CHICAGO--(BUSINESS WIRE)--Fitch Ratings has affirmed the following rating on the senior secured class A notes issued by Peru Payroll Deduction Finance Limited:
-- Class A zero-coupon notes due 2029 with a notional amount of approximately USD230 million at 'BBB-'.
The Rating Outlook is Stable.
The underlying issuance is a securitization of 'retribucion por inversiones - certificado de avance de obras' or RPI-CAOs, future payment rights from Seguro Social de Salud (EsSalud). The RPI-CAOs are related to the construction of two hospitals and two medical distribution centers in the greater Lima metropolitan area. Pursuant to three 'asociacion publica privada' (APP) agreements, Villa Maria Salud, Callao Salud, and Salog (the operators) will build and operate their respective projects.
KEY RATING DRIVERS
The rating affirmation reflects the strength of the sovereign, increasing social security collections, the transaction's liquidity protections and lack of exposure to construction risk.
Fitch currently rates Peru's foreign currency (FC) and local currency (LC) Issuer Default Ratings (IDRs) at 'BBB'/'BBB+', Outlook Stable. Contributions (social security payments) are collected by SUNAT (the state tax collection agency) and deposited into an account at Banco de la Nacion ('BBB'/'BBB+), a government entity.
EsSalud's payment of the RPI-CAOs is funded through the mandatory 9% social security contributions of all formally employed workers in Peru. For the 11 months ended March 2013, mandatory social security collections grew 10% and represented approximately 97% of EsSalud's total collections. Growth in collections reflects an increasing insured population, and decreasing unemployment, largely a product of steady GDP expansion.
The increased contribution collections have resulted in high debt service coverage ratios (DSCRs) averaging 24.29x from May 2012 through March 2013. The DSCR is calculated on a monthly basis and considers amounts on deposit in the master trust for the preceding 12 months and the projected debt service payments for the following 12 months.
The transaction benefits from a reserve account (balance as of March 2013: S/. 212,339 or USD82,016) at the master trust level equivalent to 5% of RPI and 'retribucion por mantenimiento y operacion' (RPMO) obligations as well as four 12-month reserves of all payments due under each 'asociacion public privada' (APP) agreement.
All generated RPI-CAOs are sold to the trust and are not subject to any condition or performance obligation relating to the concession agreements. Therefore, noteholders are not exposed to construction risk.
RATING SENSITIVITIES
The transaction is sensitive to changes in Peru's sovereign ratings and a decrease in social security contributions.
Initial Key Rating Drivers and Rating Sensitivity are further described in the New Issue report 'Peru Payroll Deduction Finance Limited,' published on May 31, 2012, available at www.fitchratings.com.
Additional information is available at www.fitchratings.com.
Applicable Criteria and Related Research:
-- Global Structured Finance Rating Criteria (June 06, 2012);
-- Future Flow Securitization Rating Criteria (June 19, 2012);
-- Peru Payroll Deduction Finance Limited (May 31, 2012).
Applicable Criteria and Related Research
Peru Payroll Deduction Finance Limited
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679927
Future Flow Securitization Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=681832
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679923
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=790622
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