for further information.

Please see Moody's Rating Symbols and Definitions on the Ratings Definitions page on www.moodys.com.br for further information on the meaning of each rating category and the definition of default and recovery.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com.br for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com.br for additional regulatory disclosures for each credit rating.

Ely Mizrahi
Asst Vice President - Analyst
Structured Finance Group
Moody's America Latina Ltda.
Avenida Nacoes Unidas, 12.551
16th Floor, Room 1601
Sao Paulo, SP 04578-903
Brazil
JOURNALISTS: 800 891 2518
Client Service: 1 212 553 1653

Karen Ramallo
Senior Vice President/Manager
Structured Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's America Latina Ltda.
Avenida Nacoes Unidas, 12.551
16th Floor, Room 1601
Sao Paulo, SP 04578-903
Brazil
JOURNALISTS: 800 891 2518
Client Service: 1 212 553 1653

No Related Data.
© 2020 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/OR ITS CREDIT RATINGS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY'S (COLLECTIVELY, "PUBLICATIONS") MAY INCLUDE SUCH  CURRENT OPINIONS. MOODY'S INVESTORS SERVICE 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 INVESTORS SERVICE CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS ("ASSESSMENTS"), AND  OTHER 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. AND/OR ITS AFFILIATES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND  PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND  PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES  ITS 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.

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