OREANDA-NEWS. February 22, 2016. 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.