TEXT-Fitch: no rating impact on Sound I, II from transaction changes

Fri Nov 16, 2012 10:59am EST

Nov 16 - Fitch Ratings says there is no rating impact on Sound I B.V. (Sound
I) following the restructure of the transaction and counterparty novations in
both Sound I and II. The transactions comprise 100% NHG-backed mortgage loans
sold by wholly owned indirect subsidiaries of NIBC Bank N.V. (NIBC,
'BBB'/Negative/'F3').

NIBC put forward a restructuring proposal to the issuer, which includes the 
extension of the first optional redemption date (FORD) of Sound I by 12 months 
(now falling in November 2013) and an increase in the class A notes' step-up 
margin to 110 bps (from the original 25bps). In November 2012, the margins on 
the mezzanine and junior notes will also step up and will be set at levels 
defined by the original FORD. The swap counterparty, RBS N.V. ('A'/Stable/'F1'),
has agreed to cover the increase of the interest margin on the notes. Fitch's 
ratings address the credit risk exposure of the notes up to legal final maturity
and for this reason the change in FORD has no impact on its ratings. In 
addition, Fitch views the change in margin of the notes as credit neutral, as 
the increase in cost has been fully covered by the swap agreement.

The extraordinary resolutions were adopted by all noteholders at their meeting 
on 7 November 2012. Fitch understands that the restructuring was initiated in 
order to incentivise the class A noteholders not to offer their notes in the par
tender offer by NIBC and remain invested at the new terms, while providing NIBC 
with an additional year of funding.

Fitch has also been notified by the issuers that Bank Nederlandse Gemeenten 
(BNG, 'AAA'/Stable/'F1+') will replace RBS as the liquidity guarantor in Sound I
and NIBC as the liquidity provider in Sound II B.V., respectively. The 
replacement follows the breach of the liquidity guarantor required rating 
triggers defined in the transaction documentation. Fitch's Counterparty Criteria
for Structured Finance Transactions states that a counterparty with ratings of 
at least 'A'/'F1' is generally eligible to support the ratings of transactions 
up to 'AAAsf'. As BNG's ratings are above this threshold, Fitch is of the 
opinion that the ratings of the notes are unaffected by the novations.


Additional information is available on www.fitchratings.com
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