MANILA, Philippines – Philippine Rating Services Corp. has maintained the issue credit rating of PRS Aa for the remaining P595 million Class A senior notes of National Home Mortgage and Finance Corp.’s (NHMFC) Bahay Bonds 1 Securitization Transaction.
Obligations rated ‘PRS Aa’ are of high quality and are subject to very low credit risk. The obligor’s capacity to meet its financial commitment on the obligation is very strong.
PhilRatings likewise assigned a Rating Outlook of Stable to the credit rating of the Class A senior notes.
A Stable Outlook is defined as: “The rating is likely to be maintained or remain unchanged in the next 12 months.” It considers the degree of protection that is provided by the Class B Notes in relation to the class.
An Outlook is an indication as to the possible direction of any rating change within a one year period and serves as a further refinement to the assigned credit rating for the guidance of investors, regulators, and the general public.
PhilRatings, on the other hand, has adjusted the issue credit rating for the P310.9 million class B subordinated notes from PRS Baa to PRS Baa minus with a Negative Outlook.
Obligations rated ‘PRS Baa’ exhibit adequate protection parameters. Adverse economic conditions and changing circumstances, however, are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.
In assigning the rating, the credit rating agency considered that cash balances continue to remain adequate relative to principal payments for the senior notes, the timely remittances of interest payments despite shortfalls in interest and penalty collections from the asset pool, the declining balance of outstanding senior notes, and the favorable economic conditions which remain supportive of the payment capacity of borrowers.
“Given the amortizing payment structure of the Senior Notes, its amount outstanding has been declining over time. In contrast, the subordinated notes have a bullet maturity profile and will be settled only after the senior notes have been fully paid. As such, the coverage of the subordinated notes of the senior notes has been increasing over time and provides additional protection for the settlement of the senior notes,” PhilRatings said.