Fitch Affirms UBB DPR Finance Co (Unibanco) 2004-2 A&R VFN Notes at 'BBB+'.

CHICAGO -- Fitch Ratings has affirmed the Issuer Default Rating (IDR) of UBB Diversified Payment Rights Finance Company's (Unibanco) at 'BBB+' and the US$150 million series 2004-2 A&R VFN floating-rate issuance at 'BBB+'.

In addition, Fitch has affirmed the existing series in the program as follows:

-- $105 million 2002-1 at 'BBB+';

-- $105 million 2003-2 at 'BBB+';

-- $226,860,254 2003-3 at 'BBB+';

-- $200 million 2004-1 at 'BBB+' (underlying);

-- $100 million 2004-2 at 'BBB+'.

The series 2004-2 A&R VFN floating-rate notes, along with the previously issued series 2002-1, 2003-2, 2003-3, and 2004-1 existing notes represent senior undivided interest in the trust assets. The US$200 million of series 2004-1 notes is backed by an unconditional and irrevocable financial guaranty insurance policy by Ambac Assurance Corp. The rating for this series is 'AAA'.

The 2004-2 A&R VFN series was amended and restated, and sold as a Private Placement. This series previously had US$100 million outstanding on its principal balance. The amended and restated series 2004-2 has a one year interest only period followed by a 6 year amortization schedule. The one year interest only period can be extended in yearly increments indefinitely at the mutual agreement of Unibanco and the investors. The note was structured to allow for issuance up to $200 million in multiple draws. The initial issuance in July of 2006 was for $100 million. This issuance will add another $50 million to the series, for a total 2004-2 A&R VFN issuance amount of $150 million.

The 2002-1 and all 2003 and 2004 notes are backed by the collections generated from future and existing U.S. dollar denominated diversified payment rights (DPRs) originated by Unibanco-Uniao de Bancos Brasileiros S.A. (Unibanco). Upon their generation, the trust will have rights to the DPRs through accounts maintained with Eligible Correspondent Banks. DPRs generally refer to electronic payment orders intended for third party beneficiaries via Unibanco (i.e. international trade financed by Unibanco, export remittances, workers remittances, foreign direct investment, etc).

This business line is important to Unibanco as approximately 50% of its corporate clients are exporters. Coverage levels for the existing 2002, 2003 and 2004 series are significantly high, averaging about 40 times maximum quarterly debt service over the past two years. Fitch has stressed these coverage levels and believes that Unibanco's current and future DPRs business is adequate to support the rating of these future flow notes.

The assigned 'BBB+' rating is higher than Brazil's foreign and local currency ratings of 'BB', as the transaction mitigates certain sovereign risks associated with Brazil. All correspondent banks have signed Notice and Acknowledgment agreements that obligate them to deposit DPRs collections into an offshore collection account controlled by the indenture trustee, and large coverage levels ensure that the incentive for government interference remains low.

Unibanco is one of the largest private banks in Brazil with US$46.8 billion in assets as of September 2006. Its individual and national ratings reflect its improving franchise, strong position in most product areas, and experienced management team. In recent years, Unibanco has broadened its participation in local retail markets and plans for this market share to increase in the future. Unibanco's central bank capital adequacy (BIS) ratio was 15.5% as of September 2006.

Reports on Unibanco's DPRs program can be found on the Fitch Ratings web site at www.fitchratings.com. A sovereign report regarding the credit rating of Brazil, as well as a full bank update can also be found at www.fitchratings.com.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.