Announcements

iVuzi Investments (RF) Limited Asset Backed Commercial Paper – Rating Affirmed

Johannesburg, 15 November 2017 — Global Credit Ratings (“GCR”) has affirmed the final, public short-term credit rating of ‘A1+(ZA)(sf)’ accorded to the Asset Backed Commercial Paper (“ABCP” or the “Notes”) issued and to be issued by iVuzi Investments (RF) Ltd (“iVuzi” or the “Issuer”) from time to time under the Issuer’s R15bn hybrid ABCP Program (the “Program”).

The affirmation of the rating of the Notes follows a review of the transaction from November 2016 to October 2017 (the “period under review”). The final, public rating accorded to the Notes in issue and to be issued under the Issuer’s ABCP Program relates to timely payment of interest and principal.

RATING RATIONALE

iVuzi is a hybrid ABCP Program with the ability to finance or acquire financial assets, rated securities and participating eligible investments, subject to eligibility criteria that are set out in the Transaction Documents. The Issuer’s assets and liabilities are measured on an ongoing basis at their present value, which is utilised to calculate the liquidity and credit enhancement requirements in the structure.

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The Liquidity Facility (“LF”) requirements are calculated as the outstanding principal amount of the Notes in issue less the aggregate nominal value of the rated securities with a maturity of at least two days prior to the maturity of the Notes and cash held in the Collections Account, among other factors. RMB is the sole LF provider and the facility has consistently been funded at the minimum required amount throughout the period under review. RMB continues to be rated adequately as LF provider.

The Program Wide Credit Enhancement (“PWCE”) is dynamic and sized based upon the present value of the Participating Assets and their underlying credit quality, subject to GCR’s rating methodology. GCR utilises its tailor made rating factor model on a monthly basis to determine an amount of PWCE commensurate to the rating of the Notes. RMB, in its capacity as Administrator, also runs the model to calculate the appropriate funding and PWCE requirements prior to any new issuance or any changes in the composition of Participating Assets. GCR updated the rating factor model in October 2017 to incorporate the latest default statistics, among others. There were no breaches in the PWCE requirement during the period under review.

For more information on the Program, please refer to the iVuzi Investments (RF) Limited New Rating Report published on 31 March 2016, as well as the Surveillance Report to be published in November 2017. GCR analysed the Program by applying its Global Structured Finance Rating Criteria (Feb’17); its Global Asset Backed Commercial Paper Rating Criteria (Sep’16); its Global Master Criteria for Rating Banks and Other Financial Institutions (Mar’17); with reference to its FirstRand Bank Limited Rating Report (Nov’16).

NATIONAL SCALE RATINGS HISTORY

Security Class
Initial Rating
Long Term Rating
Short Term Rating
Outlook
ABCP
31 March 2016
n.a
A1+(ZA)(sf)
n.a
Security Class
Last Rating
Long Term Rating
Short Term Rating
Outlook
ABCP
15 November 2016
n.a
A1+(ZA)(sf)
n.a

ANALYTICAL CONTACTS

Primary Analyst

Tinashe Mujuru

Structured Finance Analyst

+27 11 784 1771

tinashem@globalratings.net

Secondary Analyst

Mark Vrdoljak

Senior Structured Finance Analyst

+27 11 784 1771

markvrd@globalratings.net

Committee Chairperson

Yohan Assous

Sector Head: Structured Finance Ratings

+27 11 784 1771

yohan@globalratings.net

APPLICABLE METHODOLOGIES AND RELATED RESEARCH

  • Global Structured Finance Rating Criteria (Feb’17);
  • Global Asset Backed Commercial Paper Rating Criteria (Sep’16);
  • Global Master Criteria for Rating Banks and Other Financial Institutions (Mar’17);
  • FirstRand Bank Limited Rating Report (Nov’16);
  • iVuzi Investments (RF) Limited New Issuance Report (Mar’16); and
  • iVuzi Investments (RF) Limited Surveillance Report (Nov’16)

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.

GLOSSARY OF TERMS/ACRONYMS USED IN THIS DOCUMENT AS PER GCR’S STRUCTURED FINANCE GLOSSARY

Administrator A transaction appointed agent responsible for the managing of a Conduit or a Special Purpose Vehicle. The responsibilities may include maintaining the bank accounts, making payments and monitoring the transaction performance.
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 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.
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.
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.
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.
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.
Senior A security that has a higher repayment priority than junior securities.
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.
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 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.

The information received from the Arranger and other reliable third parties to accord the credit rating included:

  • Monthly investor reports from January 2015 to October 2017; and
  • Monthly asset compositions from January 2015 to October 2017.
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