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Fitch Affirms Jamaica Diversified Payment Rights Co.'s Ser 2013-1 Notes at 'BB'; Outlook Stable

February 21, 2014

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has affirmed the ratings assigned to the Series 2013-1 notes issued by Jamaica Diversified Payment Rights Company in light of an additional $25 million issuance under such series as follows:

-- $125 million Series 2013-1 notes at 'BB', Outlook Stable.

Fitch's rating addresses the timely payment of interest and principal on a quarterly basis in accordance with the transaction documents. The expected final payment date is March 15, 2018 with the option to extend the legal maturity date up to three years.

The issuance is backed by existing and future USD-denominated diversified payment rights (DPRs) originated by National Commercial Bank Jamaica Ltd. (NCBJ; long-term local currency (LC) Issuer Default Rating (IDR) of 'B-'; Outlook Negative). DPRs are defined as electronic or other messages utilized by financial institutions to instruct NCBJ to make a payment to a beneficiary.

KEY RATING DRIVERS

The affirmation reflects (i) the credit quality of NCBJ and its going concern assessment score of 'GC1'; (ii) coverage levels which include a significant portion of domestically originated receivables or flows considered more susceptible to diversion; (iii) the transaction structure, which helps mitigate transfer and convertibility risk; and (iv) the level of future flow debt to total liabilities and long-term funding.

NCBJ is the largest bank by total assets in the Jamaican banking system. The bank was well positioned to manage the fallout from the government's recent debt restructuring, but the Negative Outlook on its ratings reflects downside risks for a more challenging operating environment if the government is not successful at implementing its IMF programme.

Considering the amended outstanding debt size, the expected quarterly debt service coverage ratio (DSCR), calculated according to the transaction documents, is 41.3x maximum quarterly debt service. The calculation considers average quarterly flows through designated depository banks (DDBs) for the past three years and excludes 65% of flows from certain entities which have large levels of domestic flows and/or are considered more susceptible to diversion.

The transaction structure benefits from notice and acknowledgment agreements signed with DDBs, Bank of New York Mellon, Citibank, HSBC, Barclays Bank PLC, and Wells Fargo, which irrevocably instruct them to deposit DPR flows into offshore accounts controlled by the indenture trustee. The percentage of DPR flows processed by DDBs has averaged over 90% of total DPRs since 2007.

The program's total outstanding future flow debt represents 3.35% of NCBJ's total liabilities. While NCBJ's future flow debt as a percentage of total liabilities is similar to that of many future flow programs in the region, the debt represents 100% of long-term funding, which is considerably higher.

RATING SENSITIVITIES

The rating is sensitive to changes in the credit quality of NCBJ. A downgrade of NCBJ's 'B-' LC IDR could lead to a downgrade on the notes. In addition, severe reductions in coverage levels could also result in rating downgrades.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Future Flow Securitization Rating Criteria' (June 2013);

--'Global Structured Finance Rating Criteria' (May 2013).

Applicable Criteria and Related Research:

Future Flow Securitization Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=711077

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708661

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=821297

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.



Fitch Ratings

Primary Analyst

Gregory Lane

Associate Director

+1-312-606-2304

Fitch Ratings, Inc.

70 W. Madison St.

Chicago, IL 60602

or

Secondary Analyst

Cinthya Ortega

Director

+1-312-606-2373

or

Committee Chairperson

Greg Kabance

Managing Director

+1-312-368-2052

or

Media Relations:

Elizabeth Fogerty, +1-212-908-0526 (New York)

elizabeth.fogerty@fitchratings.com


Source: Fitch Ratings


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