October 5, 2012 / 9:20 PM / 6 years ago

TEXT-S&P rates Global Bank Corp 2012-1 notes 'BBB-'

     -- Global Bank Corp.'s series 2012-1 note issuance is a secured covered 
bond issuance of a Panamanian mortgage portfolio transferred to a guarantee 
trust in HSBC Investment Corp., a subsidiary of HSBC Bank (Panama) S.A. 
     -- We assigned our 'BBB-' rating to the series 2012-1 notes.
     -- The assigned rating reflects the issuer credit rating on Global Bank 
Corp. y Subsidiarias, our view of the portfolio's credit quality, the 
two-month interest reserve account, the initial overcollateralization, and the 
transaction's legal structure, among other factors.
NEW YORK (Standard & Poor's) Oct. 5, 2012--Standard & Poor's Ratings Services 
has assigned its 'BBB-' rating to Global Bank Corp.'s $200 million structured 
covered bonds series 2012-1 under its new $500 million covered bond program. 
The outlook is stable.

This is the first issuance from this program, which will be Global Bank Corp. 
y Subsidiarias' (Global Bank's) primary mortgage covered bond issuance 
platform. Further issuances could be made under this program.

The covered bonds issued under the new program represent the issuer's direct 
unconditional and unsubordinated obligations and rank pari passu among 
themselves. The covered bonds are backed by a cover pool of residential 
mortgages denominated in U.S. dollars and located in Panama; the covered 
bondholders have a priority claim on these assets. The program will have a 
separate cover pool that will be transferred to a guaranty trust in HSBC 
Investment Corp., a subsidiary of HSBC Bank (Panama) S.A. (BBB/Stable/A-2).

The rating reflects our view of: 
     -- The first recourse to Global Bank (BB+/Stable/B foreign currency 
     -- The second recourse to a portfolio of mortgages transferred to a 
guarantee trust, and the credit quality of the portfolio, which can withstand 
stressed credit risk during a pass-through scenario (i.e., without considering 
the covered bonds' maturity date).
     -- The initial overcollateralization of 17.4% (one minus the amount of 
the liabilities divided by the amount of the assets).
     -- The two-month reserve account to cover any potential interest 
     -- The fact that 46% of the portfolio benefits from an interest rate 
subsidy from the government Panama (BBB/Stable/A-2) during the first 15 years 
after the loan's origination.
     -- The transaction's legal structure, which contemplates a true sale of 
the mortgage loans from Global Bank to the guarantee trust, effectively 
isolating the mortgage portfolio from the issuer's assets in case of default.
     -- Our BBB/Stable/A-2 rating on HSBC Bank (Panama) S.A., the account bank.

In our stress scenario, we assume that Global Bank becomes insolvent and the 
covered bond transaction has to instead rely on the cover pool assets for 
repayment, including the possible sale of the portfolio of mortgages to meet 
scheduled debt service. At the assigned rating, we expect that the credit 
support will be sufficient to withstand losses of approximately 14.8% 
(assuming a foreclosure frequency of 28% and loss severity of 53%). In this 
case, the securities may default if the sale of the collateral is insufficient 
to pay the securities on time. However, the assigned rating is one notch 
higher than the issuer credit rating on Global Bank, which reflects our view 
that credit support should be sufficient to cover credit losses under a stress 
scenario consistent with the assigned rating. This approach is consistent with 
the corporate recovery criteria, which indicate that a one-notch uplift above 
the issuer credit rating would apply when recovery prospects are more than 
70%. Our stable outlook on the covered bonds transaction reflects our stable 
outlook on Global Bank. 


SEC Rule 17g-7 requires an NRSRO, for any report accompanying a credit rating 
relating to an asset-backed security as defined in the Rule, to include a 
description of the representations, warranties and enforcement mechanisms 
available to investors and a description of how they differ from the 
representations, warranties and enforcement mechanisms in issuances of similar 

The Standard & Poor's 17g-7 Disclosure Report included in this credit rating 
report is available at 
Related Criteria
     -- Criteria Methodology Applied To Fees, Expenses, And Indemnifications, 
July 12, 2012
     -- Covered Bond Ratings Framework: Methodology and Assumptions, June 26, 
     -- Counterparty Risk Framework Methodology And Assumptions, published May 
31, 2012
     -- Principles Of Credit Ratings, Feb. 16, 2011
     -- Revised Methodology And Assumptions For Assessing Asset-Liability 
Mismatch Risk In Covered Bonds, Dec. 16, 2009
     -- Criteria Guidelines For Recovery Ratings On Global Industrials 
Issuers' Speculative-Grade Debt, Aug. 10, 2009
     -- Update: Jurisdiction-Specific Adjustments To Recovery And Issue 
Ratings, June 20, 2008
     -- 2008 Corporate Criteria: Rating Each Issue, April 15, 2008
Related Research
     -- New Issue: Global Bank Corp. - Series 2012-1, Oct. 5, 2012
     -- Bulletin: Global Bank Covered Bond Programme Up To US$200 Million 2012 
Bonds Preliminary Rating Unchanged After Portfolio Update, Sept. 27, 2012
     -- Presale: Global Bank Covered Bond Programme, April 24, 2012
     -- Global Bank Corporation y Subsidiarias Rated 'BB+/B', Outlook Stable, 
April 12, 2012
     -- Global Structured Finance Scenario And Sensitivity Analysis: The 
Effects Of The Top Five Macroeconomic Factors, Nov. 4, 2011
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