TEXT-Fitch rates Garanti DPR's Series 2012-A notes at 'A-'
Aug 24 - Link to Fitch Ratings' Report: Garanti Diversified Payment Rights Finance CompanyAug 24 - Fitch Ratings has assigned Garanti Diversified Payment Rights Finance Company's (Garanti DPR or the issuer) Series 2012-A notes a final rating of 'A-', with a Stable Outlook. Fitch has also affirmed the outstanding Series 2010-B, 2010-C, 2010-D, 2011-A and 2011-B notes at 'A-' with a Stable Outlook, following the issuance of the new series. Fitch views the bank's diversified payment rights (DPR) business line and performance risk as consistent with a going concern assessment (GCA) score of GC1. Fitch's ratings on the notes primarily reflect Garanti Bank's ratings, its GCA score and the fact that monthly debt service coverage ratios have been consistently high (currently around 80x maximum debt service payments, according to Fitch's calculations, which only consider flows through designated depository banks (DDBs) but strip out any domestic Turkish flows). Garanti DPR is a securitisation of DPRs originated by Turkiye Garanti Bankasi A.S. (Garanti Bank; 'BBB-'/Stable/'F3'). DPRs are essentially hard currency payment orders processed by banks. Payment orders can arise for a variety of reasons but mainly reflect payments due on the export of goods and services, capital flows and personal remittances. The DPRs settled by Garanti Bank mainly derive from the exports made by Turkish companies and are mostly denominated in USD and EUR. Garanti DPR has purchased from Garanti Bank all present and future DPRs denominated in USD, EUR and GBP. To purchase the DPRs, the issuer sells notes that are secured on the DPRs. Additionally, the nine main correspondent banks used by Garanti Bank have signed irrevocable acknowledgement agreements whereby any collections held in those bank accounts are controlled by the indenture trustee for the benefit of the noteholders (these banks are referred to as DDBs and together they currently account for approximately 85% of total collections). As all collections are held offshore, the structure mitigates sovereign risks such as transfer and convertibility risks and the risk that the sovereign interferes with the DPR flows. Investors remain exposed to the risk that future DPRs could fall, or flows are diverted, leading to the issuer not having sufficient collections available to service the debt. Fitch has modelled these risks by stressing the cash flows and is comfortable the programme can withstand a substantial drop in collections commensurate with the ratings on the notes. Garanti DPR has been in existence since 2002. However, Fitch only began rating notes issued by the programme in 2010. Garanti Bank is Turkey's second-largest privately owned bank, with significant market shares across all business segments. As of end-H212, Garanti Bank had USD86.6bn (equivalent) in assets, representing approximately 12.7 % of total system assets and 11.9% of deposits.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, 'Future Flow Securitization Criteria', dated 19 June 2012 are available at www.fitchratings.com. Applicable Criteria and Related Research: Future Flow Securitization Rating Criteria
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