Johannesburg, 24 May 2016 — Global Credit Ratings (‘GCR’) has accorded a final, public short term credit rating of ‘A1+(ZA)(sf)’ to the Asset Backed Commercial Paper (‘CP’ or the ‘Notes’) issued and to be issued by Blue Titanium Conduit (RF) Limited (‘Blue Titanium’ or the ‘Issuer’) from time to time under the Issuer’s R10bn multi-seller Asset Backed Commercial Paper (‘ABCP’) Programme (the ‘Programme’). The final, public rating accorded relates to the timely payment of interest and principal.
Blue Titanium is a multi-seller ABCP Programme with the ability to finance or acquire Debt Instruments that are subject to the Eligibility Criteria set out in the Transaction Documents. The Notes are Rand denominated, with a maturity of up to 364 days, which may be issued at par value, at a discount, or at a premium over their nominal amount specified in the Applicable Pricing Supplement. Zero coupon Notes may also be issued at a discount.
Standard Bank of South Africa Limited, in its capacity as the sole Liquidity Facility (LF) Provider is obliged to ensure that the aggregate commitment under the Liquidity Facility, which is equal to the Principal Amount Outstanding (plus accrued interest) of all Notes in issue from time to time, is met. The Liquidity Facility made available to the Issuer may be drawn down to cover cash flow deficiencies resulting from timing mismatches and market disruptions. It should be noted that the Liquidity Facility does not cover Defaulted Assets.
The Programme Wide Credit Enhancement (‘PWCE’), which is made up of the aggregate credit enhancement amounts in respect of the financial assets as well as the Rated Debt Instruments is dynamic and measured based on the present value of the Participating Assets and their underlying credit quality. Blue Titanium does not have any financial assets and all acquired Rated Debt Instruments are rated ‘AA(ZA)(sf)’ or above, therefore PWCE is currently not required. Nevertheless, the Issuer had committed R485m as at 30 April 2016. Excess spread generated by the conduit continues to fund the Capital Reserve, which has grown to approximately R70m as at 30 April 2016.
Blue Titanium will be monitored and GCR will perform regular surveillance on the Programme.
For more information on the Programme, please refer to the “Blue Titanium Conduit (RF) Limited – New Ratings Report” to be published on 24 May 2016. GCR analysed the Programme by applying its: Global Structured Finance Rating Criteria (Feb’16); Global Asset Backed Commercial Paper Rating Criteria (Dec’15); its Global Master Criteria for Rating Banks and Other Financial Institutions (Mar’16); with reference to its Standard Bank of South Africa Limited Rating (Dec’15).
NATIONAL SCALE RATINGS HISTORY
Senior Credit Analyst
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Sector Head: Structured Finance Ratings
+27 11 784 1771.
APPLICABLE METHODOLOGIES AND RELATED RESEARCH
- Global Structured Finance Rating Criteria (Feb’16);
- Global Asset Backed Commercial Paper Rating Criteria (Dec’15);
- Global Master Criteria for Rating Banks and Other Financial Institutions (Mar’16);
- The Standard Bank Limited Rating (Dec ’15);
RATING LIMITATIONS AND DISCLAIMERS
ALL GCR’S CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://GLOBALRATINGS.NET/UNDERSTANDING-RATINGS. IN ADDITION, GCR’S RATING SCALES AND DEFINITIONS ARE ALSO AVAILABLE FOR DOWNLOAD AT THE FOLLOWING LINK: HTTP://GLOBALRATINGS.NET/RATINGS-INFO/RATING-SCALES-DEFINITIONS. GCR’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, PUBLICATION TERMS AND CONDITIONS AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE AT HTTP://GLOBALRATINGS.NET.
|Agreement||A negotiated and usually legally enforceable understanding between two or more legally competent parties.|
|Asset||An item with economic value that an entity owns or controls.|
|Collateral||An asset pledged as security in event of default.|
|Commercial Paper||A debt security of short term nature, less than a year.|
|Credit Enhancement||Limited protection to a transaction against losses arising from the assets. The credit enhancement can be either internal or external. Internal credit enhancement may include: Subordination; over-collateralisation; excess spread; security package; arrears reserve; reserve fund and hedging. External credit enhancement may include: Guarantees; Letters of Credit and hedging.|
|Credit Rating||An opinion regarding the creditworthiness of an entity, a security or financial instrument, or an issuer of securities or financial instruments, using an established and defined ranking system of rating categories.|
|Credit Risk||The probability or likelihood that a borrower or issuer will not meet its debt obligations. Credit Risk can further be separated between current credit risk (immediate) and potential credit risk (deferred).|
|Debt||An obligation to repay a sum of money.|
|Default||A default occurs when: 1.) The Borrower is unable to repay its debt obligations in full; 2.) A credit-loss event such as charge-off, specific provision or distressed restructuring involving the forgiveness or postponement of obligations; 3.) The borrower is past due more than X days on any debt obligations as defined in the transaction documents; 4.) The obligor has filed for bankruptcy or similar protection from creditors.|
|Early Redemption||The repurchase of a bond by the issuer before it matures.|
|Eligibility Criteria||Limitations imposed on the type and quality of assets that can be sold by the Originator / Servicer into the Securitisation vehicle which ensure the transaction will track the performance of historical data analysed as closely as possible.|
|Hybrid||A form of security that has characteristics of various types of transaction or product.|
|Issuer||The party indebted or the person making repayments for its borrowings.|
|Liability||All financial claims, debts or potential losses incurred by an individual or an organisation.|
|Liquidity||The ability to repay short-term obligations or short-term availability of liquid assets to a market or entity.|
|Liquidity Facility||A facility provided to a structured finance transaction that will pay the Noteholders interest in the event that the underlying assets cash flows are inadequate.|
|Loan||A sum of money borrowed by a debtor that is expected to be paid back with interest to the creditor. A debt instrument where immovable property is the collateral for the loan. A mortgage gives the lender a right to take possession of the property if the borrower fails to repay the loan. Registration is a prerequisite for the existence of any mortgage loan. A mortgage can be registered over either a corporeal or incorporeal property, even if it does not belong to the mortgagee. Also called a Mortgage bond.|
|Loss||A tangible or intangible, financial or non-financial loss of economic value.|
|National Scale Rating||The national scale provides a relative measure of creditworthiness for rated entities only within the country concerned. Under this rating scale, a ‘AAA’ long term national scale rating will typically be assigned to the lowest relative risk within that country, which in most cases will be the sovereign state.|
|Noteholder||Investor of capital market securities.|
|Obligation||The title given to the legal relationship that exists between parties to an agreement when they acquire personal rights against each other for entitlement to perform.|
|Principal||The total amount borrowed or lent, e.g. the face value of a bond, excluding interest.|
|Rated Securities||Debt securities that have been accorded a credit rating.|
|Redemption||The repurchase of a bond at maturity by the issuer.|
|Securities||Various instruments used in the capital market to raise funds.|
|Security||An asset deposited or pledged as a guarantee of the fulfilment of an undertaking or the repayment of a loan, to be forfeited in case of default.|
|Short Term Rating||A short term rating is an opinion of an issuer’s ability to meet all financial obligations over the upcoming 12 month period, including interest payments and debt redemptions.|
|Stock Code||A unique code allocated to a publicly listed security.|
|Structured Finance||A method of raising funds in the capital markets. A Structured Finance transaction is established to accomplish certain funding objectives whist reducing risk.|
|Transaction||A transaction that enables an Issuer to issue debt securities in the capital markets. A debt issuance programme that allows an Issuer the continued and flexible issuance of several types of securities in accordance with the programme terms and conditions.|
SALIENT FEATURES OF ACCORDED RATINGS
GCR affirms that a.) no part of the rating was influenced by any other business activities of the credit rating agency; b.) the rating was based solely on the merits of the rated entity, security or financial instrument being rated; c.) such rating was an independent evaluation of the risks and merits of the rated entity, security or financial instrument; and d.) the validity of the rating is for a maximum of 12 months, or earlier as indicated by the applicable credit rating document.
The Issuer and the Arranger participated in the rating process via face-to-face meetings, teleconferences and other written correspondence. Furthermore, the quality of information received was considered adequate and has been independently verified where possible.
The credit rating/s has been disclosed to the Issuer and the Arranger with no contestation of the rating.
The rating/s above were solicited by the Issuer of the Transaction; GCR has been compensated for the provision of the ratings.
GCR received the Programme Memorandum in relation to Blue Titanium, monthly investor reports from August 2010 to April 2016, satisfactory copies of all executed transaction documents, signed legal opinion and signed amendments to Transaction Documents where applicable.