Fitch Upgrades CIC Merchant Voucher Securitizations to 'A-', Outlook Stable

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has upgraded the ratings assigned to the merchant voucher securitization programs sponsored by Credomatic International Corporation (CIC) as follows:

CIC Receivables Master Trust

--Series 2002-A certificates to 'A-' from 'BBB+';

--Series 2014-A notes to 'A-' from 'BBB+'.

CIC Central American Card Receivables Limited

--Series A notes to 'A-' from 'BBB+'.

The Rating Outlook is Stable for all series.

CIC Receivables Master Trust is backed by future flows due from Visa International Service Association (Visa) and MasterCard International Incorporated (MasterCard) related to international merchant vouchers originating in Costa Rica, Guatemala, El Salvador, Honduras and Nicaragua. CIC Central American Card Receivables Limited is backed by future flows due from American Express (AmEx) related to international merchant vouchers originating in Costa Rica, Guatemala, El Salvador, Honduras and Nicaragua. Fitch's ratings address timely payment of interest and principal on a quarterly basis.

The rating upgrades reflect: the improving credit quality of CIC and the company's dominant and growing regional card franchise. The ratings are supported by: the strength of merchant voucher flows; the importance of CIC to the card companies; an adequate level of future flow debt; and the transaction structures, which mitigate certain sovereign risks as well as diversion risk.

KEY RATING DRIVERS

Improving Credit Quality of the Originator: Fitch upgraded CIC's Issuer Default Rating (IDR) to 'BBB+. This rating reflects the support CIC would receive from its parent, Banco de Bogota ('BBB+'), should it be required. CIC is considered core to its parent, based on its meaningful size, its important contribution to consolidated net income and its key role in the group's regional strategy. Fitch also assigns a going concern assessment score (GCA) of 'GC2', which allows the future flow transactions to be rated above CIC's current IDR.

Dominant and Growing Card Franchise: CIC boasts a market leading and profitable regional credit card business that drives group banking activities. CIC's recent banking acquisition in Guatemala positions the company to increase local card market share. CIC's dominant card franchise continues to benefit from the exodus of key competitors from Central America.

Strength of Merchant Voucher Flows: CIC's international acquiring volumes grew 9.4% in 2014, supporting growing coverage levels for both programs. Flows benefit from diversification within Central America, originating from five countries in the region.

Importance of CIC to Card Companies: CIC is the exclusive issuer and acquirer of AmEx in the region and remains the largest issuer and acquirer for MasterCard in Central America despite having lost an exclusive arrangement over 13 years ago. CIC is the second largest issuer and largest acquirer of Visa in the region.

Adequate Level of Future Flow Debt: CIC's future flow debt represents 8.6% of total liabilities and 46% of long-term funding. Fitch considers future flow debt as a percentage of total liabilities small enough to allow the financial future flow ratings to achieve uplift capped by the GCA score.

Low Sovereign/Diversion Risks: The transaction structures mitigate certain sovereign risks by keeping cash flow offshore until collection of periodic debt service. Fitch believes diversion risk is mitigated by agreements obligating Visa, MasterCard and Amex to make payments to transaction-specific collection accounts controlled by the applicable trustee.

The above mentioned characteristics allow the transaction to benefit from a one-notch uplift from CIC's 'BBB+' IDR.

RATING SENSITIVITIES

The ratings are sensitive to changes in the credit quality of CIC. A downgrade of CIC's 'BBB+' IDR could lead to a downgrade on the future flow ratings. In addition, severe reductions in coverage levels could also result in rating downgrades. The ratings assigned to the transactions may be sensitive to the ratings of the relevant sovereign environments. To a lesser extent, the ratings are also sensitive to Fitch's view of the credit quality of Visa, MasterCard and American Express.

TRANSACTION SUMMARY

U.S. dollar-denominated international merchant voucher receivables are generated when an AmEx, Visa or MasterCard card holder makes charges in a country different from his country of origin. The receivables are submitted to AmEx, Visa or MasterCard for clearing. AmEx, Visa and MasterCard each signed individual agreements obligating each card company to make all payments related to the USD international merchant vouchers into a transaction-specific account controlled by the applicable trustee for the benefit of noteholders.

CIC is an exempt company incorporated in the British Virgin Islands and is a wholly owned subsidiary of BAC International Bank Inc. (BIB), which is incorporated in Panama. BIB is an indirect subsidiary of Grupo Aval Acciones y Valores, S.A., a Colombian operation. CIC is the holding company of the group's credit card business and banking operations in each Central American country with the exception of Panama. Through its subsidiaries, CIC provides a variety of financial services to individuals and institutions primarily in Guatemala, Honduras, El Salvador, Nicaragua and Costa Rica.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Future Flow Securitization Rating Criteria' (June 2014);

--'Global Structured Finance Rating Criteria' (March 2015);

--'Counterparty Criteria for Structured Finance and Covered Bonds' (May 2014).

Applicable Criteria and Related Research:

Future Flow Securitization Rating Criteriahttp://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=749768

Global Structured Finance Rating Criteriahttp://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=864268

Counterparty Criteria for Structured Finance and Covered Bondshttp://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158

Additional Disclosure

Solicitation Statushttp://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=982774

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE '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. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Fitch Ratings
Primary Analyst
Gregory Lane, +1-312-606-2304
Director
Fitch Ratings, Inc.
70 W. Madison St.
Chicago, IL 60602
or
Secondary Analyst
Maria Paula Moreno, +57-1-326-9999
Senior Director
or
Committee Chairperson
Greg Kabance, +1-312-368-2052
Managing Director
or
Media Relations, New York
Elizabeth Fogerty, +1-212-908-0526
[email protected]

Source: Fitch Ratings

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