Brazil’s upgrade by Standard & Poor's on Thursday could naturally have an impact on the country’s structured finance ratings. The agency upped the foreign currency and local currency ratings one notch each, to 'BBB' and 'A-,' respectively.
One of the ways in which that could happen is through the brighter transfer and convertibility (T&C) assessment on the country, which ticked up to ‘A-’ from ‘BBB+’, according to Juan de Mollein, Managing Director at the S&P.
He added that this effectively means that there has been an easing of the risk perception that the sovereign would meddle in the access that corporates and banks have in the country to foreign exchange.
Another avenue for re-evaluating the rating of structured deals — and in particular financial future flows — is through changes in the ratings of originators that may take place following the sovereign upgrade. Future flow transactions tend to have a strong linkage to the originators, as their continued operation is necessary for the receivables to be generated.