Fitch Rates FADE's Series 21 Tap 3 'BBB+(EXP)'/Stable
OREANDA-NEWS. Fitch Ratings has assigned Fondo de Titulizacion del Deficit del Sistema Electrico FTA's (FADE) Series 21 Tap 3 notes expected rating as follows:
EUR380m Series 21 Tap 3 notes (ES0378641205): 'BBB+(EXP)'; Stable Outlook
FADE is a government-sponsored securitisation platform that issues securities backed by electricity tariff deficit (TD) cash flows in Spain. Fitch expects that proceeds from the Series 21 Tap 3 issue and from a new Series 23 issue (which is not rated by Fitch) will be used to refinance Series 17, which matures on 17 September 2016. Series 21 Tap 3 maturity date is 17 September 2019 and pays an annual fixed interest rate of 0.85%.
The final rating is contingent on the receipt of final documents conforming to information already received.
KEY RATING DRIVERS
All FADE bonds are credit-linked to Spain's Issuer Default Rating (BBB+/Stable), as they benefit from an explicit and irrevocable guarantee from the government. The Series 21 Tap 3 and Series 23 issuance have no rating impact on the outstanding Series 3, 4, 10, 14, 16, 17, 18, 19, 20 and 21 rated by Fitch, as the terms of the guarantee will remain unaltered.
The FADE programme is exposed to refinancing risk because the underlying TD receivables are collected over a horizon of approximately 15 years, while all FADE bonds have bullet maturities, resulting in cash flow mismatches between assets and liabilities. In Fitch's view, the FADE programme's ability to roll over its scheduled amortisation is commensurate with Spain's sovereign risk.
All FADE bonds are exposed to the administrative capabilities of Titulizacion de Activos SGFT SA (TdA, the management company) as issuer trustee. Fitch views this operational risk as low based on the broad experience of TdA. The government body (Comision Interministerial) created to oversee the whole process has the power to replace the management company if it fails to perform its duties.
Changes in the sovereign IDR are likely to lead to a change in the bonds' rating.
Changes to the terms of the full and unconditional guarantee from the Spanish government could affect the ratings on FADE bonds. The FADE programme can issue series of bonds up to an outstanding balance limit of EUR26bn. Including Series 21 Tap 3 and Series 23 of FADE bonds, the outstanding amount of FADE bonds is EUR20.5bn.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.
Fitch sought to receive a third party assessment conducted on the asset portfolio information, but none was available for this transaction. Overall, Fitch's assessment of the asset pool 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.
- Series 21 Tap 3 (ES0378641205) preliminary terms and conditions.
- Series 23 (ES0378641221) preliminary terms and conditions.
- The documentation issued by the Spanish Treasury which acknowledges Series 21 Tap and Series 23 issuances are within the scope of the government guarantee.
- All customary representations and warranties provided by the transaction documents at closing in January 2011, including a) transferability of assets to the SPV, b) enforceability, c) regulatory compliance, d) no fraud, e) no default.
- TD trends and reports provided by Asociacion Espanola de la Industria Electrica (UNESA) and Comision Nacional de los Mercados y La Competencia (CNMC).