RPT-Fitch Updates Global Structured Finance Rating Criteria; No Rating Impact

Tue May 20, 2014 8:45am EDT

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May 20 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings has updated its global criteria for rating structured finance (SF) transactions. The changes to the report will not have any rating impact on existing SF transactions.

The criteria describe Fitch's overarching approach to analysing SF transactions and identify the key considerations when assigning a SF rating. These include asset isolation and legal structure, asset quality, credit enhancement, financial structure and originator and servicer quality. The report also describes the agency's expectations regarding bankruptcy remote special purpose vehicles which are used in SF transactions.

In this update, Fitch has included a description of the additional risks presented by transactions with revolving periods together with potential structural mitigants. In instances where the revolving period poses excessive risk, Fitch may decline to rate or cap the maximum achievable rating for the transaction.

The report has also been expanded to include a section on the agency's analytical approach when reviewing representations and warranties which are given by key parties to a transaction. It also identifies instances where the robustness of the representations and warranties may be subject to additional scrutiny. Other minor text updates have also been included.

The principles discussed in the criteria are applicable to all asset classes including residential and commercial mortgage-backed securities, asset-backed securities and structured credit transactions. The criteria provide an overarching framework applicable to all SF transactions which is complemented by asset class-specific and cross-sector rating criteria.

The updated criteria report replaces the report of the same name dated 24 May 2013.

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