| Current Ratings | ||||
|---|---|---|---|---|
| Type | Rating | |||
| Standard ABCP notes(i) | A-1 (sf) | |||
| Callable ABCP notes(i) | A-1 (sf) | |||
| Puttable ABCP notes(i) | A-1 (sf) | |||
| Puttable/callable ABCP notes(i) | A-1 (sf) | |||
| (i)The ABCP notes listed above can be issued at a discount or interest-bearing basis at either a fixed or floating rate. To the extent any seller-related borrowings are LIBOR-based, fallback provisions are applicable referencing alternate rates such as the Secured Overnight Financing Rate (SOFR), the Federal Funds Rate, or any other base rate with varying reset periods as specified in the transaction documents. The ABCP is denominated in U.S. dollars. ABCP--Asset-backed commercial paper. | ||||
Rationale
The short-term 'A-1 (sf)' ratings on Barton Capital S.A.'s (Barton's) U.S. dollar-denominated standard, callable, puttable, and puttable/callable notes reflect the following:
- The program's legal structure, including Barton's intended bankruptcy-remote status;
- The full credit and liquidity support provided by liquidity agreements for all transactions funded in the program;
- Support providers rated 'A-1' or higher that provide liquidity or indemnification support for any hedging shortfalls; and
- The experience and ability of Société Générale as program administrator to carry out day-to-day operational services to Barton, such as adding new sellers and monitoring seller performance, administering and monitoring the maturity of ABCP, and drawing on liquidity and credit facilities to repay ABCP on a timely basis.
Environmental, Social, And Governance (ESG)
The credit quality of the underlying assets is not material to our rating analysis, so there generally are no material ESG credit factors at the asset level. Support providers in ABCP conduits are typically highly rated financial institutions, and our assessment of their creditworthiness incorporates any material ESG credit factors. In our view, exposure to ESG factors in this transaction is limited to the factors related to the support provider. For further information, see our U.S. and Canadian, EMEA, Asia-Pacific, and Latin American bank ESG industry report cards (https://www.spglobal.com/ratings/en/products-benefits/products/esg-in-credit-ratings#sector-report-cards).
Program Structure
The chart below shows an overview of the program's structure.
Chart 1
Key Features
Barton is a bankruptcy-remote special-purpose entity (SPE) incorporated under Luxembourg law to issue U.S. dollar-denominated ABCP at a discount or bear interest at a fixed or floating rate with a maturity date not greater than 270 days. The proceeds of the ABCP issuance will be used to finance the purchase of financial assets that will be identified and arranged by Société Générale for acquisition. It is our understanding that Barton does not intend to finance operating assets or interests in equity common stock.
For the callable notes, Barton has the option to pay ABCP in whole or in part prior to its maturity date. For the puttable notes, the holder has the option to require Barton to pay ABCP in whole or in part prior to its maturity date. For puttable/callable notes, Barton has the option to pay, and the holder has the option to require Barton to pay, prior to its maturity date. The pricing supplements will specify the option priority if both options are exercised. Principal and interest or discount (as applicable) accrues only up to the call or put date.
Program Overview
| Program Details | |
|---|---|
| Program name | Barton Capital S.A. |
| Program type | Multi-seller |
| Sponsor | Société Générale |
| Administrator | Société Générale |
| Maximum program limit (bil $) | $15.5 |
| Reported program-wide credit enhancement (mil. $) | Not applicable--fully supported |
| Support type | Full |
| Review type | Template-assisted |
| Preference risk | Covered by the liquidity agreement |
| Bankruptcy-remoteness | Opinions, as applicable, were reviewed as part of Barton's bankruptcy-remoteness status under Luxembourg law. |
| Rating dependent participants | |
| Liquidity provider | Société Générale |
| Bank account provider | Société Générale |
| Support provider | Société Générale |
| Non-rating dependent participants | |
| Collateral trustee | Citibank N.A. |
| Depositary | Citibank N.A. |
| Issuing and paying agent | Citibank N.A. |
Counterparty/Credit Quality
Liquidity support
Société Générale provides a liquidity agreement for each transaction. Liquidity funds for the face amount of the ABCP in the event that Barton provides notice. Assets funded in Barton typically include consumer and commercial asset-backed pools.
Credit support
All transactions in Barton are fully supported by a liquidity agreement covering all related credit risk.
Interest rate protection
Barton has the ability to issue floating-rate ABCP. Any increase in the floating rate due on the ABCP is indemnified by Société Générale.
Foreign exchange hedging
Liquidity and ABCP will always be issued in U.S. dollars, and so there will be no foreign exchange risk in paying ABCP. However, the advances to the seller can be in other currencies, but the conversion of U.S. dollar-issued ABCP funds will be done via the conduit entering in a spot/forward hedge with Société Générale. Since liquidity will always fund for the face of the ABCP, there is no additional indemnity provided by Société Générale.
Liquidity outs and limitations
- The liquidity provider is not obligated to make payments if its total investment exceeds 102% of its related commitment, or if its purchased interest exceeds its aggregate commitment; and
- The insolvency of Barton.
Legal
Barton is incorporated under Luxembourg law and with shares held by Barton Capital Stichting (Foundation), a Dutch private company and its sole equity owner and sole managing member. The purpose of Foundation is to own and hold all of the share capital and other equity interests in Barton. Sanne Group (Netherlands) B.V. is a private company with limited liability that will provide certain administrative services to Foundation. Barton has been analyzed and is consistent with S&P Global Ratings' bankruptcy-remoteness criteria.
Clawback/preference risk
ABCP investors are insulated from legal risks associated with a seller or originator bankruptcy. This is accomplished by the liquidity provider funding all preference payments through each liquidity agreement.
Cash Flow And Payment Structure
Liability issuance tests
Société Générale, on behalf of Barton, is not permitted to instruct Citibank, as depositary, to issue ABCP if:
- The face amount of outstanding commercial paper notes exceeds the program amount;
- Total support obligations under the liquidity facility exceed the available liquidity commitment;
- The face amount of outstanding commercial paper notes exceeds the available asset commitment;
- The face amount of outstanding commercial papers notes with the same maturity exceeds $7,000,000;
- The ABCP tenor exceeds 270 days from the date of issuance;
- The ABCP tenor is later than the 15th day preceding the liquidity termination date;
- The ABCP notes would be required to be registered under the Securities Act; and
- The servicing agent has actual knowledge that the servicing agreement, security agreement, or liquidity agreement cease to be in effect (other than resulting from a scheduled expiration date).
Program wind-down events
There are several events that would cause Barton to stop issuing the ABCP notes. These include:
- ABCP not being paid when due and payable (unless it results from a failure by Société Générale to honor its obligations as liquidity provider);
- The insolvency of Barton;
- Barton becoming an investment company; and
- Barton being deemed a "covered fund" under the Volcker Rule.
Waterfall/payment priority
The collateral trustee can disburse proceeds from collections in the following order of priority:
- Fees to collateral trustee not exceeding $500,000; then
- Pay outstanding ABCP and principal and interest on all advances outstanding under the liquidity loan agreement; then
- Fees to servicing agent and proportionally to private secured parties; then
- Fees, costs, expenses, and indemnities to private secured parties; then
- Unpaid fees to servicing agent; then
- Any surplus remaining paid to Barton.
Post-default waterfall/payment priority
The collateral trustee can disburse proceeds from collections in the following order of priority:
- Fees to collateral trustee not exceeding $500,000; then
- Pay outstanding ABCP and principal and interest on all advances outstanding under the liquidity loan agreement.
Operational Risk
Review status
Any new seller funded in the conduit will be fully supported by a form liquidity agreement that has been reviewed by S&P Global Ratings and qualifies as template-assisted post review under our criteria. Liquidity covers all credit risks related to the assets.
Administrator review
The program administrator's experience and past performance are factors in the ratings process. S&P Global Ratings conducts administrator business reviews to evaluate Société Générale's ability to carry out responsibilities under the program documents, such as:
- Originating and structuring new receivables pools;
- Performing a formal credit evaluation for each new seller and the related receivables;
- Maintaining ongoing surveillance of liquidity facilities;
- Maintaining and administering the issuance and maturity of ABCP; and
- Drawing liquidity facilities as necessary to repay ABCP holders on a timely basis.
Based on the outcome of the reviews and ongoing communications with Société Générale, we are satisfied that Société Générale is capable of carrying out its responsibilities under the program documents.
Surveillance
The ratings on all support providers in Barton are 'A-1 (sf)' or higher. S&P Global Ratings monitors the ratings on all support providers on an ongoing basis.
Portfolio data
The conduit administrator has provided capacity utilization data for the portfolio as a part of S&P Global Ratings' ABCP conduit surveillance process that is presented below in a standardized format.
Chart 2
Related Criteria
- Criteria | Structured Finance | General: Global Framework For Payment Structure And Cash Flow Analysis Of Structured Finance Securities, Dec. 22, 2020
- U.S. Structured Finance Asset Isolation And Special-Purpose Entity Criteria, May 15, 2019
- Criteria | Structured Finance | General: Counterparty Risk Framework: Methodology And Assumptions, March 8, 2019
- Criteria | Structured Finance | ABCP: Global Methodology For Analyzing Liquidity Funding Outs And Limitations In ABCP Transactions, Oct. 27, 2014
- Criteria | Structured Finance | General: Global Framework For Assessing Operational Risk In Structured Finance Transactions, Oct. 9, 2014
- General Criteria: Global Investment Criteria For Temporary Investments In Transaction Accounts, May 31, 2012
- Criteria | Structured Finance | ABCP: Asset-Backed Commercial Paper Issued By Multiseller Conduits: Classification And Timing Of Reviews For New-Seller Transactions, April 18, 2011
- General Criteria: Principles Of Credit Ratings, Feb. 16, 2011
- Criteria | Structured Finance | ABCP: S&P Global Ratings' Analysis Of ABCP Ratings Following Changes To Ratings On Support Providers, Dec. 18, 2008
- Criteria | Structured Finance | ABCP: Global Asset-Backed Commercial Paper Criteria, Sept. 29, 2005
Related Research
- Global Structured Finance Scenario And Sensitivity Analysis 2016: The Effects Of The Top Five Macroeconomic Factors, Dec. 16, 2016
- Standard & Poor's Clarifies Its Approach To Requests For Rating Agency Confirmation On Structured Finance Transactions, May 18, 2012
- Assessing Credit Quality By The Weakest Link, Feb. 13, 2012
- Standard & Poor's Requests Transaction Performance Metrics From Sponsors Or Administrators Of Global ABCP Conduits, Jan. 12, 2012
This report does not constitute a rating action.
| Primary Credit Analyst: | Dev C Vithani, New York + 1 (212) 438 1714; dev.vithani@spglobal.com |
| Secondary Contact: | Radhika Kalra, New York + 1 (212) 438 2143; radhika.kalra@spglobal.com |
| Research Contributor: | Mugdha Mane, CRISIL Global Analytical Center, an S&P Global Ratings affiliate, Mumbai |
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