Fitch Ratings has affirmed the foreign currency rating
of 'BBB' to UBB Diversified Payment Rights Finance Company (Unibanco),
series 2003-3, issuance. The rating applies to an issuance of
US$226,860,254. The series 2003-3 fixed-rate notes, along with the
previously issued series 2002-1, 2003-2, 2004-1, and 2004-2 existing
notes represent senior undivided interest in the trust assets. The
US$400 million of series 2002-1 notes and the US$112 million of series
2004-2 notes are backed by an unconditional and irrevocable financial
guaranty insurance policy by MBIA Insurance Corporation. The ratings
for these two series are affirmed at 'AAA' with an underlying rating
of 'BBB'. The US$200 million of series 2004-1 notes is backed by an
unconditional and irrevocable financial guaranty insurance policy by
Ambac Assurance Corp. The rating for this series is affirmed at 'AAA'
with an underlying rating of 'BBB'. The 2003-2 notes total US$105
million and the rating is affirmed at 'BBB'.
The 2002-1 and all 2003 and 2004 notes are backed by the collections generated from future and existing U.S. dollar denominated diversified payment rights (DPRs) originated by Unibanco-Uniao de Bancos Brasileiros S.A. (Unibanco). The trust will have rights to the DPRs upon generation by specified correspondent banks. DPRs generally refer to electronic payment orders intended for third-party beneficiaries via Unibanco (i.e. export remittances, workers remittances, and foreign direct investment, among others).
This business line is important to Unibanco as approximately 50% of its corporate clients are exporters. Coverage levels for the existing 2002, 2003, and 2004 series are significantly high, averaging about 40 times (x) maximum quarterly debt service over the past two years. Fitch has stressed these coverage levels and believes that Unibanco's current and future DPR business is adequate to support the rating of these future flow notes.
The 2003-3 series is being redenominated in US dollars. This series was previously issued in Japanese Yen with a foreign currency swap provided. The notes issued in Yen have been purchased and reissued in their dollar equivalency. The series is to begin amortizing in 2007.
The assigned 'BBB' rating is higher than Brazil's foreign and local currency ratings of 'BB-' by Fitch, as the transaction mitigates certain sovereign risks associated with Brazil. All correspondent banks have signed notice and acknowledgment agreements that obligate them to deposit DPR collections into an offshore collection account controlled by the indenture trustee, and large coverage levels ensure that the incentive for government interference remains low.
Unibanco is the third largest private bank in Brazil with US$38.4 billion in assets as of September 2005. Its individual and national ratings reflect its improving franchise, strong position in most product areas, and experienced management team. In recent years, Unibanco has broadened its participation in local retail markets and plans for this market share to increase in the future. Unibanco's total capital ratio was 18.2% as of September 2005.
Reports on Unibanco's DPR program can be found on the Fitch web site at 'www.fitchratings.com'. A sovereign report regarding the credit rating of Brazil, as well as a full bank update can also be found on the Fitch web site at 'www.fitchratings.com'.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, '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.
The 2002-1 and all 2003 and 2004 notes are backed by the collections generated from future and existing U.S. dollar denominated diversified payment rights (DPRs) originated by Unibanco-Uniao de Bancos Brasileiros S.A. (Unibanco). The trust will have rights to the DPRs upon generation by specified correspondent banks. DPRs generally refer to electronic payment orders intended for third-party beneficiaries via Unibanco (i.e. export remittances, workers remittances, and foreign direct investment, among others).
This business line is important to Unibanco as approximately 50% of its corporate clients are exporters. Coverage levels for the existing 2002, 2003, and 2004 series are significantly high, averaging about 40 times (x) maximum quarterly debt service over the past two years. Fitch has stressed these coverage levels and believes that Unibanco's current and future DPR business is adequate to support the rating of these future flow notes.
The 2003-3 series is being redenominated in US dollars. This series was previously issued in Japanese Yen with a foreign currency swap provided. The notes issued in Yen have been purchased and reissued in their dollar equivalency. The series is to begin amortizing in 2007.
The assigned 'BBB' rating is higher than Brazil's foreign and local currency ratings of 'BB-' by Fitch, as the transaction mitigates certain sovereign risks associated with Brazil. All correspondent banks have signed notice and acknowledgment agreements that obligate them to deposit DPR collections into an offshore collection account controlled by the indenture trustee, and large coverage levels ensure that the incentive for government interference remains low.
Unibanco is the third largest private bank in Brazil with US$38.4 billion in assets as of September 2005. Its individual and national ratings reflect its improving franchise, strong position in most product areas, and experienced management team. In recent years, Unibanco has broadened its participation in local retail markets and plans for this market share to increase in the future. Unibanco's total capital ratio was 18.2% as of September 2005.
Reports on Unibanco's DPR program can be found on the Fitch web site at 'www.fitchratings.com'. A sovereign report regarding the credit rating of Brazil, as well as a full bank update can also be found on the Fitch web site at 'www.fitchratings.com'.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, '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.