OREANDA-NEWS.  Fitch Ratings has assigned Garanti Diversified Payment Rights Finance Company's (Garanti DPR) Series 2015-A and -B notes a final rating of 'A-', with a Stable Outlook. The ratings address the likelihood of timely payment of interest and principal.

Fitch has also affirmed the outstanding Series 2014-A and -B notes, Series 2013-A, -B, -C, D and -E notes, Series 2012-A notes, Series 2011-A and -B notes, and Series 2010-B, -C and -D notes at 'A-' with a Stable Outlook, following the issuance of the new series.

Garanti DPR is a securitisation of diversified payment rights (DPR) originated by Turkiye Garanti Bankasi A.S. (Garanti, BBB-/RWP/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. Garanti DPR has purchased all present and future DPRs denominated in dollars, euros and pounds from Garanti, financed through issued notes that are secured on the DPRs. The programme has been in existence since 2002.

KEY RATING DRIVERS
Garanti's Size, Role, Supportive
Fitch has a Going Concern Assessment (GCA) score of GC1 for Garanti, based on its position as the second-largest privately owned bank in the financial system and its role in the Turkish economy. The bank had unconsolidated assets of USD88.5bn as of March 2015, representing about 11.5% of total deposits and 11.2% of total system assets, according to the Banks Association of Turkey.

Three-Notch Uplift
The GC1 score enables Fitch to apply a three-notch uplift on Garanti DPR's ratings, over the bank's Local-Currency IDR of 'BBB-'. The ratings are driven by the bank's standalone creditworthiness, as reflected in its 'bbb-' Viability Ratings, and the notching uplift is supported by the stability, strength and diversification of the flows, the size of the total outstanding notes relative Garanti's overall indebtedness, and strong debt service coverage ratios (DSCRs).

Strong Cash Flow Coverage
Fitch expects the DSCRs of the monthly adjusted collections for the programme to be 61x in the worst-case scenario, based on offshore flows processed through designated depository banks (DDBs) as of June 2015. This is well above the related early amortisation triggers and in the mid-range of peer programmes.

The agency tested the sustainability of coverage under various scenarios, including FX- and interest rate stresses and a reduction in remittances. The flows are healthy and the DSCRs are adequately above the coverage-related trigger levels set out in the transaction documents.

Sovereign Risk Reduced
When contemplating ratings above a country's Long-term IDR, Fitch considers potential sovereign risk events consistent with the rating. These risks include transfer and convertibility, devaluation and, to some degree, nationalisation and expropriation. Any controls on transfer or conversion of foreign exchange are limited in this transaction, as payments from the obligors are collected offshore. The payment-diversion risk is significantly mitigated on several levels, such as acknowledgement agreements signed by DDBs.

Reasonable Programme Size
As some tranches further amortised in July and the total amount of new tranches is reasonably small relative to the programme size, there will be no material change in the overall programme size. Fitch estimates the programme will represent about 4.1% of Garanti's total liabilities and 9.7% of total liabilities excluding customer deposits; Fitch deems current leverage reasonable.

True Sale and Acknowledgements
Under the true sale agreement between Garanti (the seller) and the special-purpose vehicle (SPC), the seller has sold to the SPC all the rights to, title to, and interest in existing and future DPRs. Selected depository banks have executed acknowledgement agreements, giving the trustee control over flows from these correspondent banks.

RATING SENSITIVITIES
The most significant variables affecting the transaction's rating are Garanti's credit quality, its GCA score, and the sovereign rating (BBB-/Stable). Additionally, the 'AA-' ratings of The Bank of New York Mellon Corporation (BONY) as the issuer's account bank may constrain the ratings of DPR notes if BONY is downgraded below the then ratings of the DPR notes and no remedial action is taken.

Although coverage levels are also a key input, DSCRs have been high, and therefore we expect the transaction to be able to withstand a significant decline in cash flows without it affecting the ratings. Nevertheless, Fitch will analyse any changes to these variables to assess the impact on the transaction's ratings.

A new issue report outlining Fitch's analysis of Garanti DPR is available at www.fitchratings.com or by clicking the link above.

DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed 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.