Fitch Affirms CIC Merchant Voucher Securitizations at 'A-', Outlook Stable
OREANDA-NEWS. Fitch Ratings has affirmed the ratings assigned to the merchant voucher securitizations sponsored by Credomatic International Corporation (CIC) at 'A-'/Outlook Stable. A full list of rating actions follows at the end of this press release.
CIC Receivables Master Trust is backed by future flows due from Visa International Service Association (Visa) and MasterCard International Incorporated (MasterCard) related to international merchant vouchers originating in Costa Rica, Guatemala, El Salvador, Honduras and Nicaragua.
CIC Central American Card Receivables Limited is backed by future flows due from American Express (AmEx) related to international merchant vouchers originating in Costa Rica, Guatemala, El Salvador, Honduras, Nicaragua, and, as of 2015, Panama. In October 2015, an amendment was executed to add CIC's AmEx acquiring receivables from Panama to the program. This followed an amendment to CIC's independent operating agreement (IOA) with AmEx which extended the IOA five years through 2025 and granted CIC exclusivity for acquiring AmEx cards in Panama. CIC is the exclusive acquirer for AmEx in all six countries.
Fitch's ratings address timely payment of interest and principal on a quarterly basis.
KEY RATING DRIVERS
Strength of the Originator: Fitch rates CIC's long-term Issuer Default Rating (IDR) 'BBB+/ Stable', reflecting the support CIC would receive from its parent, Banco de Bogota (IDR 'BBB+/Outlook Stable'). Fitch also assigns CIC a going concern assessment score (GCA) of 'GC2'.
Dominant and Growing Franchise: CIC boasts a market leading and profitable regional credit card business that drives group banking activities. CIC's regional credit card issuing volumes grew 14% CAGR and acquiring volumes grew 12.5% CAGR in 2010-2015. The addition of Panama to CIC's AmEx business line will further strengthen CIC's dominant market position in Central America.
Strength of Merchant Voucher Flows: CIC's international acquiring volumes grew more than 10% in 2015, supporting ample debt coverage levels for both programs. Flows benefit from diversification within Central America. CIC Central American Card Receivables Limited benefits from the recent addition of AmEx international acquiring receivables in Panama.
Level of Future Flow Debt: Combined debt outstanding under both merchant voucher future programs represents 5.6% of CIC's total liabilities and 34.9% of long-term funding. Fitch considers this level of future flow debt commensurate to the current ratings assigned to the transactions.
Low Sovereign/Diversion Risks: The transaction structures mitigate certain sovereign risks by keeping cash flow offshore until collection of periodic debt service. Fitch believes diversion risk is mitigated by agreements obligating Visa, MasterCard and Amex to make payments to transaction-specific collection accounts controlled by the applicable trustee.
The ratings are sensitive to changes in the credit quality of CIC. A downgrade of CIC's 'BBB+' IDR could lead to a downgrade on the future flow ratings. In addition, severe reductions in coverage levels could also result in rating downgrades. The ratings assigned to the transactions may be sensitive to the ratings of the relevant sovereign environments. To a lesser extent, the ratings are also sensitive to Fitch's view of the credit quality of Visa, MasterCard and AmEx.
Fitch has affirmed the following ratings:
CIC Receivables Master Trust
--Series 2002-A certificates at 'A-', Outlook Stable;
--Series 2014-A notes at 'A-', Outlook Stable.
CIC Central American Card Receivables Limited
--Series A notes at 'A-', Outlook Stable.