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

June 13, 2014

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has affirmed the ratings assigned to the series 2013-1 notes issued by Jamaica Diversified Payment Rights Company as follows:

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

On April 25, 2014, pursuant to the series 2013-1 Indenture Supplement, the noteholders holding more than 50% of the series 2013-1 balance (controlling party) opted to defer the repayment of principal by 12 months, extending the first expected quarterly amortization payment to Sept. 15, 2015 and the expected final payment date to March 15, 2019. The series controlling party has the option to defer the principal payments by 12 months up to three times over the life of the transaction, potentially extending the expected final payment date by another 24 months.

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 March 2014. 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 9, 2014);

--'Global Structured Finance Rating Criteria' (May 20, 2014);

--'DPR Securitizations from Lima to Istanbul' (Feb. 6, 2013).

Applicable Criteria and Related Research:

Future Flow Securitization Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=749768

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748821

DPR Securitizations from Lima to Istanbul (A Comparative Perspective)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=700111

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=834603

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, Inc.

Primary Analyst

Gregory Lane, +1-312-606-2304

Associate Director

Fitch Ratings, Inc.

70 W Madison Street

Chicago, IL 60602

or

Secondary Analyst

Cinthya Ortega, +1-312-606-2373

Director

or

Committee Chairperson

Greg Kabance, 1-312-368-2052

Manager Director

or

Media Relations

Sandro Scenga, +1-212-908-0278

sandro.scenga@fitchratings.com

Source: Fitch Ratings


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