December 27, 2017 / 5:35 PM / a year ago

Fitch Rates Bosphorus Financial Services Limited's Tranche 2017 Notes 'BBB+'; Outlook Stable

(The following statement was released by the rating agency) Link to Fitch Ratings' Report: Bosphorus Financial Services Limited - Series 2017-A and -B here LONDON, December 27 (Fitch) Fitch Ratings has assigned Bosphorus Financial Services Limited's series 2017-A and -B notes 'BBB+' ratings with Stable Outlook. The ratings address the likelihood of timely payment of interest and principal. Fitch has also affirmed the outstanding 2012- C series and 2015-A, -B, -C and -D series at 'BBB+' with Stable Outlook, following the issue of the new series. Bosphorus Financial Services Limited is a future flow transaction of diversified payment rights (DPR) originated by Finansbank A.S. (BBB-/Stable/F3). DPRs are payment orders processed by banks and mainly reflect payments due on the export of goods and services, capital flows and personal remittances. Bosphorus Financial Services Limited has purchased all present and future DPRs denominated in dollars, euros and pounds from Finansbank, financed through issued notes that are secured on the DPRs. KEY RATING DRIVERS GCA Score Supports Rating: Fitch has a Going Concern Assessment (GCA) score of GC2 on Finansbank. This indicates Finansbank's importance to the Turkish banking system as the sixth largest privately owned bank in Turkey and also the parental support from Qatar National Bank (QNB; A+/Negative/F1). Finansbank had unconsolidated assets of USD28.8 billion as of end-December 2016, representing about 3.7% and 3.9% of the total system deposits and assets, respectively, according to the Banks Association of Turkey. Two Notch Uplift: The GCA score serves as a rating cap on future flow transactions. However, Fitch tempers the notching uplift from the originator's Local-Currency Long-Term Issuer Default Rating (LC IDR) when it is an investment-grade originator, or the bank's rating benefits from parent support. Fitch has applied two-notch uplift on Bosphorus DPR's ratings from the bank's LC IDR of 'BBB-'. Weakening Coverage Levels: Fitch expects monthly debt service coverage ratios (DSCR) for the programme to be 41x after the new issue. This is markedly weaker than what would have been seen before the issuance and is now in the low range of peer programmes. This coverage incorporates Fitch's interest rate stresses and is based on the average monthly offshore flows processed through designated depositary banks (DDBs) of the past 12 months up to October 2017. Fitch tested the sustainability of coverage under various scenarios, including FX stresses and a reduction in payment orders, based on the top 20 beneficiary concentration. The resultant DSCRs are above the key trigger levels set out in the transaction documents. Moderate Programme Size: Fitch estimates the new series, in combination with the outstanding notes, represents about 3.8% of Finansbank's total interest-bearing liabilities and 9.8% of interest-bearing liabilities when customer deposits are excluded. As a percentage of long-term funding, the DPR programme represents approximately 20.5%. The current leverage is toward the medium-to-higher end compared with peer programmes. Should the size of the issuance increase further, this would likely put pressure on the ratings of the notes. VARIATIONS FROM CRITERIA None RATING SENSITIVITIES The most significant variables affecting the rating of the transaction are the credit quality of the bank, its GCA score, and the sovereign rating. Although coverage levels are a key input as well, the DSCRs have been sufficient, and therefore the transaction is expected to be able to withstand a significant decline in cash flows without affecting the ratings. Additionally, the 'AA/F1+' ratings of Bank of New York Mellon (BONY), as the issuer's account bank, may constrain the ratings of the DPR notes, if BONY is downgraded below the then ratings of the DPR notes with no remedial action taken. Another important consideration that might lead to rating action is the level of future flow debt as a percentage of the bank's overall liability profile. This is factored into Fitch's analysis to determine the maximum notching differential allowed, given the GCA score. The outstanding note balance of the issuer relative to Finansbank's liability profile is currently deemed fairly high relative to peers, especially when considering the outstanding balance as a percentage of long-term funding. Although Fitch considers the current size of the future flow debt as reasonable, further issuance would likely put pressure on the rating of the notes. Nevertheless, any change in any of these variables would be analysed to assess the possible impact on the transaction's ratings. USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO RULE 17G-10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the DPR programme. There were no findings that were material to this analysis. Fitch has neither requested any third-party assessment of the information about DPR flows nor conducted a review of origination files because there is no existing asset portfolio to assess in future flow transactions. Overall, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. SOURCES OF INFORMATION The information below was used in the analysis. -Investor reports and information provided by Finansbank as at November 2017. Contacts: Primary Analyst Paul Varty Analyst +44 20 3530 1770 Fitch Ratings Limited 30 North Colonnade London E14 5GN Committee Chairperson Joanne Wong Senior Director +44 20 3530 1077 Media Relations: Athos Larkou, London, Tel: +44 203 530 1549, Email: athos.larkou@fitchratings.com. Additional information is available on www.fitchratings.com Applicable Criteria Fitch's Interest Rate Stress Assumptions for Structured Finance and Covered Bonds - Excel File (pub. 17 Feb 2017) here Fitch’s Foreign-Currency Stress Assumptions for Residual Foreign-Exchange Exposures in Covered Bonds and Structured Finance – Excel File (pub. 30 Oct 2017) here Future Flow Securitization Rating Criteria (pub. 13 Sep 2017) here Global Structured Finance Rating Criteria (pub. 03 May 2017) here Structured Finance and Covered Bonds Counterparty Rating Criteria (pub. 23 May 2017) here Structured Finance and Covered Bonds Interest Rate Stresses Rating Criteria (pub. 17 Feb 2017) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here Solicitation Status here Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE here. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2017 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided “as is” without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001 Fitch Ratings, Inc. is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (the "NRSRO"). While certain of the NRSRO’s credit rating subsidiaries are listed on Item 3 of Form NRSRO and as such are authorized to issue credit ratings on behalf of the NRSRO (see here), other credit rating subsidiaries are not listed on Form NRSRO (the "non-NRSROs") and therefore credit ratings issued by those subsidiaries are not issued on behalf of the NRSRO. However, non-NRSRO personnel may participate in determining credit ratings issued by or on behalf of the NRSRO.

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below