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Fitch Upgrades Titularizadora de DPRs Limited Series 2016-1 Loan to 'BB-'.

Chicago: Fitch Ratings has upgraded to 'BB-' from 'B+' the issue-specific rating on Titularizadora de DPRs Limited's $100 million series 2016-1 loan. The Rating Outlook is Stable.

The future flow program is backed by U.S. dollar-denominated, existing and future diversified payment rights (DPRs) originated by Banco Cuscatlan de El Salvador, S.A. (BC). The majority of DPRs are processed by designated depository banks (DDBs) that have executed acknowledgement agreements (AAs), irrevocably obligating them to make payments to an account controlled by the transaction trustee.

Fitch's rating addresses timely payment of interest and principal on a quarterly basis.


Originator Credit Quality: BC's Issuer Default Rating (IDR) is driven by the institutional support of Grupo Terra, a Honduran diversified investment conglomerate, and is limited by El Salvador's Country Ceiling of 'B'. In Fitch's view, Grupo Terra's financial capacity is highly linked to that of Petroholdings.

Going Concern Assessment Score: BC's going concern assessment (GCA) score of 'GC2' reflects the bank's moderate systemic importance and potential support from Petroholdings, if necessary. Fitch tempers notching uplift for future flow transactions originated by sponsors with support-driven ratings. Fitch limits the DPR ratings to two notches above BC's support-driven IDR.

Adequate Debt Service Coverage: Twelve-month rolling average quarterly debt service coverage ratios (DSCRs) for the program is around 60x as of end-September 2017. BC's DPR business line is supported by the bank's well-regarded franchise, branch network, and longstanding relationships with key corporate clients.

DDB Concentration: Citibank N.A. ('A+'/Stable Outlook) is the largest DDB, historically processing more than 95% of BC's DPR flows. In Fitch's view, this concentration exposes the transaction to a higher degree of diversion risk than other Fitch-rated Central American DPR programs. The future flow rating reflects this exposure.

Moderately Large FF Debt: The future flow program represents approximately 71% of BC's non-deposit funding. While Fitch considers these ratios small enough to differentiate the credit quality of the transaction from the originator's LC IDR, the future flow debt size is a constraint on the DPR rating.


The credit strength of the transaction is linked to the performance of BC. The future flow ratings are sensitive to changes in the credit quality of Banco Cuscatlan de El Salvador, S.A., the ability of the DPR business line to continue operating (as reflected by the GCA score), changes in the ratings assigned to El Salvador, and the performance of the DPR program. A downgrade of the bank's IDRs may trigger a downgrade to the future flow ratings. In addition, severe reductions in coverage levels or an increase in the level of future flow debt as a percentage of the bank's liabilities could result in rating downgrades.


Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action.

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Publication:Daily the Pak Banker (Lahore, Pakistan)
Geographic Code:2ELSA
Date:Jan 1, 2018
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