Fitch Affirms CenterPoint Energy Transition Bond Company IV, LLC 2012 Sr. Secured Transition Bonds
KEY RATING DRIVERS
The transaction is performing within expectations, with levels of outstanding principal amounts in-line with the targeted amortization schedules. The true-up mechanism in the transaction is performing as expected, providing adequate credit support for all outstanding classes.
As part of Fitch's initial rating sensitivity, Fitch conducted a break the bond case which provides an alternative means by which to measure the potential effects of rapid, significant declines in power consumption while capping the residential securitization charges at 20% of the total customer bill. This analysis determines the maximum level of forecasted energy decline that would cause a default in required payments on the securitizations or cause the tariff charges to exceed 20% of the total residual customer bill. Despite this severe decline in consumption, due to the true-up mechanisms, the tariff charges are able to pay all debt service by the legal final maturity date.
For further detail on the rating sensitivity analysis for Utility Tariff Bonds, please refer to Fitch's criteria titled Rating Criteria for U.S. Utility Tariff Bonds available at 'www.fitchratings.com'.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.
Fitch's analysis of the Representation and Warranties (R&W) of this transaction can be found in 'CenterPoint Energy Transition Bond Company IV, LLC 2012 Senior Secured Transition Bonds -- Appendix'. These R&W are compared to those of typical R&W for the asset class as detailed in the special report 'Representations, Warranties, and Enforcement Mechanisms in the Global Structured Finance Transactions' dated June 12, 2015.
Fitch has affirmed the following ratings:
--Class A-1 notes at 'AAAsf'; Outlook Stable;
--Class A-2 notes at 'AAAsf'; Outlook Stable;
--Class A-3 notes at 'AAAsf'; Outlook Stable.