CHICAGO--(BUSINESS WIRE)--Fitch Ratings has assigned a rating of 'BBB+' with a Stable Rating Outlook to CIC Central American Card Receivables Limited's new issuance of $282 million of series A notes. Fitch's rating addresses the timely payment of interest and principal on a quarterly basis.
The issuance is backed by future flows related to the payment of international AmEx merchant vouchers originating in Costa Rica, Guatemala, El Salvador, Honduras and Nicaragua.
KEY RATING DRIVERS
The final rating reflects (i) the credit quality of Credomatic International Corporation (CIC) and its going concern assessment score of 'GC2'; (ii) the relatively large level of future flow debt to CIC's overall funding; (iii) the synergies between the credit card and the banking businesses; (iv) low diversion risk as payments are processed through one international credit card company, American Express (AmEx); (v) CIC's independent operator agreement (IOA) with AmEx which allows it to become the exclusive issuer and acquirer of AmEx cards in the region; and (vi) the transaction structure which adequately mitigates potential sovereign and/or redirection risks.
The above mentioned characteristics allow the transaction to benefit from a one-notch uplift from CIC's Issuer Default Rating (IDR) of 'BBB'.
RATING SENSITIVITIES
The rating is sensitive to changes in the credit quality of CIC. A downgrade of CIC's 'BBB' local currency IDR could lead to a downgrade on the notes. In addition, severe reductions in coverage levels could also result in rating downgrades. To a lesser extent, the rating is also sensitive to American Express Limited as the counterparty to the IOA; AmEx Limited is a wholly owned subsidiary of American Express Travel Related Services ('A+'/Outlook Stable).
TRANSACTION SUMMARY
The notes are backed by flows related to international USD-denominated American Express (AmEx) merchant voucher receivables originating in Costa Rica, Guatemala, El Salvador, Nicaragua and Honduras by CIC. The U.S. dollar-denominated AmEx merchant voucher receivables are generated when a card member makes charges in a country different from their country of origin. The receivables are submitted to AmEx for clearing. AmEx has signed a Notice and Consent Agreement which obligates it to make all payments related to the USD international merchant vouchers into an account controlled by the trustee for the benefit of the noteholders.
CIC is an exempt company incorporated in the British Virgin Islands and is a wholly owned subsidiary of BAC International Bank Inc. (BIB), which is incorporated in Panama. BIB is an indirect subsidiary of Grupo Aval Acciones y Valores, S.A., a Colombian operation, as of December 2010.
CIC is the holding company of the group's credit card business and banking operations in each Central American country with the exception of Panama. Through its subsidiaries, CIC provides a variety of financial services to individuals and institutions primarily in Guatemala, Honduras, El Salvador, Nicaragua, Costa Rica and Mexico. CIC is a leader in the credit card business with dominant market shares in the acquiring and in the issuing businesses.
For more details on the Key Rating Drivers and Rating Sensitivities please refer to the new issue report which will be available shortly on Fitch's website.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Future Flow Securitization Rating Criteria' (June 19, 2012);
--'Global Structured Finance Rating Criteria' (May 24, 2013);
--'Counterparty Criteria for Structured Finance and Covered Bonds' (May 13, 2013).
Applicable Criteria and Related Research:
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=708661
Counterparty Criteria for Structured Finance and Covered Bonds
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=707155
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=793306
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