The issuance is backed by existing and future USD-denominated diversified payment rights (DPRs) originated by National Commercial Bank Jamaica Ltd. (NCBJ) DPRs are defined as electronic or other messages utilized by financial institutions to instruct NCBJ to make a payment to a beneficiary.
Fitch's rating addresses the timely payment of interest and principal on a quarterly basis in accordance with the transaction documents.
KEY RATING DRIVERS
The affirmation reflects (i) the principal repayment deferral, which does not impact Fitch's rating; (ii) the credit quality of NCBJ and its going concern assessment (GCA) score of 'GC1'; (iii) coverage levels which include a significant portion of domestically originated receivables or flows considered more susceptible to diversion; (iv) the transaction structure, which helps mitigate transfer and convertibility risk; and (v) the level of future flow debt to total liabilities and long-term funding.
Fitch rates NCBJ foreign currency and local currency (LC) Issuer Default Ratings (IDRs) 'B-' with a Stable Outlook. NCBJ's GCA score of 'GC1' reflects its position as the largest bank by total assets in the Jamaican banking system. The 'GC1' assigned to NCBJ allows the transaction to achieve the maximum notching uplift from NCBJ's LC IDR.
The expected quarterly debt service coverage ratio (DSCR), calculated according to the transaction documents, is approximately 41x maximum quarterly debt service. The calculation considers average quarterly flows through designated depository banks (DDBs) from 2011-2013 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 irrevocably instructing the DDBs to deposit DPR flows into offshore accounts controlled by the indenture trustee. The vast majority of DPR flows are processed by DDBs.
The program's total outstanding future flow debt represents 3.26% of NCBJ's total liabilities as of
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.
--'Future Flow Securitization Rating Criteria' (
--'Global Structured Finance Rating Criteria' (
--'DPR Securitizations from
Future Flow Securitization Rating Criteria
Global Structured Finance Rating Criteria
DPR Securitizations from
Source: Fitch Ratings
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