S&P Affirms Water Capital Services Lease Ranking
– We affirmed our AVERAGE ranking on Water Capital Services S. A. de C. V. (WCAP) as an equipment leasing servicer.
– The overall ranking reflects our affirmed AVERAGE subranking on management and organization.
– The overall ranking also reflects the downgrade of our loan administration subranking to AVERAGE from ABOVE AVERAGE.
– The outlook remains Stable.
MEXICO CITY (Standard & Poor’s) Oct. 3, 2012–Standard & Poor’s Ratings Services today affirmed its AVERAGE ranking on Water Capital Services S.A. de C.V. (WCAP) as an equipment leasing servicer for the Mexican market. The outlook for the ranking is stable.
As a servicer, WCAP handles the collection operations for all of the companies of Water Capital S.A. de C.V. Our servicer ranking focuses on its lease receivables portfolio originated by Leasing Operations S.A. de C.V. (LOM). The overall AVERAGE ranking is supported by the recently affirmed AVERAGE management and organization subranking on the company, which reflects the adequate experience level of the management team, the new organizational structure, the IT platform that supports business operations, the recently reinforced internal controls that ensure operations’ quality, and a new training program that aims to increase employee’s labor capabilities.
The overall ranking also reflects the recent downgrade of our loan administration subranking to AVERAGE from ABOVE AVERAGE. We lowered the subranking mainly because of WCAP’s limited reporting capabilities and minor segregation among reconciliation and collection activities. The subranking is also supported by WCAP’s low delinquency levels within its portfolio, which indicates efficient and consistent servicing over the past four years. We also acknowledge that WCAP has adequate procedures for loan boarding, document tracking, and customer service.
KEY RANKING FACTORS
– The management team is well-experienced in the equipment leasing sector;
– A new organizational structure that supports adequately the current business strategies;
– Internal controls are adequate and ensure operational quality;
– Lease boarding and document tracking procedures are adequate and centralized;
– Low delinquency levels, which indicate efficient and consistent servicing over the past four years.
– Limited reporting capabilities;
– A low level of segregation among reconciliation and collection duties;
– A low level of automation for collections management;
– The company continues to develop its business continuity program (BCP);
– The latest organizational changes have not been fully included in the company’s policies and procedures.
The outlook is stable. In our opinion, the new strategic and organizational improvements executed by the management team could further improve servicing efficiencies over the following 12-18 months. However, we note that there is a lack of segregation among the reconciliation and collections duties, limited reporting capabilities, and the company has not developed its BCP. These areas could cause us to lower our overall ranking on the servicer in our next review.
RELATED CRITIERA AND RESEARCH
– Servicer Evaluation: Water Capital Services S.A. de C.V., Aug. 21, 2008
– Servicer Evaluation Ranking Criteria: U.S., Sept. 21, 2004
– Revised Criteria For Including RMBS, CMBS, And ABS Servicers On Standard & Poor’s Select Servicer List, April 16, 2009
– Select Servicer List