TEXT-S&P cuts ratings on 11 notes in five Spanish SME deals

Fri Nov 2, 2012 1:28pm EDT

OVERVIEW
     -- We consider there to be a direct ratings link between the ratings on 
various tranches in Empresas Banesto 1, Empresas Banesto 2, Santander Empresas 
4, Santander Hipotecario 3, and Santander Hipotecario 6--and the ratings on 
Banco Santander and Banco Espanol de Credito, as counterparties in these 
transactions.
     -- This ratings link exists because the issuers of these transactions 
have not taken any remedy actions since the previous downgrades of Banco 
Santander and Banco Espanol de Credito on April 30, 2012. 
     -- On Oct. 15, 2012, we lowered to 'BBB/Negative/A-2' our ratings on 
Banco Santander and Banco Espanol de Credito, following our Oct. 10, 2012 
downgrade of Spain.
     -- Consequently, we have today lowered our ratings on 11 classes of notes 
in these transactions to the same rating levels as the ratings on the 
counterparties.
  
MADRID (Standard & Poor's) Nov. 2, 2012--Standard & Poor's Ratings Services 
today lowered its credit ratings on 11 classes of notes in five Spanish 
transactions. 

Specifically, we have lowered to 'BBB (sf)' our ratings on: 
     -- Two tranches in Empresas Banesto 1, Fondo de Titulizacion de Activos;
     -- Two tranches in Empresas Banesto 2, Fondo de Titulizacion de Activos;
     -- Four tranches in Fondo de Titulizacion de Activos Santander Empresas 4;
     -- Three tranches in Fondo de Titulizacion de Activos Santander 
Hipotecario 3; and 
     -- Three tranches in Fondo de Titulizacion de Activos Santander 
Hipotecario 6 (see list below). 
  
Today's rating actions follow our lowering of our long-term ratings on Banco 
Santander S.A. (BBB/Negative/A-2) and Banco Espanol de Credito S.A. 
(BBB/Negative/A-2) on Oct. 15, 2012, following our downgrade of the Kingdom of 
Spain on Oct. 10, 2012 (see "Various Rating Actions On Spanish Financial 
Institutions Following Sovereign Downgrade," and "Spain Ratings Lowered To 
'BBB-/A-3' On Mounting Economic And Political Risks; Outlook Negative).  

Banco Santander and Banco Espanol de Credito are counterparties for the five 
transactions that we are taking rating actions in today. Therefore, following 
the downgrades of these financial institutions, we have applied our 2012 
counterparty criteria to assess counterparty risk in the transactions (see 
"Counterparty Risk Framework Methodology And Assumptions," published on May 
31, 2012). 

The transaction documents for these transactions stipulate that remedy actions 
need to be taken if the long- and short-term ratings on the guaranteed 
investment contract (GIC) provider and the swap counterparty are lowered below 
'A/A-1'. 

As no remedy actions have been taken in all five transactions since the 
previous April 30, 2012 downgrades of Banco Santander and Banco Espanol de 
Credito, our 2012 counterparty criteria link the ratings on the tranches in 
the transactions to the issuer credit ratings on the counterparties. 

Therefore, we have today lowered to 'BBB (sf)' our ratings on the class A2 and 
B notes in Empresas Banesto 1 and the class A and B notes in Empresas Banesto 
2. Banco Espanol de Credito acts as guaranteed investment contract (GIC) 
provider and swap counterparty in these transactions.

At the same time, we have lowered to 'BBB (sf)' our ratings on the class A1, 
A2, A3, and B notes in Santander Empresas 4 and the class A1, A2, and A3 notes 
in Santander Hipotecario 3. We have also lowered to 'BBB (sf)' our ratings on 
the class A, B, and C notes in Santander Hipotecario 6. Banco Santander acts 
as GIC provider and swap counterparty in these transactions.

Empresas Banesto 1 and Empresas Banesto 2 securitize secured and unsecured 
loans granted to Spanish small and midsize enterprises (SMEs) in their normal 
course of business. These transactions closed in October 2007 and June 2008, 
respectively.

Santander Empresas 4 was originated by Banco Santander and closed in November 
2007. The portfolio comprises secured and unsecured loans granted to Spanish 
SMEs in their normal course of business.

Santander Hipotecario 3 and Santander Hipotecario 6, which closed in April 
2007 and May 2010 respectively, were originated by Banco Santander and 
securitize residential mortgage loans granted to individuals in Spain.

STANDARD & POOR'S 17G-7 DISCLOSURE REPORT

SEC Rule 17g-7 requires an NRSRO, for any report accompanying a credit rating 
relating to an residential mortgage backed security as defined in the Rule, to 
include a description of the representations, warranties and enforcement 
mechanisms available to investors and a description of how they differ from 
the representations, warranties and enforcement mechanisms in issuances of 
similar securities. The Rule applies to in-scope securities initially rated 
(including preliminary ratings) on or after Sept. 26, 2011.

If applicable, the Standard & Poor's 17g-7 Disclosure Reports included in this 
credit rating report are available at 
"RELATED CRITERIA AND RESEARCH 

     -- Various Rating Actions On Spanish Financial Institutions Following 
Sovereign Downgrade, Oct. 15, 2012
     -- Spain Ratings Lowered To 'BBB-/A-3' On Mounting Economic And Political 
Risks; Outlook Negative, Oct. 10, 2012  
     -- Counterparty Risk Framework Methodology And Assumptions, May 31, 2012
     -- Ratings Lowered On Class A, B, And C Notes In Spanish RMBS Transaction 
Santander Hipotecario 6, May 25, 2012
     -- Ratings Lowered In Spanish SME Transactions Empresas Banesto 1 And 
Empresas Banesto 2 After Downgrade Of Counterparty, May 24, 2012
     -- Ratings Lowered On Class A1, A2, A3, D, And E Notes In Spanish SME 
Transaction Santander Empresas 4, May 22, 2012
     -- Negative Rating Actions On 16 Spanish Banks Following Sovereign 
Downgrade, April 30, 2012
     -- European Structured Finance Scenario And Sensitivity Analysis: The 
Effects Of The Top Five Macroeconomic Factors, March 14, 2012
     -- Global Structured Finance Scenario And Sensitivity Analysis: The 
Effects Of The Top Five Macroeconomic Factors, Nov. 4, 2011
     -- Nonsovereign Ratings That Exceed EMU Sovereign Ratings: Methodology 
And Assumptions, June 14, 2011
     -- Principles Of Credit Ratings, Feb. 16, 2011
  
RATINGS LIST 

Class               Rating
            To                    From


Ratings Lowered

Empresas Banesto 1 Fondo de Titulizacion de Activos 
EUR2 Billion Floating-Rate Notes

A2          BBB (sf)              A- (sf)
B           BBB (sf)              A- (sf)

Empresas Banesto 2 Fondo de Titulizacion de Activos 
EUR2 Billion Floating-Rate Notes

A           BBB (sf)              A- (sf)
B           BBB (sf)              A- (sf)

Fondo de Titulizacion de Activos Santander Empresas 4
EUR3.586 Billion Floating-Rate Notes

A1          BBB (sf)              A- (sf)
A2          BBB (sf)              A- (sf)
A3          BBB (sf)              A- (sf)
B           BBB (sf)              A- (sf)

Fondo de Titulizacion de Activos Santander Hipotecario 3
EUR2.822 Billion Mortage-Backed Floating-Rate Notes And Overissuance Of 
Floating-Rate Notes

A1          BBB (sf)               BBB+ (sf)
A2          BBB (sf)               BBB+ (sf)
A3          BBB (sf)               BBB+ (sf)

Fondo de Titulizacion de Activos Santander Hipotecario 6
EUR1.26 Billion Floating-Rate Notes

A          BBB (sf)               A- (sf)
B          BBB (sf)               A- (sf)
C          BBB (sf)               A- (sf)

S&P LOWERS RTGS ON 11 NOTES IN FIVE SPANISH SME DEALS
FILED UNDER:
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