OREANDA-NEWS. Fitch Ratings has affirmed FTA, Santander Empresas 3 as follows:

EUR101m class A2 (ISIN ES0337710018): affirmed at 'A+sf'; Outlook Stable
EUR46.9m class A3 (ISIN ES0337710026): affirmed at 'A+sf'; Outlook Stable
EUR39.7m class B (ISIN ES0337710034): affirmed at 'A+sf'; Outlook Stable
EUR117.3m class C (ISIN ES0337710042): affirmed at 'BBsf'; Outlook Stable
EUR70m class D (ISIN ES0337710059): affirmed at 'Bsf'; Outlook Negative
EUR45.5m class E (ISIN ES0337710067): affirmed at 'CCsf'; Recovery Estimate (RE) 0%
EUR45.5m class F (ISIN ES0337710075): affirmed at 'Csf'; RE 0%

F.T.A. Santander Empresas 3 is a granular cash flow securitisation of a static portfolio of secured and unsecured loans granted to Spanish small- and medium-sized enterprises by Banco Santander S.A..

KEY RATING DRIVERS
The affirmation reflects higher credit enhancement offsetting increases in defaults. Over the last 12 months, the class A2 and A3 notes have been amortised by EUR74m, resulting in credit enhancement on the class A notes increasing to 63% from 54% and to 54% from 46% for class B notes. However, credit enhancement on the class C notes increased only marginally to 27% and decreased for the class D and E notes during the same period.

Defaults increased marginally over the past 12 months to now represent 8.8% of the outstanding balance, compared with 6.6% previously. Over 90-day delinquencies increased to 1.42% from 0.34%.

The transaction is exposed to payment interruption risk should the servicer, Banco Santander S.A. (A-/Stable/F2) default. Since the reserve fund was depleted in 2013, the transaction has no liquidity line to mitigate any disruption of the collection process and to maintain timely payments to noteholders. As a result, the transaction's ratings are capped at a rating of 'A+'.

The Negative Outlook on the class D notes reflects the notes' vulnerability to the transaction's obligor concentration. The largest obligor is currently 10.51% of the outstanding balance and the 10 largest obligors make up 19.75% of the outstanding balance.

With the reserve fund being completely depleted, the class E and F notes remain under-collateralised. The class F notes funded the reserve fund and are not collateralised by underlying assets. It is therefore likely for the class F notes to default unless realised recoveries are substantially different to Fitch's expectations.

RATING SENSITIVITIES
Fitch incorporated several stress tests to analyse the ratings' sensitivity to a change in the underlying scenarios. The first test simulated an increase of the default probability by 25%, whereas the second test reduced recovery assumptions by 25%. A change to either of the underlying scenarios could lead to downgrades of up to one category.

DUE DILIGENCE USAGE
Fitch did not undertake a review of the information provided about the underlying asset pool ahead of the transaction's initial closing. The subsequent performance of the transaction over the years is consistent with the agency's expectations given the operating environment and Fitch is therefore satisfied that the asset pool information relied upon for its initial rating analysis was adequately reliable.

Overall and together with the assumptions referred to above, 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.