Fitch Upgrades One Class from Banc of America Funding 2013-R1 Ltd.

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has upgraded the class A1 notes issued by Banc of America Funding 2013-R1 Ltd. (BAFC 2013-R1), as follows:

--$8,753,036 class A1 notes to 'AAAsf' from 'Asf', Outlook Stable.

Fitch does not rate the M1, M2, M3, M4, M5, M6, M7, or M8 notes.

KEY RATING DRIVERS

The upgrade is attributed to the improved credit enhancement (CE) available to the class A1 notes as a result of a significant deleveraging of the capital structure since the transaction's last review in February 2015.

The class A1 notes received approximately $53 million in principal redemptions over the last 12 months, leaving only 8.7% of the original amount outstanding. In part, these distributions are the result of excess interest proceeds which are diverted to amortize the class A1 notes before paying interest accrued on the subordinate certificates. The average of the monthly payments to the class A1 notes over the last year was $4.5 million. With this rate of amortization, Fitch expects the notes to be paid in full within the next two to three months.

In addition, the class A1 notes current outstanding balance of $8.7 million is now fully covered by $18.8 million of Fannie Mae and Freddie Mac securities. The 'AAA' ratings of Fannie Mae and Freddie Mac are directly linked to the U.S. sovereign rating, based on Fitch's view of the U.S. government's direct financial support of these two housing government sponsored enterprises.

The portfolio is predominantly comprised of U.S. 2005-2007 vintage RMBS collateral; however, the 'BBBsf' rating cap was not applied as there is substantial coverage by performing collateral and an expected short term horizon for the notes.

BAFC 2013-R1 is collateralized by 99.9% of the A-1b notes issued by West Coast Funding I, Ltd./Corp. (West Coast Funding), a 2006 vintage structured finance CDO. Additional credit enhancement for the class A1 in BAFC 2013-R1 was created by diverting interest and principal due to the unrated subordinated notes to the class A1 notes. West Coast Funding portfolio's current balance is $379.4 million as of the Jan. 26, 2016 trustee report with the portfolio comprised entirely of residential mortgage-backed securities (RMBS) of which 56.5% is Alt-A, 38.4% Prime, and 5.7% agency.

RATING SENSITIVITIES

The ratings of the BAFC 2013-R1 class A1 notes are sensitive to significantly lower recoveries in the underlying portfolio.

DUE DILIGENCE USAGE

No third party due diligence was reviewed in relation to this rating action.

A comparison of the transaction's Representations, Warranties, and Enforcement Mechanisms (RW&Es) to those of typical RW&Es for that asset class is available by accessing the report and link indicated below.

Additional information is available at www.fitchratings.com.

Sources of Information:

The information used to assess these ratings was sourced from periodic servicer reports, note valuation reports and the public domain.

Applicable Criteria

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

Global Surveillance Criteria for Structured Finance CDOs (pub. 13 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867800

Related Research

Banc of America Funding 2013-R1 LTD. -- Appendix

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=704619

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=999604

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=999604

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160217006595/en/

Fitch Ratings, Inc.
Primary Surveillance Analyst
Barbara Burdzy
Director
+1-212-908-0813
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Alina Pak, CFA
Senior Director
+1-312-368-3184
or
Media Relations
Hannah James, + 1-646-582-4947
[email protected]

Source: Fitch Ratings

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