OREANDA-NEWS. Fitch Ratings has updated its global criteria for rating structured finance (SF) transactions. The changes to the report will not have any rating impact on existing SF transactions.

The report now describes Fitch's approach for reviewing distressed ratings of 'CCCsf' or lower. The updates include: a section on Criteria Variations that provides additional clarity regarding the application of criteria in Fitch's rating committee process; clarifications on the scope of the criteria; as well as other minor text revisions throughout the report.

Moreover, Fitch added an Appendix titled Distressed Debt Exchange; the Appendix describes the agency's approach to determining whether a transaction or class of notes should be classified as having experienced a distressed debt exchange. Fitch has simultaneously withdrawn the global criteria report titled Global Structured Finance Distressed Debt Exchange Criteria.

The updated criteria report describes Fitch's overarching approach to analysing SF transactions and identifies the key considerations when assigning an SF rating; these include: asset isolation and legal structure; asset quality; financial structure; and operational risk. The report also describes the agency's expectations regarding bankruptcy remote special purpose vehicles that are used in SF transactions.

The principles discussed in the criteria are applicable to all asset classes including residential and commercial mortgage-backed securities, asset-backed securities and structured credit transactions. The criteria provide an overarching framework applicable to all SF transactions, which is complemented by asset class-specific and cross-sector rating criteria.