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Rating Action:

Moody's takes rating actions on Fideicomiso Financiero Cuotas Cencosud Serie VIII, a securtization sponsored by Cencosud Argentina

 The document has been translated in other languages

05 Feb 2020

Buenos Aires City, February 05, 2020 -- Moody's Latin America Agente de Calificación de Riesgo (Moody's) has taken rating action on the global scale and on the national scale of Argentina of Fideicomiso Financiero Cuotas Cencosud Serie VIII. These rating actions resulted in: (i) the affirmation of the VDFA notes rated at B2 (sf) (Global Scale) and at Aa3.ar (sf) (National Scale); (ii) the upgrade of the VDFB notes to B3 (sf) from Caa3 (sf) (Global Scale Rating) and to A3.ar (sf) from Caa2.ar (sf) (National Scale Rating); (iii) the upgrade of the VDFC notes to Caa1 (sf) from Ca (sf) (Global Scale Rating) and to Baa3.ar (sf) from Ca.ar (sf) (National Scale Rating) and; (iv) the affirmation of the Certificates (CP) rated at C (sf) (Global Scale) and at C.ar (sf) (National Scale).

The full rating action is as follow:

- Class A Floating Rate Debt Securities (VDFA) of Fideicomiso Financiero Cuotas Cencosud Serie VIII: to affirm ratings at B2 (sf) in the Global Scale and at Aa3.ar (sf) in the National Scale; previously on September 6, 2019 downgraded to B2 (sf) from Ba3 (sf) (Global Scale Rating) and to Aa3.ar from Aaa.ar (sf) (National Scale Rating).

- Class B Floating Rate Debt Securities (VDFB) of Fideicomiso Financiero Cuotas Cencosud Serie VIII: to upgrade to B3 (sf) from Caa3 (sf) in the Global Scale and to A3.ar (sf) from Caa2.ar (sf) in the National Scale; previously on June 18, 2019 assigned Caa3 (sf) (Global Scale Rating) and Caa2.ar (sf) (National Scale Rating).

- Class C Floating Rate Debt Securities (VDFC) of Fideicomiso Financiero Cuotas Cencosud Serie VIII: to upgrade to Caa1 (sf) from Ca (sf) in the Global Scale and to Baa3.ar (sf) from Ca.ar (sf) in the National Scale; previously on June 18, 2019 assigned Ca (sf) (Global Scale Rating) and Ca.ar (sf) (National Scale Rating).

- Certificates (CP) of Fideicomiso Financiero Cuotas Cencosud Serie VIII: to affirm ratings at C (sf) in the Global Scale and at C.ar (sf) in the National Scale; previously on June 18, 2019 assigned C (sf) (Global Scale Rating) and C.ar (sf) (National Scale Rating).

RATINGS RATIONALE

Moody's upgraded the VDFB and VDFC notes based on the strong performance of the securitized pool and increase in credit enhancement. As of December 2020, the pool had 180+ day delinquencies of 0.3% of the original pool balance. The VDFB notes had a credit enhancement of 54.7% while the VDFC had a credit enhancement of 41.3%.

Moody's used a loss coverage ratio approach. The ratings were positioned according to the ratio of the note credit enhancement to the pool expected loss. In arriving at the ratings, Moody's also considered the note's position in the capital structure and the allocation of the collected cash flows from the securitized pool.

The rated securities are payable from the cash flow derived from the trust assets, which includes a static and amortizing pool of eligible purchases in credit card installments denominated in Argentine pesos and originated by Cencosud (Argentina) S.A. ("Cencosud Argentina"), the local subsidiary of Cencosud S.A. ("Cencosud" Baa3, Negative). Cencosud is among Latin America's largest retailers, with presence in Chile, Argentina, Peru, Colombia and Brazil.

The assigned installments pertain to credit cards issued by Cencosud Argentina. Cencosud credit cardholders can make purchases in affiliated stores and split the payments in several monthly installments bearing no interest. The monthly installments are detailed in the cardholder's monthly credit card statements. Not all installments due under a given credit card will be assigned to the trust. Therefore, a given credit card account may also have other installments that do not serve as collateral for this transaction.

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

Factors that may lead to a downgrade of the ratings include a downgrade in Argentina's local currency ceiling and an increase in delinquency levels beyond the level Moody's assumed when rating this transaction. Although Moody's analyzed the historical performance data of previous transactions and similar receivables originated by Cencosud, the actual performance of the securitized pool may be affected, among others, by the economic activity and the unemployment rate in Argentina.

Factors that may lead to an upgrade of the ratings include an upgrade in Argentina's local currency ceiling and the building of credit enhancement over time due to the turbo sequential payment structure.

The principal methodology used in these ratings was Procedures Manual for the Rating of Financial Trusts published in January 2017. Please see the Rating Methodologies page on www.moodys.com.ar for a copy of this methodology.

For more information on this transaction, please refer to the Regulatory Report to be published on Moodys.com.ar.

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 http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1174796.

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.

Moody's did not use any models, or loss or cash flow analysis, in its analysis.

Moody's did not use any stress scenario simulations in its analysis.

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security 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.ar.

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.

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

For issuers domiciled in Argentina, the regulatory report related to this rating action is available on www.moodys.com.ar.

Please see www.moodys.com.ar 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.ar for additional regulatory disclosures for each credit rating.

Alan De Simone
Analyst
Structured Finance Group
Moody's Latin America ACR
Ing. Butty 240
16th Floor
Buenos Aires City C1001AFB
Argentina
JOURNALISTS: 1 800 666 3506
Client Service: 1 212 553 1653

Daniela Jayesuria
VP-Sr Credit Officer/Manager
Structured Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Latin America ACR
Ing. Butty 240
16th Floor
Buenos Aires City C1001AFB
Argentina
JOURNALISTS: 1 800 666 3506
Client Service: 1 212 553 1653

No Related Data.
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