OREANDA-NEWS. Fitch Ratings has affirmed Dexia Secured Funding Belgium NV, Compartment DSFB-IV's class A notes, as follows:

EUR2,617,138,224 Class A notes: affirmed at 'AA-sf', Outlook Stable

The transaction is a securitisation Belgian public entities' debt governed under Belgian law and originated by Belfius Bank. The senior loans to public entities are located in three Belgian regions: Flanders (51%), Wallonia (37%) and Brussels (12%). This links the note's rating to Fitch's credit view of the Belgian local authorities and caps the rating of the most senior notes to the Kingdom of Belgium's rating (AA/Negative/F1+).

KEY RATING DRIVERS
The affirmation of the class A notes reflects the stable performance of the portfolio over the past 12 months. Despite a significant EUR377.8m repayment over the period, which has increased credit enhancement for the notes to 12.3% from 10.9%, in addition to the expiration of the transaction's revolving replacement loan feature, there has been marginal deterioration in the credit quality of the underlying portfolio to 'A'/'A-' from 'A'.

Over the last 12 months the number of loans in the portfolio has increased to 26,802 from 22,433. This increase was driven by the servicer's ability to introduce replacement loans into the pool at the expense of repurchased loans. Since October 2014, this option is no longer available and the transaction is now static. As a result, Fitch expects the weighted average life (which has fallen to 6.37 years from 6.56 years) to fall more conclusively than it has since the transaction closed in 2009.

The reserve fund is currently fully funded at EUR60m. The fund may step up to EUR100m following any delinquencies or defaults above 2% of the initial pool balance during the life of the transaction. No delinquencies or defaults have been reported since the closing of the transaction.

Due to the significant repayment over the last year, the portfolio's borrower concentration levels have increased (the largest borrower exposure has risen to 2.4% from 2%), although this is driven largely by the portfolio's amortisation. Borrower exposure by sector and by loan size remains largely unchanged.

RATING SENSITIVITIES
Fitch incorporated additional sensitivity stresses on the notes' ratings in its analysis. The stresses addressed a single-notch downgrade and a single-category downgrade to the credit rating of the underlying portfolio. Both stresses have had no material impact on the notes' rating.

However, due to the linkage of the transaction with the Kingdom of Belgium, a rating action could be triggered if the sovereign state is downgraded.