Fitch Affirms Octane ABS 1 (Proprietary) Limited's National Ratings; Outlook Stable
Fitch Ratings-Johannesburg/London-03 September 2009: Fitch Ratings has today affirmed Octane ABS 1 (Proprietary) Limited's (Octane 1) floating-rate notes' National Long-term ratings with Stable Outlooks, as follows.
Class A: affirmed at 'AAA(zaf)'; Outlook Stable; assigned a Loss Severity Rating (LS) of LS-1
Class B: affirmed at 'AA-(zaf)'; Outlook Stable; assigned LS-3
Class C: affirmed at 'A-(zaf)'; Outlook Stable; assigned LS-3
Class D: affirmed at 'BBB(zaf)'; Outlook Stable; assigned LS-3
Class E: affirmed at 'BB-(zaf)'; Outlook Stable; assigned LS-5
The rating affirmations follow an in-depth review of the transaction, focussing on its performance to date, and the expectations for the transaction's future short to medium-term performance, whilst taking South Africa's current economic environment into account.
Despite the transaction exhibiting rapid increases in its Delinquency Ratio (DR) since closing to mid-2008 (peaking at 7.5% in June 2008), Octane 1 has seen an overall drop in this ratio over the past year, with the DR falling to 5.2% in July 2009. The cash-based cumulative net default ratio for the transaction has also remained below Fitch's expectations, reaching 2.4% in July 2009, compared to a base case of 4.2%.
The agency takes comfort from the fact that the transaction continues to report healthy excess spread levels, of around ZAR12m in June 2009, while also benefiting from fully funded arrears, purchase and liquidity reserves. Despite the general deterioration of South Africa's economy over the past 12 months, Fitch continues to gain comfort that this deterioration has shown limited effects on the transaction to date. Furthermore, the notable 500bp drop in South African interest rates since December 2008 has provided additional relief to the transaction, as most of the securitised loans have floating rates.
The transaction is a securitisation of loans advanced by Imperial Bank Limited (South Africa), rated 'A+(zaf)'/'F1(zaf)'/Rating Watch Positive, through its subsidiary, the Motor Finance Corporation (MFC), to individuals residing in South Africa for the purpose of acquiring a motor vehicle. The revolving period ended on 19 July 2009.
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Contacts: Alfons Ideler, Johannesburg, Tel: +27 11 380 0901, William Rossiter, London, Tel: +44 (0) 20 7417 6301.
Media Relations: Julian Dennison, London, Tel: +44 020 7682 7480, Email: julian.dennison@fitchratings.com.
Note to Editors: Fitch's National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated 'AAA' and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as 'AAA(zaf)' for National ratings in South Africa. Specific letter grades are not therefore internationally comparable.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
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