/raid1/www/Hosts/bankrupt/TCREUR_Public/240828.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
E U R O P E
Wednesday, August 28, 2024, Vol. 25, No. 173
Headlines
A R M E N I A
ARMENIA: S&P Affirms 'BB-/B' Sovereign Credit Ratings
D E N M A R K
LIQTECH INTL: Reports $2.1 Million Net Loss in Fiscal Q2
G E R M A N Y
MERCER INTERNATIONAL: Moody's Cuts CFR to B2, Outlook Neg.
I R E L A N D
ADAGIO CLO VIII: Fitch Hikes Rating on Class E Notes to 'BB+sf'
BILBAO CLO III: Fitch Hikes Rating on Class E-R Notes to 'Bsf'
CVC CORDATUS XIV: Fitch Hikes Rating on Class F Notes to 'B+sf'
HAYFIN EMERALD XI: S&P Assigns Prelim B- (sf) Rating to F-R Notes
INVESCO EURO III: Fitch Puts 'B-sf' Final Rating to Class F-R Notes
PENTA CLO 9: Fitch Hikes Rating on Class F Notes to 'Bsf'
PRE 20 LOAN: Fitch Assigns 'BB-sf' Final Rating to Class D Notes
RIVER GREEN 2020: Moody's Cuts Rating on EUR23.6MM C Notes to Ba3
I T A L Y
EMERALD ITALY 2019: DBRS Cuts Class D Notes Rating to C
L U X E M B O U R G
TRINSEO MATERIALS: $750MM Bank Debt Trades at 20% Discount
N E T H E R L A N D S
DUTCH PROPERTY 2022-CMBS1: S&P Raises F Notes Rating to 'B+ (sf)'
FLAMINGO GROUP: EUR236.5MM Bank Debt Trades at 16% Discount
LOPAREX MIDCO: $103.9MM Bank Debt Trades at 36% Discount
P O R T U G A L
TAGUS: DBRS Confirms B Rating on Class E Notes
R U S S I A
UZBEKISTAN: Fitch Affirms 'BB-' LongTerm IDR, Outlook Stable
S P A I N
MIRAVET 2020: DBRS Confirms B Rating on Class E Notes
T U R K E Y
LIMAK CIMENTO: Fitch Assigns 'B+' LongTerm IDR, Outlook Stable
U N I T E D K I N G D O M
AF ACCIDENT: Leonard Curtis Named as Administrators
AVANTE PROPERTY: MacIntyre Hudson Named as Administrators
BARK BOOK: FRP Advisory Named as Administrators
CHESHIRE LAND: lrwin Insolvency Named as Administrators
CTD TILES: Interpath Advisory Named as Joint Administrators
DISRUPTIVE FOODS: Opus Restructuring Named as Administrators
GRAYSHOTT HOTEL: Begbies Traynor Named as Administrators
H. CHARLESWORTH: Cowgills Limited Named as Joint Administrators
HOLWELL SPORTS: Springfields Advisory Named as Administrators
PRAESIDIAD LTD: EUR290MM Bank Debt Trades at 57% Discount
PREMIERTEL PLC: Fitch Affirms 'BBsf' Rating on Class B Notes
STATUS PRODUCTS: CG&Co Named as Joint Administrators
TALENT INTUITION: Menzies LLP Named as Administrators
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A R M E N I A
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ARMENIA: S&P Affirms 'BB-/B' Sovereign Credit Ratings
-----------------------------------------------------
On Aug. 23, 2024, S&P Global Ratings affirmed its 'BB-/B' long- and
short-term foreign and local currency sovereign credit ratings on
Armenia. The outlook on the long-term ratings is stable.
Outlook
The stable outlook reflects the balance between Armenia's strong
economic growth prospects and moderate general government debt
levels, against existing vulnerabilities in the balance of
payments, and heightened geopolitical risks.
Upside scenario
S&P could consider a positive rating action if Armenia's public
finances significantly outperform its expectations, or if the risk
of a sharp reversal of Russian capital flows eases, thereby
minimizing potential balance of payments pressure. Additionally, a
reduction in geopolitical risks would further support a positive
rating action.
Downside scenario
S&P may consider lowering the ratings if significant balance of
payments pressures materialize and fiscal performance falls
significantly below our current projections. This scenario could
arise from escalating geopolitical tensions with Armenia's
neighbors or a reversal of financial and labor flows from Russia.
Rationale
Armenia is navigating a challenging economic and political
landscape. Key issues include persistent tensions with Azerbaijan,
particularly concerning border delimitation and the proposed
transit corridor, and potential constitutional amendments in
Armenia. The country is reassessing its security alliances,
particularly with Russia, and is exploring deeper ties with the
West, including reevaluating military alliances to adapt to
shifting regional dynamics. Moreover, increased spending on
refugees, infrastructure, and health care is exacerbating fiscal
pressures. Despite these challenges, Armenia's economic outlook
remains robust, supported by an increase in productive capacity
driven by substantial capital and labor inflows into the
information and communication technologies (ICT) sector.
S&P's ratings on Armenia are constrained by several factors,
including the country's weak yet gradually improving institutional
framework, moderate per capita income levels, as well as balance of
payments and fiscal vulnerabilities. Additionally, Armenia's
exposure to geopolitical risks further constrain the ratings.
The ratings are supported by Armenia's strong economic growth
outlook, moderate government debt, access to external official
funding, and a prudent policy framework, which has maintained
economic and financial stability despite multiple external shocks.
Institutional and economic profile: S&P anticipates the economy to
decelerate in 2024 compared with the high average real growth rate
of 10.7% observed during 2022-2023.
-- S&P projects that real GDP growth will decelerate to 6.2% in
2024, down from 8.7% in 2023, due to weaker external demand and a
reduction in migrant and financial inflows.
-- Persisting tensions between Azerbaijan and Armenia, despite the
transfer of control of the previously disputed Nagorno-Karabakh
(NK) region to Azerbaijan.
-- Emerging tensions between Armenia and Russia could
significantly increase uncertainty for Armenia, given its heavy
reliance on trade, energy, and financial flows from Russia.
S&P still expects Armenia's economy to expand by 6.2% this year,
due to strong consumption driven by a robust tourism sector, real
wage growth, and higher government spending.
Russian labor and capital inflows, which propelled Armenia's
growth, have decelerated over the past two years. That said, a
significant part of Russian labor and businesses are likely to stay
in Armenia due to ongoing political and economic uncertainties in
Russia, reducing the incentives for its citizens to return. Many
Russian migrants in Armenia work in the ICT sector, serving global
clients, and their return could disrupt operations.
S&P projects Armenia's economy to expand at an annual rate of
approximately 5% through 2027, supported by increased productive
capacity from past capital and labor inflows into the ICT sector.
This rate surpasses the pre-pandemic decade, reflecting the
positive impact on Armenia's economic structure and output
potential. However, uncertainty persists due to global
macroeconomic developments and regional geopolitical volatility.
Tensions between Armenia and Azerbaijan over NK date back to the
early 20th century and escalated after the dissolution of the
Soviet Union. In late 2023, Azerbaijan launched a military
offensive, leading to a ceasefire that transferred control of NK to
Azerbaijan, prompting over 100,000 residents to flee to Armenia.
Since the transfer of NK to Azerbaijan, Armenia and Azerbaijan have
engaged in peace talks. As part of these negotiations, Armenia
returned four border villages to Azerbaijan in May as a step toward
demarcation efforts. This move led to significant protests in
Armenia, with demonstrators demanding the government's resignation.
Despite these internal tensions, Azeri authorities have indicated
that 90% of the draft peace treaty has been agreed upon. However,
key issues remain unresolved. Azerbaijan insists that Armenia amend
its constitution to eliminate references to territorial claims.
Specifically, Azerbaijan demands the removal of the 1990
Declaration of Independence, which cites a 1989 unification act
between Soviet Armenia and the NK region. Additionally, Azerbaijan
is looking to create a corridor through Armenia's Syunik Province
to link with its exclave, Nakhchivan, without Armenian border
controls. This demand persists despite proposals for an alternative
route through Iran, known as the Aras corridor. Other initiatives,
such as the "Crossroads of Peace" project, are also underway,
aiming to enhance regional connectivity. Nevertheless, S&P believes
security risks will continue to persist between the two countries
for the foreseeable future, particularly with Azeri officials
repeatedly referring to parts of Armenian territory as western
Azerbaijan.
Further complicating the regional security dynamics are the rising
tensions between Armenia and Russia, primarily due to Russia's
reluctance to intervene during the 2023 NK conflict. In response to
what it perceives as Russian inaction, Armenia has been
reevaluating its security strategy. This has included declaring its
intention to suspend its membership in the Russia-led Collective
Security Treaty Organization and actively pursuing closer ties with
Western countries. Armenia has also conducted joint military
exercises with the U.S., signaling a strategic pivot toward
enhancing its international alliances.
In S&P's assessment, these developments contribute to a heightened
level of geopolitical uncertainty for Armenia, given its
substantial economic and energy dependence on Russia. In 2023,
approximately 40% of Armenia's total exports were directed to
Russia, while about 31.5% of its imports originated from there.
Furthermore, nearly 70% of remittances came from Russia,
highlighting the extensive financial ties between the two nations.
This dependency is also evident in the energy sector, with Russia
supplying almost 90% of Armenia's natural gas through pipelines,
which accounted for 60% of the country's total energy needs in
2022. Such reliance on Russia for critical economic and energy
resources underscores the potential vulnerabilities Armenia faces
amid shifting geopolitical dynamics.
Flexibility and performance profile: Fiscal pressures are
increasing due to higher health care, defense, and infrastructure
spending.
-- Armenia has recently adopted a new medium-term fiscal strategy
that projects an average budget deficit of 4.6% from 2024-2027 due
to higher spending needs.
-- As a result, net general government debt will increase to
average 48% of GDP through 2027, from 44% in 2023.
-- Following a peak in August 2023, the Central Bank of Armenia's
(CBA's) foreign reserves have been gradually declining, primarily
due to factors such as government external debt repayments.
In the first half of 2024, central government revenues fell 10%
short of Armenia's budget target. This shortfall can be attributed
to a combination of weaker economic conditions and reduced customs
duties. In anticipation of a persistent revenue weakness, the
authorities plan to finance the gap using funds from the state
reserve fund, amounting to 1.5% of GDP. The authorities have
slightly revised the budget deficit target upward to 4.7% of GDP
this year, from 4.6%, due to lower than anticipated growth while
maintaining the nominal target. The increase in the fiscal deficit
compared to last year is primarily due to elevated capital
expenditure and higher defense spending. Additionally, a
significant allocation within the budget, approximately 1.5% of
GDP, is designated to cover housing, utilities, and one-time
stipends for refugees from NK.
In late 2023, following the ceasefire in the NK region, the
Armenian government opted to directly assume 70% of the debts owed
by the authorities in NK to Armenia's financial institutions,
totaling Armenian dram (AMD) 315 billion (about 2.4% of GDP).
Armenia has recently adopted a new medium-term fiscal strategy,
which projects wider fiscal deficits of 5.5% of GDP in 2025, 4.5%
in 2026, and 3.5% in 2027. This expansionary fiscal policy is
designed to meet critical spending needs, including support for
refugees from NK, strengthening defense capabilities, upgrading
infrastructure, and improving health care. To partially finance
these expenditures, the government has implemented revenue-raising
measures, such as increasing environmental and turnover taxes.
However, given the government's historical tendency to
under-execute budgeted capital expenditure funds, particularly in
infrastructure and other large-scale projects, actual fiscal
deficits may be lower than projected. Consequently, S&P expects the
general government deficit to average about 4.2% of GDP through to
2027.
Under S&P's fiscal projections, it expects that general government
debt, net of liquid assets, will average a moderate 48% of GDP over
2024-2027. Notably, approximately 54% of this debt is denominated
in foreign currency (FX), exposing Armenia's debt portfolio to
exchange rate volatility. Nevertheless, a significant portion of
the FX-denominated debt is sourced from bilateral lenders and
international financial institutions, often provided at
concessional and fixed interest rates.
Despite recent improvements, Armenia's balance of payments remains
vulnerable. The country has persistently recorded current account
deficits, with the exception of year 2022, resulting in a
substantial net external liability position of around 70% of
current account receipts. As external demand
moderates--particularly in sectors such as automotive (mostly
re-exported) and gold exports--and domestic consumption and wider
fiscal deficits drive up imports, coupled with declining inward
remittances, S&P projects a widening of the current account deficit
to 3.0%-5.0% of GDP in the coming years, from a 2.3% deficit in
2023. To finance these deficits, Armenia is likely to rely on a mix
of government external borrowing and net foreign direct investment
inflows.
Foreign exchange reserves stood at $3.3 billion in June 2024,
marking a 14% decrease from the same period a year earlier.
Notably, reserves had reached a peak of $4.2 billion in August 2023
largely due to the CBA's net purchases of FX to absorb excess FX
inflows. These inflows were primarily driven by increased tourist
arrivals and higher remittances. Nevertheless, reserves have
largely dipped due to government debt repayments, defense imports,
and banks investing excess reserves in higher yielding assets
abroad. S&P expects some pressure to remain on reserves given
higher external financing needs this year but still project them to
remain adequate.
Since a peak at 10.3% in June 2022, headline inflation has subsided
significantly on the back of lower food and commodity prices,
currency appreciation, and monetary tightening. However, after a
few months of negative inflation readings, it has picked up,
reaching 0.8% in June, compared with the same period last year.
This rise is driven by base effects along with increases in
transport and services costs. Looking ahead, we project an average
inflation rate of 1.6% for the year, reflecting an increase in
broader price pressures. Given this inflation outlook and the CBA's
target of 4%, S&P anticipates that the institution may continue to
gradually reduce its benchmark policy rate.
Armenia's banking is adequately capitalized and has shown solid
profitability, particularly bolstered by significant inflows from
Russia during 2022-2023. Credit growth has been robust, reaching
19.4% as of June year-over-year, which has been accompanied by an
increase in real estate prices. The sector's asset quality has
remained stable, except for exposures to the former Republic of
Nagorno-Karabakh, which have since been partially assumed by the
Armenian government.
In accordance with S&P's relevant policies and procedures, the
Rating Committee was composed of analysts that are qualified to
vote in the committee, with sufficient experience to convey the
appropriate level of knowledge and understanding of the methodology
applicable. At the onset of the committee, the chair confirmed that
the information provided to the Rating Committee by the primary
analyst had been distributed in a timely manner and was sufficient
for Committee members to make an informed decision.
After the primary analyst gave opening remarks and explained the
recommendation, the Committee discussed key rating factors and
critical issues in accordance with the relevant criteria.
Qualitative and quantitative risk factors were considered and
discussed, looking at track-record and forecasts.
The committee's assessment of the key rating factors is reflected
in the Ratings Score Snapshot above.
The chair ensured every voting member was given the opportunity to
articulate his/her opinion. The chair or designee reviewed the
draft report to ensure consistency with the Committee decision. The
views and the decision of the rating committee are summarized in
the above rationale and outlook. The weighting of all rating
factors is described in the methodology used in this rating
action.
Ratings List
RATINGS AFFIRMED
ARMENIA
Sovereign Credit Rating BB-/Stable/B
Transfer & Convertibility Assessment BB
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D E N M A R K
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LIQTECH INTL: Reports $2.1 Million Net Loss in Fiscal Q2
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LiqTech International, Inc. filed with the U.S. Securities and
Exchange Commission its Quarterly Report on Form 10-Q reporting a
net loss of $2,111,700 on $4,485,062 of revenues for the three
months ended June 30, 2024, compared to a net loss of $1,555,292 on
$4,990,019 of revenues for the three months ended June 30, 2023.
For the six months ended June 30, 2024 and 2023, the Company
reported net losses of $4,499,995 and $3,944,795, respectively.
As of June 30, 2024, the Company had cash and cash equivalents of
$5,489,776, net working capital of $10,922,792, and an accumulated
deficit of $80,422,175.
As of June 30, 2024, the Company had $28,579,302 in total assets,
$16,305,054 in total liabilities, and $12,274,248 in total
stockholders' equity.
A full-text copy of the Company's Form 10-Q is available at:
https://tinyurl.com/ye2x4x66
About LiqTech International
Ballerup, Denmark-based LiqTech International, Inc. is a clean
technology company that provides state-of-the-art gas and liquid
purification products by manufacturing ceramic silicon carbide
filters and membranes as well as developing industry-leading and
fully automated filtration solutions and systems.
Draper, Utah-based Sadler, Gibb & Associates, LLC, the Company's
auditor since 2018, issued a "going concern" qualification in its
report dated March 21, 2024, citing that the Company has suffered
recurring losses from operations and has a net capital deficiency
that raises substantial doubt about its ability to continue as a
going concern.
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G E R M A N Y
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MERCER INTERNATIONAL: Moody's Cuts CFR to B2, Outlook Neg.
----------------------------------------------------------
Moody's Ratings downgraded Mercer International Inc.'s (Mercer)
corporate family rating to B2 from B1. Moody's have also downgraded
the probability of default rating to B2-PD from B1-PD, senior
unsecured debt rating to B3 from B2, and Speculative-Grade
Liquidity Rating (SGL) to SGL-4 from SGL-3. The outlook remains
negative.
"The downgrade reflects the significant volatility and ongoing
weakness in Mercer's operating results, and Moody's expectation
that the company's financial leverage will remain elevated above 5x
for longer than previously thought, due to softer lumber prices,"
said Mikhil Mahore, Moody's Ratings analyst. Moody's expect Moody's
adjusted gross debt/ EBITDA will remain around 6x in 2024, before
improving slightly towards 5.5x in 2025 with improved lumber
pricing. The negative outlook reflects the uncertainty in the
refinancing of the company's January 2026 notes, while credit
metrics remain weakly positioned.
RATINGS RATIONALE
Mercer's rating (B2 CFR) benefits from its: (1) leading global
market position in northern bleached softwood kraft (NBSK) pulp;
(2) earnings contribution from relatively stable energy and
chemical business segment; (3) operational flexibility and
geographic diversity with several pulp mills in Germany and Canada,
mass timber facilities in US, and wood product facilities in
Germany, most of which produce surplus energy.
Mercer's rating is constrained by: (1) very high financial leverage
and low interest coverage through 2025; (2) the inherent price
volatility of market pulp and lumber which periodically results in
high leverage during trough market prices; and (3) high product
concentration with over 75% of sales tied to pulp.
Mercer has weak liquidity (SGL-4). Liquidity sources total about
$580 million as compared to about $315 million in uses through
March 2026. At June 2024, the company has about $263 million in
cash and short-term investments, and about $317 million of
availability under several committed credit facilities totaling
about $450 million (most expiring in 2027). Uses of liquidity
includes about $15 million of Moody's expected free cash flow
consumption through March 2026 and $300 million in senior unsecured
notes maturity in January 2026. Moody's expect the company will
remain in compliance with its financial covenants.
The B3 rating on the company's $1.4 billion senior unsecured notes,
one notch below the B2 CFR, reflects structural subordination to
the Canadian revolving credit facility and other indebtedness and
liabilities of the operating subsidiaries. The company's senior
unsecured notes do not benefit from operating subsidiary
guarantees.
The negative outlook reflects increasing refinancing risks in
repaying its $300 million 2026 notes at a time when Moody's expect
the company's financial leverage to remain above 5x over the next
12-18 months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Mercer's ratings could be downgraded if the company does not
refinance its upcoming January 2026 debt maturities before they
become current, the company's liquidity and operating performance
continues to deteriorate, changes in financial management policies
that would materially pressure the company's balance sheet, total
adjusted debt to EBITDA is sustained above 6x, or interest coverage
is sustained below 2x.
Mercer's ratings could be upgraded if the company demonstrates less
earnings volatility and increased resiliency during downturns,
adjusted debt to EBITDA is sustained below 5x, interest coverage
sustained above 3x, improvement in liquidity and conservative
financial policies.
Mercer International Inc. is a leading producer of NBSK pulp,
operates two large lumber mills in Germany, and leader in mass
timber in North America. The company is incorporated in the State
of Washington and headquartered in Vancouver, British Columbia.
The principal methodology used in these ratings was Paper and
Forest Products published in August 2024.
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I R E L A N D
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ADAGIO CLO VIII: Fitch Hikes Rating on Class E Notes to 'BB+sf'
---------------------------------------------------------------
Fitch Ratings has upgraded Adagio CLO VIII DAC class B-1 to E notes
while affirming the rest.
Entity/Debt Rating Prior
----------- ------ -----
Adagio CLO VIII DAC
A XS2054619734 LT AAAsf Affirmed AAAsf
B-1 XS2054620310 LT AA+sf Upgrade AAsf
B-2 XS2054621045 LT AA+sf Upgrade AAsf
C XS2054621474 LT A+sf Upgrade Asf
D XS2054621987 LT BBB+sf Upgrade BBBsf
E XS2054622522 LT BB+sf Upgrade BBsf
F XS2054622951 LT B-sf Affirmed B-sf
Transaction Summary
Adagio CLO VIII DAC is a cash flow CLO comprising mostly senior
secured obligations. The transaction closed in November 2019, is
actively managed by AXA Investment Managers Inc. and exited its
reinvestment period in April 2024.
KEY RATING DRIVERS
Asset Performance Above Rating Case: Since Fitch's last rating
action in November 2023, the portfolio's performance has been
stable. According to the last trustee report dated 2 July 2024, the
transaction is passing all of its collateral-quality and
portfolio-profile tests apart from its weighted average life (WAL)
test and a weighted average rating factor (WARF) test from a
different rating agency.
The transaction is currently 1.5% below par (calculated as the
current par difference over the original target par). Exposure to
assets with a Fitch-derived rating of 'CCC+' and below is 6%,
according to the trustee, versus a limit of 7.5%. The portfolio has
approximately EUR1.5 million of defaulted assets but total par loss
remains well below its rating-case assumptions. This supports the
rating actions.
Limited Refinancing Risk: The transaction has manageable near- and
medium-term refinancing risk, in view of large default-rate
cushions for each class of notes. The CLO has no portfolio assets
maturing in 2024, 1% maturing in 2025, and a total of 4.4% maturing
before June 2026, as calculated by Fitch. The transaction's
comfortable break-even default-rate cushions support the Stable
Outlook.
'B'/'B-' Portfolio: Fitch assesses the average credit quality of
the underlying obligors at 'B'/'B-'. The WARF of the current
portfolio is 25.9 as calculated by Fitch under its latest criteria.
For the portfolio including entities with Negative Outlooks that
are notched down one level under its criteria, the WARF was 27.4 as
of 10 August 2024.
High Recovery Expectations: Senior secured obligations comprise
96.9% of the portfolio. Fitch views the recovery prospects for
these assets as more favourable than for second-lien, unsecured and
mezzanine assets. The Fitch-calculated weighted average recovery
rate (WARR) of the current portfolio is 61.4%.
Diversified Portfolio: The portfolio is well-diversified across
obligors, countries and industries. The top 10 obligor
concentration, as calculated by Fitch, is 11.7%, and no obligor
represents more than 1.4% of the portfolio balance. Exposure to the
three-largest Fitch-defined industries is 37.5% as calculated by
the trustee. Fixed-rate assets reported by the trustee are at 4.7%
of the portfolio balance, compared with a limit of 5%.
Failed Tests Constrain Reinvestment: Although the transaction
exited its reinvestment period in April 2024, the manager can
reinvest unscheduled principal proceeds and sale proceeds from
credit-risk obligations after the reinvestment period, subject to
compliance with the reinvestment criteria. However, the manager is
currently restricted as the transaction is failing the WAL test and
the WARF test from another rating agency. The manager has not been
actively reinvesting since May 2024.
If the failing collateral-quality tests are cured, the manager
would be able to reinvest. Fitch's analysis is therefore based on a
portfolio where Fitch stresses the transaction's covenants to their
limits. The WARR has been reduced by 1.5% to address the inflated
WARR, as the transaction document used an old WARR definition that
is not in line with Fitch's current criteria.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
Based on the current portfolio, downgrades may occur if the loss
expectation is larger than initially assumed, due to unexpectedly
high levels of default and portfolio deterioration.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
Upgrades may result from stable portfolio credit quality and
deleveraging, leading to higher credit enhancement and excess
spread available to cover losses in the remaining portfolio.
USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10
Form ABS Due Diligence-15E was not provided to, or reviewed by,
Fitch in relation to this rating action.
DATA ADEQUACY
Fitch has checked the consistency and plausibility of the
information it has received about the performance of the asset pool
and the transaction. Fitch has not reviewed the results of any
third-party assessment of the asset portfolio information or
conducted a review of origination files as part of its ongoing
monitoring.
The majority of the underlying assets or risk-presenting entities
have ratings or credit opinions from Fitch and/or other nationally
recognised statistical rating organisations and/or European
securities and markets authority-registered rating agencies. Fitch
has relied on the practices of the relevant groups within Fitch
and/or other rating agencies to assess the asset portfolio
information or information on the risk-presenting entities.
Overall, and together with any assumptions referred to above,
Fitch's assessment of the information relied upon for the agency's
rating analysis according to its applicable rating methodologies
indicates that it is adequately reliable.
ESG CONSIDERATIONS
Fitch does not provide ESG relevance scores for Adagio CLO VIII
DAC. In cases where Fitch does not provide ESG relevance scores in
connection with the credit rating of a transaction, programme,
instrument or issuer, Fitch will disclose in the key rating drivers
any ESG factor which has a significant impact on the rating on an
individual basis.
BILBAO CLO III: Fitch Hikes Rating on Class E-R Notes to 'Bsf'
--------------------------------------------------------------
Fitch Ratings has upgraded Bilbao CLO III DAC's class B-R, C-R,
D-R, and E-R notes, and affirmed the rest. The Outlook is Stable on
all notes.
Entity/Debt Rating Prior
----------- ------ -----
Bilbao CLO III DAC
A-1-R XS2332235733 LT AAAsf Affirmed AAAsf
A-2A-R XS2332236384 LT AAsf Affirmed AAsf
A-2B-R XS2332236970 LT AAsf Affirmed AAsf
B-R XS2332237788 LT A+sf Upgrade Asf
C-R XS2332238323 LT BBB+sf Upgrade BBBsf
D-R XS2332239131 LT BB+sf Upgrade BBsf
E-R XS2332238919 LT Bsf Upgrade B-sf
Transaction Summary
Bilbao CLO III DAC is a cash flow CLO comprising mostly senior
secured obligations. The transaction is actively managed by
Guggenheim Partners Europe Limited and will exit its reinvestment
period in February 2026.
KEY RATING DRIVERS
Stable Performance: Since Fitch's last rating action in November
2023, the portfolio's performance has remained stable. The
transaction has continued to pass all collateral-quality,
portfolio-profile and coverage tests, with no reported defaulted
assets. Exposure to assets with a Fitch-derived rating of 'CCC+'
and below is 6.6%, versus a limit of 7.5% and the portfolio's total
par loss remains below its rating-case assumptions at 0.3%.
Low Refinancing Risk: The notes have no near- and medium-term
refinancing risk, with no assets maturing in 2024 or 2025, and only
1.9% of the portfolio maturing by June 2026. The combination of
stable performance, low refinancing risk and a shortened weighted
average life (WAL) covenant, has resulted in large break-even
default-rate cushions. This has led to today's rating action.
'B'/'B-' Portfolio: Fitch assesses the average credit quality of
the underlying obligors at 'B'/'B-'. The Fitch-calculated weighted
average rating factor of the current portfolio is 35.6 as reported
by the trustee based on old criteria and 26.6 as calculated by
Fitch under its latest criteria.
High Recovery Expectations: Senior secured obligations comprise
99.0% of the portfolio. Fitch views the recovery prospects for
these assets as more favourable than for second-lien, unsecured and
mezzanine assets. The Fitch-calculated weighted average recovery
rate of the current portfolio as reported by the trustee is 62.1%.
Diversified Portfolio: The top 10 obligor concentration as reported
by the trustee is 14.4%, which complies with the 15% limit of the
current Fitch test matrix, and no obligor represents more than
1.8%.
Transaction Within Reinvestment Period: Given the manager's ability
to reinvest, Fitch's analysis is based on a stressed portfolio and
tested the notes' achievable ratings across all Fitch test
matrices, since the portfolio can still migrate to different
collateral quality tests and the level of fixed-rate assets could
change.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
Based on the current portfolio, downgrades may occur if the loss
expectation is larger than initially assumed, due to unexpectedly
high levels of default and portfolio deterioration.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
Upgrades may result from stable portfolio credit quality and
deleveraging, leading to higher credit enhancement and excess
spread available to cover losses in the remaining portfolio.
USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10
Form ABS Due Diligence-15E was not provided to, or reviewed by,
Fitch in relation to this rating action.
DATA ADEQUACY
Fitch has checked the consistency and plausibility of the
information it has received about the performance of the asset pool
and the transaction. Fitch has not reviewed the results of any
third-party assessment of the asset portfolio information or
conducted a review of origination files as part of its ongoing
monitoring.
The majority of the underlying assets or risk-presenting entities
have ratings or credit opinions from Fitch and/or other nationally
recogniesd statistical rating organisations and/or European
securities and markets authority-registered rating agencies. Fitch
has relied on the practices of the relevant groups within Fitch
and/or other rating agencies to assess the asset portfolio
information or information on the risk-presenting entities.
Overall, and together with any assumptions referred to above,
Fitch's assessment of the information relied upon for the agency's
rating analysis according to its applicable rating methodologies
indicates that it is adequately reliable.
ESG CONSIDERATIONS
Fitch does not provide ESG relevance scores for Bilbao CLO III DAC.
In cases where Fitch does not provide ESG relevance scores in
connection with the credit rating of a transaction, programme,
instrument or issuer, Fitch will disclose in the key rating drivers
any ESG factor which has a significant impact on the rating on an
individual basis.
CVC CORDATUS XIV: Fitch Hikes Rating on Class F Notes to 'B+sf'
---------------------------------------------------------------
Fitch Ratings has upgraded CVC Cordatus Loan Fund XIV DAC's class E
and class F notes and affirmed the others.
Entity/Debt Rating Prior
----------- ------ -----
CVC Cordatus Loan
Fund XIV DAC
A-1-R XS2350860693 LT AAAsf Affirmed AAAsf
A-2-R XS2350861238 LT AAAsf Affirmed AAAsf
A-3-R XS2350862129 LT AAAsf Affirmed AAAsf
B-1-R XS2350862475 LT AA+sf Affirmed AA+sf
B-2-R XS2350863366 LT AA+sf Affirmed AA+sf
C-R XS2350864174 LT A+sf Affirmed A+sf
D-R XS2350864414 LT BBB+sf Affirmed BBB+sf
E XS1964661422 LT BB+sf Upgrade BBsf
F XS1964661851 LT B+sf Upgrade Bsf
Transaction Summary
CVC Cordatus Loan Fund XIV DAC is a cash flow CLO comprising mostly
senior secured obligations. The transaction closed in May 2019, is
actively managed by CVC Credit Partners European CLO Management LLP
and exited its reinvestment period in November 2023.
KEY RATING DRIVERS
Asset Performance Above Rating Case: Since Fitch's last rating
action in September 2023, the portfolio's performance has been
stable. As per the last trustee report dated 28 June 2024, the
transaction is passing all of its collateral quality and portfolio
profile tests. The transaction is currently 0.2% below par
(calculated as the current par difference over the original target
par).
Exposure to assets with a Fitch-derived rating of 'CCC+' and below
is 3.4%, according to the trustee, versus a limit of 7.5%. There
are approximately EUR3 million of defaulted assets in the
portfolio, but total par loss remains well below its rating-case
assumptions. This supports the rating actions.
Limited Refinancing Risk: The transaction has manageable exposure
to near- and medium-term refinancing risk, in view of the large
default-rate cushions for each class of notes. The CLO has 0.8% of
portfolio assets maturing in 2024, no assets maturing in 2025, and
3.3% maturing before June 2026, as calculated by Fitch. The
transaction's comfortable break-even default-rate cushions supports
the Stable Outlooks.
'B'/'B-' Portfolio: Fitch assesses the average credit quality of
the underlying obligors at 'B'/'B-'. The weighted average rating
factor (WARF) of the current portfolio is 24.6, as calculated by
Fitch under its latest criteria. For the portfolio including
entities with Negative Outlooks that are notched down one level as
per its criteria, the WARF was 26.1 as of 10 August 2024.
High Recovery Expectations: Senior secured obligations comprise
96.1% of the portfolio. Fitch views the recovery prospects for
these assets as more favourable than for second-lien, unsecured and
mezzanine assets. The Fitch-calculated weighted average recovery
rate (WARR) of the current portfolio was 60%.
Diversified Portfolio: The portfolio is well-diversified across
obligors, countries and industries. The top 10 obligor
concentration, as calculated by Fitch, is 14.7%, and no obligor
represents more than 2.3% of the portfolio balance. The exposure to
the three-largest Fitch-defined industries is 26.6% as calculated
by the trustee. Fixed-rate assets currently are reported by the
trustee at 9.9% of the portfolio balance compared with the maximum
of 10%.
Transaction Outside Reinvestment Period: The transaction exited its
reinvestment period in November 2023, but the manager can reinvest
unscheduled principal proceeds and sale proceeds from credit-risk
obligations after the reinvestment period, subject to compliance
with the reinvestment criteria. Given the manager's ability to
reinvest, Fitch's analysis is based on a portfolio where it
stresses the transaction's covenants to their limits. The WARR has
been reduced by 1.5% to address the inflated WARR, as the
transaction document use an old WARR definition that is not in line
with Fitch's current criteria.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
Based on the current portfolio, downgrades may occur if the loss
expectation is larger than initially assumed, due to unexpectedly
high levels of default and portfolio deterioration.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
Upgrades may occur on stable portfolio credit quality and
deleveraging, leading to higher credit enhancement and excess
spread available to cover losses in the remaining portfolio.
USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10
Form ABS Due Diligence-15E was not provided to, or reviewed by,
Fitch in relation to this rating action.
DATA ADEQUACY
Fitch has checked the consistency and plausibility of the
information it has received about the performance of the asset pool
and the transaction. Fitch has not reviewed the results of any
third party assessment of the asset portfolio information or
conducted a review of origination files as part of its ongoing
monitoring.
The majority of the underlying assets or risk presenting entities
have ratings or credit opinions from Fitch and/or other Nationally
Recognized Statistical Rating Organizations and/or European
Securities and Markets Authority registered rating agencies. Fitch
has relied on the practices of the relevant groups within Fitch
and/or other rating agencies to assess the asset portfolio
information or information on the risk presenting entities.
Overall, and together with any assumptions referred to above,
Fitch's assessment of the information relied upon for the agency's
rating analysis according to its applicable rating methodologies
indicates that it is adequately reliable.
ESG CONSIDERATIONS
Fitch does not provide ESG relevance scores for CVC Cordatus Loan
Fund XIV DAC. In cases where Fitch does not provide ESG relevance
scores in connection with the credit rating of a transaction,
programme, instrument or issuer, Fitch will disclose in the key
rating drivers any ESG factor which has a significant impact on the
rating on an individual basis.
HAYFIN EMERALD XI: S&P Assigns Prelim B- (sf) Rating to F-R Notes
-----------------------------------------------------------------
S&P Global Ratings assigned its preliminary credit ratings to
Hayfin Emerald CLO XI DAC's class A-R, B-1-R, B-2-R, C-R, D-R, E-R,
and F-R notes. The issuer had also issued EUR37.30 million of
subordinated notes on the original closing date.
This transaction is a reset of the already existing transaction.
The existing classes of notes will be fully redeemed with the
proceeds from the issuance of the replacement notes on the reset
date and the ratings on the original notes will be withdrawn.
Under the transaction documents, the rated notes pay quarterly
interest unless there is a frequency switch event. Following this,
the notes will switch to semiannual payment.
The portfolio's reinvestment period will end on Oct. 25, 2029.
The preliminary ratings assigned to the reset notes reflect S&P's
assessment of:
-- The diversified collateral pool, which primarily comprises
broadly syndicated speculative-grade senior secured term loans and
bonds that are governed by collateral quality tests.
-- The credit enhancement provided through the subordination of
cash flows, excess spread, and overcollateralization.
-- The collateral manager's experienced team, which can affect the
performance of the rated notes through collateral selection,
ongoing portfolio management, and trading.
-- The transaction's legal structure, which S&P expects to be
bankruptcy remote.
-- The transaction's counterparty risks, which S&P expects to be
in line with its counterparty rating framework.
Portfolio Benchmarks
S&P Global Ratings' weighted-average rating factor 2,699.31
Default rate dispersion 663.24
Weighted-average life (years) 4.17
Weighted-average life extended to cover
the length of the reinvestment period (years) 5.10
Obligor diversity measure 99.90
Industry diversity measure 18.48
Regional diversity measure 1.22
Transaction Key Metrics
Portfolio weighted-average rating
derived from S&P's CDO evaluator B
'CCC' category rated assets (%) 2.62
Target 'AAA' weighted-average recovery (%) 35.42
Target weighted-average spread (%) 4.01
Target weighted-average coupon (%) 3.27
Rating rationale
Under the transaction documents, the rated notes pay quarterly
interest unless a frequency switch event occurs. Following this,
the notes will switch to semiannual payments. The portfolio's
reinvestment period will end 5.10 years after closing.
S&P said, "We expect the portfolio to be well-diversified,
primarily comprising broadly syndicated speculative-grade senior
secured term loans and senior secured bonds. Therefore, we
conducted our credit and cash flow analysis by applying our
criteria for corporate cash flow CDOs.
"In our cash flow analysis, we used the EUR400 million expected
portfolio size, the target weighted-average spread of 4.10%, the
target weighted-average coupon of 3.27%, and the target
rating-specific recovery rates for the rated notes. We applied
various cash flow stress scenarios, using four different default
patterns, in conjunction with different interest rate stress
scenarios for each liability rating category.
"Under our structured finance sovereign risk criteria, we consider
the transaction's exposure to country risk to be limited at the
assigned preliminary ratings, as the exposure to individual
sovereigns does not exceed the diversification thresholds outlined
in our criteria."
Until the end of the reinvestment period on Oct. 25, 2029, the
collateral manager may substitute assets in the portfolio for so
long as our CDO Monitor test is maintained or improved in relation
to the initial ratings on the notes. This test looks at the total
amount of losses that the transaction can sustain as established by
the initial cash flows for each rating, and it compares that with
the current portfolio's default potential plus par losses to date.
As a result, until the end of the reinvestment period, the
collateral manager may through trading deteriorate the
transaction's current risk profile, if the initial ratings are
maintained.
S&P said, "We expect the transaction's documented counterparty
replacement and remedy mechanisms to adequately mitigate its
exposure to counterparty risk under our current counterparty
criteria at the time of assigning final ratings.
"We expect the transaction's legal structure to be bankruptcy
remote, in line with our legal criteria.
"Following our analysis of the credit, cash flow, counterparty,
operational, and legal risks, we believe the preliminary ratings
are commensurate with the available credit enhancement for the
class A-R to F-R notes.
"Our credit and cash flow analysis indicates that the available
credit enhancement for the class B-1-R and B-2-R to F-R notes could
withstand stresses commensurate with higher preliminary ratings
than those we have assigned. However, as the CLO is still in its
reinvestment phase, during which the transaction's credit risk
profile could deteriorate, we have capped our preliminary ratings
on the notes.
"In addition to our standard analysis, to provide an indication of
how rising pressures among speculative-grade corporates could
affect our ratings on European CLO transactions, we have also
included the sensitivity of the ratings on the class A-R to E-R
notes based on four hypothetical scenarios.
"As our ratings analysis makes additional considerations before
assigning ratings in the 'CCC' category, and we would assign a 'B-'
rating if the criteria for assigning a 'CCC' category rating are
not met, we have not included the above scenario analysis results
for the class F-R notes."
Environmental, social, and governance
S&P said, "We regard the exposure to environmental, social, and
governance (ESG) credit factors in the transaction as being broadly
in line with our benchmark for the sector. Primarily due to the
diversity of the assets within CLOs, the exposure to environmental
credit factors is viewed as below average, social credit factors
are below average, and governance credit factors are average. For
this transaction, the documents prohibit assets from being related
to certain activities, including, but not limited to, the
following: electrical utility under certain conditions; oil and gas
producer under certain conditions; one whose revenues are more than
25% derived from production of opioids, banned hazardous chemicals
and pesticides or food commodity derivatives industry or soft
commodity trading; one whose revenues are more than 20% derived
from services to private prisons; one whose revenues are more than
15% derived from oil exploration; storage facilities or storage
services for oil, pipelines, or infrastructure for the use in the
oil life cycle; equipment or infrastructure intended for use in oil
extraction; one whose revenues are more than 10% derived from
manufacturing of civilian firearms or palm oil; one whose revenues
are more than 5% derived from pornographic or prostitution, tobacco
and tobacco-related products, gambling, unconventional extraction
of oil and gas, or thermal coal production; United Nations Global
Compact Ten Principles violations; payday lending; endangered
wildlife; weapons of mass destruction or controversial weapons;
fossil fuels; and illegal drugs. Accordingly, since the exclusion
of assets from these industries does not result in material
differences between the transaction and our ESG benchmark for the
sector, no specific adjustments have been made in our rating
analysis to account for any ESG-related risks or opportunities."
Ratings List
PRELIM. PRELIM. AMOUNT CREDIT
CLASS RATING* (MIL. EUR) ENHANCEMENT(%) INTEREST RATE§
A-R AAA (sf) 248 38.00 3M EURIBOR + 1.32%
B-1-R AA (sf) 29.60 28.10 3M EURIBOR + 1.90%
B-2-R AA (sf) 10.00 28.10 4.85%
C-R A (sf) 22.80 22.40 3M EURIBOR + 2.30%
D-R BBB- (sf) 29.20 15.10 3M EURIBOR + 3.65%
E-R BB- (sf) 18.40 10.50 3M EURIBOR + 6.85%
F-R B- (sf) 12.00 7.50 3M EURIBOR + 7.69%
Sub. NR 37.30 N/A N/A
*The preliminary ratings assigned to the class A-R, B-1-R, and
B-2-R notes address timely interest and ultimate principal
payments. The preliminary ratings assigned to the class C-R, D-R,
E-R, and F-R notes address ultimate interest and principal
payments. §The payment frequency switches to semiannual and the
index switches to six-month EURIBOR when a frequency switch event
occurs.
3M--Three month.
EURIBOR--Euro Interbank Offered Rate.
NR--Not rated.
N/A—-Not applicable.
INVESCO EURO III: Fitch Puts 'B-sf' Final Rating to Class F-R Notes
-------------------------------------------------------------------
Fitch Ratings has assigned Invesco Euro CLO III DAC Reset final
ratings, as detailed below.
Entity/Debt Rating Prior
----------- ------ -----
Invesco Euro
CLO III DAC
A XS2072089902 LT PIFsf Paid In Full AAAsf
A-R XS2867986593 LT AAAsf New Rating AAA(EXP)sf
B-1 XS2072090587 LT PIFsf Paid In Full AAsf
B-2 XS2072091478 LT PIFsf Paid In Full AAsf
B-R XS2867986759 LT AAsf New Rating AA(EXP)sf
C XS2072092013 LT PIFsf Paid In Full Asf
C-R XS2867987138 LT Asf New Rating A(EXP)sf
D XS2072092799 LT PIFsf Paid In Full BBBsf
D-R XS2867987302 LT BBB-sf New Rating BBB-(EXP)sf
E XS2072093334 LT PIFsf Paid In Full BB-sf
E-R XS2867987567 LT BB-sf New Rating BB-(EXP)sf
F XS2072093508 LT PIFsf Paid In Full B-sf
F-R XS2867987724 LT B-sf New Rating B-(EXP)sf
X XS2867986247 LT AAAsf New Rating AAA(EXP)sf
Transaction Summary
Invesco Euro CLO III DAC is a securitisation of mainly senior
secured obligations (at least 90%) with a component of senior
unsecured, mezzanine, second-lien loans and high-yield bonds. Note
proceeds were used to refinance the original rated notes and to
fund its existing portfolio with a target par of EUR400 million
that is actively managed by Invesco European RR L.P. The CLO has a
2.2-year reinvestment period and a 6.2 year weighted average life
(WAL) test.
KEY RATING DRIVERS
Average Portfolio Credit Quality (Neutral): Fitch assesses the
average credit quality of obligors at 'B'/'B-'. The
Fitch-calculated weighted average rating factor of the identified
portfolio is 26.4.
High Recovery Expectations (Positive): At least 90% of the
portfolio comprises senior secured obligations. Fitch views the
recovery prospects for these assets as more favourable than for
second-lien, unsecured and mezzanine assets. The Fitch-calculated
weighted average recovery rate of the identified portfolio is
61.6%.
Diversified Portfolio (Positive): The transaction includes various
concentration limits, including the maximum exposure to the three
largest Fitch-defined industries in the portfolio at 40%. These
covenants ensure that the asset portfolio will not be exposed to
excessive concentration.
Portfolio Management (Neutral): The transaction has a 2.2-year
reinvestment period and includes reinvestment criteria similar to
those of other European transactions. Fitch's analysis is based on
a stressed-case portfolio with the aim of testing the robustness of
the transaction structure against its covenants and portfolio
guidelines. The transaction also includes two Fitch matrices
effective at closing with a maximum 6.2-year WAL test. They all
correspond to a top 10 obligor concentration limit at 22% and
fixed-rate asset limits of 7.5% and 12.5%.
Cash-flow Modelling (Positive): The WAL used for the transaction's
stressed-case portfolio analysis is 12 months shorter than the WAL
covenant, floored at six years. This reflects the strict
reinvestment criteria post reinvestment period, which includes
satisfaction of Fitch 'CCC' limitation and the coverage tests, as
well as a WAL covenant that linearly steps down over time. In
Fitch's opinion, these conditions reduce the effective risk horizon
of the portfolio during stress periods.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
An increase of the default rate (RDR) at all rating levels in the
current portfolio by 25% of the mean RDR and a decrease of the
recovery rate (RRR) by 25% at all rating levels would have no
impact on the class X, A-R and E-R notes, and would lead to
downgrades of one notch for the class D-R notes, two notches for
the class B-R and C-R notes and to below 'B-sf' for the class F-R
notes. Downgrades may occur if the build-up of the notes' credit
enhancement following amortisation does not compensate for a larger
loss expectation than initially assumed due to unexpectedly high
levels of defaults and portfolio deterioration.
Due to the better metrics and shorter life of the current portfolio
than the Fitch-stressed portfolio, the class C-R notes display a
rating cushion of one notch, the class B-R, D-R and E-R notes two
notches, and the class F-R notes three notches.
Should the cushion between the current portfolio and the
Fitch-stressed portfolio be eroded either due to manager trading or
negative portfolio credit migration, a 25% increase of the mean RDR
and a 25% decrease of the RRR across all ratings of the stressed
portfolio would lead to downgrades of four notches for the class
A-R and B-R notes, three notches for the class C-R and E-R notes,
two notches for the class D-R notes, to below 'B-sf' for the class
F-R notes and have no impact on the class X notes.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
A reduction of the RDR at all rating levels in the stressed
portfolio by 25% of the mean RDR and an increase in the RRR by 25%
at all rating levels would result in upgrades of up to five notches
for all notes. Further upgrades may occur if the portfolio's
quality remains stable and the notes start to amortise, leading to
higher credit enhancement across the structure.
During the reinvestment period, based on the Fitch-stressed
portfolio, upgrades may occur on better-than-expected portfolio
credit quality and a shorter remaining WAL test, allowing the notes
to withstand larger-than-expected losses for the transaction's
remaining life. After the end of the reinvestment period, upgrades
may result from stable portfolio credit quality and deleveraging,
leading to higher credit enhancement and excess spread available to
cover losses in the remaining portfolio.
USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10
Form ABS Due Diligence-15E was not provided to, or reviewed by,
Fitch in relation to this rating action.
DATA ADEQUACY
Fitch has checked the consistency and plausibility of the
information it has received about the performance of the asset pool
and the transaction. Fitch has not reviewed the results of any
third party assessment of the asset portfolio information or
conducted a review of origination files as part of its ongoing
monitoring.
The majority of the underlying assets or risk presenting entities
have ratings or credit opinions from Fitch and/or other Nationally
Recognized Statistical Rating Organizations and/or European
Securities and Markets Authority registered rating agencies. Fitch
has relied on the practices of the relevant groups within Fitch
and/or other rating agencies to assess the asset portfolio
information or information on the risk presenting entities.
Overall, and together with any assumptions referred to above,
Fitch's assessment of the information relied upon for the agency's
rating analysis according to its applicable rating methodologies
indicates that it is adequately reliable.
PENTA CLO 9: Fitch Hikes Rating on Class F Notes to 'Bsf'
---------------------------------------------------------
Fitch Ratings has upgraded Penta CLO 9 DAC's class B to F notes and
affirmed the class A notes.
Entity/Debt Rating Prior
----------- ------ -----
Penta CLO 9 DAC
A XS2344756577 LT AAAsf Affirmed AAAsf
B-1 XS2344756494 LT AA+sf Upgrade AAsf
B-2 XS2344756650 LT AA+sf Upgrade AAsf
C XS2344756734 LT A+sf Upgrade Asf
D XS2344756817 LT BBB+sf Upgrade BBBsf
E XS2344757898 LT BB+sf Upgrade BBsf
F XS2344757971 LT Bsf Upgrade B-sf
Transaction Summary
Penta CLO 9 DAC is a securitisation of mainly senior secured loans
(at least 90%) with a component of senior unsecured, mezzanine, and
second-lien loans. The portfolio is actively managed by Partners
Group (UK) Management Ltd. The transaction will exit its
reinvestment period in July 2026.
KEY RATING DRIVERS
Performance Better Than Expected Case: Since Fitch's last rating
action in October 2023, the portfolio's performance has been
stable. Based on the last trustee report dated 31 July 2024, the
transaction was passing all its tests. The transaction was 0.1%
below par and has no defaulted assets. Exposure to assets with a
Fitch-derived rating of 'CCC+' and below is 4%, versus a limit of
7.5% and the portfolio's total par loss remains below its
rating-case assumptions. This is reflected in the upgrades of the
notes.
Manageable Refinancing Risk: The transaction has manageable near-
and medium-term refinancing risk, with 1% of portfolio assets
maturing in 2025 and another 6% in 2026, as calculated by Fitch.
'B'/'B-' Portfolio: Fitch assesses the average credit quality of
the transaction's underlying obligors at 'B'/'B-'. The weighted
average rating factor of the current portfolio, as calculated by
Fitch under its latest criteria, is 25.3.
High Recovery Expectations: Senior secured obligations comprise
100% of the portfolio. Fitch views the recovery prospects for these
assets as more favourable than for second-lien, unsecured and
mezzanine assets. The Fitch-calculated weighted average recovery
rate of the current portfolio is 62.3%.
Diversified Portfolio: The portfolio is well-diversified across
obligors, countries and industries. The top 10 obligor
concentration, as calculated by Fitch, is 11.1%, and no obligor
represents more than 1.5% of the portfolio balance. Exposure to the
three-largest Fitch-defined industries is 31.6% as calculated by
the trustee. Unhedged fixed-rate assets as reported by the trustee
are 0.7% of the portfolio balance, versus a limit of 5%.
Transaction Inside Reinvestment Period: Given the manager's ability
to reinvest, Fitch's analysis is based on a stressed portfolio
using the agency's collateral quality matrix specified in the
transaction documentation. Fitch used the matrix with limits of the
top 10 obligors at 15%, the largest Fitch-defined industry at 17.5%
and the three-largest Fitch-defined industries at 40%.
Cash Flow Analysis: Fitch used a customised proprietary cash flow
model to replicate the principal and interest waterfalls and the
various structural features of the transaction, and to assess their
effectiveness, including the structural protection provided by
excess spread diverted through the par-value and interest-coverage
tests.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
Based on the current portfolio, downgrades may occur if the loss
expectation is larger than initially assumed, due to unexpectedly
high levels of default and portfolio deterioration.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
Upgrades may result from stable portfolio credit quality and
deleveraging, leading to higher credit enhancement and excess
spread available to cover losses in the remaining portfolio.
USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10
Form ABS Due Diligence-15E was not provided to, or reviewed by,
Fitch in relation to this rating action.
DATA ADEQUACY
Penta CLO 9 DAC
Fitch has checked the consistency and plausibility of the
information it has received about the performance of the asset pool
and the transaction. Fitch has not reviewed the results of any
third party assessment of the asset portfolio information or
conducted a review of origination files as part of its ongoing
monitoring.
The majority of the underlying assets or risk presenting entities
have ratings or credit opinions from Fitch and/or other Nationally
Recognized Statistical Rating Organizations and/or European
Securities and Markets Authority registered rating agencies. Fitch
has relied on the practices of the relevant groups within Fitch
and/or other rating agencies to assess the asset portfolio
information or information on the risk presenting entities.
Overall, and together with any assumptions referred to above,
Fitch's assessment of the information relied upon for the agency's
rating analysis according to its applicable rating methodologies
indicates that it is adequately reliable.
ESG CONSIDERATIONS
Fitch does not provide ESG relevance scores for Penta CLO 9 DAC. In
cases where Fitch does not provide ESG relevance scores in
connection with the credit rating of a transaction, programme,
instrument or issuer, Fitch will disclose in the key rating drivers
any ESG factor which has a significant impact on the rating on an
individual basis.
PRE 20 LOAN: Fitch Assigns 'BB-sf' Final Rating to Class D Notes
----------------------------------------------------------------
Fitch Ratings has assigned RRE 20 Loan Management DAC final
ratings, as detailed below.
Entity/Debt Rating Prior
----------- ------ -----
RRE 20 Loan
Management DAC
A-1 XS2854984908 LT AAAsf New Rating AAA(EXP)sf
A-2A XS2854985202 LT NRsf New Rating NR(EXP)sf
A-2B XS2854985541 LT NRsf New Rating NR(EXP)sf
B XS2854986275 LT NRsf New Rating NR(EXP)sf
C-1 XS2854986515 LT NRsf New Rating NR(EXP)sf
C-2 XS2854986861 LT NRsf New Rating NR(EXP)sf
D XS2854987596 LT BB-sf New Rating BB-(EXP)sf
Performance Notes
XS2854988214 LT NRsf New Rating NR(EXP)sf
Preferred Return
Notes XS2854989451 LT NRsf New Rating NR(EXP)sf
Subordinated
XS2854987919 LT NRsf New Rating NR(EXP)sf
The class A-2A, A-2B, B, C-1 and C-2 notes are not rated and their
model-implied ratings (MIRs) are 'A+sf', 'A+sf', 'BBB+sf', 'BB+sf'
and 'BB+sf', respectively.
Transaction Summary
RRE 20 Loan Management DAC is a securitisation of mainly senior
secured obligations with a component of senior unsecured,
mezzanine, second-lien loans and high-yield bonds. Note proceeds
were used to purchase a portfolio with a target par of EUR400
million. The portfolio is actively managed by Redding Ridge Asset
Management (UK) LLP. The collateralised loan obligation (CLO) has a
4.6 reinvestment period and an 8.5-year weighted average life (WAL)
test.
KEY RATING DRIVERS
Average Portfolio Credit Quality (Neutral): Fitch assesses the
average credit quality of obligors at 'B'/ 'B-'. The Fitch weighted
average rating factor (WARF) of the identified portfolio is 24.6.
High Recovery Expectations (Positive): At least 96% of the
portfolio comprise senior secured obligations. Fitch views the
recovery prospects for these assets as more favourable than for
second-lien, unsecured and mezzanine assets. The Fitch weighted
average recovery rate (WARR) of the identified portfolio is 62.9%.
Diversified Asset Portfolio (Positive): The transaction includes
various concentration limits in the portfolio, including a top-10
obligor concentration limit of 20% and a maximum exposure to the
three largest Fitch-defined industries in the portfolio of 40%.
These covenants ensure the asset portfolio will not be exposed to
excessive concentration.
Portfolio Management (Neutral): The transaction has a roughly
4.6-year reinvestment period and reinvestment criteria similar to
those of other European transactions. Fitch's analysis is based on
a stressed-case portfolio with the aim of testing the robustness of
the transaction structure against its covenants and portfolio
guidelines.
The transaction includes four Fitch matrices. One is effective at
closing, corresponding to an 8.5-year WAL; one is effective one
year after closing, corresponding to a 7.5-year WAL with a
collateral principal amount (defaulted obligations at
Fitch-calculated collateral value) condition of EUR400 million; and
two are effective 1.5 years after closing, corresponding to a
seven-year WAL with a collateral principal amount (defaulted
obligations at Fitch-calculated collateral value) condition of
EUR400 million and EUR398 million, respectively. All matrices are
based on a top-10 obligor concentration limit of 20% and a
fixed-rate asset limit of 10%.
Cash Flow Modelling (Positive): The WAL used for the transaction's
stressed-case portfolio and matrices analysis is 12 months less
than the WAL covenant to account for structural and reinvestment
conditions after the reinvestment period, including the
satisfaction of the over-collateralisation test and Fitch 'CCC'
limit, together with a consistently decreasing WAL covenant. These
conditions would in Fitch's opinion reduce the effective risk
horizon of the portfolio during stress periods.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
A 25% increase of the mean default rate (RDR) across all ratings
and a 25% decrease of the recovery rate (RRR) across all ratings of
the identified portfolio would have no rating impact on the class
A-1 notes and would lead to a downgrade of no more than one notch
for the D notes.
Based on the identified portfolio, downgrades may occur if the loss
expectation is larger than initially assumed, due to unexpectedly
high levels of defaults and portfolio deterioration. Due to the
better metrics and shorter life of the identified portfolio than
the Fitch-stressed portfolio, the class D notes display a rating
cushion of two notches.
Should the cushion between the identified portfolio and the
Fitch-stressed portfolio be eroded either due to manager trading or
negative portfolio credit migration, a 25% increase of the mean RDR
across all ratings and a 25% decrease of the RRR across all ratings
of the Fitch-stressed portfolio would lead to downgrades of four
notches for the class A-1 notes and to below 'B-sf' for the class D
notes.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
A 25% reduction of the mean RDR across all ratings and a 25%
increase in the RRR across all ratings of the Fitch-stressed
portfolio would lead to an upgrade of two notches for the class D
notes.
During the reinvestment period, upgrades, based on the
Fitch-stressed portfolio, except for the 'AAAsf' notes, may occur
on better-than-expected portfolio credit quality and a shorter
remaining WAL test, allowing the notes to withstand
larger-than-expected losses for the remaining life of the
transaction. After the end of the reinvestment period, upgrades,
except for the 'AAAsf' notes, may result from stable portfolio
credit quality and deleveraging, leading to higher credit
enhancement and excess spread available to cover losses in the
remaining portfolio.
USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10
Form ABS Due Diligence-15E was not provided to, or reviewed by,
Fitch in relation to this rating action.
ESG CONSIDERATIONS
Fitch does not provide ESG relevance scores for RRE 20 Loan
Management DAC. In cases where Fitch does not provide ESG relevance
scores in connection with the credit rating of a transaction,
programme, instrument or issuer, Fitch will disclose in the key
rating drivers any ESG factor which has a significant impact on the
rating on an individual basis.
DATA ADEQUACY
The majority of the underlying assets or risk-presenting entities
have ratings or credit opinions from Fitch and/or other nationally
recognised statistical rating organisations and/or European
securities and markets authority-registered rating agencies. Fitch
has relied on the practices of the relevant groups within Fitch
and/or other rating agencies to assess the asset portfolio
information or information on the risk-presenting entities.
Overall, and together with any assumptions referred to above,
Fitch's assessment of the information relied upon for the agency's
rating analysis according to its applicable rating methodologies
indicates that it is adequately reliable.
RIVER GREEN 2020: Moody's Cuts Rating on EUR23.6MM C Notes to Ba3
-----------------------------------------------------------------
Moody's Ratings has downgraded the ratings of all four classes of
notes issued by River Green Finance 2020 DAC:
EUR103.5M (Current outstanding amount EUR95,320,127) Class A
Notes, Downgraded to A1 (sf); previously on Apr 11, 2024 Downgraded
to Aa2 (sf)
EUR25.2M (Current outstanding amount EUR24,255,000) Class B Notes,
Downgraded to Baa3 (sf); previously on Apr 11, 2024 Downgraded to
Baa1 (sf)
EUR23.6M (Current outstanding amount EUR22,715,000) Class C Notes,
Downgraded to Ba3 (sf); previously on Apr 11, 2024 Downgraded to
Ba1 (sf)
EUR34.09M (Current outstanding amount EUR32,811,625) Class D
Notes, Downgraded to B3 (sf); previously on Apr 11, 2024 Downgraded
to B1 (sf)
Moody's do not rate the Class X1 and X2 notes.
RATINGS RATIONALE
The rating actions reflect an increase in the expected loss of the
underlying loan due to the elevated refinancing risk. In addition,
the credit strength of the anchor tenant remains weak as it works
through its financial restructuring with its creditors. There
remains the risk that the borrower could agree to a lease
restructure with the tenant that could result in a lower rental
income received from Atos and/or an increased vacancy, in turn,
resulting in a lower market value for the property.
Moody's loan to value ratio (LTV) on the securitised loan is 93.3%
based on Moody's vacant possession value and 65.3% based on Moody's
value assuming current tenancy.
Whilst the loan was structured at closing with two extension
options, as per the Notice of Default and Special Servicing
Transfer Event [1] the borrower and the servicer were jointly of
the view that a consensual long-term restructuring of the loan was
warranted and agreed that the second extension option under the
loan agreement would not be exercised. The loan was not repaid on
the due date on January 15, 2024 and subsequently defaulted and was
transferred to special servicing on January 16, 2024.
The special servicer entered into a 3-month standstill agreement
with the borrower. In April and July 2024, the special servicer
extended the standstill period each time by 3 months [2].
According to the August 7, 2024 notice [3], following the loan
restructuring, on August 6, 2024 the loan modifications and waivers
took effect. Notably, the loan maturity was extended to April 2026
with the option of a further extension to April 2027. To extend the
maturity, certain criteria will need to be met including no Loan
Default and LTV breach continuing, and the borrower entering into
an interest rate hedging agreements.
The loan restructure also required the borrower to deposit an
amount of EUR10 million into an account that can be withdrawn for
value accretive asset management initiatives or towards the
prepayment or repayment of the loans. In addition, the Debt Yield
covenant was permanently waived, while the LTV covenant has been
waived until April 2026. The requirement for entering hedging
agreements does not set any specific strike rate or coverage rule.
Following the modifications, the loan remains in Special Servicing
and until its April 2026 and 2027 maturities will remain in full
cash sweep, meaning that all available net surplus cash will be
used to amortise the loan and subsequently the notes. As there is
no more scheduled amortization, the amount available to amortise
will depend on the available funds after costs and the strike rate
under the hedging agreement. The notes will continue to be paid
sequentially.
The loan is secured on a single large office building (River Ouest)
located in Bezons, Greater Paris, sitting on the banks of the River
Seine, just north of La Défense.
According to the July 2024 Quarterly Investor Report [4], the
property is 96.6% occupied by two tenants following Sophos lease
expiry in June 2024. The largest tenant, Atos SE ("Atos"), pays
approximately 84.7% of total rent and its lease runs until July 31,
2030. The lease of the second tenant, EMC2, is set to expire in
December 2024. The Quarterly Investor Report [4] shows the rent
collection rate was 100% and the loan remains in compliance with
its Debt Yield and Loan to Value covenants. However, Atos has
recently agreed to a financial restructuring with its creditors,
while it appears to be trying to sub-let at least some of its
rented space at River Ouest.
According to a Atos' August 1, 2024 announcement [5], the relevant
Court has opened the accelerated safeguard proceedings to implement
Atos pre-arranged financial restructuring plan. As part of the
restructuring plan, debt will be reduced by around EUR3.1 billion,
no debt will be maturing before year-end 2029 and it will receive
c. EUR1.8 billion of new funding.
Moody's rating action reflects a base expected loss in the range of
0%-10% of the current balance. Moody's derive this loss expectation
from the analysis of the default probability of the securitised
loan (both during the term and at maturity) and its value
assessment of the collateral.
Moody's note that the transaction benefits from an amortising
liquidity facility provided by Credit Agricole Corporate and
Investment Bank (Aa3/ P-1) and currently sized at EUR10.6 million
(down from EUR11.3 million at closing). It is generally available
to cover senior expenses and note interest shortfalls on the Class
A, B and C notes (and Issuer Loan). It is not available for the
Class D notes.
Methodology Underlying the Rating Action:
The principal methodology used in these ratings was "Moody's
Approach to Rating EMEA CMBS Transactions" published in May 2021.
Factors that would lead to an upgrade or downgrade of the ratings:
An upgrade to currently assigned ratings is unlikely at this time.
Main factors or circumstances that could lead to a downgrade of the
ratings are (i) a decrease in the occupancy or achievable rental
levels of the property leading to a lower property value
assessment, (ii) an increase in the likelihood of enforcement
actions or (iii) a higher default risk assessment of the tenants.
=========
I T A L Y
=========
EMERALD ITALY 2019: DBRS Cuts Class D Notes Rating to C
-------------------------------------------------------
DBRS Ratings GmbH downgraded its credit ratings on the commercial
mortgage-backed floating-rate notes due September 2030 issued by
Emerald Italy 2019 SRL (the Issuer) as follows:
-- Class A notes to BB (high) (sf) from BBB (low) (sf)
-- Class B notes to B (low) (sf) from BB (low) (sf)
-- Class C notes to CC (sf) from CCC (sf)
-- Class D notes to C (sf) from CC (sf)
The trends on the Class A and Class B notes remain Negative. There
are no trends applicable to the Class C and Class D notes.
CREDIT RATING RATIONALE
The downgrade is driven by the distressed performance of the
underlying collateral, coupled with a lack of improvement in the
forecast net rental income in the sponsor's business plan for the
next three years. Illiquidity persists in the Italian secondary
retail market and the transaction's refinancing risk remains high,
notwithstanding the three-year maturity extension to the loan and
the notes consented via an extraordinary resolution approved by the
noteholders on July 23, 2024.
The transaction is a securitization of a EUR 105.8 million Italian
commercial real estate loan advanced to Investire Societa Di
Gestione Del Risparmio S.p.A., acting on behalf of an Italian real
estate alternative closed-end fund (fondo comune di investimento
immobiliare alternativo di tipo chiuso riservato) named Everest,
which is ultimately owned by Kildare Partners. The loan comprised a
EUR 100.4 million term facility and a EUR 5.4 million capital
expenditure (capex) facility, arranged by J.P. Morgan Securities
plc (JPM) and advanced by J.P. Morgan Chase Bank, N.A., Milan
branch. The loan is amortizing at the rate of 1.5% per annum
(p.a.), along with an additional deferable 1.0% p.a. deleverage and
bears a three-month Euribor variable rate over a 4.05% p.a. margin.
The loan is secured by a portfolio of two retail malls and one
shopping center located in the Lombardy region of Northern Italy.
The loan was originated in July 2019, and it was transferred to
special servicing in June 2020 following an uncured payment
default. The noteholders, through an extraordinary resolution on 10
November 2021, approved the Issuer's entry into an agreement
standstill on any enforcement action until the loan termination in
September 2022, when the sequential payment was triggered as
extension conditions, including appropriate in-place hedging, were
not satisfied. Subsequently, the special servicer agreed to a
standstill period with the borrower until 15 September 2023, during
which the key terms of the loan continued to apply, with default
interest of 2.0% accruing since the September 2022 interest payment
date (IPD) on all overdue amounts. On the June 2023 IPD, the
calculation agent determined that the loan default interest amounts
distributed as pro rata default interest to Class A through Class D
noteholders should have been used for sequential principal
redemption of the notes. Therefore, certain adjustments were made
to the distribution of interest available funds on the September
2023 IPD, which led to the redistribution of interest deferrals and
a decrease in the Class A principal balance. The loan is currently
under a standstill agreement terminating on 15 September 2024.
As of the June 2024 IPD, the outstanding loan amount is EUR 94.8
million. Available funds after Issuer expenses were sufficient to
cover interest payments on the Class A to Class C notes and partial
interest payments on the Class D notes. Pending deferred interest
on Class D stands at EUR 906,703, of which EUR 45,337 has been
allocated to the retention tranche D of the Class R notes whereas
the Class R notes represent the 5.0% unrated vertical interest
retained by JPM in the transaction. Also, the Class D notes carry
forward EUR 95,527 deferred pro rata default interest amount, of
which EUR 4,777 represents the portion on the retention tranche D
of the Class R notes.
At closing, the collateral backing the loan was valued by Cushman &
Wakefield Debenham Tie Leung Limited (C&W) at EUR 161.4 million as
of October 31, 2021, resulting in a loan-to-value (LTV) of 65.5%.
The transaction has suffered a substantial deterioration in the
collateral value since. The LTV increased to 70.8% based on the EUR
134.0 million valuation prepared by Jones Lang LaSalle IP, Inc
(JLL) on 30 June 2022. The latest available valuation report by
Savills Advisory Services Limited (Savills) provided a market value
of EUR 78,910,000 as of April 27, 2023, equivalent to a decrease of
51.1% on the C&W valuation at issuance and an increase in LTV to
120.2%.
The value decline is driven by lower rental values of the
properties that have experienced a decrease in footfall following
the coronavirus pandemic and competition from new supply, as well
as widening of yields due to higher reference rate and shortage of
liquidity in the retail sector.
Based on the latest valuation, a Valuation Reduction Amount equal
to EUR 24,425,621 has been determined and a Control Valuation Event
has occurred with respect to the Class D notes on the June 2023
IPD. As such, the Class C noteholders became the controlling class
and appointed an Operating Advisor via an ordinary resolution on 7
July 2023.
As of the June 2024 IPD, the contracted rent decreased to EUR 10.8
million from EUR 11.7 million at the last review conducted by
Morningstar DBRS in September 2023. Vacancy increased to 17.1% in
June 2024 from 13.0% in September 2023. Net rental income decreased
to EUR 9.2 from EUR 9.8 million during this period.
Arrears as of June 2024 were EUR 1.95 million, including
receivables worth EUR 1.28 million that are 90 days past due. This
level of arrears has remained stable over the past couple of years
and has been accounted for as bad debts in the last revaluation,
with a provision ranging from 1.5% to 2.0% of the passing rent. In
addition, the valuer reported that the properties were overrented
and tenant incentives have been compounded for circa 10% of the
gross rental income on new leases. Forecast cash flows were
published in a regulatory news service (RNS) notice dated July 24,
2024 and reflected a lack of improvement in the projected net
operating income for the 2024 to 2027 period. In the absence of
hedging, increased reference rate and default interest continue to
further aggravate the transaction's cash flow position.
The loan's covenants are based on the debt service coverage ratio
(DSCR), LTV, and debt yield (DY) derived from the ERV. The cash
trap covenants are set at 1.55 times (x) the DSCR, 70% LTV for
years one to two and 67.5% LTV thereafter, and 11.3% ERV DY, while
the default covenants are set at 1.38x the DSCR, 75.0% LTV, and
10.7% ERV DY. The loan is in cash trap since March 2020 with a
breach of the DSCR covenant ratio. A Class X diversion trigger
event has occurred and is ongoing. As of June 2024 IPD, the Class X
diversion ledger reports a credit of EUR 66,043, of which EUR 3,302
pertains to the retention tranche X of the Class R notes.
On July 23, 2024 the noteholders approved via an extraordinary
resolution the extension of the final loan maturity to 15 September
2027 from September 2024 and extension of the notes' maturity date
to September 24, 2033, from September 24, 2030. The business plan
comprises a sales plan with marketing of the three properties
starting in 18 months (i.e., January 2026). The restructuring
provides for the unitholder parent of the borrower, Ticino
Acquisitions Sarl, to grant 10% profit share of the proceeds
(Contingent Value Rights) to the noteholders otherwise payable to
the sponsor following the repayment of the loan. This will be
allocated as final items in the pre and post enforcement
waterfall.
The restructuring includes waivers of default interest, scheduled
amortization, hedging provision, and financial covenants, starting
from the effective date, i.e., September 16, 2024. This would
potentially improve the cash flow position to the benefit of the
capex program and lease regearing, especially if the reference rate
moves downwards. The loan margin capped at the current level of
4.05% will comprise two components named base and additional,
whereas the latter represents the portion of the loan interest not
applied to cover the Issuer's senior expenses and timely interest
payments on the Class A and Class B notes and will be deferred
until the earlier of the liquidation of the assets, or the final
loan maturity date. The loan will remain in special servicing and
principal repayment remains sequential. Outstanding interest
deferrals, including accrued pro rata default interest will be
crystalized, together with any potential Euribor excess amount.
Following the redemption of the notes, deferrals will be paid as
residual amounts.
The restructuring includes the principal amount of the Class X
notes (and the related Retention Tranches) to be redeemed. The
balance of the Class X account stands at EUR 1,053 as of the June
2024 IPD. Any amounts owing to the Class X notes and the related
Retention Tranche will be cancelled and any amounts in any Class X
diversion ledger will be applied as Interest Available Funds.
The loan seller also provided a liquidity facility of EUR 3.5
million (EUR 5.3 million at issuance) to the Issuer to cover any
potential interest payment shortfalls on the Class A and Class B
notes, including the corresponding retention tranches. According to
Morningstar DBRS' analysis, the current commitment amount is
equivalent to approximately nine months of interest payment
shortfalls based on the 5% Euribor cap and the relevant margins for
the Class A and Class B notes. Morningstar DBRS reference rate
stress of 5.4%. exceeds the Euribor cap.
At origination, the Class D notes were subject to an available
funds cap where the shortfall was attributable to interest due on
the securitized loan not sufficient to pay senior costs and
interest due on the notes. However, the cap will be removed after
the restructuring effective date.
Morningstar DBRS updated its Net Cash Flow (NCF) assumptions and
updated its cap rate assumption to 12%, from 11% at the September
2023 annual review and 9.5% at cut off. The Morningstar DBRS NCF
declined to EUR 6.8 million from EUR 7.5 million at the last annual
review in September 2023 mostly due to the decline in the
contracted rent and increase in the vacancy rate. Morningstar DBRS
value results in EUR 56.8 million, which translates to a haircut of
28.1% to the latest available valuation dated April 2023.
From the date the restructuring enters into force, the legal final
maturity of the notes is extended to September 2033, from September
2030. The tail period is reduced to six years, from seven years at
inception.
Morningstar DBRS' credit ratings on the Class A to Class D of the
commercial mortgage-backed floating-rate notes issued by Emerald
Italy 2019 SRL address the credit risk associated with the
identified financial obligations in accordance with the relevant
transaction documents. Where applicable, a description of these
financial obligations can be found in the transactions' respective
press releases at issuance.
Notes: All figures are in euros unless otherwise noted.
===================
L U X E M B O U R G
===================
TRINSEO MATERIALS: $750MM Bank Debt Trades at 20% Discount
----------------------------------------------------------
Participations in a syndicated loan under which Trinseo Materials
Operating SCA is a borrower were trading in the secondary market
around 79.8 cents-on-the-dollar during the week ended Friday, Aug.
23, 2024, according to Bloomberg's Evaluated Pricing service data.
The $750 million Term loan facility is scheduled to mature on May
3, 2028. About $725.4 million of the loan is withdrawn and
outstanding.
Based in Luxembourg, Trinseo is a specialty material solutions
provider.
=====================
N E T H E R L A N D S
=====================
DUTCH PROPERTY 2022-CMBS1: S&P Raises F Notes Rating to 'B+ (sf)'
-----------------------------------------------------------------
S&P Global Ratings raised its credit ratings on Dutch Property
Finance 2022-CMBS1 B.V.'s class C notes to 'AAA (sf)' from 'AA
(sf)', class D notes to 'AA (sf)' from 'A (sf)', class E notes to
'A (sf)' from 'BBB (sf)', and class F notes to 'B+ (sf)' from 'B
(sf)'. At the same time, S&P affirmed its 'AAA (sf)' rating on the
class B notes.
Rating rationale
The rating actions follow S&P's review of the transaction's five
key rating factors (credit quality of the securitized assets, legal
and regulatory risks, operational and administrative risks,
counterparty risks, and payment structure and cash flow
mechanisms). Since closing, the issuer has received approximately
EUR7.0 million in scheduled amortization and EUR170.6 million in
prepayments, together accounting for 76.6% of the initial principal
balance.
The transaction pays sequential from the outset. Therefore, the
repayments have increased credit enhancement for all classes except
the most junior class. The class A notes fully repaid on the April
2024 interest payment date (IPD).
None of the remaining loans are delinquent or in default.
Transaction overview
At closing, Dutch Property Finance 2022-CMBS1 used the issuance
amount to purchase a portfolio of 65 commercial mortgage loans and
to fund a committed liquidity reserve account. The collateral pool
consists of granular Dutch assets. The portfolio is split up into
risk/obligor groups, of which there were originally 19, and eight
remain.
The issuer benefits from each of the mortgage loans' security
package, which typically includes first ranking charge over the
property (all loans are first lien), any underlying leases, rental
income and associated claims, as well as parent companies
guarantees in some cases.
Portfolio performance
Per the investor report (as of the April 2024 IPD):
-- The pool has an average loan size of EUR2,723,650.
-- 16.3% of the loans are interest-only mortgage loans.
-- Current weighted-average loan to value (LTV) is 48.7%.
-- The weighted-average current interest rate is 4.1%.
-- The number of loans decreased to 20 from 49 at the previous
review (65 at closing).
-- The number of properties decreased to 65 from 258 at the
previous review (331 at closing).
-- The number of obligor groups decreased to eight from 17 at the
previous review (19 at closing).
Of the remaining 17 obligor groups as per the last review, S&P
found that nine have repaid in full and the remaining eight have
amortized partially, either from scheduled amortization or from
prepayments.
The total property value of the underlying assets has declined at a
similar rate to the debt. The pool's weighted-average LTV is now
48.7%, versus 48.8% at the previous review. Given that very few of
the remaining properties have reported an updated valuation since
closing, most of the valuations are out of date.
As of the April 2024 report, none of the loans report any arrears
or are in default. The remaining loans' weighted-average remaining
term has decreased to 3.7 years from 4.9 years at the last review,
reflecting prepayments in the underlying pool. The weighted-average
seasoning has increased to 6.5 from 5.9 years, and the longest
maturity is in 2041.
Concentration has increased within the pool, however this does not
affect S&P's analysis given that it gives very little diversity
credit in its ratings.
Table 1
Loan concentration
AT PREVIOUS CURRENT
CLOSING (%) REVIEW (%) REVIEW (%)
Largest loan 10.8 12.2 20.9
Top 5 35.0 38.2 64.8
Credit evaluation
S&P said, "In our analysis, we evaluated the loans' underlying real
estate collateral in order to generate an "expected case" value.
This value constitutes the S&P Global Ratings value that we
determine for each property--or portfolio of properties--securing a
loan (or multiple loans) in a securitization. It primarily results
from a calculation that considers each property's net adjusted cash
flows and an applicable capitalization (cap) rate.
"We determined the loans' underlying value, focusing on sustainable
property cash flows and cap rates. We assumed that a real estate
workout would be required throughout the tail period (the period
between the maturity date of the latest maturing loan and the
transaction's final maturity date) needed to repay noteholders, if
the respective borrowers defaulted."
Table 2
Loan and collateral summary
AT PREVIOUS
CURRENT REVIEW AT CLOSING
S&P Global Ratings NCF (EUR mil.) 5.8 20.3 28.4
S&P Global Ratings value (EUR mil.) 72.3 210.2 332.1
S&P Global Ratings blended cap rate (%)8.05 8.20 8.13
Haircut to reported market value (%) -37.3 -34.5 -33.8
Class F S&P Global Ratings LTV
before recovery rate adjustments (%) 77.6 72.0 75.5
NCF--Net cash flow.
LTV--Loan to value.
On a like-for-like basis, S&P's value is more or less unchanged.
S&P said, "Our property-level cash flow analysis derives what we
believe to be a property's long-term sustainable net cash flow
(NCF). In our analysis, we considered provided rental levels and
operational statements, third-party appraisal reports, relevant
market data, and assessments of the various properties' competitive
positions.
"The servicer does not report NCF but only gross rental income. Our
pool-wide estimated NCF is 71% lower than at last review while our
combined S&P Global Ratings LTV is 78%. The debt has reduced by 60%
since last review."
Other analytical considerations
S&P said, "Our rating analysis includes an analysis of the
transaction's payment structure and cash flow mechanics. We assess
whether the cash flow from the securitized assets would be
sufficient, at the applicable rating levels, to make timely
payments of interest and ultimate repayment of principal by the
legal maturity date for each class of notes, after taking into
account available credit enhancement and allowing for transaction
expenses and external liquidity support.
"The transaction maintains a EUR1.0 million liquidity reserve. The
reserve amortizes in line with the combined class A to D notes
balance. We have therefore deducted the outstanding liquidity
reserve amount from the reported class B note balance, given that
the class A notes have been repaid in full.
"We also analyzed the transaction's counterparty exposure. The
maximum rating that the counterparties can support in this
transaction under our current counterparty criteria is 'AAA (sf)'.
"Our analysis also included a full review of the legal and
regulatory risks and operational and administrative risks. Our
assessment of these risks remains unchanged since our last review
and is commensurate with the ratings assigned."
Rating actions
S&P said, "Our ratings in this transaction address the timely
payment of interest on the class A to D notes, payable quarterly in
arrears, and the payment of interest on the class E and F notes
together with the payment of principal on all tranches no later
than the legal final maturity date.
"Per the transaction documents, interest on the notes can be
deferred if the issuer does not have sufficient income, except for
the then most senior class (currently class B). However, our
ratings address timely payment of interest and do not address the
deferral mechanism for the class B to D notes. We have analyzed the
issuer-level cash flows in line with our CMBS criteria and guidance
and found that both the class B and class C notes would receive
interest in full and not defer, even in the most stressful
environment."
The issuer has applied substantial amortization and prepayments in
the transaction since closing, representing approximately 76.6% of
the original securitized loan balance to the class A notes fully
and the class B notes partially, thereby increasing credit
enhancement for all rated notes, except the class F notes.
Therefore, the relative credit risk for these classes has improved,
which S&P reflected in its updated ratings.
S&P said, "The class B and C notes' credit enhancement is now
higher than that of the class A notes at the last review. At the
same time, our opinion on the underlying properties'
creditworthiness has remained almost unchanged on a like-for-like
basis. For the class F notes, our model suggested a higher rating.
However, we adjusted the rating on this tranche down by one notch
in line with our European CMBS criteria. There is a risk that, if
the cash reserve is used, the loan balance at the maturity date
will be less than the aggregate note balance, because principal
receipts may be used to make interest payments."
FLAMINGO GROUP: EUR236.5MM Bank Debt Trades at 16% Discount
-----------------------------------------------------------
Participations in a syndicated loan under which Flamingo Group
International Ltd is a borrower were trading in the secondary
market around 84.1 cents-on-the-dollar during the week ended
Friday, Aug. 23, 2024, according to Bloomberg's Evaluated Pricing
service data.
The EUR236.5 million Term loan facility is scheduled to mature on
August 1, 2028. The amount is fully drawn and outstanding.
Flamingo Group International Limited is a business combination
created in February 2018 between Flamingo Horticulture Ltd
(Flamingo UK), a supplier of cut flowers and premium vegetables to
the UK premium and value retailers, and Afriflora, a supplier of
sweetheart roses to major European retailers such as Lidl, Aldi and
Edeka. The company runs farming operations primarily in Kenya and
Ethiopia. Flamingo is owned by private equity funds managed and
advised by Sun Capital Partners, Inc. and its affiliates. The
Company's country of domicile is the Netherlands.
LOPAREX MIDCO: $103.9MM Bank Debt Trades at 36% Discount
--------------------------------------------------------
Participations in a syndicated loan under which Loparex Midco BV is
a borrower were trading in the secondary market around 63.9
cents-on-the-dollar during the week ended Friday, Aug. 23, 2024,
according to Bloomberg's Evaluated Pricing service data.
The $103.9 million Term loan facility is scheduled to mature on
February 1, 2027. The amount is fully drawn and outstanding.
Loparex is a provider of release liners. Based in the Netherlands,
Loparex Midco B.V. operates as a financial holding company
incorporated in 2019. The majority of the Company's end market
sales come from graphic arts, tapes, industrial, and medical.
Labelstock, hygiene, and composites accounts for a smaller portion
of end market sales.
===============
P O R T U G A L
===============
TAGUS: DBRS Confirms B Rating on Class E Notes
----------------------------------------------
DBRS Ratings GmbH (Morningstar DBRS) confirmed its credit ratings
on the notes (collectively, the rated notes) issued by Tagus -
Sociedade de Titularizacao de Creditos, S.A., Viriato Finance No. 1
(the Issuer):
-- Class A notes at AA (low) (sf)
-- Class B notes at A (high) (sf)
-- Class C notes at BBB (high) (sf)
-- Class D notes at BB (high) (sf)
-- Class E notes at B (sf)
The credit rating on the Class A notes addresses the timely payment
of scheduled interest and the ultimate repayment of principal by
the legal final maturity date in October 2040. The credit ratings
on the Class B, Class C, Class D, and Class E notes address the
ultimate payment of interest while junior to other outstanding
classes of notes but the timely payment of scheduled interest when
they are the senior-most tranche, and the ultimate repayment of
principal by the final maturity date.
CREDIT RATING RATIONALE
The confirmations follow an annual review of the transaction and
are based on the following analytical considerations:
-- Portfolio performance, in terms of delinquencies, defaults, and
losses, as of the June 2024 payment date;
-- Probability of default (PD), loss given default (LGD), and
expected loss assumptions on the remaining receivables; and
-- Current available credit enhancement to the rated notes to
cover the expected losses at their respective credit rating
levels.
The transaction is a securitization of Portuguese unsecured
consumer loan receivables originated by WiZink Bank S.A.U.,
Portuguese Branch. The transaction closed in September 2021 and
included an initial 12-month revolving period, which ended on the
September 2022 payment date, when the rated notes started to
amortize on a pro rata basis. As of the June 2024 payment date, the
EUR 78.1 million portfolio (excluding defaulted receivables)
consisted of fixed-rate unsecured amortizing personal loan
receivables granted without a specific purpose for existing credit
card customers (credito adicional) and further advances (top-up) to
private individuals domiciled in Portugal.
PORTFOLIO PERFORMANCE
As of the June 2024 payment date, loans that were one to two months
and two to three months delinquent represented 1.2% and 0.8% of the
portfolio balance, respectively, while loans more than three months
delinquent represented 1.8%. Gross cumulative defaults were 6.4% of
the original portfolio balance, with cumulative recoveries of 44.9%
to date.
PORTFOLIO ASSUMPTIONS AND KEY DRIVERS
Morningstar DBRS conducted a loan-by-loan analysis of the remaining
pool of receivables and maintained its base case PD and LGD
assumptions at 8.2% and 20.0%, respectively.
CREDIT ENHANCEMENT
The subordination of the junior obligations provides credit
enhancement to the rated notes. As of the June 2024 payment date,
credit enhancement to the Class A, Class B, Class C, Class D, and
Class E notes was 24.0%, 20.0%, 12.0%, 6.5%, and 3.5%,
respectively. The credit enhancement has remained stable because of
the pro rata amortization mechanism and will continue to remain
stable until a sequential redemption event occurs.
The cash reserve account is available to cover senior expenses and
interest shortfalls on the Class A, Class B, and Class C notes. The
cash reserve account was funded at closing with EUR 1.3 million and
its required balance is set at 1.0% of the outstanding Class A,
Class B, and Class C notes, subject to a EUR 0.7 million floor. The
cash reserve has always been at its target level and, as of the
June 2024 payment date, stood at EUR 0.7 million.
Elavon Financial Services DAC (Elavon) is the account bank provider
for the transaction. Based on the Morningstar DBRS' private credit
rating on Elavon and the downgrade provisions outlined in the
transaction documents, Morningstar DBRS considers the risk arising
from the exposure to the account bank to be consistent with the
credit ratings assigned to the rated notes, as described in
Morningstar DBRS' "Legal Criteria for European Structured Finance
Transactions" methodology.
BNP Paribas SA (BNP Paribas) is the swap counterparty for the
transaction. Morningstar DBRS' public credit rating on BNP Paribas
is consistent with the credit ratings assigned to the rated notes,
as described in Morningstar DBRS' "Derivative Criteria for European
Structured Finance Transactions" methodology.
Notes: All figures are in Euros unless otherwise noted.
===========
R U S S I A
===========
UZBEKISTAN: Fitch Affirms 'BB-' LongTerm IDR, Outlook Stable
------------------------------------------------------------
Fitch Ratings has affirmed Uzbekistan's Long-Term Foreign-Currency
Issuer Default Rating (IDR) at 'BB-' with a Stable Outlook.
Key Rating Drivers
Fundamental Rating Strengths and Weaknesses: The rating is
supported by Uzbekistan's relatively low public debt, sizeable
fiscal and external buffers, high trend GDP growth, and reform
progress to liberalise the economy. These factors are balanced by
low GDP per capita, weak but improving governance, high commodity
dependence and financial dollarisation, and a large and
uncompetitive, albeit declining, state presence in the economy.
Statistical Revisions to GDP Data: The official GDP series was
revised earlier this month to better capture informal economic
activity, with the 2023 level increasing by 11.8%. This
survey-based exercise was conducted jointly with the IMF, and
higher recorded construction and restaurant activity accounted for
the biggest revisions. Fitch understands the government does not
intend to weaken its planned fiscal adjustment, despite the
starting position for the 2023 fiscal deficit improving by 0.5% of
GDP due to the higher nominal GDP.
Fiscal Slippage: The consolidated fiscal deficit (including
extrabudgetary accounts, the Uzbekistan Fund for Reconstruction and
Development, and externally financed expenditure) widened 0.1% of
GDP yoy in 1H24, following a 2.5pp underperformance against target
in 2023. Fitch forecasts the fiscal balance improves in 2H24 with a
full-year deficit of 4.2% of GDP, from 4.9% in 2023, but 0.7pp
above target (excluding the recent GDP revision). Fitch projects
the deficit narrows to 3.4% of GDP in 2025, partly reflecting the
effect of energy tariff liberalisation in May 2024 offsetting a
further increase in debt interest costs, and to 3.0% in 2026, still
above the 'BB' median of 2.4%.
Low Public Debt: Fitch forecasts general government debt/GDP
(including external guarantees), which rose 2pp in 2023 to 32.5%,
to be broadly stable, ending 2026 at 32.1%, well below the 'BB'
median of 53.6%. Around 90% of public debt is foreign-currency
denominated, but external debt has a fairly long average maturity
of 9.2 years and 87% is concessional.
Central government deposits are sizeable, at 13.1% of GDP at
end-1H24, albeit down from 26.5% of GDP at end-2020 and Fitch
projects them to fall to 10% at end-2026. There has been progress
in strengthening public financial management including monitoring
of risks from public-private partnerships, where committed projects
rose to 20% of GDP at end-2023, and from non-guaranteed state-owned
enterprise debt (25.6% of GDP, including private external debt of
state-owned banks).
Favourable Trend Growth: GDP rose 6.4% in 1H24, helped by surging
investment and an 8.6% increase in real wages, and Fitch projects
full-year growth of 6.2% (6.3% in 2023). Fitch forecasts GDP growth
to moderate to 5.5% in 2026 as fiscal consolidation and cooling
investment offset support from lower inflation. This is close to
the trend rate, which is boosted by 2% annual population growth,
and above the 'BB' median of 3.5% in 2026. There is significant
economic dependence on Russia, which accounts for 13% of exports
and 21% of imports, compounded by last year's deal to commence
natural gas imports, but Uzbekistan continues to cooperate on
enforcement of Western sanctions.
Foreign-Exchange Reserve Buffer: The current account deficit (CAD)
widened in 2023 to a multi-year high of 7.7% of GDP, partly due to
one-off equipment investment and fiscal loosening. Fitch projects
the CAD narrows to 6.2% in 2024, helped by 32% growth in
remittances in 7M24, and to 4.7% in 2026. Fitch assumes net FDI
rises to 2.5% of GDP, reflecting a strong investment pipeline,
particularly in the energy sector. Fitch projects FX reserves to
decline to 7.8 months of current external payments in 2026, from
8.8 in 2023, still well above the 'BB' median of 4.5 months, and
the net external creditor position weakens 15pp in 2023-2026 to
3.6% of GDP.
Progress in Reform and Governance: There has been substantial
economic reform progress in recent years, including last year's
privatisation of Ipoteka Bank, and energy price hikes for firms in
October 2023 and for households in May 2024. Plans to privatise two
other large banks, Asaka and SQB, have advanced albeit more slowly
than envisaged. Uzbekistan's overall World Bank governance
percentile ranking has improved 9.6pp since 2020, and WTO accession
negotiations have accelerated. The share of state-subsidised policy
lending has fallen further to 12% of new lending in June, from 17%
at end-2023, but is still 28% of the stock, impairing monetary
policy transmission.
Relatively High Inflation: Inflation picked up to 10.5% in July,
from 8.1% in April, on energy price hikes, but core inflation has
trended down (2.6pp this year), and household inflation
expectations also fell from 13.6% at end-2023 to a still elevated
12%. Fitch forecasts inflation averages 9.5% in 2024, 8% in 2025
and 5.8% in 2026, above the Central Bank of Uzbekistan's (CBU) 5%
inflation target and the projected 'BB' median rate of 3.5% in
2026. CBU cut the policy rate in July for the first time since
March 2023, by 50bp to 13.5%, and Fitch anticipates further easing
consistent with a neutral real interest rate of around 3%.
Stable Banking Sector: The sector is moderately profitable, with a
return on equity of 11% in June 2024, has a solid Tier 1
capital/risk-weighted assets ratio of 13.9%, and fairly low
regulatory non-performing loan ratio of 4%, although Fitch
considers actual problem loans to be significantly higher (in
excess of 10% of sector loans at end-2023). A tightening of
macroprudential policy helped cool credit growth, to 18.5% in June,
from a peak of 27% in August 2023, which was driven by surging
household loans. The deposit dollarisation ratio has fallen by 9pp
since 2021 to 30% in June, still above the 'BB' median of 27%,
while loan dollarisation has reduced more gradually to 42.1%.
ESG - Governance: Uzbekistan has an ESG Relevance Score (RS) of '5'
for both Political Stability and Rights and for the Rule of Law,
Institutional and Regulatory Quality and Control of Corruption.
Theses scores reflect the high weight that the World Bank
Governance Indicators (WBGI) have in its proprietary Sovereign
Rating Model. Uzbekistan has a low WBGI ranking at the 28th
percentile, reflecting relatively weak rights for participation in
the political process, weak institutional capacity, uneven
application of the rule of law and a high level of corruption.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- External Finances: A marked worsening of external finances, for
example, via a large and sustained drop in remittances, or a
widening in the trade deficit, leading to a significant decline in
FX reserves.
- Public Finances: A marked rise in the government debt-to-GDP
ratio or an erosion of sovereign fiscal buffers, for example, due
to an extended period of low growth, loose fiscal stance, sharp
currency depreciation, or crystallisation of contingent
liabilities.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Macro: Consistent implementation of structural reforms that
promote macroeconomic stability, sustain strong GDP growth
prospects and support better fiscal outturns.
- Public Finances: Confidence in a durable fiscal consolidation
that enhances medium-term public debt sustainability.
- Structural: A marked and sustained improvement in governance
standards.
Sovereign Rating Model (SRM) and Qualitative Overlay (QO)
Fitch's proprietary SRM assigns Uzbekistan a score equivalent to a
rating of 'BB-' on the Long-Term Foreign-Currency (LT FC) IDR
scale.
Fitch's sovereign rating committee did not adjust the output from
the SRM to arrive at the final LT FC IDR.
Fitch's SRM is the agency's proprietary multiple regression rating
model that employs 18 variables based on three-year centred
averages, including one year of forecasts, to produce a score
equivalent to a LT FC IDR. Fitch's QO is a forward-looking
qualitative framework designed to allow for adjustment to the SRM
output to assign the final rating, reflecting factors within its
criteria that are not fully quantifiable and/or not fully reflected
in the SRM.
Country Ceiling
The Country Ceiling for Uzbekistan is 'BB-', in line with the LT FC
IDR. This reflects the absence of material constraints and
incentives, relative to the IDR, against capital or exchange
controls being imposed that would prevent or significantly impede
the private sector from converting local currency into foreign
currency and transferring the proceeds to non-resident creditors to
service debt payments.
Fitch's Country Ceiling Model produced a starting point uplift of 0
notches above the IDR. Fitch's rating committee did not apply a
qualitative adjustment to the model result.
ESG Considerations
Uzbekistan has an ESG Relevance Score of '5' for Political
Stability and Rights as World Bank Governance Indicators have the
highest weight in Fitch's SRM and are therefore highly relevant to
the rating and a key rating driver with a high weight. As
Uzbekistan has a percentile rank below 50 for the respective
Governance Indicator, this has a negative impact on the credit
profile.
Uzbekistan has an ESG Relevance Score of '5' for Rule of Law, Inst.
& Regulatory Quality, Control of Corruption as World Bank
Governance Indicators have the highest weight in Fitch's SRM and
are therefore highly relevant to the rating and a key rating driver
with a high weight. As Uzbekistan has a percentile rank below 50
for the respective Governance Indicator, this has a negative impact
on the credit profile.
Uzbekistan has an ESG Relevance Score of '4' for Human Rights and
Political Freedoms as the Voice and Accountability pillar of the
World Bank Governance Indicators is relevant to the rating and a
rating driver. As Uzbekistan has a percentile rank below 50 for the
respective Governance Indicator, this has a negative impact on the
credit profile.
Uzbekistan has an ESG Relevance Score of '4[+]' for Creditor Rights
as willingness to service and repay debt is relevant to the rating
and is a rating driver for Uzbekistan, as for all sovereigns. As
Uzbekistan has a track record of 20+ years without a restructuring
of public debt and captured in Fitch's SRM variable, this has a
positive impact on the credit profile.
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Prior
----------- ------ -----
Uzbekistan,
Republic of LT IDR BB- Affirmed BB-
ST IDR B Affirmed B
LC LT IDR BB- Affirmed BB-
LC ST IDR B Affirmed B
Country Ceiling BB- Affirmed BB-
senior
unsecured LT BB- Affirmed BB-
=========
S P A I N
=========
MIRAVET 2020: DBRS Confirms B Rating on Class E Notes
-----------------------------------------------------
DBRS Ratings GmbH took the following credit rating actions on the
notes issued by Miravet S.a r.l. acting on behalf of its
Compartment 2019-1 (Miravet 2019) and Compartment 2020-1 (Miravet
2020):
Miravet 2019
-- Class A confirmed at AAA (sf)
-- Class B confirmed at A (high) (sf)
-- Class C confirmed at A (low) (sf)
-- Class D confirmed at BBB (sf)
-- Class E confirmed at BBB (low) (sf)
Miravet 2020
-- Class A confirmed at AAA (sf)
-- Class B confirmed at A (high) (sf)
-- Class C confirmed at BBB (high) (sf)
-- Class D confirmed at BB (high) (sf)
-- Class E confirmed at B (sf)
The credit ratings on the Class A notes in both transactions
address the timely payment of interest and the ultimate payment of
principal on or before the legal final maturity dates in May 2065.
The credit ratings on the Class B, Class C, Class D, and Class E
notes in both transactions address the ultimate payment of interest
and principal on or before the legal final maturity dates in May
2065.
The credit rating actions follow an annual review of the
transactions and are based on the following analytical
considerations:
-- Portfolio performance, in terms of delinquencies, defaults, and
losses, as of the May 2024 payment date;
-- Portfolio default rate (PD), loss given default (LGD), and
expected loss assumptions on the remaining receivables; and
-- Current available credit enhancement to the notes to cover the
expected losses at their respective credit rating levels.
The transactions are securitizations of residential mortgage loans
originated by Catalunya Banc S.A., Caixa d'Estalvis de Catalunya,
Caixa d'Estalvis de Tarragona, and Caixa d'Estalvis de Manresa, all
entities currently integrated into Banco Bilbao Vizcaya Argentaria,
S.A. (BBVA). BBVA acts as collection account bank and master
servicer, with servicing operations delegated to Anticipa Real
Estate, S.L.U. at closing and then transferred to Pepper Spanish
Servicing, S.L.U. (Pepper).
Both portfolios include a high percentage of loans that have been
restructured or have benefitted from a grace period in the past, or
those that have credit line facilities. Additionally, the
portfolios are highly concentrated in the autonomous region of
Catalonia.
PORTFOLIO PERFORMANCE
The delinquency levels have been high since the initial credit
ratings on both transactions. As of the April 2024 cut-off date,
mortgages one to three months in arrears and more than three months
in arrears were as follows:
-- Miravet 2019: 4.6% and 14.9%, respectively, compared with 4.9%
and 12.4%, respectively, one year prior; and
-- Miravet 2020: 5.3% and 12.7%, respectively, compared with 4.6%
and 11.5%, respectively, one year prior.
As of the April 2024 cut-off date, the gross cumulative default
ratios were 9.7% for both transactions. Cumulative losses as a
percentage of the initial portfolio balances remain low at 0.2% for
Miravet 2019 and 0.3% for Miravet 2020.
PORTFOLIO ASSUMPTIONS AND KEY DRIVERS
Morningstar DBRS conducted a loan-by-loan analysis of the remaining
pool of receivables and updated its base case PD and LGD
assumptions at the B (sf) rating level as follows:
-- Miravet 2019: 30.2% and 13.6%, respectively; and
-- Miravet 2020: 28.5% and 13.0%, respectively.
CREDIT ENHANCEMENT
The credit enhancement (CE) to all the notes consists of the
subordination of their respective junior notes. As of the May 2024
payment dates, the CE to the notes had increased since the initial
rating as follows:
Miravet 2019:
-- Class A to 47.4% from 31.2%;
-- Class B to 30.4% from 19.4%;
-- Class C to 24.3% from 15.3%;
-- Class D to 22.2% from 13.8%; and
-- Class E to 20.4% from 12.5%.
Miravet 2020:
-- Class A to 46.5% from 34.7%;
-- Class B to 29.2% from 22.3%;
-- Class C to 22.1% from 17.2%;
-- Class D to 19.6% from 15.4%; and
-- Class E to 17.1% from 13.6%.
Both transactions benefit from amortizing liquidity reserves,
funded via the Class Z notes issuance and available to cover senior
fees, Class A interest, and Class X interest. As of the May 2024
payment date, the liquidity reserves for Miravet 2019 and Miravet
2020 were at their target levels of approximately EUR 5.4 million
and EUR 12.3 million, respectively.
Elavon Financial Services DAC (Elavon) acts as the account bank for
both transactions. Based on Morningstar DBRS's private rating on
Elavon, the downgrade provisions outlined in the transaction
documents, and other mitigating factors inherent to the
transactions' structures, Morningstar DBRS considers the risk
arising from the exposure to the account bank to be consistent with
the credit ratings assigned to the notes, as described in
Morningstar DBRS's "Legal Criteria for European Structured Finance
Transactions" methodology.
BNP Paribas SA (BNP Paribas) acts as the interest cap provider for
both transactions. Morningstar DBRS's Long Term Critical
Obligations Rating of AA (high) on BNP Paribas is above the first
rating threshold as described in Morningstar DBRS's "Derivative
Criteria for European Structured Finance Transactions"
methodology.
Notes: All figures are in euros unless otherwise noted.
===========
T U R K E Y
===========
LIMAK CIMENTO: Fitch Assigns 'B+' LongTerm IDR, Outlook Stable
--------------------------------------------------------------
Fitch Ratings has assigned LIMAK CIMENTO SANAYI VE TICARET ANONIM
SIRKETI (Limak Cement) final first-time Long-Term Foreign-Currency
(LTFC) and Long-Term Local-Currency (LTLC) Issuer Default Ratings
(IDR) of 'B+'. The Outlook on both ratings is Stable.
Fitch has also assigned a final senior unsecured rating of 'B+' to
Limak Cement's USD575 million 9.75% notes due 2029, in line with
its LTFC IDR. The Recovery Rating on the senior unsecured debt is
'RR4'. The assignment of the final ratings reflects the completion
of refinancing of all prior-ranking debt at operating companies
(opcos) and final documentation conforming to drafts reviewed by
Fitch.
The ratings are constrained by its smaller scale and weaker
geographical diversification than peers', foreign exchange (FX)
risks and negative free cash flow (FCF) due to capex. The group has
moderate profitability fluctuations through the cycle and Fitch
views its ability to pass on costs to customers as modest.
The LTLC IDR is underpinned by the group's strong market position
in cement production in Turkiye, notably in the south east, a long
record of good operating performance at its established network of
cement factories and ready-mix concrete plants as well as a
diversified customer base.
The Stable Outlook reflects Fitch's expectation that
post-refinancing, Limak Cement will maintain leverage within its
rating sensitivities and that FCF will turn positive in 2025
despite some dividend payments.
Key Rating Drivers
Scale and Geography Constraints: Limak Cement's business profile is
sustainable, but weaker than some of Fitch-rated EMEA peers', with
8.9 million tons of cement and 8 million tons of clinker produced
in 2023. Concentration of revenues in Turkiye limits its operating
environment assessment. Limak Cement is less geographically
diversified than larger peers and has a weaker market position
globally. The Turkish market faces substantial risks including
hyperinflation. Future cash flow and working-capital management
will rely on the group's continued ability to pass on rising costs
in a timely manner.
Restricted Group Structure: Limak Cement is ultimately wholly owned
by Limak Holding A.S.. Under the bond documentation, Limak Cement's
debt financing is separate from its parent, with no
cross-guarantees or cross-default provisions and with restricted
payment definitions limiting future related-party transactions.
Under the bond indentures Limak Cement's ability to rapidly
increase leverage is constrained by a fixed charge coverage
covenant, which also limits dividends paid to the parent. Fitch
thus views Limak Cement's legal ring-fencing as 'insulated' under
Fitch's Parent and Subsidiary Rating Linkage (PSL) Criteria. This,
in combination with 'porous' access and control, enables Limak
Cement to be rated on a standalone basis.
Profitability Higher than Peers: Limak Cement's EBITDA margin is
high versus its peers', at 30% in 2023, supported by healthy orders
from the Turkish construction industry, where it is among the top
five suppliers by capacity. Its costs are 71% in Turkish lira,
which typically provide a greater margin buffer than at
international peers. Domestic sales in 2023 grew 16% year-on-year
to reach TRY19.8 billion or 95% of total consolidated revenues,
while export sales were 5%. Fitch expects EBITDA margins to remain
strong, albeit slightly lower towards 28% on average in 2024-2027,
as cement price increases continue to outstrip cost rises.
Refinancing Increases FX Risks: Fitch forecasts EBITDA gross
leverage of below 3x in 2024-2027, in line with 2023's 2.8x, which
is within its rating sensitivities. Fitch expects initially weak
interest cover of 1.5x- 2x, but this is likely to improve as EBITDA
grows. Fitch expects Limak Cement's capital structure to be almost
fully denominated in US dollars, increasing its exposure to FX risk
in interest and principal payments, and will continually test its
ability to pass on foreign currency-denominated costs to
customers.
The bond has minimal impact on leverage since the group has repaid
all existing debt. The new capital structure will include a USD52.5
million subordinated loan to Limak Holding A.S. Following the
transaction, assets under lien valued at about TRY20 billion will
be released as part of the refinancing. The new capital structure,
however, will be heavily reliant on a single fixed income
instrument, which reduces funding diversification and may increase
refinancing risk.
Capex Raises Execution Risk: The group is committed to deploying an
aggregate of TRY15.5 billion (USD209 million) of capex for
2024-2028. Nearly 50% of the plan is focused on energy
decarbonisation as Limak Cement seeks to transition to net zero by
2050 with CO2 emission reduction of nearly 34% by 2030. In 2023, it
spent TRY950 million on capex and is on course to deploy TRY2.7
billion capex for 2024 and TRY4.3 billion in 2025. Despite the
capex plan providing improved cost visibility, Fitch does not
expect production capacity growth or margin improvement, due to
limited cost savings.
Derivation Summary
Limak Cement's scale is significantly smaller than that of
Fitch-rated heavy building materials peers including Holcim Ltd
(BBB/Positive), CRH plc (BBB+/Stable) and CEMEX S.A.B. de C.V.
(Cemex, BBB-/Stable), which have stronger market positions and
wider production networks.
Limak Cement's product concentration on cement is similar to that
of Cemex, Titan Cement International S.A. (TCI, BB+/Stable). TCI
derives the bulk of its revenue from the US, as well as Greece,
Turkiye, Egypt and several south eastern European countries while
the majority of Limak Cement's revenues are generated domestically.
This is offset by Limak Cement's ability to leverage its logistical
network to increase exports to European cities.
Limak Cement's financial profile is broadly in line with Cemex's
but weaker than that of CRH and Holcim. It has weaker financial
flexibility due to tight liquidity with no access to committed
credit facilities, but this is offset by a record of financial
discipline. Limak Cement's expected EBITDA margin of 28% is higher
than TCI's and CRH's operating profitability. Fitch expects Limak
Cement's FCF margin to improve in 2025 to over 5%, which is
stronger than the majority of peers' and reflects its capex
intensity.
Key Assumptions
- Revenue to grow in line with GDP, and adjusted by Fitch's
assumptions for inflation under its Global Economic Outlook for
June 2024
- EBITDA margin of 28% to 2027
- Large capex at 11%-13% of revenue for 2024-2026 before falling to
well below 10%
- Dividend payments to commence in 2024 at around TRY170 million,
rising to close to TRY1 billion by 2027
- No M&As to 2027
Recovery Analysis
- The recovery analysis assumes that Limak Cement would be deemed a
going concern (GC) in bankruptcy and that it would be reorganised
rather than liquidated
- Its GC value available for creditor claims is estimated at about
TRY20.7 billion, assuming GC EBITDA of TRY5.1 billion
- GC EBITDA assumes a failure to broadly pass on raw-material cost
inflation to customers. The assumption also reflects corrective
measures taken in reorganisation to offset the adverse conditions
that trigger its default
- A 10% administrative claim
- An enterprise value (EV) multiple of 4.5x EBITDA is applied to GC
EBITDA to calculate a post-reorganisation EV. The multiple is based
on Limak Cement's strong market position in Turkiye and good
customer diversification. At the same time, the EV multiple
reflects the group's concentrated geographical diversification,
volatile FCF generation and a low cement price environment
- Fitch estimates the total amount of senior debt claims at TRY20.7
billion, based on the issue of the USD575 million five-year bond
- These assumptions result in a recovery rate for the senior
unsecured instrument within the 'RR3' range, but Turkiye's Country
Ceiling constrains this to 'RR4', corresponding to the group's LTFC
IDR at 'B+'. The principal and interest waterfall analysis output
percentage on current metrics and assumptions is also capped at
50%
RATING SENSITIVITIES
Factors That Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Upside to LTFC IDR is constrained by Turkiye's Country Ceiling
- EBITDA gross leverage below 2.5x on a sustained basis, supported
by a consistent financial policy
- Sustainable FCF margins of at least 5%
Factors That Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- EBITDA gross leverage above 3.5x on sustained basis
- Neutral FCF generation
- The LTFC IDR would be downgraded on a downgrade of the Turkiye
sovereign rating and a downward revision of its Country Ceiling
Liquidity and Debt Structure
Refinancing Improves Liquidity: Fitch estimates Limak Cement had
about TRY1.5 billion readily available cash in 1Q24. Fitch adjusts
cash by TRY900 million for intra-year working-capital volatility,
which is about 3.5% of revenue. The group has access to uncommitted
short-term funding from local and international banks. However,
given the short-term nature of these facilities, they are excluded
from its liquidity calculations. The group will have no significant
scheduled debt repayments until 2028, following the bond issue. The
US dollar bond now represents the majority of Limak Cement's debt
structure, and exposes the group to currency fluctuation risks.
Issuer Profile
Limak Cement is one of the largest cement manufacturers in Turkiye
and has a presence in Ivory Coast, and Mozambique, while exporting
to 15 countries across four continents.
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Fitch's latest quarterly Global Corporates Macro and Sector
Forecasts data file which aggregates key data points used in its
credit analysis. Fitch's macroeconomic forecasts, commodity price
assumptions, default rate forecasts, sector key performance
indicators and sector-level forecasts are among the data items
included.
ESG Considerations
Limak Cement has an ESG Relevance Score of '4' for Financial
Transparency due to a lack of interim IFRS reporting, which has a
negative impact on the credit profile, and is relevant to the
rating in conjunction with other factors.
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
LIMAK CIMENTO
SANAYI VE TICARET
ANONIM SIRKETI LT IDR B+ New Rating B+(EXP)
LC LT IDR B+ New Rating B+(EXP)
senior unsecured LT B+ New Rating RR4 B+(EXP)
===========================
U N I T E D K I N G D O M
===========================
AF ACCIDENT: Leonard Curtis Named as Administrators
---------------------------------------------------
AF Accident Repairs Limited was placed into administration
proceedings in the High Court of Justice Business and Property
Courts in Manchester, Insolvency & Companies List (ChD), Court
Number: CR-2024-MAN-001007, and Conrad Beighton and Kirsty Swan of
Leonard Curtis were appointed as administrators on Aug. 12, 2024.
AF Accident offers maintenance and repair of motor vehicles. Its
registered office address is at Cavendish House, 39-41 Waterloo
Street, Birmingham B2 5PP. Its principal trading address is at 4-5
Bean Road Industrial Estate, Bean Road, Tipton, Dudley DY4 9AQ.
The administrators can be reached at:
Conrad Beighton
Kirsty Swan
Leonard Curtis
Cavendish House, 39-41 Waterloo Street
Birmingham, B2 5PP
Further details, contact:
The Joint Administrators
Tel: 0121 200 2111
Email: recovery@leonardcurtis.co.uk
Alternative contact: Mahnoor Aslam
AVANTE PROPERTY: MacIntyre Hudson Named as Administrators
---------------------------------------------------------
Avante Property Developments Ltd was placed into administration
proceedings in the High Court of Justice Business, Court Number:
CR-2024-004909, and James Alexander Snowdon and Liam Alexander
Short of MacIntyre Hudson LLP were appointed as administrators on
Aug. 19, 2024.
Avante Property operates in the real estate buy and sell industry.
Its registered office and principal trading address is at Office 21
Phoenix House, Hyssop Close, Cannock, WS11 7GA.
The administrators can be reached at:
James Alexander Snowdon
Liam Alexander Short
MacIntyre Hudson LLP
6th Floor, 2 London Wall Place
London, EC2Y 5AU
For further details, contact:
Clara Groves
Tel No: 0207 429 4100
E-mail: Clara.Groves@mha.co.uk
BARK BOOK: FRP Advisory Named as Administrators
-----------------------------------------------
The Bark Book Ltd was placed into administration proceedings in the
High Court of Justice Business and Property Courts in Birmingham,
Insolvency & Companies List (ChD), Court Number: CR-2014-484, and
John Anthony Lowe and Nathan Jones of FRP Advisory Trading Limited
were appointed as administrators on Aug. 14, 2024.
The Bark Book Ltd, trading as Lords and Labradors, manufactures
household textiles. Its registered office is at The Grange, Dalby
Road, Partney, Spilsby, PE23 4PH in the process of being changed to
FRP Advisory Trading Limited, St Nicholas Court, 25-27 Castle Gate,
Nottingham, NG1 7AR. Its principal trading address is at The
Grange, Dalby Road, Partney, Spilsby, PE23 4PH.
The administrators can be reached at:
John Anthony Lowe
Nathan Jones
FRP Advisory Trading Limited
Ashcroft House, Ervington Court
Meridian Business Park, Leicester
LE19 1WL
Contact information for Liquidators: Tel No: 0116 303 3337
Alternative contact:
Mitchell Emery
E-mail: cp.leicester@frpadvisroy.com
CHESHIRE LAND: lrwin Insolvency Named as Administrators
-------------------------------------------------------
Cheshire Land Limited was placed into administration proceedings in
the High Court of Justice Business and Property Courts Birmingham,
Company and Insolvency List (Chd), Court Number:
CR-2024-BHM-000501, and Gerald Irwin of lrwin Insolvency was
appointed as administrator on Aug. 16, 2024.
Cheshire Land Limited is a building developer. Its registered
office address is at Xeinadin Manchester, 100 Barbirolli Square,
Manchester M2 3BD. Its principal trading address is at Cookes
Lane, Rudheath, Northwich, CW9 7RS.
The administrators can be reached at:
Gerald Irwin
lrwin Insolvency
Station House, Midland Drive
Sutton Coldfield, West Midlands
B72 1TU
For further details, contact:
John Pearson
E-mail: john.pearson@irwinuk.net
Tel No: 0121 321 1700
CTD TILES: Interpath Advisory Named as Joint Administrators
-----------------------------------------------------------
CTD Tiles Limited was placed into administration proceedings in the
High Court of Justice, Business and Property Courts of England and
Wales, Insolvency and Companies List (Chd), Court Number:
CR-2024-004684, and William James Wright and James Ronald Alexander
Lumb of Interpath Advisory, trading as Interpath Ltd., were
appointed as joint administrators on Aug. 19, 2024.
CTD Tiles Limited, trading as CTD Tiles, CTD, offers retail sale of
carpets, rugs, wall and floor coverings in specialized store. Its
registered office address is at 20-22 Melchett Road, Kings Norton
Business Centre, Birmingham, B30 3HS.
The joint administrators can be reached at:
James Ronald Alexander Lumb
Interpath Advisory, Interpath Ltd
60 Grey Street, Newcastle upon Tyne
NE1 6AH
-- and --
William James Wright
Interpath Advisory, Interpath Ltd
10 Fleet Place, London
EC4M 7RB
For further details, contact: CTDcreditors@interpath.com
DISRUPTIVE FOODS: Opus Restructuring Named as Administrators
------------------------------------------------------------
Disruptive Foods Ltd was placed into administration proceedings in
the High Court of Justice, Court Number: CR-2024-000835, and Gareth
David Wilcox and Paul William Harding of Opus Restructuring LLP
were appointed as administrators on Aug. 19, 2024.
Disruptive Foods Ltd, trading as Disruptive Foods, sells food,
beverages and tobacco. Its registered office address is at Suite 5a
Lincoln House, Freckleton Street, Kirkham, Preston, England, PR4
2SH. Its principal trading address is at Hornbeam Road, Off Willow
Lane, Lune Ind Est, Lancaster, LA1 5NA.
The administrators can be reached at:
Gareth David Wilcox
Paul William Harding
Opus Restructuring LLP
Cornwall Buildings,
45 Newhall Street
Birmingham, B3 3QR
For further details, contact:
The Joint Administrators
Tel: 0121 803 0307
Alternative contact: Monika Olajcova
GRAYSHOTT HOTEL: Begbies Traynor Named as Administrators
--------------------------------------------------------
Grayshott Hotel Limited was placed into administration proceedings
in the High Court of Justice Business and Property Courts of
England and Wales, Insolvency & Companies List (ChD), Court Number:
CR-2024-004765, and Stephen Katz, David Rubin, and Asher Miller of
Begbies Traynor (London) LLP were appointed as administrators on
Aug. 16, 2024.
Grayshott Hotel operates in the hotels and accommodations industry.
Its registered office is at Pearl Assurance House, 319 Ballards
Lane, London, N12 8LY.
The administrators can be reached at:
Stephen Katz
Asher Miller
David Rubin
Begbies Traynor (London) LLP
Pearl Assurance House
319 Ballards Lane
London, N12 8LY
Further information, contact:
Katie Gregor
E-mail: SC-Team@btguk.com
Tel No: 020 8343 5900
H. CHARLESWORTH: Cowgills Limited Named as Joint Administrators
---------------------------------------------------------------
H. Charlesworth & Co Limited was placed into administration
proceedings in the High Court of Justice Business and Property
Courts in Manchester, Insolvency & Companies (ChD), No 001022-of
2024, and Craig Johns and Jason Mark Elliott of Cowgills Limited
were appointed as joint administrators on Aug. 8, 2024.
H. Charlesworth, trading as Charlesworth Press, is an operator of a
printing and publishing company based in Wakefield, England. The
company specializes in bound publications such as books, journals
and magazines. Its registered office and principal trading address
is at Flanshaw Way, Flanshaw Lane Wakefield, West Yorkshire, WF2
9LP.
The joint administrators can be reached at:
Craig Johns
Jason Mark Elliott
Cowgills Limited
Fourth Floor, Unit 5B
The Parklands, Bolton
BL6 4SD
For further information, contact:
Ashley Carlton
E-mail: Ashley.Carlton@cowgills.co.uk
Tel No: 0161 827 1222
HOLWELL SPORTS: Springfields Advisory Named as Administrators
-------------------------------------------------------------
The Holwell Sports And Social Club Limited was placed into
administration proceedings in the High Court of Justice Business
and Property Courts in Leeds, Court Number: CR-2024-LDS-000815 of
2024, and Situl Devji Raithatha of Springfields Advisory LLP was
appointed as administrator on Aug. 15, 2024.
Holwell Sports is a membership club providing social and sporting
facilities to members. Its registered office address and principal
trading address is at 41 Welby Road, Asfordby Hill, Melton Mowbray,
LE14 3RD.
The administrators can be reached at:
Situl Devji Raithatha
Springfields Advisory LLP
38 De Montfort Street, Leicester
LE1 7GS
For further information, contact:
Sachin Raithatha
E-mail: sachin.r@springfields-uk.com
Tel No: 0116 299 4745
PRAESIDIAD LTD: EUR290MM Bank Debt Trades at 57% Discount
---------------------------------------------------------
Participations in a syndicated loan under which Praesidiad Ltd is a
borrower were trading in the secondary market around 43.3
cents-on-the-dollar during the week ended Friday, Aug. 23, 2024,
according to Bloomberg's Evaluated Pricing service data.
The EUR290 million Term loan facility is scheduled to mature on
October 4, 2024. The amount is fully drawn and outstanding.
Praesidiad Limited provides security products and solutions. The
Company offers force protection solutions, perimeter security
systems, industrial mesh, and fencing products that defend and
protect military, commercial, and domestic end-users. The Company's
country of domicile is the United Kingdom.
PREMIERTEL PLC: Fitch Affirms 'BBsf' Rating on Class B Notes
------------------------------------------------------------
Fitch Ratings has affirmed Premiertel plc's notes as detailed
below.
Entity/Debt Rating Prior
----------- ------ -----
Premiertel p.l.c.
Class A XS0180245515 LT AAsf Affirmed AAsf
Class B XS0180245945 LT BBsf Affirmed BBsf
Transaction Summary
Premiertel is a securitisation of a loan financing long-term rental
cash flows from a portfolio of five office properties located
throughout the UK (two in England, two in Scotland and one in
Northern Ireland) and fully let to British Telecommunications plc
(BT; BBB/Stable/F2). A cost overrun caused primarily by the
difference between interest earned and charged in respect of a
standby drawing of the liquidity facility (continuing since 2013)
will, absent sponsor-led deleveraging, lead to an unintended
balloon amount on the class B notes (and corresponding loan).
KEY RATING DRIVERS
Class A Coverage and Liquidity: The class A notes affirmation
reflects the adequacy of Fitch's stressed property value and
available liquidity to support timely interest and principal in its
'AAsf' rating case, in which BT is assumed to default. A GBP16
million liquidity facility covers roughly two years of class A debt
service and therefore acts as a minimum two-year tail period in
case of tenant default (class A legal maturity is in 2029).
However, the risk of a more protracted liquidation (in case of an
earlier tenant default) does not support a higher rating.
Structure Constrains Class B Rating: The class B notes' rating is
constrained below the tenant's rating given refinancing risk
associated with a projected shortfall in scheduled (albeit
deferrable) principal payments on the loan, which means class B
principal will remain unpaid at lease expiry in 2032 (also class B
legal maturity). This exposes these notes to risks associated with
the borrower's ability and willingness to refinance its portfolio.
Rental value estimated in the last valuation available to Fitch
(from June 2019) is used to support its analysis.
Fitch assesses the adequacy of the collateral to cover the
projected terminal balance on the basis that the portfolio's
underlying properties are scored '5' and in need of significant
capex (modelled on an assumed 50% depreciation). In line with
Fitch's CRE loan rating approach for loans with no financial
covenants and secured on less than average collateral, Fitch
applies a six-notch adjustment down from the 'AA-sf' break-even
(defined as one notch above model-implied rating). The 'BBsf'
rating leaves adequate headroom to account for uncertainty over the
terminal class B note balance.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- A weakening in property market conditions could cause a downgrade
of either class of notes by reducing vacant possession value
- A class A notes downgrade would be floored by the rating of the
tenant as these notes continue to receive all scheduled
amortisation proceeds
- A multi-category downgrade of BT would lead to a downgrade of the
class B notes, as their rating is capped by BT's
A change in model output that would apply if cap rate assumptions
are 1pp higher produces the following ratings:
'AAsf' / 'BB-sf'
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- The longer BT performs, the more scope for an upgrade based on
the additional debt service cover associated with the liquidity
facility
A change in model output that would apply if the tenant rating is
one category higher produces the following ratings:
'AAsf' / 'BBsf'
USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10
Form ABS Due Diligence-15E was not provided to, or reviewed by,
Fitch in relation to this rating action.
DATA ADEQUACY
Fitch has checked the consistency and plausibility of the
information it has received about the performance of the asset pool
and the transaction. There were no findings that affected the
rating analysis. Fitch has not reviewed the results of any
third-party assessment of the asset portfolio information or
conducted a review of origination files as part of its ongoing
monitoring
Prior to the transaction closing, Fitch reviewed the results of a
third-party assessment conducted on the asset portfolio information
and concluded that there were no findings that affected the rating
analysis.
Overall, Fitch's assessment of the information relied upon for the
agency's rating analysis according to its applicable rating
methodologies indicates that it is adequately reliable.
ESG Considerations
Premiertel has an ESG Relevance Score of '5' for Transaction &
Collateral Structure due to the absence of a tail period created by
the projected failure of the class B notes to amortise in full by
lease expiry, which has a negative impact on the credit profile,
and is highly relevant to the rating, resulting in an implicitly
lower rating.
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
STATUS PRODUCTS: CG&Co Named as Joint Administrators
----------------------------------------------------
Status Products Ltd was placed into administration proceedings in
the High Court of Justice Business and Property Courts of
Manchester, No CR-2024-MAN-001014, and Nick Brierley and Edward M
Avery-Gee of CG&Co were appointed as joint administrators on Aug.
15, 2024.
Status Products, trading as EasyTots, creates a range of baby
suction plates that help reduce mess during the weaning stages.
Its registered office and principal trading address is at EasyTots
Warehouse, Nijman Zeetank Haulage Park, Washway Lane, St. Helens,
WA10 6PE.
The joint administrators can be reached at:
Nick Brierley
Edward M Avery-Gee
CG&Co
27 Byrom Street, Manchester
M3 4PF
For further details, contact:
Bill Brandon
Tel No: 0161 358 0210
TALENT INTUITION: Menzies LLP Named as Administrators
-----------------------------------------------------
Talent Intuition Limited was placed into administration proceedings
in the High Court of Justice Business and Property Courts in
Cadiff, Court Number: CR-2024-000028, and John Dean Cullen and
Bethan Louise Evans of Menzies LLP were appointed as administrators
on Aug. 19, 2024.
Talent Intuition, trading as Stratigens, offers business and
domestic software development; management consultancy activities
other than financial management. Its registered office address and
principal trading address is at Unit 3.13 Tramshed Tech, Griffin
Street, Newport, Monmouthshire, NP20 1GL.
The administrators can be reached at:
John Dean Cullen
Bethan Louise Evans
Menzies LLP, 5th Floor, Hodge House
114-116 St Mary Street
Cardiff, CF10 1DY
For further details, contact:
The Administrators
E-mail: LAsekome@menzies.co.uk
Tel No: +44 (0)3309 129473
Alternative contact: Lauren Asekome
*********
S U B S C R I P T I O N I N F O R M A T I O N
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Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman,
Editors.
Copyright 2024. All rights reserved. ISSN 1529-2754.
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