Fitch cuts Alliance DPR 2006-B,07-A Notes To CC
Fitch Ratings has today downgraded Alliance DPR Company SA's 2006-B and 2007-A notes, removed them from Rating Watch Negative (RWN) and assigned them a Recovery Rating of 'RR4'. Fitch also affirmed the 2006-A note.
The rating actions are as follows:
Series 2006-A US $95 million notes affirmed at 'AAA'; Outlook Stable, Series 2006-B US $67.9 million notes downgraded to 'CC' from 'B-' (B minus); off RWN; assigned 'RR4' Series 2007-A US $75 million notes downgraded to 'CC' from 'B-' (B minus); off RWN; assigned 'RR4'
The transaction is a securitization of present and future diversified payment rights originated by Alliance Bank JSC, a private commercial bank headquartered in Almaty, Kazakhstan.
Fitch's downgrade follows further changes in the collection flows for the diversified payment rights transaction, highlighting the agency's concerns regarding the volatility and composition of the flows, expressed in a commentary issued on April 14, 2009 (see 'Fitch Downgrades Alliance DPR's 2006-B & 2007-A Notes; Affirms 2006-A Note' on www.fitchresearch.com).
According to Alliance's un-audited monthly report for March 2009, total monthly collections have dropped to US $14.4 million, from US $156.4 million the previous month, taking the monthly debt service coverage ratio (DSCR) to 1.4x, from 27.2x in February 2009.
Fitch views this drop in the monthly DSCR as an indication that the flows to the transaction have been seriously impacted by the loss of confidence in the bank and by the general deterioration in the Kazakh economy. Fitch's downgrade of the notes to 'CC' reflects the agency's view that future flows may not be sufficient to repay the notes in full.
As of March 2009, reported non-Kazakh collections were US $12.9m, increasing from the previous month's value of US $1.6 million; itself a drop from the January non- Kazakh collections of US $36.1 million.
Having increased substantially in February 2009 to US $154.8 million, from US $43.9 million in January, Kazakhstani collections fell again in March to US $1.5 million.
Fitch assigned the 2006-B and 2007-A notes an 'RR4' Recovery Rating, reflecting the benefit to bondholders of the amount trapped in the reserve account, reported to be US $49.3 million, and the pre-funded amount already available to meet payment obligations in May 2009.
Fitch also gave some credit in its Recovery Rating to Alliance Bank’s recovery prospects.
Fitch's decision to affirm the 2006-A note is based on the guarantee and reimbursement agreement provided by the Asian Development Bank (ADB) ('AAA'/ Stable), guaranteeing the full payment of interest and principal on the note.
Fitch also downgraded Alliance DPR Company's long-term IDR to 'CC', and placed it on Rating Watch Negative, Nasdaq reported.