Announcements Rating Alerts Structured Finance

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

Johannesburg, 15 February 2019 — 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 by iVuzi Investments (RF) Limited (“iVuzi” or the “Issuer”) from time to time under the Issuer’s R15bn hybrid ABCP Program (the “Program”). The final, public rating accorded to the Notes in issue under the Issuer’s ABCP Program relates to timely payment of interest and principal.

The affirmation of the rating of the Notes follows from the ongoing monitoring and review of the transaction from November 2017 to February 2019 (the “period under review”). During the period under review, GCR published updates to its Global Master Structured Finance Rating Criteria in September 2018, as well as its Global Asset Backed Commercial Paper Rating Criteria in November 2018. The review of the rating accorded to the Notes issued by iVuzi was carried out in accordance with the updated rating criteria mentioned above.

RATING RATIONALE

iVuzi is a hybrid ABCP Program with the ability to acquire financial assets, rated securities and participating eligible investments, subject to eligibility criteria set out in the Transaction Documents, using the proceeds from the issuance of Notes that are limited to a maximum maturity of one year. The Issuer’s assets and liabilities are measured on an ongoing basis at their present values, which are utilised to calculate the liquidity and credit enhancement requirements in the structure from month to month.

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The Liquidity Facility (“LF”) requirement is 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, in its capacity as the Administrator and sole LF provider, has maintained the facility at the minimum required amount throughout the period under review. In addition, the dynamic Program Wide Credit Enhancement (“PWCE”), which is determined in accordance with GCR’s rating methodology, has also been reported at adequate levels on a monthly basis. The PWCE requirement is dependent on the credit quality of the underlying assets and is determined using a tailored model developed by GCR. It is noted that the Issuer is required to confirm the availability of sufficient liquidity and PWCE prior to the issuance of any Notes under the Program.

Pursuant to the updates of the rating criteria as mentioned above, GCR reviewed the transaction documents and an updated legal opinion. It was noted that the Issuer added several new assets to the structure over the review period, however, the ratings associated with these assets were of sufficient quality to maintain the Notes rating, as per the transaction documents. GCR will continue to review any additional assets to be added to the structure, with appropriate updates made to the credit enhancement model as the need arises.

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 by March 2019. GCR analysed the Program by applying its Global Master Structured Finance Rating Criteria (Sep’18); and its Global Asset Backed Commercial Paper Rating Criteria (Nov’18); with reference to its Global Master Criteria for Rating Banks and Other Financial Institutions (Mar’17); its Global Master Criteria for Rating Corporate Entities (Feb’18) and its FirstRand Bank Limited Rating Report (Nov’18).

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 2017
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

Corne Els

Senior Structured Finance Analyst

+27 11 784 1771

cornee@globalratings.net

Committee Chairperson

Yohan Assous

Sector Head: Structured Finance Ratings

+27 11 784 1771

yohan@globalratings.net

APPLICABLE METHODOLOGIES AND RELATED RESEARCH

  • Global Master Structured Finance Rating Criteria (Sep’18);
  • Global Asset Backed Commercial Paper Rating Criteria (Nov’18);
  • Global Master Criteria for Rating Banks and Other Financial Institutions (Mar’17);
  • Global Master Criteria for Rating Corporate Entities (Feb’18)
  • FirstRand Bank Limited Rating Report (Dec’18);
  • iVuzi Investments (RF) Limited New Issuance Report (Mar’16); and
  • iVuzi Investments (RF) Limited Surveillance Report (Nov’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.

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 Arranger.

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:

  • Updated legal opinion dated February 2019;
  • Monthly investor reports from January 2015 to November 2018; and
  • Monthly asset compositions from January 2015 to November 2018.
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ALL GCR CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS, TERMS OF USE OF SUCH RATINGS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS, TERMS OF USE AND DISCLAIMERS BY FOLLOWING THIS LINK:HTTP://GCRRATINGS.COM. IN ADDITION, RATING SCALES AND DEFINITIONS ARE AVAILABLE ON GCR’S PUBLIC WEB SITE AT WWW.GCRRATINGS.COM/RATING_INFORMATION. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. GCR's CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THIS SITE.

CREDIT RATINGS ISSUED AND RESEARCH PUBLICATIONS PUBLISHED BY GCR, ARE GCR’S OPINIONS, AS AT THE DATE OF ISSUE OR PUBLICATION THEREOF, OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. GCR DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL AND/OR FINANCIAL OBLIGATIONS AS THEY BECOME DUE. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: FRAUD, MARKET LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND GCR’S OPINIONS INCLUDED IN GCR’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS AND GCR’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND GCR’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL OR HOLD PARTICULAR SECURITIES. NEITHER GCR’S CREDIT RATINGS, NOR ITS PUBLICATIONS, COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. GCR ISSUES ITS CREDIT RATINGS AND PUBLISHES GCR’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING OR SALE.

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