articles Ratings /ratings/en/research/articles/200924-summary-fmsbonds-inc-series-2020-xf2907-tender-option-certificates-bonds-11667273 content
Log in to other products

Login to Market Intelligence Platform


Looking for more?

Request a Demo

You're one step closer to unlocking our suite of comprehensive and robust tools.

Fill out the form so we can connect you to the right person.

If your company has a current subscription with S&P Global Market Intelligence, you can register as a new user for access to the platform(s) covered by your license at Market Intelligence platform or S&P Capital IQ.

  • First Name*
  • Last Name*
  • Business Email *
  • Phone *
  • Company Name *
  • City *
  • We generated a verification code for you

  • Enter verification Code here*

* Required

Thank you for your interest in S&P Global Market Intelligence! We noticed you've identified yourself as a student. Through existing partnerships with academic institutions around the globe, it's likely you already have access to our resources. Please contact your professors, library, or administrative staff to receive your student login.

At this time we are unable to offer free trials or product demonstrations directly to students. If you discover that our solutions are not available to you, we encourage you to advocate at your university for a best-in-class learning experience that will help you long after you've completed your degree. We apologize for any inconvenience this may cause.

In This List

Summary: FMSbonds Inc. (Series 2020-XF2907); Tender Option Certificates/Bonds

Capital Markets View - October 2020


SF Credit Brief: CLO Insights: How Middle Market CLOs Are Faring During COVID; Second Quote Book Published


Ratings Raised In Spanish RMBS Transactions AyT Caja Murcia I And II; AyT Caja Murcia I's Class A Notes Affirmed


U.S. Auto Loan ABS Tracker: August 2020 Performance

Summary: FMSbonds Inc. (Series 2020-XF2907); Tender Option Certificates/Bonds


Closing date:

Sept. 25, 2020



Liquidity provider:

Mizuho Capital Markets LLC

Credit provider:

Mizuho Capital Markets LLC


Mizuho Bank Ltd.

Administrative agent:

FMSbonds Inc.

Remarketing agent:

JPMorgan Securities LLC


S&P Global Ratings assigned the above-mentioned ratings to the taxable floater notes, reflecting its opinion of the likelihood the trust will have sufficient assets to pay timely interest and full principal when due on the notes.

Trust assets include all distributions of principal; interest; and premiums, if any, from the underlying securities and the liquidity facility, which is in place to support tender payments on the notes, as well as all such distributions from the standby letter of credit (LOC), which is in place to support principal-and-interest payments on the notes.

The long-term component of our rating on the notes reflects our long-term rating on the guarantor, as support for the standby LOC, and addresses full and timely interest-and-principal payments when noteholders have not exercised the put option. The short-term component reflects our short-term rating on the guarantor, as support for the liquidity provider. The short-term rating addresses full and timely interest-and-principal payments when noteholders exercise the put option.

Our ratings do not reflect our opinion of the likelihood noteholders will receive the full and timely payment of premiums or gain-share payments, and they do not reflect our opinion of the likelihood such payments will be subject to the entity funding such payments potentially filing for bankruptcy.

Based on our analysis, we think the trust's assets support the full and timely payment of all obligations on the notes, except in certain circumstances as described in the structural review section.

Structural Review

On the closing date, the trust acquired the underlying securities and concurrently entered into a liquidity agreement that supports tender payments on the notes and a credit-enhancement agreement in the form of a standby LOC that supports principal-and-interest payments from the underlying securities due to noteholders. The trust also entered into a guarantee that supports payments due under the liquidity and credit-enhancement agreements.

The standby LOC and guaranty act as credit support in the event the trustee does not receive scheduled interest or principal payments associated with the underlying securities. If the trustee does not receive a scheduled interest payment from the underlying securities by the taxable floater notes interest payment date that is sufficient to pay related accrued interest due to the noteholders on such date, then the note trustee draws on the standby LOC for the shortfall. The credit-enhancement agreement covers principal-and-interest payments that accrue between underlying security interest payment dates plus a preference period of 124 days. The liquidity facility covers principal-and-interest payments that accrue between underlying security interest payment dates plus the period before the latest related mandatory tender date in the event of a default under the credit-enhancement agreement.

The guaranty supports the liquidity provider's and credit provider's obligations in this transaction. This guaranty includes coverage of preference risk and remains in effect as long as any liquidity or credit provider obligations remain outstanding.

The trust has issued notes and residual certificates equal to or less than the par amount of underlying securities. The notes will evidence a beneficial interest in trust assets, and they will be payable solely from payments received by the trust attributable to trust assets. Any tax amounts due related to the notes or residual certificates are payable by such noteholders or certificateholders.

Put-option risks

The notes are a variable-rate issuance with a holder option to demand repayment before notes mature (known as the put or tender option), which is available during rated modes. The holders could exercise their put option with notice to the trustee and remarketing agent.

In the event a portion or all of the affected notes cannot be remarketed successfully, the liquidity provider will loan funds equal to any shortfall in the purchase price of the affected notes.

Early call/redemption risk

Notes are also subject to mandatory tender upon the occurrence of certain events detailed in trust documents. These events include:

  • An act of bankruptcy by the underlying obligor or guarantor;
  • The failure to make principal-and-interest payments on the notes by the liquidity provider, credit provider, or guarantor;
  • The ratings on the notes are lowered below 'BBB+' by the rating agencies;
  • A notice of material tax liabilities on the trust with the liabilities being disadvantageous to holders;
  • The expiration, termination, and substitution of a liquidity or credit-enhancement agreement; or
  • The trust being noncompliant with current financial-market regulations.

Notes are also subject to either whole or partial redemption due to the redemption of underlying securities. No tender-option-termination events exist in this transaction.

Rating Sensitivity

Changes to our rating on the notes could result from, among other things, changes to transaction terms or the guarantor or our ratings on the guarantor. The liquidity or credit agreements could expire prior to note maturity, and the guaranty supporting the agreements could terminate upon such expiration and fulfillment of obligations under the expired agreement. If liquidity or credit agreements have not been extended, or if alternate liquidity or credit agreements have not been delivered, we could withdraw the ratings on the notes.

Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at for further information. Complete ratings information is available to subscribers of RatingsDirect at All ratings affected by this rating action can be found on S&P Global Ratings' public website at Use the Ratings search box located in the left column.

Primary Credit Analyst:Nicholas Breeding, Centennial (303) 721-4362;
Secondary Contact:James Ho, New York + 1 (212) 438 1306;

No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor’s Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages.

Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P’s opinions, analyses and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. Rating-related publications may be published for a variety of reasons that are not necessarily dependent on action by rating committees, including, but not limited to, the publication of a periodic update on a credit rating and related analyses.

To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw or suspend such acknowledgment at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof.

S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process.

S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, (free of charge), and and (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at

Any Passwords/user IDs issued by S&P to users are single user-dedicated and may ONLY be used by the individual to whom they have been assigned. No sharing of passwords/user IDs and no simultaneous access via the same password/user ID is permitted. To reprint, translate, or use the data or information other than as provided herein, contact S&P Global Ratings, Client Services, 55 Water Street, New York, NY 10041; (1) 212-438-7280 or by e-mail to: