/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/250130.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 Thursday, January 30, 2025, Vol. 26, No. 22 Headlines F R A N C E NORIA 2023: Moody's Lowers Rating on EUR5MM Class F Notes to B3 SEQUOIA LOGISTICS 2025-1: Fitch Assigns BB-(EXP) Rating on E Notes ZF INVEST: Moody's Upgrades CFR to B2 & Alters Outlook to Stable I R E L A N D AQUEDUCT EUROPEAN 10: Fitch Assigns 'B-sf' Final Rating on F Notes CONTEGO CLO VII: Fitch Assigns 'B-sf' Final Rating on Cl. F-R Notes HARVEST CLO XXXIV: Fitch Assigns 'B-(EXP)sf' Rating on Cl. F Notes HAYFIN EMERALD XIV: Fitch Assigns B-sf Final Rating on Cl. F Notes I T A L Y CERVED GROUP: Fitch Puts 'B' LongTerm IDR on Watch Negative IREN SPA: Fitch Assigns BB+ Rating on EUR500MM Subordinated Notes L U X E M B O U R G IREL BIDCO: Fitch Affirms 'B+' LongTerm IDR, Outlook Stable R O M A N I A CEC BANK: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable S P A I N EDREAMS ODIGEO: Fitch Hikes IDR to 'B+', Outlook Stable S W I T Z E R L A N D APTIV SWISS: Fitch Lowers Rating on Jr. Subordinated Debt to 'BB+' T U R K E Y TAV HAVALIMANLARI: Fitch Affirms 'BB+' Foreign Currency IDR U N I T E D K I N G D O M ANNINGTON LIMITED: Moody's Assigns Ba1 CFR & Alters Outlook to Neg. AYLESBURY PARK: Lewis Business Named as Administrators AZULE ENERGY: Fitch Rates USD1.2BB Unsecured Notes ‘B+’ BACHUS INNS: Philip Lewis Named as Administrators HUSH BRASSERIES: Interpath Advisory Named as Administrators SOUTHERN PACIFIC 06-A: Fitch Lowers Rating on Cl. E Notes to BB+sf SOUTHERNS BROADSTOCK: Alvarez & Marsal Named as Administrators STO LIMITED: Grant Thornton Named as Administrators SWEET LADYBIRD: Begbies Traynor Named as Administrators - - - - - =========== F R A N C E =========== NORIA 2023: Moody's Lowers Rating on EUR5MM Class F Notes to B3 --------------------------------------------------------------- Moody's Ratings has downgraded the ratings of five notes in NORIA 2023 and affirmed the rating of the most senior Class A Notes. The rating action reflects worse than expected collateral performance and the decrease of credit enhancement available for the affected notes. Moody's affirmed the ratings of the Class A Notes that had sufficient credit enhancement to maintain their current ratings. EUR410M Class A Notes, Affirmed Aaa (sf); previously on Jul 20, 2023 Definitive Rating Assigned Aaa (sf) EUR30M Class B Notes, Downgraded to Aa3 (sf); previously on Jul 20, 2023 Definitive Rating Assigned Aa2 (sf) EUR10M Class C Notes, Downgraded to Baa1 (sf); previously on Jul 20, 2023 Definitive Rating Assigned A3 (sf) EUR9M Class D Notes, Downgraded to Baa3 (sf); previously on Jul 20, 2023 Definitive Rating Assigned Baa2 (sf) EUR16M Class E Notes, Downgraded to Ba3 (sf); previously on Jul 20, 2023 Definitive Rating Assigned Ba2 (sf) EUR5M Class F Notes, Downgraded to B3 (sf); previously on Jul 20, 2023 Definitive Rating Assigned B2 (sf) RATINGS RATIONALE The rating action is prompted by increased key collateral assumptions, namely the default probability (DP) assumption, due to worse than expected collateral performance, and the decrease of credit enhancement available for the affected notes. Revision of Key Collateral Assumptions As part of the rating action, Moody's reassessed Moody's default probability assumption for the portfolio reflecting the collateral performance to date. The performance of the transaction has deteriorated quicker than expected since closing in July 2023. Total delinquencies have been relatively stable in the past year, with 90 days plus arrears currently standing at 0.16% of current pool balance. However, cumulative defaults have increased to 1.96% of original pool balance including replenishments, since closing 17 months ago. Moody's have increased the current default probability assumption to 5.00%, from 4.50% of the current portfolio balance, which corresponds to a default probability of 5.10% based on original portfolio balance. Moody's have maintained the recovery rate assumption at 30.0% and the portfolio credit enhancement assumption at 14.5%. Decrease of available credit enhancement The worse than expected collateral performance has led to a reduction of the general reserve, which was originally funded at EUR13 million, to EUR5.8 million as of December 2024, thereby reducing the total credit enhancement available for the notes. For example, for the most senior note affected by the downgrade action, the Class B Notes, the available credit enhancement reduced to 13.3% as of December 2024 compared to 14.6% at closing. Currently, the general reserve is equal to 1.3% of the aggregate amount outstanding for Class A to G Notes, and it is part of the available revenue proceeds. Despite the worse than expected collateral performance, the notes continue to be paid pro rata, with triggers leading to a switch to sequential notes' amortisation payments only upon the Principal Deficiency Ledger of Class G Notes reaching the threshold of 0.75% of the outstanding pool balance or the cumulative defaults reaching their incrementally increasing trigger values, for example, 3.0% cumulative defaults for December 2024. This switch is not imminent and will depend on the timing of defaults. The principal methodology used in these ratings was "Moody's Approach to Rating Consumer Loan-Backed ABS" published in July 2024. Factors that would lead to an upgrade or downgrade of the ratings: Factors or circumstances that could lead to an upgrade of the ratings include (1) performance of the underlying collateral that is better than Moody's expected, (2) an increase in available credit enhancement, and (3) improvements in the credit quality of the transaction counterparties. Factors or circumstances that could lead to a downgrade of the ratings include (1) an increase in sovereign risk, (2) performance of the underlying collateral that is worse than Moody's expected, (3) deterioration in the notes' available credit enhancement and (4) deterioration in the credit quality of the transaction counterparties. SEQUOIA LOGISTICS 2025-1: Fitch Assigns BB-(EXP) Rating on E Notes ------------------------------------------------------------------ Fitch Ratings has assigned Sequoia Logistics 2025-1 Designated Activity Company's (DAC) notes expected ratings. The assignment of final ratings is contingent on the receipt of final information conforming to the reviewed documentation. Entity/Debt Rating ----------- ------ Sequoia Logistics 2025-1 Designated Activity Company A LT AAA(EXP)sf Expected Rating B LT AA-(EXP)sf Expected Rating C LT A-(EXP)sf Expected Rating D LT BBB-(EXP)sf Expected Rating E LT BB-(EXP)sf Expected Rating Transaction Summary Fitch Ratings has assigned expected ratings to Sequoia Logistics 2025-1 DAC's floating-rate notes. The transaction is a securitisation of a EUR524.8 million commercial real estate loan originated by Barclays Bank PLC for entities related to Blackstone Inc. The loan refinances 53 properties in France, Finland, Germany and The Netherlands. The originator retains 5% of the liabilities transferred to the issuer, in the form of an issuer loan, pari passu with the notes. KEY RATING DRIVERS Secondary Quality, Localised Underperformance: The portfolio consists of 46 secondary industrial properties across Finland, Germany (one property) and The Netherlands, plus seven French suburban business parks (mainly in Ile de France). Much of the stock is aged, with modernisation required in most of the French and Finnish stock to reduce vacancy and opex margins. The weighted average property score is '2.8' (France '2.7', Germany '2.0', Finland '3.5' and Netherlands '2.6'). Fitch assumes 6.3% depreciation (weighted by estimated rental value (ERV)) and apply a 10% haircut to ERV for four French assets (ID 2 in Limonest, ID 3 in Vitrolles, ID 5 in Evry and ID 6 in Villebon). Defensive Debt Yield: The loan finances 68.5% of open market value (OMV, being the sum of individual property values). Despite 17% vacancy by ERV and associated void costs, the initial debt yield exceeds 8.8% (pre-rent fees), which is relatively healthy but vulnerable due to short leases. The vulnerability is especially notable in France and Finland, where many tenants have rolling breaks and void costs are high. Release Pricing Neutral: While release premiums (RP) start at zero (until 10% of properties are released), for most properties, release price floors ensure some deleveraging throughout. RPs rise to 5% and 10%, respectively, as cumulative sales exceed 10% and 20% of OMV, accelerating deleveraging. Also, RPs do not get recalculated downwards, unlike some other recent CMBS. The borrower can subdivide property titles and release parts thereof, with RP allocated by gross lettable area (GLA), exposing noteholders to adverse selection wherever value is unevenly distributed by area (e.g., the French business parks). This also limits credit upside from equity-funded capex. Unimproved land plots (with no GLA) can be sold at "arms-length," with proceeds used to repay the loan. Overall, Fitch views disposal risk as typical of granular industrial CMBS. Jurisdictional Limitations: The Finnish asset-owning entities have security and guarantee limitations (some restrictive). After closing, a merger and demerger of all but three such entities is planned to harmonise debt capacity and support cross-guarantees. Mortgages are limited by jurisdiction, capping modelled recoveries on an entity-by-entity basis. Risk of a court-administered French debt restructuring (including French safeguard proceedings) is mitigated by the "double Luxco" structure and bolstered by the Dailly Law assignment of rent. While transfer to special servicing does not arise for all pre-maturity loan events of default, borrower insolvency (including French safeguard proceedings) or a payment default arising for two consecutive loan payment dates are both triggers. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Lower market rent could lead to negative rating action. The change in model output that would apply with a 10pp increase in rental value decline assumptions would imply the following ratings: 'AA-sf'/'BBB+sf'/'BBB-sf'/'BB-sf'/'Bsf' Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Reducing vacancy or achieving significant rent increases following lease expiries could lead to positive rating action. The change in model output that would apply with a 1pp decrease in cap rate assumptions would imply the following ratings: 'AAAsf'/'AA+sf'/'A+sf'/'BBB+sf'/'BBB-sf' KEY PROPERTY ASSUMPTIONS (all weighted by net ERV) Weighted average (WA) depreciation: 6.3% Non-recoverable costs: EUR4.2 million Fitch ERV: EUR60.5 million 'Bsf' WA cap rate: 6.3% 'Bsf' WA structural vacancy: 15.8% 'Bsf' WA rental value decline: 12.5% 'BBsf' WA cap rate: 6.9% 'BBsf' WA structural vacancy: 17.1% 'BBsf' WA rental value decline: 15.3% 'BBBsf' WA cap rate: 7.7% 'BBBsf' WA structural vacancy: 19.2% 'BBBsf' WA rental value decline: 18.07% 'Asf' WA cap rate: 8.7% 'Asf' WA structural vacancy: 21.6% 'Asf' WA rental value decline: 20.8% 'AAsf' WA cap rate: 9.1% 'AAsf' WA structural vacancy: 22.7% 'AAsf' WA rental value decline: 24.6% 'AAAsf' WA cap rate: 9.5% 'AAAsf' WA structural vacancy: 25.4% 'AAAsf' WA rental value decline: 28.4% USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Fitch was provided with Form ABS Due Diligence-15E ("Form 15E") as prepared by Deloitte. The third-party due diligence described in Form 15E focused on certain characteristics with respect to the 53 properties in the portfolio. Fitch considered this information in its analysis and it did not have an effect on Fitch's analysis or conclusions. DATA ADEQUACY 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, 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 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. ZF INVEST: Moody's Upgrades CFR to B2 & Alters Outlook to Stable ---------------------------------------------------------------- Moody's Ratings has upgraded ZF Invest's (Prosol or the company) corporate family rating to B2 from B3, as well as its probability of default rating to B2-PD from B3-PD. Concurrently, Moody's have upgraded to B2 from B3 the instrument ratings on the EUR1,632 million senior secured term loan B and the EUR270 million senior secured revolving credit facility (RCF), both issued by the company. The outlook has been changed to stable from positive. RATINGS RATIONALE The rating action reflects Prosol's strong revenue growth, driven by both organic growth and new store openings, and EBITDA margin improvement in the financial year that ended September 30, 2024 (financial 2024). This operating performance has resulted in a substantial strengthening of its key credit metrics, which Moody's expect to further improve in the next 12-18 months and will position the company solidly in the B2 rating category. Prosol has significantly improved its financial in metrics in financial 2024. Revenue rose by 15% driven by the Grand Frais (+15%) and Fresh (+36%) banners, underpinned by both new openings and like-for-like growth of existing stores for both banners. In financial 2024, the constant perimeter of Grand Frais grew by 8.5%, mainly driven by higher store traffic (+6.7%) in the context of an easing inflation. This has resulted in a significant improvement in EBITDA with Moody's-adjusted gross debt/EBITDA (leverage) decreasing to about 6.8x in financial 2024 (6.2x excluding convertible bonds) from 8.5x a year ago, despite the EUR250 million add-on to the term loan B raised in March 2024. Similarly, Moody's-adjusted (EBITDA-capex)/interest improved to about 1.6x in financial 2024 (1.9x excluding convertible bonds) from 0.9x in financial 2023. These metrics exclude the Banco Fresco banner in Italy, which is being restructured. On July 30, 2024, the company completed the acquisition of GD Finance, which includes a network of 50 butcheries mainly in the Ile-de-France region, most of which operate under the Novoviande brand within Grand Frais stores. The acquisition increases Prosol's exposure to the butchery segment and is expected to lead to central cost and procurement synergies. The total consideration amounted to EUR220 million, slightly less than the EUR250 million add-on to the term loan B raised in March 2024. The acquisition had a limited impact on reported financials for 2024, with only two months consolidated. Moody's estimate that, on a pro forma basis for the acquisition, Moody's-adjusted leverage and Moody's-adjusted (EBITDA-capex)/interest were respectively 6.5x and 1.7x in financial 2024. Going forward, Moody's expect Prosol's revenue to grow annually in the high-single-digits in percentages in financial 2025 and 2026, sustained by about 30 store openings per year together with continued organic growth driven by good traffic trends. Moody's anticipate that EBITDA margin will continue to improve mainly thanks to the ramp up of Fresh and Monmarché.fr banners. As a result, Moody's forecast that Moody's-adjusted leverage will decrease towards 5x in the next 12-18 months driven by EBITDA growth. Prosol's B2 CFR remains supported by: (i) its exposure to the higher growth segment of the fresh food market; (ii) its high profitability compared with traditional grocers; and (iii) its ability to source high quality products from local producers. Concurrently, the company's B2 CFR is constrained by: (i) a small size compared with traditional grocers; (ii) its concentration in the fresh food segment; (iii) the execution risk related to its ambitious growth program with significant capital spending weighing on free cash flow (FCF) generation; (iv) its geographical concentration in France. LIQUIDITY Moody's consider Prosol's liquidity to be good. It is supported by a cash balance of EUR177 million as of September 30, 2024, as well as access to a EUR270 million RCF of which EUR90 million was drawn at the same date. The company's liquidity is also supported by Moody's expectation of positive FCF, which is projected to improve to around EUR150 million per year from 2025 onwards, driven by EBITDA growth but partly hampered by around EUR90 million of capex related to new store openings. There is no significant debt maturity prior to the RCF in January 2028. The RCF is subject to a leverage covenant which is tested if outstanding borrowings under the RCF are equal to, or greater than, 40% of the overall size of the facility. Moody's expect Prosol to maintain a good headroom under this covenant. STRUCTURAL CONSIDERATIONS The senior secured term loan B and the senior secured RCF, which are rated B2, in line with the CFR, rank pari passu and benefit from the presence of upstream guarantees from material subsidiaries of the group. The outstanding EUR245 million convertible bonds are fully subordinated to the senior secured debt. The B2-PD PDR, in line with the CFR, reflects Moody's assumption of a 50% recovery rate as is customary for capital structures with bank debt and a covenant-lite structure. RATING OUTLOOK The stable outlook reflects Moody's view that Prosol's revenue and profitability will continue to improve over the next 12-18 months and that Prosol's FCF generation will grow, such that its Moody's-adjusted FCF/debt improves to around 5%. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Upward pressure on the ratings could arise if Moody's-adjusted leverage decreases sustainably below 5.5x, Moody's-adjusted (EBITDA-capex)/interest expense improves above 2.0x and Moody's-adjusted FCF/debt is sustained above 5% after expansion capex. An upgrade would also require evidence of a more conservative financial policy being sustainably maintained with no major debt-funded acquisitions or shareholder distributions. Downward pressure on the ratings could arise if Prosol's profitability or FCF generation weakens, if Moody's-adjusted (EBITDA-capex)/interest expense decreases below 1.5x or if Moody's-adjusted leverage is significantly above 6.5x on a sustained basis. Moody's could also consider downgrading the ratings if there is a material financial underperformance among Grand Frais' partners that leads to a disruption in footfall at Grand Frais stores. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Retail and Apparel published in November 2023. COMPANY PROFILE Headquartered in Chaponnay, France, Prosol is the largest member of the Grand Frais group, a store network focused on fresh quality products. Each Grand Frais store is around 1,000 square meters large and sells five different types of products: fruit and vegetable, fish, and dairy, which are managed by Prosol (Prosol also manages meat shelves in about 50 Grand Frais stores), and meat and grocery products, which are generally managed by third parties. Prosol controls 50% of the Grand Frais group and the remainder is equally split between two private companies, Euro Ethnic Foods and Despinasse. Prosol generated EUR3.5 billion revenue in financial 2024 and had 383 stores as of September 30, 2024. Prosol owns also Fresh, a network of 53 proximity stores as of September 30, 2024 which is complementary to Grand Frais and is managed independently from it. Each Fresh store is around 500 square meters and sells fresh products. Since 2017, Prosol has been majority-owned by Ardian, a global private equity company. ============= I R E L A N D ============= AQUEDUCT EUROPEAN 10: Fitch Assigns 'B-sf' Final Rating on F Notes ------------------------------------------------------------------ Fitch Ratings has assigned Aqueduct European CLO 10 DAC final ratings. Entity/Debt Rating ----------- ------ Aqueduct European CLO 10 DAC A XS2950715917 LT AAAsf New Rating B XS2950716139 LT AAsf New Rating C XS2950716303 LT Asf New Rating D XS2950716568 LT BBB-sf New Rating E XS2950716725 LT BB-sf New Rating F XS2950717020 LT B-sf New Rating Subordinated Notes XS2950718341 LT NRsf New Rating Z-1 XS2950717376 LT NRsf New Rating Z-2 XS2950717459 LT NRsf New Rating Z-3 XS2950717889 LT NRsf New Rating Transaction Summary Aqueduct European CLO 10 DAC is a securitisation of mainly (at least 90%) senior secured obligations with a component of senior unsecured, mezzanine, second lien loans and high-yield bonds. Note proceeds have been used to purchase a portfolio with a target par of EUR600 million. The portfolio is actively managed by HPS Investment Partners CLO (UK) LLP and the CLO has a reinvestment period of 4.5 years 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 26.2. 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 weighted average recovery rate of the identified portfolio is 62.9%. Diversified Portfolio (Positive): The transaction includes four Fitch test matrices, two of which are effective at closing. All matrices correspond to a top 10 obligor concentration limit of 20%, fixed-rate obligation limits at 5% and 10%, and an 8.5-year WAL covenant. It has two forward matrices corresponding to the same top 10 obligors and fixed-rate asset limits, and a 7.5-year WAL covenant. The forward matrices are effective one year post closing, subject to the aggregate collateral balance (defaults at Fitch collateral value) being at least at the reinvestment target par. Portfolio Management (Neutral): The transaction has a reinvestment period of about 4.5 years 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. Cash Flow Modelling (Positive): The WAL for the transaction's Fitch-stressed portfolio analysis is 12 months less than the WAL covenant. This is to account for the strict reinvestment conditions envisaged by the transaction after its reinvestment period, which include passing the coverage tests, the Fitch WARF test and the Fitch 'CCC' bucket limit test after reinvestment as well as a WAL covenant that progressively steps down, before and after the end of the reinvestment period. Fitch believes these conditions would 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) and a 25% decrease of the recovery rate (RRR) across all ratings of the identified portfolio would lead to downgrades of no more than one notch each for the class C, D and E notes and have no impact on the class A, B and F notes. Based on the identified portfolio, downgrades may occur if the loss expectation is larger than initially assumed, due to unexpectedly high levels of default and portfolio deterioration. Due to the better metrics and shorter life of the identified portfolio than the Fitch-stressed portfolio, the class B, C, D and E notes each display a rating cushion of two notches, the class F notes have a cushion of four notches, while the class A notes have no rating cushion. Should the cushion between the identified portfolio and the Fitch-stressed portfolio be eroded, 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 Fitch-stressed portfolio would lead to downgrades of up to four notches. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade A 25% reduction of the mean RDR and a 25% increase in the RRR across all ratings of the Fitch-stressed portfolio would lead to upgrades of up to four notches, except for the 'AAAsf' rated notes. During the reinvestment period, upgrades, which are based on the Fitch-stressed portfolio, 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 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 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 Aqueduct European CLO 10 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 any ESG factor that is a key rating driver in the key rating drivers section of the relevant rating action commentary. CONTEGO CLO VII: Fitch Assigns 'B-sf' Final Rating on Cl. F-R Notes ------------------------------------------------------------------- Fitch Ratings has assigned Contego CLO VII DAC Reset final ratings. Entity/Debt Rating Prior ----------- ------ ----- Contego CLO VII DAC A XS2053876764 LT PIFsf Paid In Full AAAsf A-R Loan LT AAAsf New Rating A-R Notes XS2954141383 LT AAAsf New Rating B-1 XS2053877572 LT PIFsf Paid In Full AA+sf B-1-R XS2954141540 LT AAsf New Rating B-2 XS2053878034 LT PIFsf Paid In Full AA+sf B-2-R XS2954141896 LT AAsf New Rating C XS2053878620 LT PIFsf Paid In Full A+sf C-R XS2954142191 LT Asf New Rating D XS2053879354 LT PIFsf Paid In Full BBB+sf D-R XS2954142357 LT BBB-sf New Rating E XS2053879941 LT PIFsf Paid In Full BB+sf E-R XS2954142514 LT BB-sf New Rating F XS2053880444 LT PIFsf Paid In Full B+sf F-R XS2954142787 LT B-sf New Rating Transaction Summary Contego CLO VII 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 have been used to fund a portfolio with a target par of EUR450 million, which is actively managed by Five Arrows Managers LLP. The collateralised loan obligation (CLO) has a five-year reinvestment period and an eight-year weighted average life (WAL) test at closing. 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 25.8. 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 weighted average recovery rate (WARR) of the identified portfolio is 61.4%. Diversified Portfolio (Positive): The transaction includes six Fitch test matrices, four effective at closing, with two matrices corresponding to an eight-year WAL and two corresponding to a nine-year WAL, and another two effective two years after closing and corresponding to a seven-year WAL. All the matrices correspond to a top 10 obligor concentration limit at 20%, and for each WAL there can be two different fixed-rate limits of 5% and 10%. The transaction also has various concentration limits, including a 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. WAL Step-Up Feature (Neutral): The transaction can extend the WAL by one year on the step-up date, which is one year after closing. The WAL extension is at the option of the manager, but subject to conditions including the collateral quality tests, and the collateral principal balance (with defaulted obligations accounted at Fitch collateral value) being greater than the reinvestment target par. Portfolio Management (Neutral): The transaction has a five-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. Cash Flow Modelling (Positive): The WAL used for the transaction's Fitch-stressed portfolio and matrices analysis is 12 months less than the WAL covenant, to account for structural and reinvestment conditions post-reinvestment period, including the over-collateralisation test and Fitch 'CCC' limitation post reinvestment. This ultimately reduces the maximum possible risk horizon of the portfolio when combined with loan pre-payment expectations. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A 25% increase of the mean default rate (RDR) and a 25% decrease of the recovery rate (RRR) across all ratings of the identified portfolio would lead to downgrade of one notch each on the class B-R, C-R, D-R and E-R notes, to below 'B-sf' on the class F-R notes, and have no impact on the class A-R notes. Based on the identified portfolio, downgrades may occur if the loss expectation is larger than initially assumed, due to unexpectedly high levels of default and portfolio deterioration. Due to the better metrics and shorter life of the identified portfolio than the Fitch-stressed portfolio, the class C-R notes have a one-notch cushion, the class B-R, D-R and E-R notes each have a two-notch cushion, the class F-R notes have a four-notch cushion, and there is no rating cushion for the class A-R notes. Should the cushion between the identified portfolio and the Fitch-stressed portfolio be eroded due to manager trading or negative portfolio credit migration, a 25% increase of the mean RDR ratings and a 25% decrease of the RRR across all ratings of the Fitch-stressed portfolio would lead to downgrades of up to four notches for the notes. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade A 25% reduction of the mean RDR and a 25% increase in the RRR across all ratings of the Fitch-stressed portfolio would lead to upgrades of up to three notches, except for the 'AAAsf' rated notes. During the reinvestment period, upgrades, based on the Fitch-stressed portfolio, 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 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 Contego CLO VII 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 any ESG factor that is a key rating driver in the key rating drivers section of the relevant rating action commentary. HARVEST CLO XXXIV: Fitch Assigns 'B-(EXP)sf' Rating on Cl. F Notes ------------------------------------------------------------------ Fitch Ratings has assigned Harvest CLO XXXIV DAC's notes expected ratings. The assignment of final ratings is contingent on the receipt of final documents conforming to information already reviewed. Entity/Debt Rating ----------- ------ Harvest CLO XXXIV DAC A-1 LT AAA(EXP)sf Expected Rating A-2 LT AAA(EXP)sf Expected Rating B-1 LT AA(EXP)sf Expected Rating B-2 LT AA(EXP)sf Expected Rating C LT A(EXP)sf Expected Rating D LT BBB-(EXP)sf Expected Rating E LT BB-(EXP)sf Expected Rating F LT B-(EXP)sf Expected Rating Subordinated Notes LT NR(EXP)sf Expected Rating Transaction Summary Harvest CLO XXXIV DAC is a securitisation of mainly (at least 96%) senior secured obligations with a component of senior unsecured, mezzanine, second-lien loans and high-yield bonds. Note proceeds will be used to purchase a portfolio with a target par of EUR450 million. The portfolio is actively managed by Investcorp Credit Management EU Limited and the CLO will have a reinvestment period of 4.6 years 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 of the identified portfolio is 24.7. High Recovery Expectations (Positive): At least 96% of the portfolio will 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 of the identified portfolio is 60.5%. Diversified Portfolio (Positive): The transaction will include various concentration limits, including a maximum exposure to the three-largest Fitch-defined industries in the portfolio at 40% and a top 10 obligor concentration limit at 20%. These covenants ensure that the asset portfolio will not be exposed to excessive concentration. Portfolio Management (Neutral): The transaction will have a reinvestment period of an 4.6 years and include reinvestment criteria similar to those of other European transactions. Fitch's analysis is based on a stressed portfolio with the aim of testing the robustness of the transaction structure against its covenants and portfolio guidelines. WAL Step-Up Feature (Neutral): The transaction could extend the WAL test by one year at the step-up date one year from closing if the aggregate collateral balance (defaulted obligations at the lower of Fitch and another rating agency-calculated collateral value) is at least at the reinvestment target par amount and if the transaction is passing the collateral-quality tests (including the WAL), the coverage tests and the portfolio profile tests. Cash Flow Modelling (Positive): The WAL used for the transaction's Fitch-stressed portfolio and matrices analysis is 12 months less than the WAL covenant, to account for structural and reinvestment conditions after the reinvestment period. These include the over-collateralisation tests and Fitch's 'CCC' limitation after reinvestment. In Fitch's opinion, these conditions would 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) and a 25% decrease of the recovery rate (RRR) across all ratings of the identified portfolio would lead to downgrades of two notches for the class B-1 and B-2 notes, one notch each for the class C to E notes, to below 'B-sf' for the class F notes and have no impact on the class A-1and A-2 notes. Based on the identified portfolio, downgrades may occur if the loss expectation is larger than initially assumed, due to unexpectedly high levels of default and portfolio deterioration. Due to the better metrics and shorter life of the identified portfolio than the Fitch-stressed portfolio, the class C notes have a one-notch cushion, the class B-1, B-2 and class D to F notes each have a two-notch cushion, while the class A-1 and A-2 notes have no rating cushion. Should the cushion between the identified portfolio and the Fitch-stressed portfolio be eroded 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 Fitch-stressed portfolio would lead to downgrades of up to four notches for the class A-1 to D notes, and to below 'B-sf' for the class E and F notes. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade A 25% reduction of the mean RDR and a 25% increase in the RRR across all ratings of the Fitch-stressed portfolio would lead to upgrades of up to five notches, except for the 'AAAsf' rated notes. During the reinvestment period, upgrades, based on the Fitch-stressed portfolio, may occur on better-than-expected portfolio credit quality and a shorter remaining WAL test, allowing the notes to withstand larger-than -xpected 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 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 Harvest CLO XXXIV 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 any ESG factor that is a key rating driver in the key rating drivers section of the relevant rating action commentary. HAYFIN EMERALD XIV: Fitch Assigns B-sf Final Rating on Cl. F Notes ------------------------------------------------------------------ Fitch Ratings has assigned Hayfin Emerald CLO XIV DAC final ratings. Entity/Debt Rating Prior ----------- ------ ----- Hayfin Emerald CLO XIV DAC A XS2962031659 LT AAAsf New Rating AAA(EXP)sf B XS2962031816 LT AAsf New Rating AA(EXP)sf C XS2962032384 LT Asf New Rating A(EXP)sf D XS2962032897 LT BBB-sf New Rating BBB-(EXP)sf E XS2962034166 LT BB-sf New Rating BB-(EXP)sf F XS2962036963 LT B-sf New Rating B-(EXP)sf Subordinated notes XS2962040130 LT NRsf New Rating NR(EXP)sf Transaction Summary Hayfin Emerald CLO XIV 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 have been used to fund a portfolio with a target par of EUR375 million. The portfolio is actively managed by Hayfin Emerald Management LLP. The CLO has a two-year reinvestment period and a six-year weighted average life (WAL). KEY RATING DRIVERS Average Portfolio Credit Quality (Neutral): Fitch places the average credit quality of obligors at 'B+'/'B'. The Fitch weighted average rating factor of the current portfolio is 23.3. 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 weighted average recovery rate of the current portfolio is 62.7%. Diversified Asset Portfolio (Positive): The transaction includes two matrices that are both effective at closing, corresponding to a six-year WAL and two different fixed-rate asset limits at 5% and 12.5%. The transaction also includes various concentration limits, including a top 10 obligor concentration limit at 20% and a maximum exposure to the three largest Fitch-defined industries in the portfolio at 40%. These covenants ensure the asset portfolio will not be exposed to excessive concentration. Portfolio Management (Neutral): The transaction has a two-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. Cash Flow Modelling (Positive): The WAL used for the Fitch-stressed portfolio analysis is eligible for a 12-month haircut, subject to a six-year floor. This is to account for the strict reinvestment conditions envisaged after the reinvestment period. These conditions include passing the coverage tests, the Fitch 'CCC' maximum limit after reinvestment and a WAL covenant that progressively steps down over time, both before and after the end of the reinvestment period. In its opinion, these conditions would reduce the effective risk horizon of the portfolio during stress periods. As the maximum WAL in the transaction is six years, the modelled WAL was also six years. 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. Due to the better metrics and shorter life of the current portfolio than the Fitch-stressed portfolio, the class B, D and E notes each display a rating cushion of two notches and the class F notes have a cushion of three notches. The class A notes are already at the highest achievable 'AAAsf' rating and therefore have no cushion. 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 in the mean default rate (RDR) and a 25% decrease in the recovery rate (RRR) across all ratings of the Fitch-stressed portfolio, would lead to downgrades of up to three notches each for the class A to E notes and to below 'B-sf' for the class F notes. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade A 25% reduction of the mean RDR and a 25% increase in the RRR across all ratings of the Fitch-stressed portfolio would lead to upgrades of up to three notches, except for the 'AAAsf' rated notes. During the reinvestment period, upgrades, based on the Fitch-stressed portfolio, 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 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 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 Hayfin Emerald CLO 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 any ESG factor that is a key rating driver in the key rating drivers section of the relevant rating action commentary. ========= I T A L Y ========= CERVED GROUP: Fitch Puts 'B' LongTerm IDR on Watch Negative ----------------------------------------------------------- Fitch Ratings has placed Cerved Group S.p.A.'s Long-Term Issuer Default Rating (IDR) of 'B' and senior secured instrument rating of 'B' on Rating Watch Negative (RWN). The Recovery Rating is 'RR4'. The RWN is driven by Cerved's high leverage and low interest coverage, projected through to 2027, more in line with a 'B-' rating. Fitch will aim to resolve the RWN in the next 30 days upon having further discussions with the management on business and forecast expectations for 2025 and broader capital allocation policy. The company's ratings reflect the group's aggressive financial structure, its weak financial flexibility due to weak revenue growth, high interest payments and compressed free cash flow (FCF) generation. This is balanced by a strong market position in risk-intelligence, the expectation that the group's strategy, already started in 2024, would result in greater revenue growth, and satisfactory liquidity. Key Rating Drivers Sustained High Leverage: Cerved's Fitch calculated EBITDA leverage has remained stable at around 7.6x at end-2024 compared with end-2023 given the company's lack of EBITDA growth. This is above Cerved's negative sensitivity of 6.5x EBITDA Leverage for the 'B' rating. Fitch forecasts leverage will remain above this level until at least 2027, reflecting a credit profile more in line with a 'B-' rating. Low Interest Coverage: EBITDA interest coverage decreased to 1.6x at end-2024 from 1.9x at end-2022 due to the company's mostly floating-rate debt. A reduction in base interest rates may provide some relief and, at the cash flow level, but financial flexibility has reduced. Whilst refinancing risks have increased, Cerved's long-dated debt maturities should provide it time to improve its financial profile ahead of refinancing, subject to limited or no dividend distributions. Partial FCF Generation Recovery: FCF generation was negative in 2023 and 2024 and Fitch expects it to partially recover in 2025 as lower interest and tax payments provide some relief. However, FCF generation will be contingent on revenue growth and effective working-capital management. Fitch forecasts FCF as a percentage of sales to remain in the low single digits until 2027 in line with peers in the 'B-' rating level. Volatile Revenue Growth: Cerved's services are key for its clients' business, banks in particular. However, contracts are flexible and, in downturns, clients are able to cut back on their subscriptions to or reduce their scope of services from Cerved. The business has some cyclicality, as demonstrated by a 6.6% revenue drop in 2020, due to the pandemic, and a 1.4% drop in 2022 and a 3.5% drop in 2023. Cerved's revenues have decreased by 3.2% in 2024, but Fitch expects stabilisation and growth in 2025 and 2026. Strategy Shift: Cerved has invested in its offering to diversify from competitors offering similar data-based solutions. The group expects additional growth in 2025 will be spurred by sales from new products and restructured sales team and processes. This aims to address Cerved's level of service to its clients' and revenue visibility. Fitch is conservative on growth from the new product suite as execution risk is higher where Cerved is less well known and has yet to establish its market share. Deleveraging Through Cost Savings: Cerved has earmarked a total of EUR63 million available remaining cost savings as of 4Q24, after achieving EUR58 million. In its forecasts Fitch assumes EUR50 million by 2027, factoring in execution risks and potential delays. However, its deleveraging assumptions for 2025-2027 rely heavily on these savings. Aggressive Financial Policy: The group issued EUR195 million floating-rate notes in 2023 to fund a EUR108 million dividend and a EUR65 million loan to another ION company, which Fitch treats as equity distributions. Leverage is high in a context of weak FCF generation, but management targets up to EUR50 million of yearly dividends distributions. This weakens Cerved's credit profile despite its assumption of lower dividends at EUR20 million-30 million and, in its view, reflects an aggressive financial policy. Revenue Contraction in 2024: Fitch assumes revenues decreased 1.8% in 2024 due to a reduction in real-estate appraisals, a lack of new non-performing loan portfolio opportunities and a few contract renegotiations with clients. The latter resulted in better payment terms, contractual protection and lengths, but at the cost of some revenue impairment in 2023 and 2024. Fitch does not expect any further renegotiations to put pressure on revenues as the company has transitioned to new contract terms. Risk-Intelligence Lead in Italy: Cerved's risk-intelligence division has a leading position in Italy since the 1970s. It started as a data processing centre for the registry of Italian companies. Fitch understands from management that it still maintains a leading market share, with CRIF as its key competitor. Clients are corporations and banks, which acquire, among other things, Cerved's credit data and scoring services. Banks are usually covered by subscription-based contracts, while corporations are usually billed as they use Cerved's services. Derivation Summary Cerved's ratings are based on its strong market position and its high leverage and low interest coverage ratios. Compared with large information providers such as Thomson Reuters Corporation (BBB+/Stable) and Informa PLC (BBB/Stable), Cerved has significantly lower scale, is less geographically diversified and has a more leveraged capital structure. Cerved is also comparable with LBO and high-yield public and privately rated issuers covered by Fitch in the business services sector. Enterprise resource planning providers such as TeamSystem S.p.A. (B/Stable) and digital listings platforms like Speedster Bidco GmbH (Autoscout 24, B/Stable) have leverage and margin structures that are stronger than Cerved's. In addition, Fitch believes that both Teamsystem's and Autoscout24's business models are more robust, due to low churn in the ERP sector and greater geographic diversification, respectively. Cerved has a similar FCF profile to Dedalus SpA (B-/Negative) but lower leverage. The companies are similar as they have made slow deleveraging progress and high execution risks around their growth strategies, which can only be successful with new contract wins or additional service volumes from up- and cross-selling, while deleveraging would also require tight cost control. Key Assumptions - Revenue declines of 1.5%-2% in 2024 followed by low-single-digit growth in 2025 and 2026 - Fitch-defined EBITDA margin to grow to around 45% in 2024 from 43.5% in 2023, mainly due to Cerved's large cost-efficiency plan, and further to 48% by 2027 - Working capital outflows of EUR15 million-20 million in 2024-2026 - Capex at around 8% of revenue a year until 2027 - EUR20 million-30 million of dividends in 2024-2027 - No incremental debt assumed Recovery Analysis Its recovery analysis assumes that Cerved would remain a going-concern in distress rather than be liquidated in a default. Most of its value is derived from its brand, proprietary products and contents portfolio, and from its knowledge and established market position in credit management. Fitch assumes a 10% charge for administrative claims. Its analysis assumes a going-concern EBITDA of around EUR165 million. This assumes corrective measures to have been taken in a restructuring, still positive FCF generation, and an unsustainable financial structure due to excessive leverage, increasing refinancing risk. A restructuring may arise from financial distress related to increased competition via a broad adoption of disruptive technologies, and therefore pricing pressures, in credit information. It may also arise from a broad consolidation of Cerved's clients, particularly banks, that leads to more contractual power for them. A drop in the number of managed loans in Cerved's portfolio, following disposals by owners on the secondary markets, may also be a factor. Fitch continues to apply an enterprise value multiple of 5.5x to the post-restructuring going-concern EBITDA, towards the higher end of its range. Its waterfall analysis assumes the EUR80 million super senior revolving credit facility is fully drawn on default, and Fitch includes the EUR350 million fixed rate notes and the EUR1.245 billion floating rate notes, both due in 2029. Its analysis generates a ranked recovery in the 'RR4' band, after deducting 10% for administrative claims. This indicates an instrument rating for the senior secured notes of 'B' with a RWN and expected recoveries are of 46%. RATING SENSITIVITIES Factors That Could, Individually or Collectively, Lead to an Upgrade: - Fitch does not expect an upgrade to Cerved's ratings Factors That Could, Individually or Collectively, Lead to a Revision of the Rating Outlook to Stable: - Substantial evidence of progress in reducing EBITDA leverage to below 6.5x - Greater visibility in EBITDA interest coverage rising above 2.0x - Stabilisation and growth of revenues and successful execution of the group's cost-cutting plan and new product introduction plan as reflected in EBITDA margin expansion Factors That Could, Individually or Collectively, Lead to Downgrade: - EBITDA leverage above 6.5x on a sustained basis - EBITDA interest coverage at below 2.0x - CFO less capex sustained at below 2% of total debt - Continuing operational challenges such as business disruptions, including rapid decreases of managed loans in credit management or material pricing power erosion in risk intelligence Liquidity and Debt Structure Fitch expects Cerved to maintain a fairly constant amount of cash on its balance sheet of EUR20 million-30 million over 2024-2026, based on its forecasts of positive FCF from 2025 and subject to cash distributed for dividends or intercompany loans. In addition, Cerved has access to an undrawn revolving credit facility of EUR80 million. Issuer Profile Cerved is an established leader in credit information and intelligence and credit management in the Italian market. It has a well-entrenched position in the financial market in Italy with a customer base of 30,000 corporates, 150 public authorities and around 95% of Italian banks. Sources of Information In accordance with Fitch Ratings' policies, the issuer decided to appeal and has undertaken to provide additional information to Fitch Ratings. This resulted in a Rating action that is different than the original Rating committee outcome. 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 Cerved Group S.P.A. has an ESG Relevance Score of '4' for Governance Structure due to inter-company loan movements and related-party transactions between ION Group companies over which Fitch has limited visibility on its terms and economic substance. This has a negative impact on the credit profile and is relevant to the ratings 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 ----------- ------ -------- ----- Cerved Group S.P.A. LT IDR B Rating Watch On B senior secured LT B Rating Watch On RR4 B IREN SPA: Fitch Assigns BB+ Rating on EUR500MM Subordinated Notes ----------------------------------------------------------------- Fitch Ratings has assigned Iren S.p.A.'s (BBB/Stable) EUR500 million perpetual subordinated notes' a final rating of 'BB+'. This follows the receipt of final bond documentation conforming to the information reviewed earlier. The hybrid notes qualify for 50% equity credit, as interest payments are deferrable at the company's discretion. Additionally, the notes' subordinated ranking provides loss absorption for Iren's more senior debt, as the notes rank senior only to shares and any other class of share capital. IREN's IDR and Stable Outlook reflect its well-integrated and balanced business mix of mostly regulated and quasi-regulated activities. Fitch expects the hybrid issue to enhance financial flexibility and allow Iren to maintain its strong financial profile, with funds from operations (FFO) net leverage skewed towards its positive rating sensitivity over 2024-2028, even when accounting for the earlier-than-expected consolidation of EGEA S.p.A. Key Rating Drivers The Notes Rating Reflects Deep Subordination: The hybrid notes are rated two notches below Iren's senior unsecured rating of 'BBB', given their deep subordination and loss-absorption features and, consequently, lower recovery prospects. The notes only rank senior to the claims of common equity and other class of share capital. Equity Treatment: The securities qualify for 50% equity credit as they meet Fitch's 'Corporate Hybrids Treatment and Notching Criteria' with regard to deep subordination, limited events of default, full discretion to defer coupons for at least five years, and optional call dates. These are equity-like characteristics, but equity credit is limited to 50%, due to the cumulative interest coupon, a feature that is more debt-like in nature. Cumulative Coupon Limits Equity Treatment: The interest coupon deferrals are cumulative, resulting in a 50% debt treatment of the hybrid notes by Fitch. Despite the 50% equity treatment, Fitch treats coupon payments as 100% cash interest. Iren will be obliged to make a mandatory settlement of deferred interest payments under certain circumstances, including the declaration of a cash dividend. This is a feature similar to debt-like securities and reduces its financial flexibility. Effective Maturity Date: While the new hybrid is perpetual, Fitch deems its effective remaining maturity as 2050, when Iren will no longer be bound by replacement language, which discloses an intention to replace the instrument with the proceeds of a similar instrument or with equity on redemption or repurchase. The cumulative coupon step-ups are limited to 25bp in 10.25 years and 100bp (cumulative) in 25.25 years. Under Fitch's criteria, the equity credit of 50% falls to 0% five years before the effective maturity date. Iren S.p.A Strong Leverage Metrics, Ample Headroom: Iren remains committed to its 'BBB' rating, with solid rating headroom allowing high financial flexibility. Fitch expects FFO net leverage to average 4.3x in 2024-2028, including the hybrid issue, EGEA consolidation, and some conservative assumptions on regulations, energy prices, and supply profitability. Fitch projects EBITDA at slightly over EUR1.4 billion in 2028, while net debt will increase to near EUR5.1 billion in 2028, from EUR3.9 billion in 2023, primarily driven by its investment plan and increasing dividends. Synergies Acceleration from EGEA Acquisition: Iren is now expected to step up its ownership of EGEA to 55%. While Fitch expects the consolidation of EGEA to modestly affect Iren's net leverage trajectory, in light of the Alba-based utility's EUR55 million-EUR60 million EBITDA and EUR170 million net debt, Fitch believes it will substantially accelerate synergies. This is due to its proximity to Iren in the Piedmont region, its strong recognition in the Cuneo Province, and the complementary services it provides, such as district heating, water and gas distribution networks, and waste collection and supply. Positive Trading & Governance Evolution: Iren's EBITDA performance in 9M24 was solid and marginally better than its forecast, with a 2024 company-defined net debt/EBITDA of 3.3x versus its expected 3.4x. This was due to higher hydroelectric production and higher-than-expected electricity volumes sold to final clients during 2H24. Iren's appointment of the Gianluca Bufo, as CEO in September 2024, confirms the shareholders' alignment with the 2024-2030 business plan that is grounded in disciplined organic growth. Resilient Business Mix: Iren's business mix is defensive, with regulated activities (electricity, gas and water distribution, waste management, and district heating) expected to contribute 66% of EBITDA until 2028. Quasi-regulated activities (incentive and long-term contracted generation, some waste treatment activities, and capacity market contributions) will add another 11%, minimising Iren's volume and price risks. The Italian regulated network is fully protected from high inflation and interest rates. Well-Balanced Merchant Exposure: Iren's merchant activities are largely naturally hedged, providing overall stability even in a volatile energy environment. In waste management, the company shows a willingness to maintain a balance between collection and treatment activities. Additionally, Iren's hedging policy is sound and balanced, in its view. Instrument Uplift Dependent on Sovereign: Fitch currently does not apply the one-notch uplift for higher expected recoveries on debt instruments issued by utilities with more than 50% of earnings from regulated activities under its Corporates Recovery Ratings and Instrument Ratings Criteria. This is because doing so would result in Iren's senior unsecured debt rating exceeding Italy's IDR of 'BBB'/Positive. However, a rating upgrade on Italy would allow the uplift and be positive for Iren's debt ratings. Derivation Summary Iren has a comparable business profile with other Italian multi-utilities rated by Fitch, such as Acea SpA (BBB+/Stable) and Alperia SpA (BBB/Stable), and international peers such as EDP, S.A (BBB/Stable) and Naturgy Energy Group, S.A. (BBB/Stable). For Acea, the rating differential largely reflects a higher 85% contribution of fully regulated activities, versus Iren's 66%, notwithstanding its slightly higher leverage. Alperia has a lower debt capacity than Iren, due to a lower 30% contribution of regulated and quasi-regulated activities, which is partially offset by its 100% fuel cost-free asset base. The larger EDP is rated at the same level as Iren with similar leverage metrics, but has a slightly lower debt capacity, due to its lower share of regulated activities. Naturgy has a similar leverage profile but a moderately weaker business risk profile, due to its higher exposure to volatile gas activities, which is partially offset by its slightly larger share in regulated businesses. Key Assumptions - Electricity prices normalising at EUR85/MWh by 2027 - Lower weighted average cost of capital of 5.9% for gas and 5.6% for electricity distribution from 2025 onwards - EBITDA to rise to EUR1.4 billion by 2028 - Cumulative net investments of almost EUR6 billion in 2024-2028 - Cumulative dividends of more than EUR910 million in 2024-2028 RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - FFO net leverage above 5.0x (2023: 3.4x), and FFO interest coverage below 4.0x (2023: 11.6x) over a sustained period, for instance as a result of lower-than expected operating cash flow and lack of capex and dividend flexibility - Growing exposure to unregulated activities or material debt-funded acquisitions beyond its expectation Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Clear commitment to structural FFO net leverage below 4.3x and FFO interest coverage sustained above 5.0x, assuming an unchanged business risk profile - An upgrade of the Italian sovereign rating to 'BBB+' will trigger an upgrade of Iren's senior unsecured debt and the hybrid notes ratings Liquidity and Debt Structure At end-September 2024, Iren had cash and cash equivalents of around EUR1.3 billion and current available long-term committed facilities of almost EUR0.7 billion. This is adequate for its short-term debt maturities until December 2025 of around EUR1.1 million and its expectation of negative free cash flow of under EUR0.7 billion after acquisitions and divestitures in the next 15 months. Issuer Profile Iren is the fourth largest Italian multi-utility by revenues. Date of Relevant Committee 13 January 2025 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 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 ----------- ------ ----- Iren S.p.A. Subordinated LT BB+ New Rating BB+(EXP) =================== L U X E M B O U R G =================== IREL BIDCO: Fitch Affirms 'B+' LongTerm IDR, Outlook Stable ----------------------------------------------------------- Fitch Ratings has affirmed Germany-based Irel BidCo S.a.r.l.'s (IFCO) Long-Term Issuer Default Rating (IDR) at 'B+' with Stable Outlook. Fitch has also affirmed IFCO's senior secured rating at 'BB-' with a Recovery Rating of 'RR3'. The rating affirmation reflects volatile free cash flow (FCF), due to high capex to fulfill new contracts, while profitability remains robust and other key credit ratios are within the rating sensitivities in its updated rating case forecast. IFCO's leading market position in reusable packaging container (RPC) pooling solutions, and stable, non-cyclical demand from its end-markets mitigate its narrow product offering. Following several recent acquisitions, Fitch forecasts steady revenue growth, reflecting a ramp-up of the business operations with a sustainable EBITDA margin that supports the Stable Outlook. Key Rating Drivers Robust Profitability: IFCO consistently achieved EBITDA margins exceeding 20% during FY21-FY24 (financial year-end June), allowing the group to maintain leverage at an average of 5.5x. Healthy profitability is supported by the nature of the business through the reuse of RPCs, appropriate price revision to cover cost inflation, and the application of cost indexation clause in contracts. Fitch forecasts Fitch-defined EBITDA margin to remain at 21%-22% for FY25-FY28. Negative FCF: In FY24, FCF was significantly hit by increased interest paid, due to amend & extend (A&E) refinancing in February 2024 and multiple debt rollovers throughout the year. Capex also slightly exceeded its previous forecasts. The projected higher capex for FY25-FY28, compared with its earlier estimates, is driven by the group's expansion as it needs to enhance its network following recent acquisitions and new contract wins. Fitch expects FCF margins to be slightly negative in FY26, before turning sustainably positive from FY27 onwards. Expansion Drives Capex: IFCO's capex is subject to both the volatility of resin (polypropylene) prices and the volume of RPCs to be replaced or added to the existing pool in operation. Capex in FY24, net of proceeds from RPCs disposals, increased by about EUR18 million to EUR234 million, and Fitch forecasts it to rise to about EUR292 million in FY25, due to prior acquisitions and anticipated RPCs ramp-up. It typically takes about three to four years to ramp up the RPC pool on new major contracts and acquisitions. Cost Control Strategies: Rubber, plastics and other cost inflation such as labour and transportation are largely covered via product price indexation, which varies by the country of operations. To mitigate rising RPC unit price, IFCO is increasing the use of recycled material from broken RPCs and legacy pools. Adequate Leverage: Healthy EBITDA margin gains supported EBITDA leverage at FYE24 of 5.0x, down from FYE23's 5.5x, which is the negative rating sensitivity. Fitch forecasts that lower inflationary pressure, accompanied by the expected ramp-up, will support deleveraging in the next three years. Fitch forecasts EBITDA leverage to fall to and average 4.5x during FY25-FY28. Good Revenue Visibility: IFCO holds leading market positions in the regions it operates and has a large network of customers under long-term contracts with an average maturity of 4.9 years as of FYE24. This provides the group with good revenue visibility and acts as a barrier to entry. Over the last four years, the group has successfully increased the share of contracts with indexation clauses that support the sustainability of operating margins. Narrow Service Offering: IFCO's service offering is limited to providing RPCs, primarily to fruit and vegetable producers for further transport to retailer warehouses or shops. This is mitigated by its strong market position and good, albeit concentrated, geographic diversification (Europe at 70% in FY24), the US and Canada (21%), Latin America (5%) and China/Japan (4%). It has concentration risk as its top five customers represent 53% of trip volumes, though they represent a lower share of revenue. Supportive End-Market: IFCO's business profile is robust and characterised by sustainable demand from customers, long-term relationships with customers, exposure to industries with low cyclicality, and a solid market position. The market is growing due to population growth, partial replacement of cardboard packaging and healthier lifestyle choices. Fitch sees scope for further growth, with pooled RPCs only accounting for 20% of global fresh produce shipping volumes and the majority still shipped in one-way carton-board containers. Global Niche Market Leader: IFCO has strong shares of the European and North American pooled RPC markets. Its strong international coverage across more than 50 countries offers retailers a network that is stronger than its competitors'. IFCO's size and coverage offer further scale benefits and price leadership, and it is renowned for building strong relationships with larger retail chains. Competition comes from single-use packaging, from which IFCO is taking market share, retailers' own pools, as well as small regional RPC providers. Derivation Summary As IFCO does not have a direct peer Fitch compares it with packaging manufacturing companies and business services companies. IFCO is much smaller than larger packaging company CANPACK Group, Inc. (BB-/Positive), which has a stronger business profile supported by greater product diversification. IFCO compares well with Fiber Bidco S.p.A. (B+/Stable) by scale and has similar geographical diversification, with both being mostly exposed to Europe. IFCO is larger than Reno De Medici S.p.A. (B+/Stable) but shares similar concentrated geographical diversification and a narrow product mix. IFCO compares well against Fitch-rated medium-sized companies in niche markets, including property damage restoration service provider Polygon Group AB (B/Stable) and provider of testing, inspection and certification services Amber HoldCo Limited (Applus; B+/Stable). Applus's business profile is stronger through better geographical diversification and mix of end-markets. Polygon's end-market diversification is also stronger versus IFCO's while geographical exposure is similarly concentrated on Europe. IFCO's EBITDA margins are weaker than Albion Holdco Limited's (BB-/Stable), but stronger than that of Polygon, Applus and the aforementioned packaging companies. Similar to CANPACK's and Albion's, IFCO's FCF margin is under pressure from growth capex to ramp up for new accounts, while Fiber Bidco and Applus report broadly positive FCF margins. IFCO's EBITDA leverage on average is comparable with that of Applus, Assemblin Caverion Group AB (B/Stable) and is stronger than Fiber Bidco's and Polygon's. Key Assumptions Key Assumptions Within Its Rating Case for the Issuer - Revenue to rise on average 3.4% in FY25-FY28, supported by price revisions and ramp-up of the RPCs in operations - EBITDA margin at slightly above 21% in FY25 and rising towards 22% by FY28 on revenue growth and cost control - Capex net of disposals of RPCs (around EUR35 million annually) of EUR292 million in FY25, EUR265 million in FY26, EUR245 million in FY27 and EUR230 million in FY28 - Drawdown of an additional EUR30 million in its revolving credit facility (RCF) in FY25, with the total drawdown of the RCF at EUR70 million by FYE25 - No M&A or dividends to FY28 Recovery Analysis The recovery analysis assumes that IFCO would be considered a going concern (GC) in bankruptcy and that it would be reorganised rather than liquidated. This is driven by its leading position in a niche market, a long-term operating performance record, and long-term relationships with customers. Fitch assumes a 10% administrative claim. Its GC EBITDA estimate of EUR230 million reflects the loss of a number of its largest retailers, increased substitution to one-way cardboard packaging among some clients, and increased competition. The assumption also reflects corrective measures taken in reorganisation to offset the adverse conditions that trigger the assumed default. A multiple of 5.0x is applied to GC EBITDA to calculate a post-reorganisation valuation, in line with multiples applied to some peers in the packaging industry. The choice of this multiple considers the concentration around one product/service, as well as IFCO's market leadership, geographic diversification and a flexible cost base. Fitch estimates the total amount of senior debt for creditor claims at EUR1.9 billion, which comprises a secured term loan B (TLB) of EUR1.64 billion, secured RCFs of EUR40 million maturing in November 2025 and EUR270 million maturing in May 2029, and other debt of EUR5 million. Its waterfall analysis generates a ranked recovery for IFCO's TLB equivalent to a Recovery Rating of 'RR3', leading to a 'BB-' rating. The waterfall generated recovery computation output score is 53%. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Operating under-performance resulting from a loss of large customers, significant pricing pressure, technology risk, or margin-dilutive debt-funded acquisitions - EBITDA leverage consistently above 5.5x - EBITDA interest coverage below 3.0x - Inability to generate positive FCF margins on a sustained basis Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - EBITDA leverage sustained below 4.5x - EBITDA interest coverage above 4.0x - FCF margins in the high single digits on a sustained basis - Larger scale while maintaining an EBITDA margin greater than 20% and reduced customer concentration Liquidity and Debt Structure IFCO reported readily available cash of EUR110 million at end-September 2024. Its EUR310 million RCFs, were drawn down by EUR40 million to fund new business acquisitions in Europe during 2HFY24 and to cover temporary fluctuations in working capital. Readily available cash (after its adjustment for working capital needs at 3% of revenues) and the remaining RCFs are enough to cover expected negative FCF of EUR59 million in the coming 12 months. At FYE24, IFCO had one first-lien TLB on its balance sheet of EUR1.64 billion maturing in November 2029. Issuer Profile IFCO runs a global network of RPC operations, servicing some 550 retailers and more than 18,000 growers worldwide. 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 IFCO has an ESG Relevance Score of '4' [+] for Waste & Hazardous Materials Management; Ecological Impacts, due to its product design that benefits life cycle management, which has a positive impact on the credit profile, and is relevant to the ratings 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 ----------- ------ -------- ----- Irel Bidco S.a.r.l. LT IDR B+ Affirmed B+ IFCO Management GmbH senior secured LT BB- Affirmed RR3 BB- ============= R O M A N I A ============= CEC BANK: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable --------------------------------------------------------- Fitch Ratings has affirmed Romania-based CEC Bank S.A.'s (CEC) Long-Term Issuer Default Rating (IDR) at 'BB' with a Stable Outlook, its Viability Rating (VR) at 'bb', and Government Support Rating (GSR) at 'b'. Key Rating Drivers VR Drives IDRs: CEC's IDRs are driven by its VR, which reflects the bank's moderate, albeit strengthening, business profile, adequate capitalisation and reasonable funding and liquidity. These factors offset its asset quality and profitability that are weaker than that of the sector. CEC's risk profile is commensurate with its fairly simple business model, with underwriting standards broadly in line with domestic industry standards, but with partly decentralised lending approval and fairly unsophisticated risk controls. Operating Environment on Negative Outlook: The Outlook change on the Romanian sovereign to Negative recently has led to a negative revision of the operating environment (OE) outlook for Romanian banks. The OE is assessed at 'bbb-' and capped at the sovereign rating. It will be revised lower should the sovereign be downgraded. Medium-Sized, State-Owned Bank: CEC is a medium-sized, state-owned bank. It operates a universal bank business model with lending primarily to the non-retail segment, including a large, but declining, exposure to public-sector entities. The bank is largely funded by granular retail customer deposits. Reasonable Risk Profile: CEC's risk profile assessment is commensurate with its business model and balances a conservative risk appetite for retail lending, dominated by mortgage loans, against a moderately concentrated and fast-growing corporate loan portfolio. Loan Quality Weaker than Peers: CEC's loan-quality metrics are weaker than peers', largely reflecting problematic corporate and SME exposures. The Stage 3 loan ratio of 7% at end-1H24 was above the peer- and sector-average of 3%, but Fitch expects it to improve slightly toward 6% by end-2026. Gross loans accounted for a low 37% of assets, while other exposures mainly comprised lower-risk Romanian and eurozone sovereign risk, supporting CEC's asset quality. Improved Profitability: CEC's operating profit improved to 2.5% of risk-weighted assets (RWAs) in 1H24, but its profitability remains weaker than larger peers', reflecting its loan book structure, higher funding costs, and less diversified revenues. Fitch expects CEC's profitability to moderately decline over the next two years, as RWAs growth and higher costs offset a higher net interest margin. However, Fitch expects operating profit to remain above 2% of RWAs. Adequate Capitalisation: CEC's capitalisation is broadly in line with its peers' and adequate for its business and risk profiles. The common equity Tier 1 (CET1) ratio fell to 17.2% at end-1H24 from 18.6% at end-2023, but Fitch expects the ratio to recover to above 18%, once 2024 earnings are capitalised. Its assessment is underpinned by the state's propensity to provide ordinary support, as demonstrated by its plans for further capital injections. Stable Funding and Strong Liquidity: CEC's funding and liquidity profile reflects its strong liquidity buffer and a diversified, granular customer deposit base. It had a healthy loans/customer deposit ratio of 44% at end-1H24. However, its deposit franchise is moderately weaker than higher-rated domestic peers', in its view, as reflected in CEC's higher deposit remuneration. Fitch estimates that CEC met its minimum requirement for own funds and eligible liabilities (MREL) with a solid buffer at end-2024, which was further strengthened by the issuance of eligible senior non-preferred (SNP) debt in late 2024. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade The bank's VR and IDRs have headroom to absorb a potential one-notch downward revision of the Romanian banks operating environment score, which would most likely be driven by a sovereign downgrade. However, a severe weakening in the operating environment that severely affects business prospects for Romanian banks would increase pressure on CEC's ratings. CEC's ratings would likely be downgraded if its CET1 ratio weakens to below 15% for an extended period and if a sharp increase in impairment charges erodes operating profitability. The bank's VR and IDRs could also be downgraded if the bank's risk appetite increases materially, which may be reflected in rapid business expansion and lending growth that materially weakens asset quality. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade An upgrade of the bank's VR and IDRs would require a stabilisation of the Romanian banks' operating environment and a record of sustained improvements in profitability, underpinned by a structural improvement of its business profile, while its asset-quality metrics materially improve and converge toward those of its domestic peers. OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS CEC's SNP is rated in line with the bank's Long-Term IDR. This is in line with the baseline notching under Fitch's Bank Rating Criteria and reflects its expectation that the bank's resolution buffer will be met only by SNP and more junior instruments. CEC's GSR of 'b' reflects Fitch's view of a limited probability of extraordinary support being provided to CEC by the Romanian state, its 100% owner. Fitch judges that the likelihood of support is reduced by the Bank Recovery and Resolution Directive and the Single Resolution Mechanism, which limits the ability for banks to be supported without the bail-in of senior creditors. Its view of the state's incentive to support CEC is based on its direct, full and willing state ownership and the bank's large presence in Romania's underbanked regions. OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES The SNP debt rating would be downgraded if the bank's Long-Term IDR is downgraded. The SNP debt rating would also be downgraded to one notch below the bank's Long-Term IDR if Fitch expects CEC to use senior preferred debt to meet its MREL while the buffer of SNP and more junior debt would no longer exceed 10% of CEC resolution group's RWAs on a sustained basis. The SNP debt rating could be upgraded if the bank's Long-Term IDR is upgraded. The GSR could be downgraded if the state reduces its ownership of CEC, due to partial or full privatisation of the bank, or if sovereign support to the bank is not provided in a timely manner. An upgrade of the bank's GSR is highly unlikely, given existing resolution legislation. VR ADJUSTMENTS The 'bb' earnings & profitability score is below the 'bbb' implied score, due to the following adjustment reason: revenue diversification (negative) The 'bb+' capitalisation & leverage score is below the 'bbb' implied score, due to the following adjustment reason: risk profile and business model (negative) The 'bb+' funding & liquidity score is below the 'bbb' implied score, due to the following adjustment reason: deposit structure (negative) Public Ratings with Credit Linkage to other ratings CEC's GSR is based on Fitch's assessment of support from the Romanian sovereign. ESG Considerations 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 ----------- ------ ----- CEC Bank S.A. LT IDR BB Affirmed BB ST IDR B Affirmed B Viability bb Affirmed bb Government Support b Affirmed b Senior non-preferred LT BB Affirmed BB ========= S P A I N ========= EDREAMS ODIGEO: Fitch Hikes IDR to 'B+', Outlook Stable ------------------------------------------------------- Fitch Ratings has upgraded eDreams ODIGEO S.A.'s Issuer Default Rating (IDR) to 'B+' from 'B'. The Outlook is Stable. Fitch has also upgraded the company's senior secured debt rating to 'B+' from 'B' and affirmed the Recovery Rating at 'RR4'. The upgrade follows eDreams' strong operating performance and financial deleveraging since its last update, with consistent growth in its prime membership customer base despite a highly competitive environment, resulting in a gradually maturing business model and strengthening credit metrics. The 'B+' rating balances eDreams' good brand recognition in Europe, strong free cash flow (FCF) generation and conservative credit metrics against high, albeit reducing, business profile risk versus other subscription-based businesses, modest scale and concentration on flight ticket sales. Maturity of the business model and quality of the financial policy will increasingly drive eDreams' medium-term credit profile. Key Rating Drivers Performance Ahead of Expectations: eDreams outperformed its rating case in FY24 (fiscal year ending March 2024), with Fitch-adjusted EBITDA reaching EUR88 million. Fitch projects EBITDA increasing to EUR125 million for FY25. This includes the adjustment for costs of internally developed software (FY24: -EU39 million) and for deferred revenue from the prime business (EUR34 million), which Fitch reclassifies from changes in working capital to better align EBITDA with cash generation. Fitch projects EBITDA margins to improve further in FY25 as the share of the more profitable prime business increases, while the number of subscribers that stay with the company for two or more years also grows. Steadily Maturing Business Profile: Fitch views eDreams' business profile as gradually evolving towards its higher 'B+' rating. This recognises its maturing subscriber, or prime, business, which represents around 70% of cash revenue, and the group's improving profitability profile as prime members renew their subscription and customer acquisition costs fall. Its attractive consumer proposition has allowed for continued strong growth in prime, despite an increasingly competitive environment. Despite this, Fitch views the group's modest business scale (measured by EBITDA) and concentration on flight ticket sales as continuing to constrain the rating at the upper 'B' rating level. Fitch also believes that eDreams' subscription model is riskier than other rated subscription-based businesses, for instance gym operators, given higher customer churn rates and still maturing business model. Reducing Execution Risks: eDreams has made significant progress in its business model transition into the first subscription model for the travel industry, with 6.5 million prime members at end-1HFY25. It has consistently grown its subscriber base, including in challenging times, such as during the pandemic and in the softening consumer environment in 2024. There are underlying business development risks, but Fitch sees these execution risks as well managed in the group's efforts to evolve its products and its aim to increase penetration in existing markets as well as for expansion into new geographies. Lower Financial Leverage, Financial Policy: Fitch anticipates eDreams' gross EBITDA leverage to decrease significantly to 3.0x in FY25 from 7.1x in FY23. This reduction is largely attributed to the enhanced profitability of its new business model. Fitch estimates a growing leverage headroom under the current rating, assuming the company sustains its new subscriber growth, with leverage not being a rating constraint. At the same time, there is a growing significance of a consistent financial policy and capital allocation priorities, especially given the company's recently executed share buy-backs. Highly Cash-Generative Business Model: eDreams operates an asset-light business model with most of its costs being variable and mostly consisting of customer acquisition, merchant, IT and call centre costs. The business also has limited capex requirements, resulting in strong FCF generation, which favourably differentiates eDreams from other 'B+'-rated peers. Fitch projects eDreams will sustain positive FCF over the medium term, assuming a continued growth in the prime business and neutral changes in working capital (after adjusting for deferred prime revenue). Neutral Outlook for Travel: The company has benefited from a faster rebound of European travel routes over the past three years, with most EMEA airlines seeing volumes return to pre-pandemic levels. Fitch believes sector fundamentals will remain neutral for the business in 2025, with flight volumes expected to surpass 2024 levels, partially offset by pressure on ticket prices. Although consumer demand has softened, evidenced by smaller basket sizes, eDreams has been less affected than peers due to the evolution of its business to a subscription model. Strong Positioning in Highly Competitive Market: The global online travel agent market is characterised by low switching costs and intense competition from bigger and more diversified operators, metasearch sites and the direct channels of airlines and hotels, making industry players more vulnerable to higher customer acquisition costs and rates of churn. However, the highly fragmented travel industry in Europe continues to favour the use of intermediators and online-based companies are enjoying increasing penetration. eDreams' fully online subscription model, with well-developed mobile channels and different web-based brands, is a competitive advantage. Derivation Summary eDreams trails behind global online travel agents like Expedia Group, Inc. (BBB/Stable) and Booking.com in scale, geographic diversification, market penetration, and the variety of offerings across hotels, flights, cars, and insurance. Fitch also views eDreams' subscription business model as less mature than transactional business model that Expedia and Booking.com operate. The rating differential with Expedia is further explained by Expedia's stronger financial flexibility. Compared with other subscription-based businesses, such as gym operators, eDreams has higher business risk in view of its less sticky customer based and more discretionary product. Fitch rates eDreams higher than UK based gym operators Deuce Midco Limited (B/Stable) and Pinnacle Bidco plc (B-/Stable), driven by more conservative financial structure and considerably stronger FCF profile. While not direct competitors, tech companies like TeamSystem S.p.A. (B/Stable) and Sophos Intermediate I Limited (B/Stable) both operate on a subscription-based model. With a significantly lower churn rate than eDreams', both peers demonstrate strong revenue visibility, achieving above 86% recurring revenue for both. Both TeamSystem and Sophos also boast higher EBITDA margins, expected to reach 36% and 26% in 2024, respectively, compared with less than 20% anticipated for eDreams in the same year. However, TeamSystem's aggressive acquisition strategy has led to increased leverage, with Fitch-defined EBITDA leverage projected at 5.3x in 2025, remaining notably higher than eDreams' 3.0x forecast for this year. Fitch expects Sophos' EBITDA leverage will also see a spike to 7.6x (pro-forma 6.6x) in FY25 resulted from M&A, before falling to 6.3x in FY26. Key Assumptions - Revenue from non-prime business reducing to around 20% of total revenue by FY27 - Addition of 1.3 million prime subscribers in FY25 - No deterioration in churn rates and increasing share of subscribers that stay with the company for two and more years - Prime average revenue per user (ARPU) remaining broadly stable over FY26-FY28 after declining to EUR75 in FY25 (EUR78 in FY24) - Stable working capital (after adjusting for changes in deferred prime revenue) - Fixed costs at EUR100million-EUR120 million a year (excluding personnel costs that Fitch reclassifies from capex) - Capex of EUR50 million-EUR70 million a year, of which 80% is expensed, reducing Fitch-adjusted EBITDA - No bolt-on M&A - Share buybacks of around EUR85 million in FY25; about EUR50 million a year thereafter Recovery Analysis In its recovery analysis, Fitch would consider eDreams to be a going concern in bankruptcy that would be reorganised rather than liquidated. Fitch has assumed a 10% administrative claim in the recovery analysis. Fitch assumes a going-concern EBITDA of EUR80 million which Fitch believes should be sustainable post-restructuring. This implies EUR10 million increase from its previous estimate, given the company's higher earnings base, with increased prime subscriber base. Fitch assumes a 5.0x distressed enterprise value/EBITDA multiple, reflecting a weaker competitive position than global leaders. The above-mentioned assumptions result in a distressed enterprise value of about EUR360 million. Based on the payment waterfall, Fitch has assumed the group's EUR180 million RCF to be fully drawn and ranking senior to its EUR375 million senior secured notes. Its waterfall analysis generates a ranked recovery for its senior secured debt in the 'RR4' band, indicating a 'B+' instrument rating, in line with eDreams IDR. The waterfall analysis output percentage on current metrics and assumptions is 48% for the senior secured bond. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Increasing churn rates or diminishing share of prime subscribers that have been with the company for two and more years or further decrease in ARPU, leading to declining or stagnating profitability margins - EBITDA leverage above 4.5x on a sustained basis - FCF margins reducing to low single digits Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Maturity of the subscription business model, reflected in reduced churn rates and higher proportion of subscribers that stay with the company for two or more years - Increased business scale with EBITDA above EUR200 million on a sustained basis, alongside improving product and geographical diversification - Fitch-adjusted EBITDA margins trending above 20%, alongside FCF margins sustained in the high single digits - EBITDA leverage below 3x on a sustained basis, supported by a consistent financial policy Liquidity and Debt Structure Comfortable Liquidity: As of end-September 2024, eDreams had EUR41 million of reported cash and EUR145 million available for cash drawings under its EUR180 million revolving credit facility (RCF). Fitch projects positive FCF will contribute to cash build-up over the next four years, despite assumed share buybacks. eDreams' RCF matures in January 2027 and the senior secured notes are due in July 2027. Fich assesses refinancing risks as limited in view of low leverage and strong cash generation. Issuer Profile eDreams is a travel subscription platform and is one of the largest e-commerce businesses in Europe. 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 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 ----------- ------ -------- ----- eDreams ODIGEO S.A. LT IDR B+ Upgrade B senior secured LT B+ Upgrade RR4 B ===================== S W I T Z E R L A N D ===================== APTIV SWISS: Fitch Lowers Rating on Jr. Subordinated Debt to 'BB+' ------------------------------------------------------------------ Fitch Ratings has placed Aptiv PLC and Aptiv Corporation's (collectively, Aptiv) ratings, including both Long-Term Issuer Default Ratings (IDRs) on Rating Watch Negative (RWN) due to the company's plans to spin off its Electrical Distribution Systems (EDS) business into a separate company. The RWN applies to all the company's rated debt. Fitch has also assigned Aptiv Swiss Holdings Limited a Long-Term IDR of 'BBB' and placed the rating on RWN. Following a reorganization in December 2024, Aptiv Swiss Holdings is the obligor for the debt previously issued by Aptiv PLC. Fitch has downgraded Aptiv Swiss Holdings' junior subordinated debt to 'BB+' from 'BBB-' to align the rating more closely with similar instruments of other issuers. While Fitch's Corporates Hybrids Treatment and Notching Criteria allows for modified notching, the decision to downgrade it was made following a committee review to ensure consistency, and has therefore been categorized as an error due to the procedural requirement of convening a committee. Fitch has placed the ratings on RWN due to the smaller size of the remaining company (New Aptiv) following the spin-off, which could cause gross EBITDA leverage to rise without a decrease in debt. Fitch could downgrade the ratings if leverage is expected to be sustained above Fitch's negative rating sensitivity threshold following the spin-off. However, Fitch expects a potential downgrade would be limited to a single notch. Fitch could remove the ratings from RWN and assign a Stable Rating Outlook if New Aptiv develops a plan to keep leverage within 'BBB' tolerances following the spin-off. Resolution of the RWN will occur by transaction completion currently expected by the end of 1Q26, as it will be contingent on more information becoming known about New Aptiv's capital structure. Key Rating Drivers Planned Spin-Off of EDS Business: The planned spin-off of the EDS business will create two separate companies with differing profiles. The New Aptiv will remain an industrial technology business with a focus on leading edge automotive technologies, such as advanced driver assistance systems (ADAS) and software-defined vehicles (SDVs), as well as technologically complex engineered components for use in harsh environments. Fitch expects the EDS business, which will be focused on low voltage (LV) and high voltage (HV) vehicle electrical architecture systems, to also have good growth prospects, but at a lower rate than New Aptiv. Due to the nature of the two businesses, Fitch expects New Aptiv will have higher EBITDA and FCF margins than the standalone EDS business. Potentially Higher Leverage: Although New Aptiv will likely show stronger margins and a higher growth profile than the current, pre-spin business, Fitch estimates the spin-off will reduce Aptiv's EBITDA by over 25%. This decline in EBITDA could result in gross EBITDA leverage running above 2.5x for at least several years unless the company reduces debt to bring its capital structure in line with the smaller size of the remaining company. Aptiv's gross EBITDA leverage was already running above the level of Fitch's negative rating sensitivity following the company's debt-funded accelerated share repurchase (ASR) in 2024. However, Fitch expected leverage at the time to decline toward 2.0x by YE 2026. The spin-off could result in higher leverage for longer than Fitch's previous expectations. Strong Product Demand: Aptiv's strong position in emerging automotive technologies drove about $111 billion of new business between YE 2020 and 3Q24 (based on estimated lifetime gross program revenues), although Fitch estimates between 35% and 40% of these bookings related to the EDS business. New Aptiv remaining business will continue to have a growing presence outside of the automotive industry. The company's HellermannTyton, Winchester Interconnect and Wind River Systems units also have substantial non-automotive lines of business. Strong FCF: Fitch estimates that New Aptiv's FCF margins (according to Fitch's methodology) could run in the high-single-digit range once the lower-margin EDS business is separated from it. This assumes that capex as a percentage of revenue runs in the 4.0%-5.0% range following the separation, which is in line with historical levels. It also assumes that New Aptiv does not reinstate a common dividend following the separation. Aptiv's decision to reward shareholders via share buybacks, rather than dividends, has helped to support its FCF under Fitch's methodology. Potential Tariff Effects: The potential for higher tariffs on parts and components imported to the U.S., particularly from Mexico, could also pose a risk to both New Aptiv and the EDS business. However, Fitch expects the companies would have opportunities to mitigate a portion of higher costs through negotiations with their customers. The company's low cost structure and ongoing rotation of manufacturing capacity to lower cost locations could also help to mitigate the impact of any potential tariffs. Other Rating Considerations: Aptiv's ratings incorporate the cyclical nature of the global auto industry, volatile raw material costs, intense competition in the automotive technology sector and ongoing pandemic-related supply-chain disruptions. These factors are mitigated by Aptiv's diversification across geographies, customers and products and by its low-cost operating model. The potential for significant acquisition activity could be a risk, but this will be mitigated over the intermediate term by the company's strong FCF generation. Derivation Summary Aptiv has a relatively strong competitive position, focusing on automotive technologies that are rising in importance as safety regulations, emissions regulations, and customer demand drive growth in ADAS, connectivity and electrified propulsion systems. Aptiv, compared with more traditional auto suppliers, such as BorgWarner Inc. (BBB+/Stable) or Tenneco Inc. (B/Positive), is essentially an industrial technology company that is focused largely on autos. It also has a presence in other industries, such as aerospace and telecommunications. However, some large global suppliers compete head-to-head with Aptiv in automotive technologies, including Continental AG (BBB/Positive), ZF Friedrichshafen AG, Visteon Corporation and Lear Corporation (BBB/Stable). All four have units focused on similar automotive technologies. Aptiv's margins are strong relative to most of the global Fitch-rated auto suppliers, largely due to the company's focus on high value-added technologies and its low-cost production footprint. However, it is more mid-pack in terms of size, with less than half the revenue of the largest players, such as Continental, Magna International Inc. or Robert Bosch GmbH (A/Stable). Aptiv's credit protection metrics are generally in line with auto suppliers rated in the 'BBB' category, such as BorgWarner and Lear. Fitch rates the Long-Term IDRs of Aptiv, Aptiv Swiss Holdings and Aptiv Corp on a consolidated basis using the stronger subsidiary approach, with open access and control factors. The assessment is based on the parent and subsidiaries operating as a single enterprise with strong legal and operational ties, as well as upstream and downstream guarantees. Key Assumptions - Aptiv completes the spin-off of the EDS business by 1Q26; - Global light vehicle production in Aptiv's markets declines in the low single-digit range in 2025, then rises slightly, in the low single-digit range in subsequent years; - New Aptiv's revenue, excluding EDS, rises in the mid-single-digit range in 2025, then rises in the high-single-digit range in subsequent years, reflecting solid growth over market arising from its advanced vehicle technologies; - EBITDA margins, excluding EDS, in the high teens in 2025 and then in the low 20% range in subsequent years as the company benefits from a combination of a higher margin product portfolio, higher production levels and the realization of cost-savings benefits; - FCF margins, excluding EDS, run in the mid- to high single-digit range over the longer term; - Capex runs at about 4.5%-5.0% of revenue over the next several years; - The company maintains a strong liquidity position, including cash and revolver capacity; - Excess cash is applied primarily to share repurchases; - Fitch has incorporated the following SOFR curve assumptions in its forecasts: 4.02% in 2025, 3.93% in 2026, 3.94% in 2027 and 3.92% in 2028. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - A shift in industry dynamics that leads to a meaningful loss of share the products that Aptiv will retain post-separation; - A clear indication that the company plans to operate with sustained gross EBITDA leverage above 2.0x following the separation; - A change in the business profile that leads to sustained midcycle EBITDA margins below 12% and FCF margins below 2.0%. Factors that Factors that Could, Individually or Collectively, Lead to Removing the RWN and Assigning a Stable Outlook - A clear indication that the company plans to reduce debt, such that post-separation gross EBITDA leverage is sustained below 2.0x; - Expectations for post-separation EBITDA margins will be sustained around 15% and FCF margins will be sustained above 3.0%. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - A shift in financial policy that leads to a sustained decrease in midcycle EBITDA leverage below 1.0x; - Maintaining midcycle EBITDA margins of 17% and FCF margins above 4.0% while continuing to grow its advanced technology portfolio. Liquidity and Debt Structure Strong Liquidity: Fitch expects Aptiv's liquidity will remain strong over the intermediate term. Aptiv had $1.8 billion of unrestricted cash, cash equivalents and short-term investments at Sept. 30, 2024. Short-term investments of $791 million were earmarked to redeem the company's EUR750 million 1.5% senior unsecured notes due 2025, which were subsequently redeemed during 4Q24. In addition to its cash and cash equivalents, Aptiv had nearly full availability on Aptiv Corp's $2.0 billion revolver, with no borrowings and less than $1.0 million in letters of credit issued against it. Aptiv Corp's credit agreement matures in 2026 and includes two sustainability-linked key performance indicators (KPIs) that adjust the facility's pricing based on the company's performance against its sustainability goals. The two KPIs are based on Aptiv's greenhouse gas emissions intensity and its performance against its employee health-and-safety standards. Based on the company's recent performance, Fitch has treated $95 million of Aptiv's cash as not readily available as of Sept. 30, 2024. This is Fitch's estimate, based on its criteria, of the amount of cash Fitch believes Aptiv needs to keep on hand to cover seasonal changes in cash flow without any incremental borrowing. Fitch treats this cash as not readily available for the purposes of calculating net metrics. Debt Structure: The principal value of Aptiv's consolidated debt as of Sept. 30, 2024 was $9.6 billion (excluding estimated finance lease liabilities). The debt consisted primarily of $8.1 billion of senior unsecured notes, $500 million of junior subordinated notes, $600 million outstanding on a term loan A and $466 million of other debt. During 4Q24, the company redeemed its EUR700 million 1.5% senior unsecured notes due 2025, which was included in the above debt figure at $782 million. Issuer Profile Aptiv is an industrial technology supplier focused primarily on the auto industry. Aptiv's Signal and Power Solutions segment designs and manufactures components for vehicle electrical architecture systems. Its Advanced Safety and User Experience segment provides components and software related to vehicle safety and convenience. 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 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 ----------- ------ ----- Aptiv Corporation LT IDR BBB Rating Watch On BBB senior unsecured LT BBB Rating Watch On BBB Aptiv Swiss Holdings Limited LT IDR BBB New Rating senior unsecured LT BBB Rating Watch On BBB junior subordinated LT BB+ Downgrade BBB- senior unsecured LT BBB Rating Watch On BBB Aptiv PLC LT IDR BBB Rating Watch On BBB =========== T U R K E Y =========== TAV HAVALIMANLARI: Fitch Affirms 'BB+' Foreign Currency IDR ----------------------------------------------------------- Fitch Ratings has affirmed Tav Havalimanlari Holding A.S.'s (TAVH) Long-Term Foreign-Currency Issuer Default Rating (IDR), and its senior unsecured notes at 'BB+'. The Outlook is Stable. RATING RATIONALE The IDR reflects TAVH's diversified portfolio of assets, its financial metrics that are commensurate with a 'BB+' rating, and potential support from its parent Aeroports de Paris S.A. (ADP; BBB+/Stable). TAVH's Standalone Credit Profile (SCP) of 'bb-' reflects its material operating and regulatory exposure to Turkiye as well as the structural subordination of holding company (holdco) TAVH's debt to project-financed operating companies' (opco) debt. TAVH's ratings are notched up twice from the SCP to reflect the 'High' strategic incentive, but 'Low' operational and legal incentive for ADP to provide financial support. Fitch views TAVH as a strategic asset for ADP but the parent does not guarantee the subsidiary's debt. TAVH has yet to refinance the EUR2.2 billion bridge loan of its co-controlled Antalya airport, although Fitch understands from management it is actively working to refinance this bridge loan by 1Q25. Any delays would lead Fitch to reassess its credit profile. KEY RATING DRIVERS Revenue Risk - Volume - High Midrange Well-Diversified Portfolio; Limited Competition TAVH operates 15 airports in eight countries, benefiting from strong business and geographical diversification including locations where the aviation industry is rapidly developing. In Turkiye, TAV owns domestic hub airports (Ankara and Izmir), where passenger numbers are driven by domestic macro-economic and industry factors, and sizeable leisure point-to-point airports (Antalya and Bodrum) with a strong exposure to international passengers. TAVH's airports outside Turkiye (Almaty and Tbilisi) have strong competitive positions within their countries. In addition to the airport operations (71% of EBITDA in 9M24), TAVH provides ground handling services (even outside its own airports) and retail offerings. The customer/carrier base is well-diversified, with the 10 largest customers only accounting for 46% of total revenue in 2023. Revenue Risk - Price - Midrange Mostly Regulated Activities TAVH's capacity to increase aviation tariffs in its main assets is limited. In Turkiye, aviation passenger fees are in euros and fixed for the entire concession period while the remaining regulated aviation services are adjusted by CPI on a yearly basis. The asset in Kazakhstan (Almaty) is 85% owned, and its aviation tariffs are increased according to investments made into the airport, subject to the approval by the local regulator. Ground handling and retail are generally unregulated, but driven by private contracts with exposure to market conditions and CPI. TAVH's exposure to soft currencies is limited (25% of revenues only are in Turkish lira while the rest are in US dollars or euros, linked to euros or are in currencies pegged to the US dollar, in 2023). Infrastructure Dev. & Renewal - Midrange Investment Cycle at Peak TAVH is implementing a robust investment plan to renovate or increase capacity in Ankara, Almaty and Antalya, its key airports. The investments are part of the contractual agreements embodied in different concession agreements. Expansion capex totals EUR1.3 billion (including 100% of Antalya airport investments) and all the projects are expected to be completed by 1H25, accelerating passenger volume growth and retail spending at the airports. Debt Structure - 1 - Weaker Unsecured and Uncovenanted Corporate-Like Debt TAVH's debt is a senior five-year, fixed-rate, unsecured, single-bullet bond, with few creditor-protection features. It is structurally subordinated to opco debt, as most of the airports have projects finance-like debt structures. TAVH also guarantees EUR1,109 million debt, equal to 50% of the existing bridge bank loan in Antalya that it expects to refinance by 1Q25. This debt is included in Fitch-adjusted net debt. Financial Profile Under the Fitch rating case (FRC), Fitch estimates proportional consolidated net debt/EBITDA at 4.9x in 2024, before falling to 3.9x by end-2028, after the completion of the investment plans. PEER GROUP Within Fitch's portfolio of publicly rated airports in EMEA, Aena S.M.E. S.A. (Aena, A/Stable) is the only direct peer. Like TAVH, Aena is a group of airports, predominantly leisure and focused on origin and destination traffic. Aena's strategic importance, its monopolistic position in Spain, and lower leverage support its higher rating than that of TAVH, whose debt is also structurally subordinated to project- financed opco debt. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Proportional consolidated leverage of TAVH consistently above 4.5x - Failure to refinance Antalya airport's guaranteed bridge loan by 1Q25 Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Proportional consolidated leverage of TAVH consistently below 4.0x SECURITY TAVH debt is on unsecured basis and guaranteed by Havaş Havaalanlari Yer Hizmetleri A.Ş., TAV İşletme Hizmetleri A.Ş., TAV Bilişim Hizmetleri A.Ş. and Aviator Netherlands B.V.. TAVH's airport opcos have share pledges, account pledges and receivables as security. ESG Considerations 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 ----------- ------ ----- TAV Havalimanlari Holding A.S. LT IDR BB+ Affirmed BB+ TAV Havalimanlari Holding A.S./Airport Revenues - Senior Unsecured Debt/1 LT LT BB+ Affirmed BB+ =========================== U N I T E D K I N G D O M =========================== ANNINGTON LIMITED: Moody's Assigns Ba1 CFR & Alters Outlook to Neg. ------------------------------------------------------------------- Moody's Ratings has assigned a long-term corporate family rating of Ba1 to Annington Limited (Annington or the company) and withdrawn its Baa3 long-term issuer rating. Moody's also downgraded to (P)Ba1 from (P)Baa3 Annington Funding plc's backed senior unsecured Euro Medium Term Note (EMTN) programme rating. Finally, Moody's downgraded to Ba1 from Baa3 the ratings of the backed senior unsecured notes issued by Annington Funding plc. The outlook for both entities was changed to negative. Previously, the ratings were on review for downgrade. The action follows the closing of Annington's circa GBP6 billion portfolio sale to the UK's Ministry of Defence (MoD) and the outcome of its notes buyback offer. This rating action concludes the review that was initiated on December 19, 2024. RATINGS RATIONALE Moody's downgraded the ratings to Ba1 due to the company's smaller scale following the sale, a more aggressive approach to leverage with the target loan-to-value (LTV) increasing to 55% from 50% pre-transaction, and substantial execution risks and uncertainties from planned investments in new UK residential real estate assets, particularly regarding timing, capital amount, and redeployment ability. Following the tender, optional redemptions, and term loan repayment, the company will have approximately GBP740 million in remaining notes outstanding and a cash balance of about GBP1.4 billion, after an expected dividend payment of around GBP2 billion. The company will also hold a residential portfolio valued at approximately GBP400 million, which includes the receipt of GBP55 million worth of surplus homes from the MoD. The company plans to invest the majority of its GBP1.4 billion cash balance in UK residential assets. However, predicting the speed of this deployment remains challenging. Meanwhile, Moody's view the substantial cash balance, which covers the company's outstanding debt by nearly two times, as a key credit positive. Annington aims to ensure that the principal of its remaining notes is approximately 55% of the value of its cash, property, and other assets. Governance considerations drive rating action, reflecting changes to Annington's scale, business profile, and capital structure due to the announced transaction. The intention to use part of the transaction proceeds for significant shareholder remuneration also plays a role. Additionally, Moody's governance considerations reflect Moody's expectation that the company will continue to operate with adequate liquidity and maintain its targeted 55% LTV ratio. RATIONALE FOR THE NEGATIVE OUTLOOK The negative outlook reflects the uncertainty surrounding the ultimate composition of the company's portfolio, including its quality, geographic distribution, and income-earning potential. Additionally, there is a risk that the portfolio may not sustain interest coverage in line with Moody's expectations for the Ba1 ratings. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS An upgrade is unlikely at this point given the negative outlook. Moody's could downgrade the ratings if the company exceeds its targeted 55% LTV ratio or does not maintain a Moody's-adjusted fixed-charge ratio above 2x. Moody's might also downgrade the ratings if the company's cash balance deployment into UK residential assets does not meet Moody's expectations. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was REITs and Other Commercial Real Estate Firms published in February 2024. AYLESBURY PARK: Lewis Business Named as Administrators ------------------------------------------------------ Aylesbury Park Golf Club Limited was placed into administration proceedings in the High Court of Justice, Business & Property Courts in Leeds, Company and Insolvency List (CHD), Court Number: CR-2025-LDS-000066, and Gareth James Lewis and Matthew Russell of Lewis Business Recovery & Insolvency, were appointed as administrators on Jan. 21, 2025. Aylesbury Park is a golf club with a course that covers 18 holes with a par of 72. Its registered office is at 24a Bramshill Road, Arborfield, Wokingham, Berks, RG2 9NF. Its principal trading address is at Andrews Way, Aylesbury, HP17 8QQ. The joint administrators can be reached at: Gareth James Lewis Matthew Russell Lewis Business Recovery & Insolvency Suite E10, Joseph's Well Westgate, Leeds LS3 1AB For further details, contact: Liam Ryde Email: liam@lewisbri.co.uk Tel No: 0113 245 9444 AZULE ENERGY: Fitch Rates USD1.2BB Unsecured Notes ‘B+’ ----------------------------------------------------------- Fitch Ratings has assigned Azule Energy Finance Plc's USD1.2 billion notes a final senior unsecured 'B+' rating. The Recovery Rating is 'RR4'. The notes are guaranteed by Azule Energy Holdings Limited (Azule Energy; B+/Stable) and certain subsidiaries representing 100% of Azule Energy's and its subsidiaries' revenue and adjusted EBITDA (as defined by the company), as well as 99.9% of total assets. Azule Energy's rating reflects a weak operating environment in Angola (B-/Stable) and higher production costs than at some peers, but Fitch expects them to decline from late 2025 as output grows. Rating strengths are its medium-size oil and gas production, good reserve life, a strong financial profile, and a supportive shareholding structure as a joint venture between BP plc (A+/Stable) and Eni SpA (A-/Stable). Fitch rates the company two notches above Angola's 'B-' Country Ceiling, due to strong offshore enhancements, including sales proceeds deposited at a UK bank. Key Rating Drivers Scale, Low Leverage Support Ratings: Azule Energy's credit profile is supported by its scale of operations, good record in operating its assets, the strong credit position of oil offtakers, healthy liquidity, and low leverage. Key rating constraints are a lack of geographical diversification and Angola's weak operating environment. Production to Grow: Azule Energy's key Angolan growth projects include the Agogo and New Gas Consortium (NGC) developments. The Agogo project is expected to achieve first oil in late 2025, with full field production starting in early 2026. The NGC project will commence gas production in early 2026. Fitch expects these projects to increase Azule's consolidated production to around 220 kboe/d by 2026 from 176 kboe/d in 2023 (excluding Angola LNG; ALNG). Sales to Partners: Azule Energy markets its oil through long-term offtake contracts expiring in 2029 with BP Oil International Limited (BPOI) and Eni Trade & Biofuels S.p.A (ETB), which are trading arms of BP and Eni, respectively. The oil pricing is aligned with market conditions and based on Brent crude, with the average realised crude price for 2023 at USD82.6/boe. The strong credit position of Azule Energy's offtakers is positive for its credit profile. Strong Offshore Enhancements: Azule Energy's export revenues are deposited into Standard Chartered Bank in the UK. A portion of the proceeds is directed to a pre-export facility debt service account held at the bank, where Azule Energy must maintain debt service for the next six months. The remaining proceeds are transferred to Azule Energy's central account at Standard Chartered. In Angola, Azule Energy only retains the cash necessary to cover current payments to employees and contractors. High Debt Service Coverage Ratio: Angola does not have repatriation requirements for export revenues held abroad. Consequently, Fitch calculated a debt service coverage ratio taking 50% of export EBITDA, cash held abroad, and the company's revolving credit facility for 2025 against upcoming principal and interest payments. The calculated ratio was significantly above 1.5x in 2024-2027, resulting in the rating being two notches above Angola's Country Ceiling. Even if Fitch factors in only offshore cash, the coverage ratio is solid at around 1.5x on average over 2024-2027. Three-pillar Strategy: Azule Energy's strategy focuses on three key pillars of organic production growth, exploration opportunities, and lower carbon initiatives. The company aims to grow its business mainly in Angola, with additional production in new areas such as Namibia. Azule Energy invests in reducing carbon emissions and supports Angola's energy transition through gas projects and renewable energy, including the Caraculo photovoltaic plant. Rating on a Standalone Basis: Fitch rates Azule Energy on a standalone basis despite it being 50%/50% owned by BP and Eni. Azule Energy operates and funds its operations independently. However, the expertise and strong exploration and production credentials brought by BP and Eni enhance Azule Energy's credit profile. Derivation Summary Azule Energy's closest peers include Ithaca Energy plc (BB-/Stable) and Energean plc (BB-/Stable). As a joint venture between BP and Eni, Azule Energy distinguishes itself as a leading oil and gas producer in Angola, with a production lof 176kboe/d in 2023, significantly surpassing Ithaca's approximately 100kboe/d and Energean's 123kboe/d. Azule Energy's 2023 production was majority oil-based. Following its merger with Eni UK's business, Ithaca has increased its scale and reserve base, gaining operational diversification and a balanced liquids and gas mix, despite a reserve life of around six years. The company is focused on maintaining low leverage and a flexible dividend policy for financial stability, although it faces challenges from high operating costs on the UK Continental Shelf. Energean is primarily focused on Israel and has a strong gas-weighted production profile backed by substantial long-term contracts, despite limited geographic diversification. Its competitive production costs and focus on Israeli assets improve cash flow visibility. However, geopolitical risks and an evolving dividend policy create uncertainties. Key Assumptions - Oil and gas price assumptions in line with Fitch's price deck - Consolidated oil and gas production rising to around 220kboe/d by 2026 (excluding production from ALNG) - Capex in line with management's assumptions - Dividend payments of USD650 million-USD1 billion, allowing a healthy liquidity buffer RECOVERY ANALYSIS Key Recovery Rating Assumptions - The recovery analysis assumes that Azule Energy would be a going concern (GC) in bankruptcy and that the company would be reorganised rather than liquidated - A 10% administrative claim - Its GC EBITDA estimate of USD1.5 billion reflects Fitch's view of a sustainable, post-reorganisation EBITDA on which Fitch bases the valuation of the company - An enterprise value multiple of 4x - Taking into account Fitch's Country-Specific Treatment of Recovery Ratings Criteria, its analysis leads to a waterfall-generated recovery computation in the 'RR4' band, indicating a 'B+' senior unsecured rating. The Recovery Rating for corporate issuers in Angola is capped at 'RR4'. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - A downgrade of Angola's Country Ceiling - An increase in EBITDA net leverage to above 3.5x on a consistent basis Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - An upgrade of Angola's Country Ceiling, coupled with EBITDA net leverage below 2.5x on a sustained basis and debt service coverage ratio well above 1.5x on a consistent basis Liquidity and Debt Structure Azule Energy's cash balance at end-September 2024 was USD834 million, against short-term debt of USD195 million. Liquidity is further supported by a USD500 million revolving credit facility maturing in April 2026 and the recently issued USD1.2 billion notes. Issuer Profile Azule Energy is a JV between BP and Eni with a portfolio across eight offshore producing blocks in Angola and a 27.2% stake in ALNG. Its 1P reserves were 480mmboe at end-2024 with a reserve life of 7.4 years (excluding ALNG). Date of Relevant Committee 02 January 2025 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 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 ----------- ------ -------- ----- Azule Energy Finance Plc senior unsecured LT B+ New Rating RR4 B+(EXP) BACHUS INNS: Philip Lewis Named as Administrators ------------------------------------------------- Bachus Inns Limited was placed into administration proceedings in the High Court of Justice in Northern Ireland Chancery Division, Court Number: NI051261, and David Hudson and Philip Lewis Armstrong of FRP Advisory Trading Limited were appointed as administrators on Jan. 15, 2025. Bachus Inns is a public house and bar. Its registered office is at 248 Upper Newtownards Road, Belfast, Northern Ireland, BT4 3EU. The joint administrators can be reached at: David Hudson Philip Lewis Armstrong FRP Advisory Trading Limited 110 Cannon Street London EC4N 6EU HUSH BRASSERIES: Interpath Advisory Named as Administrators ----------------------------------------------------------- Hush Brasseries 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-2025-000149, and Howard Smith and James Wright of Interpath Advisory, were appointed as administrators on Jan. 21, 2025. Hush Brasseries is a licensed restaurant. Its registered office is at Interpath Ltd, 10 Fleet Place, London, EC4M 7RB. The joint administrators can be reached at: Howard Smith James Wright Interpath Advisory Interpath Ltd Tailors Corner 1 Thirsk Row Leeds, LS1 4DP For further details, contact: Karen Croston Tel No: 0161 509 8604 SOUTHERN PACIFIC 06-A: Fitch Lowers Rating on Cl. E Notes to BB+sf ------------------------------------------------------------------ Fitch Ratings has taken multiple rating actions on three Southern Pacific Financing RMBS, including two downgrades and revision of Outlooks to Negative. The affected transactions are Southern Pacific Financing 06-A (SPF 06-A), Southern Pacific Securities 06-1 (SPS 06-1), and Southern Pacific Financing 06-B (SPF 05-B). Entity/Debt Rating Prior ----------- ------ ----- Southern Pacific Financing 06-A Plc Class B XS0241082287 LT AAAsf Affirmed AAAsf Class C XS0241083764 LT AAAsf Affirmed AAAsf Class D1 XS0241084572 LT AAsf Affirmed AAsf Class E XS0241085033 LT BB+sf Downgrade BBB+sf Southern Pacific Financing 05-B Plc Class B XS0221840324 LT AAAsf Affirmed AAAsf Class C XS0221840910 LT AAAsf Affirmed AAAsf Class D XS0221841561 LT AA+sf Affirmed AA+sf Class E XS0221842023 LT A+sf Affirmed A+sf Southern Pacific Securities 06-1 plc Class C1a 84359LAM6 LT AAAsf Affirmed AAAsf Class C1c 84359LAN4 LT AAAsf Affirmed AAAsf Class D1a 84359LAP9 LT A+sf Affirmed A+sf Class D1c 84359LAQ7 LT A+sf Affirmed A+sf Class E1c 84359LAS3 LT CCCsf Downgrade B-sf Transaction Summary The three transactions are UK non-conforming RMBS securitisations, comprising loans originated between 2003 and 2006 by wholly-owned subsidiaries of Lehman Brothers. They closed between 2005 and 2006. KEY RATING DRIVERS Deteriorating Asset Performance: Arrears have seen a material increase since the last review for all three transactions. One month plus arrears have increased to 30.56% from 25.96% in SPF 05-B, to 30.23% from 26.09% in SPF 06-A, and to 44.92% from 38.95% in SPS 06-1. Fitch factored the worse asset performance into the ratings actions and has contributed to the affirmations and downgrades of the note ratings. Negative Outlooks Signal Increased Risks: The transactions are suffering from a combination of increased arrears, greater loss severity than Fitch's base case assumption, diminishing loan count and a persistent and growing proportion of interest only (IO) loans remaining outstanding beyond their maturity date. Fitch tested for increased foreclosure frequency (FF) and decreased recovery rates (RR) to account to for larger-than-modelled loss levels. Where downgrades were implied, Fitch has revised the Outlook to Negative to signal future downgrades if performance trends do not stabilise. Performance deterioration could be further exacerbated by the diminishing loan count and the growing share of IO past due. However, sequential note amortisation and the presence of a reserve fund and liquidity facility for each transaction has limited further downgrades. Off Rating Watch Negative: The class D1 notes of SPS 06-1 and the E notes of SPF 06-A and SPF 05-B have been removed from Rating Watch Negative. The affirmation of SPS 06-1 and SPF 05-B is attributed to the lower and stabilising fixed fees observed after the LIBOR transition. Although Fitch anticipates that SPF 06-A will replicate the latest fixed fees observed in SPS 06-1 and SPF 05-B, Fitch had previously modeled the fixed fees for SPF 06-A at a lower level compared with the other two. As a result, the fees still exceed its assumptions, contributing to the downgrade of the class E notes in SPF 06-A. Excessive Counterparty Exposure Caps Ratings: Credit enhancement (CE) for the class E notes for SPF 05-B is primarily driven by the transactions' reserve funds, which are held by Barclays Bank UK PLC (Barclays). The ratings for these class notes are capped at Barclays' 'A+' IDR. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade The transactions' performance may be affected by changes in market conditions and economic environment. Weakening asset performance is strongly correlated to increasing levels of delinquencies and defaults that could reduce CE available to the notes. Additionally, unanticipated declines in recoveries could also result in lower net proceeds, which may make certain note ratings susceptible to negative rating actions, depending on the extent of the decline in recoveries. A 15% increase in the weighted average (WA) FF and a 15% decrease in the WARR imply downgrades for the class E notes of no more than eight notches for SPF 05-B, 11 notches in SPF 06-A, and four notches for SPS 06-1. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Stable to improved asset performance driven by stable delinquencies and defaults would lead to increasing CE levels and, potentially, upgrades. A decrease in the WAFF of 15% and an increase in the WARR of 15% imply upgrades of no more than four notches for the class E notes and one notch for the class D notes in SPF 05-B, nine notches for the class E notes and two notches for the class D1 notes in SPF 06-A, and four notches for the class D1a/c notes in SPS 06-1. 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 pools and the transactions. 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. Fitch did not undertake a review of the information provided about the underlying asset pools ahead of the transactions' initial closing. The subsequent performance of the transactions over the years is consistent with the agency's expectations given the operating environment and Fitch is therefore satisfied that the asset pool information relied upon for its initial rating analysis was adequately reliable. 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 SPF 05-B, SPF 06-A and SPS 06-1 have an ESG Relevance Score of 4 for "Human Rights, Community Relations, Access & Affordability", due to a significant proportion of the pools containing owner-occupied loans advanced with limited affordability checks, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. SPF 05-B, SPF 06-A and SPS 06-1 have an ESG Relevance Score of 4 for "Customer Welfare - Fair Messaging, Privacy & Data Security", due to the pools exhibiting an IO maturity concentration of legacy non-conforming owner-occupied loans of greater than 20%, which has a negative impact on the credit profile, and is relevant to the ratings 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. SOUTHERNS BROADSTOCK: Alvarez & Marsal Named as Administrators -------------------------------------------------------------- Southerns Broadstock 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), No CR-2025-000046, and Mark Firmin and Michael Magnay of Alvarez & Marsal Europe LLP were appointed as administrators on Jan. 20, 2025. Southern Broadstock engages in the manufacture of office and shop furniture. Its registered office is at Lyme Green Business Park, Brunel Road, Macclesfield, SK11 0TA. Its principal trading address is at Unit 1, Easter Park, Great Bank Rd, Wingates, Westhoughton, Bolton, BL5 3XU. The joint administrators can be reached at: Michael Magnay Alvarez & Marsal Europe LLP Suite 3 Regency House 91 Western Road Brighton, BN1 2NW Tel No: +44(0)20-7715-5200 For further information, contact: Daniel Cudlip Alvarez & Marsal Europe LLP Tel No: +44(0)20-7715-5223 Email: INS_SOUTBL@alvarezandmarsal.com STO LIMITED: Grant Thornton Named as Administrators --------------------------------------------------- Sto Limited was placed into administration proceedings in the Court of Session, Scotland, Court Number: No P1185 of 2024, and Stuart Preston and Julie Tait of Grant Thornton UK LLP were appointed as administrators on Jan. 17, 2025. Sto Limited is a wholesaler of wood & construction materials. The Company's registered office is c/o Grant Thornton UK LLP at Level 8, 110 Queen Street, Glasgow, G1 3BX. Its principal trading address is at 2 Gordon Avenue, Glasgow, G52 4TG. The joint administrators can be reached at: Stuart Preston Grant Thornton UK LLP Level 8, 110 Queen Street Glasgow, G1 3BX Tel No: 0141 223 0000 -- and -- Julie Tait Grant Thornton UK LLP 7 Castle Street Edinburgh EH2 3AH Tel No: 0131-229-9181 For further information, contact: CMU Support Grant Thornton UK LLP Level 8, 110 Queen Street Glasgow, G1 3BX Tel No: 0161 953 6906 Email: cmusupport@uk.gt.com SWEET LADYBIRD: Begbies Traynor Named as Administrators ------------------------------------------------------- Sweet Ladybird Ltd was placed into administration proceedings in the Business and Property Courts in Manchester Insolvency and Companies List (ChD) Court Number: CR-2025-MAN-000052, and Paul Stanley and Mark Weekes of Begbies Traynor (Central) LLP were appointed as administrators on Jan. 20, 2025. Sweet Ladybird, trading as 63 Degrees, is a bar and restaurant. Its registered office is at 79 Tib Street, Manchester, M4 1LS. The joint administrators can be reached at: Paul Stanley Mark Weekes Begbies Traynor (Central) LLP 340 Deansgate Manchester M3 4LY Any person who requires further information may contact: Jack Priestley Begbies Traynor (Central) LLP E-mail: jack.priestley@btguk.com Tel No: 0161-837-1700 ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2025. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter Chapman at 215-945-7000. * * * End of Transmission * * *