Action follows confirmation of Spanish government rating
Frankfurt am Main, October 23, 2012 -- Moody's has today confirmed the A3 (sf) ratings on the following structured
finance securities that are guaranteed by the European Investment Fund
(EIF, Aaa stable) and issued by BBVA 5 FTPYME FTA and by EdT FTPYME
PASTOR 3, FTA:
- Issuer: BBVA 5 FTPYME Fondo de Titulizacion de Activos
C Notes, confirmed at A3 (sf); previously on 2 August 2012
Moody's had downgraded the issuer to A3 (sf), with the rating
on review for possible further downgrade
- Issuer: EdT FTPYME PASTOR 3 Fondo de Titulización
de Activos
B Notes, confirmed at A3 (sf); previously on 2 August 2012
Moody's had downgraded to A3 (sf), with the rating on review
for possible further downgrade
Today's rating confirmations follow Moody's confirmation of the Spanish
government bond rating at Baa3/(P)P-3 (assigned negative outlook)
on 16 October 2012, and the announcement that Spain's country
ceilings would remain unchanged at A3 (see "Moody's confirms
Spain's government bond rating at Baa3/(P)P-3, assigns
negative outlook." http://www.moodys.com/research/Moodys-confirms-Spains-government-bond-rating-at-Baa3PP-3-assigns--PR_257500).
The confirmed securities benefit from the unconditional and irrevocable
guarantee of the EIF to pay any shortfall of interest or principal due,
on their respective due dates. Moody's ratings on these securities
is subject to the Spanish country ceiling (see "Moody's downgrades
certain structured finance securities guaranteed by EIF",
2 August 2012 http://www.moodys.com/research/Moodys-downgrades-certain-structured-finance-securities-guaranteed-by-EIF--PR_251876).
For additional information on structured finance ratings, please
refer to the webpage containing Moody's related announcements http://www.moodys.com/eusovereign.
RATINGS RATIONALE
Today's actions reflect the confirmation of the Spanish government's
rating and the fact that the local country ceiling will remain unchanged
at A3 (see "Moody's confirms Spain's government bond
rating at Baa3/(P)P-3, assigns negative outlook."
http://www.moodys.com/research/Moodys-confirms-Spains-government-bond-rating-at-Baa3PP-3-assigns--PR_257500).
Moody's had placed the ratings of the EIF guaranteed notes in both
Spanish transactions on review for downgrade on 2 August 2012 to reflect
the review for downgrade on Spain's sovereign rating.Moody's
considers the EIF guaranteed securities in Spanish ABS transactions to
be exposed to the country risks that the local country ceiling addresses.
In particular, Moody's believes that the EIF guarantee does
not cover the risk of a currency redenomination or from capital controls
being placed on external payments. Moody's is concerned that
such an event could result in either the euro equivalent of redenominated
securities being worth less than the rated promise or that guarantee payments
would be trapped in a local account. In such a scenario,
full performance by the EIF on its payment obligations under the guarantee
may not be sufficient to repay the euro amount of the rated securities,
resulting in a payment default under Moody's definitions.
Country ceilings address risks in a given country that arise from political,
institutional, financial and economic factors within or which affect
that country, including risks such as political instability,
civil unrest, regulatory and legal uncertainty, enforceability
of contracts, the risk of government intervention, expropriation/nationalisation
of local assets, the risk of systemic economic disruption,
crystallisation of severe financial stability risks, currency redenomination
and devaluation, among others.
--Assumption and sensitivity
Because this rating action has been primarily driven by Moody's analysis
of the guarantee coverage and the application of Moody's country ceiling
for Spain, Moody's has not updated key modelling assumptions,
sensitivities, cash-flow analysis and stress scenarios for
the transactions. Any change in the Spanish country ceiling would
have a strong influence on the ratings of these securities.
--Rating Methodologies
Sovereign credit quality impacts structured finance and covered bonds
ratings primarily through the performance of underlying collateral and
the credit quality of counterparties, as detailed in the Rating
Implementation Guidance "How Sovereign Credit Quality May Affect Other
Ratings" (http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_139495).
Structured finance and covered bond securities benefit from revenue diversification,
credit enhancement and other structural features. As a result they
can achieve higher ratings than other non-structured issuers and
may, where certain conditions are met, exceed the sovereign
by a limited number of notches, subject to the constraint of the
relevant country ceiling.
The country ceiling (or 'guideline') is described in the Special Comment
"Local Currency Guidelines " (http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_32373).
Moody's is considering reintroducing individual country ceilings for other
euro area members, which could affect further the maximum structured
finance rating achievable in those countries, as discussed in Moody's
special report "Rating Euro Area Governments Through Extraordinary Times
-- An Updated Summary" ( http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_136315).
The rating considerations described in this press release complement the
principal rating methodology. The principal methodology used in
these ratings was Moody's Approach to Rating CDOs of SMEs in Europe published
in February 2007. Please see the Credit Policy page on www.moodys.com
for a copy of this methodology.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides relevant 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 relevant regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides relevant 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.
The ratings have been disclosed to the rated entities or their designated
agent(s) and issued with no amendment resulting from that disclosure.
Information sources used to prepare each of the ratings are the following:
parties involved in the ratings, public information, and confidential
and proprietary Moody's Investors Service information.
Moody's did not receive or take into account a third party assessment
on the due diligence performed regarding the underlying assets or financial
instruments related to the monitoring of these transactions in the past
six months.
Moody's considers the quality of information available on the rated
entities, obligations or credits satisfactory for the purposes of
issuing these ratings.
Moody's adopts all necessary measures so that the information it
uses in assigning the ratings 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.
Moody's Investors Service may have provided Ancillary or Other Permissible
Service(s) to the rated entities or their related third parties within
the two years preceding the credit rating action. Please see the
special report "Ancillary or other permissible services provided
to entities rated by MIS's EU credit rating agencies" on the
ratings disclosure page on our website www.moodys.com for
further information.
Please see the ratings disclosure page on www.moodys.com
for general disclosure on potential conflicts of interests.
Please see the ratings disclosure page on www.moodys.com
for information on (A) MCO's major shareholders (above 5%)
and for (B) further information regarding certain affiliations that may
exist between directors of MCO and rated entities as well as (C) the names
of entities that hold ratings from MIS that have also publicly reported
to the SEC an ownership interest in MCO of more than 5%.
A member of the board of directors of this rated entity may also be a
member of the board of directors of a shareholder of Moody's Corporation;
however, Moody's has not independently verified this matter.
Please see Moody's Rating Symbols and Definitions on the Rating
Process page on www.moodys.com for further information on
the meaning of each rating category and the definition of default and
recovery.
Please see ratings tab on the issuer/entity page on www.moodys.com
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
for further information.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has
issued the rating.
Yuezhen?Wang
Associate Analyst
Structured Finance Group
Moody's Deutschland GmbH
An der Welle 5
Frankfurt am Main 60322
Germany
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Ariel Weil
Vice President - Senior Analyst
Structured Finance Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Releasing Office:
Moody's Deutschland GmbH
An der Welle 5
Frankfurt am Main 60322
Germany
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moody's confirms notes guaranteed by EIF in Spanish ABS transactions