Fitch places Trust 18247-6 Credit Line on Rating Watch Negative.

Fitch Ratings has placed on Rating Watch Negative (RWN) the Trust 18247-6 Credit Line ratings 'BBB+sf' the long-term global scale rating and the 'AAA(mex)vra' national scale rating of the credit line provided by Banco Santander Mexico, S.A., Institucion de Banca Multiple (Santander Mexico) as lender to Banco Nacional de Mexico, S.A., Institucion de Banca Multiple (Citibanamex) as trustee of Fideicomiso Irrevocable de Administracion y Fuente de Pago con Derechos de Reversion Numero 18247-6 (UFN F18247-6).

The RWN reflects a heightened probability of a potential disruption on Unifin Financiera S.A.B. de C.V. (UNIFIN) servicing and reporting activities given the company's recent announcement of a voluntary restructuring of its debt. In Fitch's opinion, disruptions in UNIFIN's servicing activities may lead to a temporary disruption in collection and transfer processes between the master collection trust (MCT) and the transaction accounts which could ultimately impact the transaction's ability to meet debt service. Additionally, relevant reporting deficiencies on transaction's performance reports can impact Fitch's ability to correctly monitor the rated transaction.

RATING ACTIONS

Entity / Debt

Rating

Prior

UFN F18247-6 (2019)

UFN F18247-6 (2019)

LT

BBB+sf

Rating Watch On

BBB+sf

UFN F18247-6 (2019)

Natl LT

AAA(mex)vra

Rating Watch On

AAA(mex)vra

Page

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VIEW ADDITIONAL RATING DETAILS

Transaction Summary

The credit line represents a securitization of a dynamic pool of equipment lease contracts originated by Unifin where the Long- and Short-Term Foreign and Local Currency Issuer Default Ratings were downgraded by Fitch on Aug. 10th, 2022 to 'C' and 'C' from 'BB-' and 'B', respectively. The National Scale Long-Term and Short-Term ratings have also been downgraded to 'C(mex)' and 'C(mex)' from 'A-(mex)' and 'F2(mex)', respectively.

KEY RATING DRIVERS

Heightened Temporary Exposure to Commingling Risk: Although collections can be deposited in the MCT, mechanism which has recently proven to be effective under distressed scenarios to mitigate transaction's exposure to commingling risk, also transaction's collections can be received in UNIFIN accounts, which are then transferred to the MCT within three days according to the governing documents.

Any recurring or sustained delays in the transfer of funds collected by UNIFIN to the MCT beyond the established timeframe, increase the transaction's exposure to commingling risk, and may lead to a negative rating action on the credit facility.

Potential Servicing Disruption Increases Exposure to Payment Interruption Risk (PIR): The correct functioning of the MCT, which is shared by different UNIFIN structured credit facilities, relies on UNIFIN or a substitute servicer to provide detailed fund allocation instructions to the MCT trustee in order for flows to then be distributed to the specific transaction accounts.

In the event of a delay or interruption of servicer reporting processes by UNIFIN, and before a servicer substitution process is in place, the MCT may not be able to correctly distribute funds between the different facilities on a timely manner. In Fitch's opinion, although the transaction benefits from reserves in place to mitigate exposure to PIR, if the correct collection allocation takes longer than expected the transaction's ability to meet debt service could be impacted.

Delayed Reporting Could Lead to Rating Withdrawal: In order to correctly monitor and maintain the assigned ratings, Fitch expects to receive on a timely manner information regarding performance of the transaction's collateral as well as of UNIFIN's overall leasing portfolio and general transaction reporting including but not limited to transaction account balances and details on monthly waterfall allocations.

For its surveillance process it is also important that Fitch be informed on a timely manner of all material changes in the information provided and any potential material events. It is important to highlight that consistent delays in providing information as reasonably requested by Fitch, may lead to a rating withdrawal.

RATING SENSITIVITIES

Factors that could, individually or collectively, lead to negative rating action/downgrade:

The RWN could be resolved resulting in a downgrade if Fitch perceives a material weakening or disruption in Unifin's servicing activities and if reporting or surveillance information is not provided in a consistent manner;

A downgrade could also occur upon an increase of Fitch's assessment of the transaction's exposure to commingling risk or PIR.

Factors that could, individually or collectively, lead to positive rating action/upgrade:

Upgrades on the global scale rating are unlikely given the RWN on the transaction's rating. The national scale rating is already at the top of its scale and thus cannot be upgraded.

Best/Worst Case Rating Scenario

International scale credit ratings of Structured Finance transactions have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of seven notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of seven notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579.

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