Fitch Takes Rating Actions on MAEXIM Secured Funding Limited Series 1-2013
--Class A1 notes affirmed at 'AAA'; Outlook Stable;
--Class A2 notes upgraded to 'BBB-' from 'BB+'; Outlook revised to Stable from Positive.
The ratings address timely payment of interest on a semi-annual basis and payment of principal at legal maturity.
The transaction is backed by euro-denominated notes (collateral securities) issued by the Hungarian Export-Import Bank (Eximbank) under its EUR2 billion Global Medium Term Note Programme (MTN Programme). The collateral securities are unconditionally and irrevocably guaranteed by the government of Hungary.
The Multilateral Investment Guarantee Agency (MIGA) has provided a guarantee to MAEXIM for 95% of the scheduled payments due under the collateral securities. The MIGA contract of guarantee only relates to the collateral securities, but as the scheduled coupon and principal payments on the class A1 notes represent 95% of the scheduled payments of the collateral securities, the class A1 notes are fully covered by the payments received under the MIGA contract of guarantee.
The upgrade to the class A2 notes follows Fitch's upgrade to the ratings of Hungary, Eximbank and the collateral securities.
KEY RATING DRIVERS
Guarantee of Sovereign Nonpayment: The MIGA contract of guarantee only relates to the collateral securities, but, as the scheduled coupon and principal payments on the class A1 notes represent 95% of the scheduled payments of the collateral securities, the class A1 notes would be fully covered by payments received under the MIGA contract of guarantee. The rating assigned to the class A1 notes is consistent with the credit quality of the guarantee provider, MIGA. A member of the World Bank Group (WBG), MIGA has access to private - and public-sector players and has considerable experience and expertise in situation involving political risk.
Rating of Collateral Securities: The rating assigned to the class A2 notes is linked to the rating assigned to the collateral securities, which benefit from an irrevocable guarantee by Hungary. Fitch recently upgraded the ratings of Hungary, Eximbank and the collateral securities to 'BBB-'/Stable from 'BB+'/Positive.
Sovereign Ties to Eximbank: Fitch upgraded Eximbank's Long-Term Issuer Default Rating (IDR) to 'BBB-' from 'BB+'. The Rating Outlook was revised to Stable from Positive, following the upgrade of Hungary's Long-Term IDR to 'BBB-'/Stable Outlook. The upgrade of Eximbank reflects the improved ability of the government to provide extraordinary support, in case of need, as reflected in the upgrade of Hungary's IDR, while the government's propensity to support the bank remains strong.
Performance and Liquidity: All semi-annual interest payments on the notes have been paid on a timely basis since transaction inception. A liquidity buffer of six months is in place due to the fact that the collateral securities pay interest in advance, while the series 1-2013 notes pay coupons in arrears. The transaction also benefits from an expense reserve account to cover any potential legal fees.
The rating of the class A1 notes is directly linked to the credit quality of MIGA, the guarantee provider. A change in Fitch's assessment of the credit quality of MIGA would automatically result in a change in the rating on the class A1 notes. Any change in Fitch's view on the contract of guarantee, or deterioration on the credit quality of the counterparties may result in a downgrade to the notes.
The rating of the class A2 notes reflects the credit quality of the collateral securities. Any change to the IDR of Hungary and as a consequence to Eximbank's IDR or the notes issued under Eximbank's MTN program would cause a change to the rating of the class A2 notes.
USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G-10
Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action.