NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed the following ratings assigned to the notes and loans issued by SBP DPR Finance Company (Scotiabank Peru DPR):
--US$50 million series 2010-A notes at 'A+';
--US$125 million series 2010-B notes at 'A+';
--US$62.5 million series 2010-C loans at 'A+';
--US$62.5 million series 2010-D loans at 'A+';
--US$50 million series 2012-A loans at 'A+'.
The Rating Outlook is Stable.
The program is backed by collections generated from future and existing diversified payment rights (DPRs) originated by Scotiabank Peru S.A.A (SBP). DPRs refer to electronic payment orders intended for third-party beneficiaries, and are mostly related to export flows, worker remittances, and foreign direct investment. The collateral includes MT-100 payments and electronic or other payment orders processed by designated depository banks (DDBs) that have signed account agreements (AAs).
Fitch's rating addresses the timely payment of interest and principal on a quarterly basis.
KEY RATING DRIVERS
The rating affirmations reflect (i) the support-driven upgrade to SBP's Issuer Default Ratings (IDRs) following the upgrade to Peru's IDRs and country ceiling; (ii) the overall performance of the transaction; and (iii) the level of future flow debt relative to total liabilities.
On Oct. 31, 2013, Fitch upgraded SBP's foreign currency (FC) and local currency (LC) IDRs to 'A-'/'A+' from 'BBB+'/'A' and maintained the bank's Viability rating (VR) at 'bbb+' following the upgrade to Peru's sovereign IDRs and country ceiling. SBP's IDRs are driven by the support it would likely receive from its parent, the Bank of Nova Scotia ('AA-', Stable Outlook). Fitch's view of SBP's intrinsic creditworthiness, as indicated by the VR, remains unchanged.
While the going concern assessment score (GCA) of 'GC1' assigned to SBP could allow for the transaction to be rated higher than the LC IDR assigned to the bank, Fitch limits this rating differential for higher rated investment grade entities. Additionally, Fitch considers the VR of the bank when determining the notching differential for entities with significant parental support. The transaction's structural characteristics allow for the rating of the DPR program to be rated two notches higher than SBP's FC IDR of 'A-'. For more information regarding this rating approach, see Fitch's "Future Flow Securitization Rating Criteria," dated June 18, 2013, available at 'www.fitchratings.com'.
Fitch's quarterly debt service coverage ratio (DSCR), which considers flows through DDBs during the last 12 recorded months and maximum quarterly debt service during the life of the transaction, averaged 102.5x.
As of September 2013, the outstanding balance of the program is $278.9 million or about 2% of bank liabilities.
RATING SENSITIVITIES
The ratings assigned to the program are sensitive to changes in the credit quality of SBP, the performance of the DPR business line, and changes in the sovereign environment.
Additional information is available at www.fitchratings.com.
Applicable Criteria and Related Research:
--'Future Flow Securitization Rating Criteria' (June 18, 2013)
--'Global Structured Finance Rating Criteria' (May 24, 2013)
--'DPR Securitizations from Lima to Istanbul' (Feb. 6, 2013)
Applicable Criteria and Related Research:
DPR Securitizations from Lima to Istanbul (A Comparative Perspective)
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=700111
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708661
Future Flow Securitization Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=711077
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=807956
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