RPT-Fitch assigns FADE's series 3 tap 5 'BBB(EXP)' expected rating

Tue May 7, 2013 6:46am EDT

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May 7 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings has assigned Fondo de Titulizacion del Deficit del Sistema Electrico FTA's (FADE or the issuer) Series 3 Tap 5 EUR248m issuance an expected rating of 'BBB(EXP)' with Negative Outlook.


All FADE series are fully guaranteed by the Spanish government up to a maximum of EUR22bn and hence the ratings are credit-linked to Spain's Long-term Issuer Default Rating (IDR) of 'BBB'.

All FADE series are exposed to the administrative capabilities of Titulizacion de Activos SGFT SA (TdA) as issuer trustee. TdA is responsible for formalising drawings under the guarantee if necessary. Any operational delay in making these drawings could cause a delay in payments to the FADE bonds. Fitch is comfortable with this operational risk based on the broad experience of TdA; If is not performing, the Comision Interministerial (the government body created to oversee the process) has the power to replace the sociedad gestora. Transaction documents detail the procedure and the roles of both the gestora and the Spanish treasury.


Any change in the sovereign IDR is likely to lead to a change in the bonds' rating. Moreover, any change in the terms of the full and unconditional guarantee from the Spanish government could impact the ratings on FADE bonds. The Series 3 Tap 5 issuance has no rating impact on the outstanding series 1, 2, 3, 4, 5, 10, 13 14 16 and 17 FADE bonds rated by Fitch as the terms of the guarantee remain unaltered.

FADE bonds are backed by the outstanding electricity tariff deficit credit rights in Spain that have not yet been securitised through other securitisation platforms, and is able to issue different series of bonds up to the current programme limit of EUR22bn subject to certain conditions in the programme documents. Each series can have different terms, such as different maturity dates and interest rates. However, it is a condition under the programme documentation that all the bonds issued are fully guaranteed by the Spanish government.

FADE has a total EUR20.52bn of bonds outstanding to date. This will increase to EUR20.77bn after the Series 3 Tap 5 issuance on 10 May 2013. The Series 3 Tap 5 maturity date is 17 March 2021 and it pays an annual fixed rate coupon of 5.9%. The agency understands that the Series 3 Tap 5 issuance will be used for the acquisition of new tariff deficit claims, and also for the repayment of Series 5 which is scheduled to take place in September 2013.