(Repeat for additional subscribers)
May 20 (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
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