Fitch Rates FADE's Series 14 Tap 1 'BBB+'/Stable
FADE is a government-sponsored securitisation platform that issues securities backed by the electricity tariff deficit (TD) cash flows in Spain. The Series 14 Tap 1 issue proceeds, together with the Series 22 Tap 1 are being used for the refinancing of Series 13, which matures on 17 December 2015. The Series 14 Tap 1 maturity date is 17 March 2017 and it pays an annual fixed interest rate of 4.125%.
KEY RATING DRIVERS
All FADE bonds are credit-linked to Spain's Issuer Default Rating (IDR; BBB+/Stable), as they benefit from an explicit and irrevocable guarantee from the government. The Series 14 Tap 1 and Series 22 Tap 1 issuance have no rating impact on the outstanding Series 3, 4, 10, 13, 14, 16, 17, 18, 19, 20 and 21 rated by Fitch, as the terms of the guarantee remain unaltered.
The FADE programme is exposed to refinancing risk because the underlying TD receivables are collected over a horizon of approximately 15 years, while all FADE bonds have bullet maturities and cash flow mismatches between assets and liabilities are anticipated. In Fitch's view, the FADE programme's ability to roll over its scheduled amortisation is commensurate with Spain's sovereign risk.
All FADE bonds are exposed to the administrative capabilities of Titulizacion de Activos SGFT SA (TdA, the management company) as issuer trustee. Fitch views this operational risk as low based on the broad experience of TdA. The government body (Comision Interministerial) created to oversee the whole process has the power to replace the management company if it fails to perform its duties.
Because the ratings are credit-linked to Spain, a change in the sovereign IDR is likely to lead to a change in the bonds' rating.
Changes to the terms of the full and unconditional guarantee from the Spanish government could affect the ratings on FADE bonds. The FADE programme can issue series of bonds up to an outstanding balance limit of EUR26bn. Including the Series 14 Tap 1 and Series 22 Tap 1 issuance, the outstanding amount of FADE bonds is EUR21.75bn.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.
Fitch sought to receive a third party assessment conducted on the asset portfolio information, but none was available for this transaction. Overall, Fitch's assessment of the asset pool information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable.
SOURCES OF INFORMATION
The information below was used in the analysis.
- EUR232m Series 14 Tap 1, (ES0378641130) final terms and conditions.
- EUR50m Series 22 Tap 1, (ES0378641213) final terms and conditions.
- The documentation issued by the Spanish Treasury which acknowledges Series 14 Tap 1 and the Series 22 Tap 1 issuance within the scope of the government guarantee.
- All customary representations and warranties provided by the transaction documents at closing in January 2011, including a) transferability of assets to the SPV, b) enforceability, c) regulatory compliance, d) no fraud, e) no default.
- TD trends and reports provided by Asociacion Espanola de la Industria Electrica and Comision Nacional de los Mercados y La Competencia. The TD trends and reports are regularly monitored by Fitch to maintain the ratings.