SAO PAULO--(BUSINESS WIRE)--Fitch Ratings has assigned a 'BBBsf' rating with a Stable Outlook to the following Brazil Loan Trust I (the Issuer) notes:
--USD661,967,121 senior secured pass-through notes due 2023.
The transaction is a pass-through securitization of a 10-year amortizing loan originated by Bank of America N.A. (BofA) to the Brazilian State of Maranhao (Maranhao - rated 'BB+'/Stable). The loan is guaranteed on an unconditional and irrevocable basis by the Federative Republic of Brazil (Brazil - Issuer Default Rating 'BBB'/Stable).
KEY RATING DRIVERS
Guaranty from the Sovereign: The loan is signed between BofA (lender), Maranhao (borrower), Brazil (Guarantor) and a loan administrative agent. Payments are to be made by either Maranhao or Brazil on D-1 of the loan's scheduled payment date. The Loan provides for the absolute, irrevocable, and unconditional guaranty of Brazil as primary obligor under the loan. Brazil pledges its full faith and credit, and such contingent liability ranks pari passu with all its other existing and future foreign currency debt.
Highly Rated Account Banks: Payments from Maranhao and/or Brazil under the loan are made in a bank account at Wilmington Trust N.A. (IDR 'A-'/Stable) as administrative agent to the loan. On the following day, funds are transferred to an Issuer account at the Bank of New York Mellon (IDR 'AA-'/Stable) as Indenture Trustee to the notes. Payments are made under the notes immediately thereafter.
Adequate Legal Structure: All governmental authorizations and approvals related to Maranhao's ability to obtain loans in foreign currency were obtained. Conditions precedent to loan disbursement included legal opinions from the Attorney General of Maranhao and from the Office of the Attorney General of the National Treasury attesting the loan is a legal, valid, binding, and enforceable obligation against the State and the Guarantor. Additional opinions will also verified that the sale/assignment of the loan to the Issuer followed all necessary steps, including obtaining written consent from the Guarantor.
RATING SENSITIVITIES
The transaction's rating is sensitive to changes to the IDR assigned to Brazil as Guarantor on an unconditional and irrevocable basis. Whilst Brazil's rating remains higher than the long-term rating of Maranhao, the transaction's rating is not sensitive to the rating assigned to Maranhao. The transaction's rating is equivalent to the higher of Brazil's long term rating or Maranhao's long-term rating.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Rating Criteria for Single- and Multi-Name Credit-Linked Notes' Feb. 21, 2013;
--'Global Structured Finance Rating Criteria' May 24, 2013;
--'Counterparty Criteria for Structured Finance and Covered Bonds' May 13, 2013;
--'Maranhao, State of' (June 13, 2013);
--'Brazil's Growth and Fiscal Challenges: Cyclical and Structural Factors Underlie Slowdown' (March 27, 2013);
--'Brazil' (July 31, 2012).
Sources of information: Transaction documents and Prestacao de Contas da Presidenta da Republica - Exercicio de 2012
Applicable Criteria and Related Research:
Brazil - Growth and Fiscal Challenges: Cyclical and Structural Factors Underlie Slowdown
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=704255
Brazil
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=684051
Global Rating Criteria for Single- and Multi-Name Credit-Linked Notes
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=701709
Counterparty Criteria for Structured Finance and Covered Bonds
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=707155
Maranhao, State of
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=707296
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=798463
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