Fitch Ratings has downgraded Trust 18247-6 Credit Line's long-term global scale rating to 'CCCsf' from 'BBB+sf', and national scale rating to 'CCC(mex)vra' from '
The credit line is provided by
RATING ACTIONS
Entity / Debt
Rating
Prior
UFN F18247-6 (2019)
UFN F18247-6 (2019)
LT
CCCsf
Downgrade
BBB+sf
UFN F18247-6 (2019)
Natl LT
CCC(mex)vra
Downgrade
Page
of 1
VIEW ADDITIONAL RATING DETAILS
The downgrade reflects enduring collection delay that has impacted the transaction's cashflow dynamics and collateral credit performance. In a previous commentary, Fitch anticipated a heightened probability of a potential disruption of
The poor performance could be related to delinquencies, information inconsistencies, remaining collections deposited into Unifin's accounts, impaired servicing or cash transfer delays from the servicer. However, Fitch lacks the information needed to determine the specific impact of these or other factors, and relies on information it receives from
Transaction Summary
The transaction consists of a securitization of a pool of equipment lease contracts originated and serviced by
KEY RATING DRIVERS
Sustained Exposure to Commingling Risk: Although collections can be deposited in the
Servicing and Operational Disruption: Fitch believes the asset pool has standard characteristics and enough market participants to replace servicing activities for a suitable transition process. However, recent 'concurso mercantil' filed by the entity, specifically prevent the SPV from substituting the primary servicer, enhancing the likely reliance on
Overcollateralization Impacted by Default Metrics: The transaction's current portfolio levels have decreased over the last three months and since the interruption of substitution or new transfers of leases to the SPV. In its previous commentary and considering information provided by the company, Fitch considered 15% of substitutions as defaults and the rest were due to rebalancing of assets to address concentration limits (industry, geographic or obligor) between three different SF transactions. However, after the termination of revolving period, default rates of the resulting static portfolio have reached 17.65% as of
Insufficient OC to Cover Stressed Loss or Concentrations: Although the rating actions are driven by heightened operational risk, Fitch estimated the maximum levels of gross loss that the transaction could withstand. Considering the current portfolio and the credit line's outstanding balance reported at the end of
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative rating action/downgrade:
Major delinquency levels, OC reduction or lack of liquidity with further pressure towards transaction default could lead to a downgrade.
Factors that could, individually or collectively, lead to positive rating action/upgrade:
Fitch will continue monitoring the transactions through monthly reports and surveillance with the Master Servicer and lenders. If there are improvements on collection transfers from
Best/Worst Case Rating Scenario
International scale credit ratings of Structured Finance transactions have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of seven notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of seven notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579.
(C) 2022 Electronic News Publishing, source