NEW YORK?(BUSINESS WIRE)?
Fitch Ratings affirms eight and downgrades nine classes of tobacco settlement asset-backed bonds from Buckeye Tobacco Settlement Financing Authority, 2007 (Ohio). See the full list of rating actions at the end of this release.
The turbo and capital appreciation bonds were put on Rating watch Negative in July 2011 based on the expectation that the trust would draw on the reserve account and cause the reserve to fall below the required minimum amount on the December 2011 distribution date. The transaction did draw on the reserve account in order to make interest payments and there is now a shortfall of $7,359,213.81.
As a result of the shortfall, principal payments will no longer be made to the turbo bonds, and will not resume until the reserve account is funded to its requirement. Additionally, since it will now take longer for the turbo bonds to be paid off, it will also take longer for the capital appreciation bonds, which accrete interest until principal repayment begins, to begin to pay down. As a result, Fitch has downgraded the turbo and capital appreciation bonds to the model implied rating, rather than assigning them the rating one notch above the model implied rating as is Fitch?s typical approach for tobacco transactions.
As a result, some of the longer dated turbo bonds have higher ratings than the shorter dated turbo bonds, despite the sequential pay structure. This is based on each bond?s maturity date and outstanding balance and some are more likely to pay by legal final date than others. For instance, in a ?B? stress environment the 2024 bonds will pay at the maturity date. But if the stress environment is increased to a ?B+? (under which the 2024 defaults), the 2030 turbo would be able to withstand this higher stress and still pay on time.
In the event that a shorter dated turbo bond defaults by not paying principal in full by the maturity date, payments are still made to the defaulted bond. However, the payment structure for the remaining bonds switches to pro-rata. This feature increases the likelihood of longer dated bonds paying by their maturity date, since they would begin paying principal earlier in this scenario.
The various actions are based on Fitch?s structured Finance Criteria ?Global Structured Finance Rating Criteria? published Aug. 4, 2011 and the level of stress each class is able to withstand as indicated by Fitch?s breakeven cash flow model. The model indicates, for each class of bonds, the level of the annual Master Settlement Agreement (MSA) payment percent change the trust would be able to sustain and still pay the bond in full by the legal final date. The base case ?B? corresponds to a 1% increase in the MSA payment received by the trust every year. The ? BBB ? category corresponds to an annual MSA payment decline of between 0.3% to 2.5%. The cash flow model accounts for the amount of the MSA payment that the transaction has received in 2010, the capital structure, the reserve account, and the bonds? legal final dates.
The bond payments are also tied to the tobacco companies making MSA payments. Tobacco settlement bonds can be rated up to ?BBB+? based on Fitch?s view of the whole tobacco industry and the executory nature of the MSA. In the event of a bankruptcy of a tobacco company, Fitch believes there is an incentive for the company to continue to make payments under the MSA.
Fitch affirms the following ratings:
Senior Series 2007A-1 Senior Current Interest Serial Bonds
?$4,480,000 due June 1, 2012 at ?BBB+sf?; Outlook Stable ;
?$15,815,000 due June 1, 2012 at ?BBB+sf?; Outlook Stable;
?$12,230,000 due June 1, 2013 at ?BBB+sf?; Outlook Stable;
?$23,995,000 due June 1, 2014 at ?BBB+sf?; Outlook Stable;
?$26,640,000 due June 1, 2015 at ?BBB+f?; Outlook Stable;
?$35,000,000 due June 1, 2016 at ?BBB+sf?; Outlook Stable;
?$38,995,000 due June 1, 2017 at ?BBB+sf?; Outlook Stable.
Fitch downgrades the following ratings:
Senior Series 2007A-2 Senior Current Interest Turbo Term Bonds
?$200,000,000 due June 1, 2024 to ?Bsf? from ?B+sf?; removed from Negative Watch and assigned Negative Outlook ;
?$949,530,000 due June 1, 2024 to ?Bsf? from ?B+sf?; removed from Negative Watch and assigned Negative Outlook;
?$687,600,000 due June 1, 2030 to ?B+sf? from ?BB-sf?; removed from Negative Watch and assigned Negative Outlook;
?$505,200,000 due June 1, 2034 to ?BBsf? from ?BB+sf?; removed from Negative Watch and assigned Negative Outlook;
?$750,000,000 due June 1, 2047 to ?BBsf? from ?BB+sf?; removed from Negative Watch and assigned Negative Outlook;
?$1,383,715,000 due June 1, 2047 to ?BBsf? from ?BB+sf?; removed from Negative Watch and assigned Negative Outlook.
Senior Series 2007A-3 Senior Convertible Capital Appreciation Turbo Term Bonds
?$274,751,138 due June 1, 2037 to ?B+sf? from ?BB-sf?; removed from Negative Watch and assigned Negative Outlook.
First Subordinate Series 2007B Capital Appreciation Turbo Term Bonds
?$191,265,480 due June 1, 2047 to ?Bsf? from ?B+sf?; removed from Negative Watch and assigned Negative Outlook.
Second Subordinate Series 2007C Capital Appreciation Turbo Term Bonds
?$128,182,923 due June 1, 2052 to ?Bsf? from ?B+sf?; removed from Negative Watch assigned Negative Outlook.
Fitch affirms the following rating and revises the Outlook:
Senior Series 2007A-2 Senior Current Interest Turbo Term Bonds
?$250,000,000 due June 1, 2042 at ?BBBsf?; removed from Negative Watch and assigned Negative Outlook.
Additional information is available at ? www.fitchratings.com ?. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.
Applicable Criteria and Related Research:
?? Global Structured Finance Rating Criteria ? (Aug. 4, 2011).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: . IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY?S PUBLIC WEBSITE ? WWW.FITCHRATINGS.COM ?. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH?S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE ?CODE OF CONDUCT? SECTION OF THIS SITE.
Tags: Settlement
evans vs davis oscar nominations 2012 fast times at ridgemont high fast times at ridgemont high phil davis soylent green george st pierre
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.