Fitch Rates UBB DPR Fin Co -Unibanco- 2004-2 Notes 'AAA'.

CHICAGO -- Fitch Ratings has assigned a preliminary rating of 'AAA' to series 2004-2 of the UBB Diversified Payment Rights Finance Company (Unibanco) program. The series is supported by a financial guaranty from MBIA Insurance Corporation (MBIA), which Fitch currently rates MBIA 'AAA'. The preliminary stand-alone rating for the securitization is 'BBB'.

The existing Unibanco diversified payment rights (DPR) program consists of the following tranches, affirmed at the accompanying ratings.

--Series 2002-1: $400 million 'AAA' with MBIA insurance guaranty ('BBB' underlying);

--Series 2003-2: $105 million 'BBB';

--Series 2003-3: JPY25 billion 'BBB';

--Series 2004-1: $200 million 'AAA' with AMBAC insurance guaranty ('BBB' underlying).

Another tranche, series 2003-1 for $112 million was recently redeemed in full.

The program is a securitization of the collections generated from future and existing U.S. dollar denominated diversified payment rights (DPRs) originated by Unibanco. DPRs generally refer to electronic payment orders intended for third party beneficiaries via Unibanco (i.e. export remittances, workers remittances, foreign direct investment, etc). The Trust will have rights to all DPRs upon generation, and all existing notes will represent senior undivided interest in the Trust assets.

The DPR business line is important to Unibanco as a significant portion of its corporate clients are exporters. Coverage levels under current conditions for the program will be high at approximately 26 times (x) maximum quarterly debt service. Fitch has stressed these coverage levels and believes that Unibanco's current and future DPR business is adequate to support the additional series of future flow notes.

The assigned 'AAA' rating with 'BBB' underlying is higher than Brazil's foreign and local currency ratings of 'B+'. Strengths of the DPR program include the support of the MBIA and AMBAC financial guaranties, as well as the stand-alone structure that mitigates certain sovereign risks associated with Brazil. For example, eligible Correspondent Banks, which make up approximately 90% of the DPR flow have signed Notice and Acknowledgment agreements that obligate them to deposit DPR collections into an offshore collection account controlled by the indenture Trustee. Large coverage levels also help the structure to ensure that the incentive for government interference remains low.

Unibanco is the third largest private bank in Brazil with approximately US$24 billion in assets as of year-end 2003. Its individual and national ratings reflect its improving franchise, strong position in most product areas, and sound management team. In recent years, Unibanco has broadened its participation in local retail markets to approximately fourteen million retail clients, and plans for this market share to increase in the future. Unibanco's risk adjusted capital ratio improved to 18.6% in December 2003.

A presale report titled 'UBB Diversified Payment Rights Finance Company (Unibanco) series 2004-2' 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'.