Johannesburg, 16 May 2018 — Global Credit Ratings (“GCR”) has affirmed the final, public short-term credit rating of ‘A1+(ZA)(sf)’ accorded to the Asset-Backed Commercial Paper (“CP” or the “Notes”) issued by Blue Titanium Conduit (RF) Limited (“Blue Titanium” or the “Issuer”) under the Issuer’s R10bn multi-seller Asset-Backed Commercial Paper (“ABCP”) Programme. Concurrently, GCR has withdrawn the rating of the Notes at the request of the client.
The final, public rating accorded to the Notes related to timely payment of interest and principal.
Blue Titanium was established as Standard Bank of South Africa Limited (“SBSA”) managed ABCP Programme with the ability to issue Rand denominated CP to finance or acquire Debt Instruments (“Participating Assets”) that are subject to Eligibility Criteria as set out in the Transaction Documents.
SBSA, in its capacity as the sole Liquidity Facility (“LF”) Provider is obliged to ensure that the aggregate commitment under the LF, which is equal to the Principal Amount Outstanding (plus accrued interest) of all Notes in issue from time to time, is met. The LF made available to the Issuer may be drawn down to cover cash flow deficiencies resulting from timing mismatches and market disruptions. GCR currently rates SBSA ‘AA+(ZA)’ and ‘A1+(ZA)’, with a Stable outlook, on a long and short-term basis respectively.
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. At 30 April 2018, the lowest long-term rating of any of the Participating Assets of the Issuer was ‘AA+(ZA)’. Therefore, PWCE is currently not required as per GCR’s ABCP criteria. This notwithstanding, PWCE provided to the Issuer (via a subordinated 2nd loss Credit Enhancement Facility provided by SBSA) amounted to R421.4m at 30 April 2018, equivalent to 21.8% of the aggregate CP outstanding at the time. No breaches in single Participating Asset exposure limits or Programme Wind Down Events were reported over the review period.
For more information on the ABCP Programme, please refer to the Blue Titanium New Ratings Report published on 24 May 2016 and the Blue Titanium Surveillance report published on 16 May 2018. GCR analysed the ABCP Programme by applying its: Global Structured Finance Rating Criteria (Feb’17); Global Asset Backed Commercial Paper Rating Criteria (Nov’17); its Global Master Criteria for Rating Banks and Other Financial Institutions (Mar’17); with reference to The Standard Bank of South Africa Limited Rating (May’17).
NATIONAL SCALE RATINGS HISTORY
Structured Finance Analyst
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Structured Finance 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’17);
- Global Asset Backed Commercial Paper Rating Criteria (Nov’17);
- Global Master Criteria for Rating Banks and Other Financial Institutions (Mar’17);
- The Standard Bank Limited Rating (May ’17);
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.
|Asset||An item with economic value that an entity owns or controls.|
|Cash Flow||A financial term for monetary changes in operations, investing and financing activities.|
|Commercial Paper||A debt security of short term nature, less than a year.|
|Conduit||A commercial lending entity that is established to purchase assets to securitise.|
|Credit||A contractual agreement in which a borrower receives something of value now, and agrees to repay the lender at some date in the future, generally with interest. The term also refers to the borrowing capacity of an individual or company|
|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.|
|Debt||An obligation to repay a sum of money.|
|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.|
|Exposure||Exposure is the amount of risk the holder of an asset or security is faced with as a consequence of holding the security or asset. For a company, its exposure may relate to a particular product class or customer grouping. Exposure may also arise from an overreliance on one source of funding.|
|International Scale Rating LC||International local currency (International LC) ratings measure the likelihood of repayment in the currency of the jurisdiction in which the issuer is domiciled. Therefore, the rating does not take into account the possibility that it will not be able to convert local currency into foreign currency or make transfers between sovereign jurisdictions.|
|Issuer||The party indebted or the person making repayments for its borrowings.|
|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.|
|Long-Term Rating||A long term rating reflects an issuer’s ability to meet its financial obligations over the following three to five year period, including interest payments and debt redemptions. This encompasses an evaluation of the organisation’s current financial position, as well as how the position may change in the future with regard to meeting longer term financial obligations.|
|Loss||A tangible or intangible, financial or non-financial loss of economic value.|
|Market||An assessment of the property value, with the value being compared to similar properties in the area.|
|Principal||The total amount borrowed or lent, e.g. the face value of a bond, excluding interest.|
|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.|
|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.|
|Surveillance||Process of monitoring a transaction according to triggers, covenants and key performance indicators.|
|Timely Payment||The principal debt, interest, fees and expenses being repaid promptly in accordance with the contractual obligation.|
|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 written correspondence. Furthermore, the quality of information received was considered adequate and has been independently verified where possible.
The credit rating has been disclosed to the Issuer and the Arranger with no contestation of the rating.
The rating above was solicited by the Issuer of the Transaction; GCR has been compensated for the provision of the rating.
GCR received the Issuer’s monthly investor reports for the period October 2010 to April 2018.