RPT-Fitch Assigns FADE's Series 20 'BBB' Rating; Outlook Stable

Fri Feb 21, 2014 5:40am EST

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Feb 21 (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, the issuer) Series 20 EUR1.5bn notes a final 'BBB' rating with Stable Outlook FADE bonds are backed by the Spanish electricity tariff deficits (TDs) it purchases which are repaid by the electricity system as an annuity over 15 years in monthly instalments. TDs are reflected within the access tolls collected by the Comision Nacional de los Mercados y la Competencia (CNMC), the Spanish energy regulator who in turn pays into FADE's bank account held at Instituto de Credito Oficial (ICO, BBB/Stable/F2).

KEY RATING DRIVERS

All FADE bonds' ratings are fully guaranteed by the Kingdom of Spain (BBB/Stable) up to a maximum EUR26bn and credit-linked to its Long-term Issuer Default Rating .

FADE programme is exposed to refinancing risk as the proceeds of some FADE issuances have been allocated to refinance other outstanding series. However, should there be refinancing difficulties or should ICO default, the Spanish government guarantee will meet the payments due on the bonds.

All FADE series are exposed to the administrative capabilities of Titulizacion de Activos SGFT SA (TdA, the management company) as issuer trustee. Fitch is comfortable with this operational risk based on the broad experience of TdA. The government body (Comision Interministerial) created to oversee the whole process has the power to replace the management company if it failed to perform its duties.

RATING SENSITIVITIES

Any change in the sovereign IDR or the guarantee terms is likely to lead to a change in the bonds' rating. The Series 20 issuance has no rating impact on the outstanding series 1, 2, 3, 4, 10, 13, 14, 16, 17, 18 and 19 FADE bonds rated by Fitch as the terms of the guarantee remain unaltered.

While the total issued amount of FADE bonds since its creation is EUR26.72bn, the outstanding amount of FADE bonds is EUR24.65bn inclusive of the Series 20 issuance, which was on 21 February 2014.

Series 20's maturity date is September 2017 and it pays an annual fixed interest rate of 1.875%. The agency understands that the Series 20 issuance proceeds will be used for the refinancing of Series 1, which matures on 17 March 2014

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