MONTERREY, Mexico--(BUSINESS WIRE)--Fitch Ratings has downgraded and removed from Rating Watch Negative the following Metrofinanciera, S.A.P.I. de C.V., SOFOM, E.N.R. (Metro) residential mortgage back securities (RMBS) as follows:
MTROCB 07U
--UDI indexed notes due 2033 downgraded to 'CCCsf' from 'B+sf' and to 'CCC(mex)vra' from 'BBB(mex)vra'; removed from Rating Watch Negative.
MTROCB 08U
--UDI indexed notes due 2033 downgraded to 'CCCsf' from 'B+sf' and to 'CCC(mex)vra' from 'BBB(mex)vra'; removed from Rating Watch Negative.
KEY RATING DRIVERS
The rating actions reflect the transactions' exposure to liquidity risk given Metro's inability to transfer collections from its banking accounts to the trust accounts in order to cover near term coupon payments. This rating action also considers the consistent deterioration of the underlying loan collateral which results in weaker credit protection for both notes.
As of the April 2013 distribution date, overcollateralization (excluding +90 days delinquent loans) for MTROCB 07U and MTROCB 08U stands at -45.1% and -46.1%, respectively. Both levels negatively compare with those observed twelve months ago which were -34.7% and -33.4%, respectively.
Metro is the primary servicer on these transactions, and its collection accounts are temporarily frozen following a lawsuit filed by an unsecured investor. Metro is leading different alternatives to redirect borrowers' payments to the issuer trust accounts in order to stabilize cash-flows.
RATING SENSITIVITIES
Further downgrades could occur if, despite paying the next coupons, Metro's banking accounts continue to be frozen in the coming months and its servicing abilities remain challenged worsening asset quality metrics and expected losses.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (June 6, 2012);
--'Rating Criteria for RMBS in Latin America' (Feb. 15, 2013);
--'RMBS Latin America Criteria Addendum - Mexico' (Aug. 2, 2012).
Applicable Criteria and Related Research
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679923
Rating Criteria for RMBS in Latin America
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=701131
RMBS Latin America Criteria Addendum - Mexico (Mortgage Loss and Cash Flow Assumptions)
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=683811
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=789740
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