Mexico, May 21, 2014 -- Moody's de México (Moody's) has upgraded three residential mortgage
backed securitizations (RMBS) serviced by Patrimonio, S.A.
de C.V., SOFOM, E.N.R.
This rating action follows the recent upgrade of the ratings of the financial
guarantors MBIA Insurance Corporation (MBIA) and MBIA Mexico (MBIA Mexico).
This action concludes the review Moody's initiated on 19 February 2014,
when it placed the ratings on review for upgrade.
The rating action is as follows:
Issuer: HSBC México, S.A., Institución
de Banca Múltiple, Grupo Financiero HSBC, División
Fiduciaria, acting solely as trustee.
-- MXMACFW 07-3U Class A, upgraded to B2 (sf)
(Global Scale, Local Currency) and Ba1.mx (sf) (Mexican National
Scale) from B3 (sf) (Global Scale, Local Currency) and B1.mx
(sf) (Mexican National Scale). The certificates' underlying ratings
(reflecting the certificates' intrinsic credit quality absent the financial
guarantee that MBIA provides) are Ca (sf) and Ca.mx (sf).
-- MXMACFW 07-5U Class A, upgraded to B2 (sf)
(Global Scale, Local Currency) and Ba1.mx (sf) (Mexican National
Scale) from B3 (sf) (Global Scale, Local Currency) and B1.mx
(sf) (Mexican National Scale). The certificates' underlying ratings
(reflecting the certificates' intrinsic credit quality absent the financial
guarantee that MBIA Mexico provides) are C (sf) and C.mx (sf).
-- BRHCCB 07-2U Class A-2, upgraded
to B2 (sf) (Global Scale, Local Currency) and Ba1.mx (sf)
(Mexican National Scale) from B3 (sf) (Global Scale, Local Currency)
and B1.mx (sf) (Mexican National Scale). The certificates'
underlying ratings (reflecting the certificates' intrinsic credit quality
absent the financial guarantee that MBIA Mexico provides) are Ca (sf)
and Ca.mx (sf).
RATINGS RATIONALE
This action is solely driven by Moody's announcement on 21 May 2014 that
it has upgraded the Insurance Financial Strength (IFS) ratings of MBIA
Insurance Corporation (MBIA Corp.), and of MBIA Mexico.
MXMACFW 07-3U benefits from a financial guaranty insurance policy
issued by MBIA Insurance Corp., while MXMACFW 07-5U
and BRHCCB 07-2U benefit from a similar guaranty issued by MBIA
Mexico, that covers timely interest payment and ultimate principal
payment by the legal final maturity date of the certificates.
The certificates' current ratings are consistent with Moody's modified
approach to rating structured finance securities wrapped by financial
guarantors at the higher of (1) the guarantor's insurance financial strength
rating and (2) the underlying ratings, which reflect the intrinsic
credit quality of the certificates in the absence of the guarantee.
In the case of MXMACFW 07-3U Class A, MXMACFW 07-5U
Class A and BRHCCB 07-2U Class A-2, since MBIA's financial
strength ratings are higher than the certificates' underlying ratings,
the certificates' ratings are in line with MBIA's current ratings.
As part of evaluating the current ratings of these transactions,
Moody's also reviewed the certificates' underlying ratings, which
are as follows:
-- MXMACFW07-3U Class A: Ca.mx (sf),
Ca (sf)
-- MXMACFW07-5U Class A: C.mx (sf),
C (sf)
-- BRHCCB 07-2U Class A-2: Ca.mx
(sf), Ca (sf)
Regarding the variability of these transactions, any change in MBIA
insurance financial strength rating would result in a change in the ratings
of the affected certificates.
Factors that would lead to an upgrade or downgrade of the rating:
Given the low underlying ratings of the certificates compared to the guarantor's
rating, the ratings are directly affected by any change in the insurance
financial strength of the guarantor.
With respect to the underlying ratings, the primary sources of uncertainty
are related to the macroeconomic environment, particularly regarding
the dynamics of the labor market, and the severity of loss assumption
for defaulted loans.
Moody's considered the originator and servicer's practices in its
analysis; the evaluation of such practices informs some of the assumptions
of the deals.
RATING METHODOLOGY
The principal methodology used in these ratings was "Moody's Approach
to Rating RMBS using the MILAN Framework" published in November 2013.
Please see the Credit Policy page on www.moodys.com.mx
for a copy of this methodology.
However, this action is driven solely by the rating action on MBIA
and is not a result of change in key assumptions, expected losses,
cash flows and stress scenarios on the underlying assets.
The period of time covered in the financial information used to determine
the listed deals' ratings is between March 31, 2007 and March
31, 2014. (source: periodic collections and remittances
reports sent by the servicers, trustees and common representative
agents)
The transactions are backed by residential mortgage loans granted to middle
and low income borrowers, denominated in UDIS. The analysis
of the collateral is performed under the MILAN methodology, which
take into account the characteristics of the loans in order to assess
potential losses on the structures.
Moody's National Scale 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 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 ".mx"
for México. For further information on Moody's approach
to national scale ratings, please refer to Moody's Rating Methodology
published in October 2012 entitled "Mapping Moody's National Scale
Ratings to Global Scale Ratings".
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 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.
In issuing and monitoring this rating, Moody's de México
S.A. de C.V. considered the existence and
extent of arrangements and mechanism, if any, to align the
incentives of the originator, servicer, administrator and
guarantor of the securities with those of its potential acquirers.
Credit ratings incorporate Moody's macroeconomic outlook and its implications
on key variables that may include but not be limited to interest rates,
inflation, economic growth, unemployment, performance
of counterparties, credit availability, sector level changes
in competitive conditions, supply/demand and margins, and
issuer specific changes in capital structure, competitive positioning,
governance, risk profile, and liquidity. Unexpected
changes in such variables may lead to changes in the credit rating level,
potentially by several notches. Further information on the sensitivity
of the rating to specific assumptions is included in this disclosure.
In issuing this credit opinion, Moody's de México S.A.
de C.V. did not rely on ratings issued by any other credit
rating agency over this issuer/security or any underlying securities.
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.
Information sources used to prepare the rating are the following:
parties involved in the ratings, and public information.
The ratings have been disclosed to the rated entities prior to public
dissemination.
A general listing of the sources of information used in the rating process,
and the structure and voting process for the rating committees responsible
for the assignment and monitoring of ratings can be found in the Disclosure
tab in www.moodys.com.mx.
The date of the last Credit Rating Action was 19/2/2014.
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.mx.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this rating action, and
whose ratings may change as a result of this 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.
This Rating is subject to upgrade or downgrade based on future changes
in the financial condition of the Issuer/Security, and said modifications
will be made without Moody's de México S.A. de C.V
accepting any liability as a result.
The below contact information is provided for information purposes only.
Please see the ratings tab of the issuer page at www.moodys.com.mx,
for each of the ratings covered, Moody's disclosures on the
lead analyst and the Moody's legal entity that has issued the ratings
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
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.
Please see Moody's Rating Symbols and Definitions on www.moodys.com.mx 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.mx
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 our website www.moodys.com.mx
for further information.
Please see www.moodys.com.mx for any updates on changes
to the lead rating analyst and to the Moody's legal entity that has issued
the rating.
The ratings issued by Moody's de Mexico are opinions regarding the credit
quality of securities and/or their issuers and not a recommendation to
invest in any such security and/or issuer.
Please see the ratings tab on the issuer/entity page on www.moodys.com.mx
for additional regulatory disclosures for each credit rating.
Carlos Gonzalez
Asst Vice President - Analyst
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
Mexico
JOURNALISTS: 001-888-779-5833
SUBSCRIBERS:52-55-1253-5700
Maria Muller
Senior Vice President/Manager
Structured Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's de Mexico S.A. de C.V
Ave. Paseo de las Palmas
No. 405 - 502
Col. Lomas de Chapultepec
Mexico, DF 11000
Mexico
JOURNALISTS: 001-888-779-5833
SUBSCRIBERS:52-55-1253-5700
Moody's upgrades three Mexican RMBS guaranteed by MBIA
