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251226.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 Friday, December 26, 2025, Vol. 26, No. 258 Headlines G R E E C E INTRALOT SA: Fitch Alters Outlook on 'B+' IDR to Negative I R E L A N D BLACKROCK EUROPEAN XVI: S&P Assigns B-(sf) Rating to Class F Notes CAPITAL FOUR XI: Fitch Gives B-sf Rating to Class F Debt HARVEST CLO XXXVIII: S&P Assigns B- (sf) Rating to Class F Notes MADISON PARK XXI: Fitch Assigns B-sf Rating to Class F Notes NASSAU EURO I: Fitch Affirms B-sf Rating on Class F Notes NORTH WESTERLY VI: Fitch Puts B-sf Final Rating to Class F-R Notes ST. PAUL'S XI: Fitch Affirms B-sf Rating on Class F Notes L A T V I A ELEVING GROUP: Fitch Affirms 'B' LongTerm IDR, Outlook Positive R U S S I A ASIA INSURANCE: S&P Affirms 'B' Fin'l. Strength Rating S P A I N CELSA OPCO: Fitch Assigns 'BB-' LongTerm IDR, Outlook Stable S W E D E N POLESTAR AUTOMOTIVE: Secures $600M Term Loan for Corporate Purposes T U R K E Y ANADOLU EFES BIRACILIK: Fitch Alters Outlook on BB IDR to Neg. ISTANBUL METROPOLITAN: Fitch Affirms 'BB-' IDRs, Outlook Stable U N I T E D K I N G D O M AQUEDUCT EUROPEAN 8: Fitch Puts B-sf Final Rating to Cl. F-R Notes ASIMI FUNDING 2024-1: S&P Affirms 'BB (sf)' Rating on F-Dfrd Notes BARINGS EURO 2024-1: Fitch Affirms Bsf Rating on Class F Notes EVOKE PLC: Fitch Cuts LongTerm IDR to 'B', Outlook Negative GRAINGER PLC: S&P Affirms 'BB+' LT ICR, Alters Outlook to Positive HEATHROW FINANCE: Fitch Affirms BB+ Rating on High Yield Notes PROJECT AURORA I: S&P Assigns 'B' LT ICR, Outlook Stable X X X X X X X X [] BOOK REVIEW: Taking Charge - - - - - =========== G R E E C E =========== INTRALOT SA: Fitch Alters Outlook on 'B+' IDR to Negative --------------------------------------------------------- Fitch Ratings has revised Intralot S.A.'s Outlook to Negative from Stable, while affirming its Long-Term Issuer Default Rating (IDR) at 'B+'. Fitch has also affirmed the EUR300 million senior secured floating-rate and EUR600 million of senior secured fixed-rate notes, issued by Intralot Capital Luxembourg S.A., at 'BB', with a Recovery Rating of 'RR2'. The Negative Outlook is driven by Intralot's material exposure to the increased taxation in the UK, which will result in EBITDA expectations revised down for 2026-2027, with the leverage being outside of Fitch's sensitivities over the next two years. The affirmation reflects Fitch's view of Intralot's robust business profile after the acquisition of Bally International Interactive (BII), a subsidiary of Bally's Corporation (B-/Stable). The 'B+' IDR is a result of the 'b+' Standalone Credit Profile (SCP) and an application of Parent and Subsidiary Linkage (PSL) Rating Criteria with a 'consolidated plus two' outcome. Key Rating Drivers Material Exposure to Increased Taxation: A sharp increase in remote gambling duty in the UK will materially affect the combined EBITDAR of the consolidated business, with a full-year pre-mitigation effect of about EUR127 million, which is almost 30% of 2025E pro forma EBITDAR. The company announced material mitigation measures, including reduction of generosity, opex and marketing spending, coupled with synergies of the business combination. As the proposed measures are implemented, we expect Intralot to exhaust its previously expected ample leverage headroom and exceed Fitch's negative gross leverage sensitivity of 4.5x in 2026 and 2027. Should the impact be more material or the mitigating measures be less effective than anticipated, Fitch may downgrade the rating. UK iGaming Main Market: The combined entity will generate a high share of revenue in the UK, with 73% coming from sports betting and iGaming. The combined entity is materially exposed to the UK online gaming market, the largest in Europe, but also one of the most heavily regulated. From April 2026, the company will be exposed to 40% remote tax duty, which will materially affect the EBITDAR generation of the combined entity before accounting for the mitigating measures. Deleveraging Delayed: Fitch said, "We expect the combined entity's leverage to increase to 4.7x in 2026 and 2027 from 4.3x in 2025 pro forma due to adverse impact from the increase in taxation in the UK. Deleveraging to below 4.0x will be delayed due to the announced change in taxation, but we expect deleveraging to be driven in the future by consolidated EBITDA margin expansion, due to the integration of the BII business and realisation of synergies." Strong Business Profile: The acquisition of BII has improved the combined company's business profile, with larger scale and higher product and geographic diversification, alongside high operating profitability and free cash flow (FCF) margins. However, Intralot's revenue mix has shifted to mostly business-to-consumer from a 90% exposure to business-to-business, which will reduce revenue visibility, as the latter is typically more predictable. Stronger Subsidiary Under PSL Criteria: Intralot's SCP post-acquisition at 'b+' is stronger than its Parent's 'B-'/Stable consolidated credit profile. Fitch said, "We assess Bally's access to and control of Intralot's cash flow as 'porous', due to material minorities and separate public listing, which is mildly compensated for by the company's separate cash management and funding policies." Fitch assesses its legal ringfencing from the parent as 'porous', given self-imposed limitations on dividends and intercompany flows, in combination with the dividend payment obligation of at least 35% of net income. This results in Intralot's 'consolidated plus two notches' IDR of 'B+'. If the SCP is downgraded to 'b', Intralot's IDR would also be downgraded, being capped by its SCP, with a reduced uplift form the weaker parent. Healthy FCF Generation: Fitch estimates healthy FCF margins for the combined business, after a minimum 35% of net income dividend obligation. Fitch's projections assume higher dividend distributions at 50%, given strong Fitch-estimated FCF-before-dividends generation. This would leave flexibility for cutbacks in the event of operational underperformance or higher capital intensity. For 2026 and 2027, materially affected by the increased taxation, Fitch expects the dividends to be at 35%. Peer Analysis Intralot is a close peer to evoke plc (B/Negative), with similar revenue concentration in the UK market and exposure to the online segment, making both entities similarly exposed to regulation. At the same time, Intralot's BII segment has better profitability than evoke's UK online and retail segment and evoke had higher EBITDAR leverage above 6.0x in 2024 and is projected to maintain that indebtedness level until end-2027. Another close peer of Intralot is Allwyn International AG (BB-/Rating Watch Positive), an internationally diversified B2B and B2C provider with a complex group structure, but materially larger than Intralot. Meuse Bidco SA (B+/Stable) has less geographical diversification, with concentration in the mature European market - Belgium in particular - and concentration in iGaming. Its strong profitability and low leverage support its rating. Fitch's Key Rating-Case Assumptions - Average mid-single-digit annual revenue growth in 2026-2029 - Improved profitability of the combined Intralot group - Nine-month impact of higher taxation in 2026 with 25% mitigation measures; full-year impact of higher tax in 2027 with EUR40 million mitigation measures - Dividends paid to minority shareholders increasing towards EUR12 million in 2029 from EUR5 million in 2025 - High capex intensity in 2027-2028, driven by the B2B segment, before moderating from 2028 - Dividend distribution at the 35% minimum required in 2026-2027, at 50%, thereafter, on strong profitability and healthy cash flow generation Recovery Analysis The recovery analysis assumes that Intralot would be considered a going concern (GC) in bankruptcy and that it would be reorganised rather than liquidated. Fitch has assumed a 10% administrative claim. Fitch said, "We applied a distressed enterprise value/EBITDA multiple of 5.0x to the combined Intralot's operations. The GC EBITDA of the combined Intralot of EUR285 million reflects our view of a sustainable, post-reorganisation EBITDA level, on which we base the valuation of the combined group." "After deducting 10% for administrative claims, our principal waterfall analysis would generate a senior secured recovery in the 'RR2' band, leading to a two-notch uplift of the senior secured debt, from the IDR to 'BB'," Fitch said. The senior secured debt consists of EUR900 million bonds, EUR460 million-equivalent (GBP400 million) senior secured term loan B and EUR200 million Greek bank debt, all ranking pari passu. Its EUR160 million super senior revolving credit facility (RCF) ranks ahead of the senior secured debt. Fitch applies a blended cap, based on the combined country exposure (2024: pro forma revenue and EBITDA contribution by country). RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Weakening in Bally's consolidated group profile - Change in Bally's policy towards Intralot, leading to potential material cash leakage from the subsidiary - Revision of PSL legal ring-fencing or access and control assessments to "open", leading us to reduce the uplift from Bally's to one notch or considering Intralot's credit profile on a consolidated basis, in line with the parent - Weakening of Intralot's SCP The Following Developments Would be Considered for a Downward Revision of Intralot's SCP - Adverse regulatory changes leading to material deterioration in revenue or operating profits - FCF margin in low-single digits as a result of operating underperformance, considerable increases in capex or large amounts of cash being distributed to shareholders - EBITDAR leverage above 4.5x - EBITDAR fixed-charge coverage below 3.0x. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Strengthening of the SCP, combined with the two factors below - Improvement in Bally's consolidated credit profile - Revision of PSL access and control assessment to "insulated", leading Fitch to assess Intralot's credit profile on a standalone basis The Following Developments Would be Considered for an Upward Revision of Intralot's SCP - Continued growth and geographic expansion into new regulated markets - FCF margin at medium-to-high single digits through the investment cycle - EBITDAR leverage consistently below 3.5x - EBITDAR fixed-charge coverage maintained above 3.5x Liquidity and Debt Structure The newly instated capital structure is long term, comprising EUR600 million fixed-rate and EUR300 million floating-rate senior secured notes and EUR460 million of pound sterling term loans (GBP400 million) maturing in 2031. The company also has EUR200 million of senior secured Greek debt amortising and maturing in 2029 and a EUR130 million unsecured Greek retail bond maturing in 2029. It has access to a EUR160 million super senior RCF due six months before the maturity of the senior debt. We expect cash flow generation to be affected by the recent fiscal pressure increase, but, accounting for the mitigating measures, the company will still be generating mid-single digit FCF, except for 2027, when capex will be high. The company has announced a share buyback programme, the size of which is yet to be communicated. The combined entity has a comfortable liquidity profile. Issuer Profile Intralot is a supplier of integrated gaming systems and services. BII is an international interactive segment of Bally's Corporation, active in iGaming, and the UK is its main market. ============= I R E L A N D ============= BLACKROCK EUROPEAN XVI: S&P Assigns B-(sf) Rating to Class F Notes ------------------------------------------------------------------ S&P Global Ratings assigned its credit ratings to Blackrock European CLO XVI DAC's class A, B, C, D, E, and F notes. At closing, the issuer also issued subordinated notes. The reinvestment period will be approximately 4.60 years, while the noncall period will be 1.50 years after closing. Under the transaction documents, the rated notes will pay quarterly interest unless there is a frequency switch event. Following this, the notes will switch to semiannual payment. The ratings assigned to the notes reflect S&P's assessment of: -- The diversified collateral pool, which primarily comprises broadly syndicated speculative-grade senior secured term loans and bonds that are governed by collateral quality tests. -- The credit enhancement provided through the subordination of cash flows, excess spread, and overcollateralization. -- The collateral manager's experienced team, which can affect the performance of the rated notes through collateral selection, ongoing portfolio management, and trading. -- The transaction's legal structure, which is bankruptcy remote. -- The transaction's counterparty risks, which are in line with S&P's counterparty rating framework. Portfolio benchmarks S&P Global Ratings weighted-average rating factor 2,715.90 Default rate dispersion 553.14 Weighted-average life (years) 5.18 Obligor diversity measure 137.18 Industry diversity measure 22.67 Regional diversity measure 1.40 Transaction key metrics Total par amount (mil. EUR) 400.00 Defaulted assets (mil. EUR) 0.00 Number of performing obligors 154 Portfolio weighted-average rating derived from S&P's CDO evaluator B 'CCC' category rated assets (%) 0.63 Target 'AAA' weighted-average recovery (%) 36.99 Target weighted-average spread (net of floors; %) 3.71 Target weighted-average coupon (%) 3.22 S&P's ratings reflect our assessment of the collateral portfolio's credit quality, which has a weighted-average rating of 'B'. S&P said, "The portfolio is well-diversified, primarily comprising broadly syndicated speculative-grade senior secured term loans and bonds. Therefore, we conducted our credit and cash flow analysis by applying our criteria for corporate cash flow CDOs. "In our cash flow analysis, we modeled the target weighted-average spread of 3.71%, the target weighted-average coupon of 3.22%, and the identified weighted-average recovery rates for all notes expect for class A, where we modeled covenanted recoveries (36.50%). We applied various cash flow stress scenarios, using four different default patterns, in conjunction with different interest rate stress scenarios for each liability rating category. "The transaction's documented counterparty replacement and remedy mechanisms adequately mitigate its exposure to counterparty risk under our current counterparty criteria. "Under our structured finance sovereign risk criteria, the transaction's exposure to country risk is sufficiently mitigated at the assigned ratings. "The transaction's legal structure and framework is bankruptcy remote, in line with our legal criteria. "Our credit and cash flow analysis indicates that the available credit enhancement for the class B to E notes could withstand stresses commensurate with higher ratings than those assigned. However, as the CLO will be in its reinvestment phase starting from the effective date, during which the transaction's credit risk profile could deteriorate, we have capped our ratings assigned to the notes." The class A and F notes can withstand stresses commensurate with the assigned ratings. S&P said, "Following our analysis of the credit, cash flow, counterparty, operational, and legal risks, we believe that our ratings are commensurate with the available credit enhancement for all rated classes of notes. "In addition to our standard analysis, we have also included the sensitivity of the ratings on the class A to E notes, based on four hypothetical scenarios. "As our ratings analysis makes additional considerations before assigning ratings in the 'CCC' category, and we would assign a 'B-' rating if the criteria for assigning a 'CCC' category rating are not met, we have not included the above scenario analysis results for the class F notes." Environmental, social, and governance S&P regards the exposure to environmental, social, and governance (ESG) credit factors in the transaction as being broadly in line with its benchmark for the sector. Primarily due to the diversity of the assets within CLOs, the exposure to environmental credit factors is viewed as below average, social credit factors are below average, and governance credit factors are average. For this transaction, the documents prohibit assets from being related to certain activities. Accordingly, since the exclusion of assets from these industries does not result in material differences between the transaction and our ESG benchmark for the sector, no specific adjustments have been made in our rating analysis to account for any ESG-related risks or opportunities. BlackRock European CLO XVI is a European cash flow CLO securitization of a revolving pool, comprising euro-denominated senior secured loans and bonds issued mainly by speculative-grade borrowers. BlackRock Investment Management (UK) Ltd. manages the transaction. Ratings Amount Credit Class Rating* (mil. EUR) enhancement (%) Interest rate A AAA (sf) 248.00 38.00 Three/six-month EURIBOR plus 1.28% B AA (sf) 45.00 26.75 Three/six-month EURIBOR plus 1.90% C A (sf) 24.00 20.75 Three/six-month EURIBOR plus 2.10% D BBB- (sf) 28.00 13.75 Three/six-month EURIBOR plus 3.05% E BB- (sf) 18.00 9.25 Three/six-month EURIBOR plus 5.40% F B- (sf) 11.00 6.50 Three/six-month EURIBOR plus 8.24% Sub. Notes NR 31.80 N/A N/A *The ratings assigned to the class A and B notes address timely interest and ultimate principal payments. The ratings assigned to the class C, D, E, and F notes address ultimate interest and principal payments. The payment frequency switches to semiannual and the index switches to six-month EURIBOR when a frequency switch event occurs. EURIBOR--Euro Interbank Offered Rate. NR--Not rated. N/A--Not applicable. CAPITAL FOUR XI: Fitch Gives B-sf Rating to Class F Debt -------------------------------------------------------- Fitch Ratings has assigned Capital Four CLO XI DAC final ratings. Capital Four CLO XI DAC A XS3214803812 LT AAAsf New Rating B XS3214804117 LT AAsf New Rating C XS3214804463 LT Asf New Rating D XS3214804893 LT BBB-sf New Rating E XS3214805270 LT BB-sf New Rating F XS3214805437 LT B-sf New Rating Subordinated Notes XS3214805601 LT NRsf New Rating X XS3214803572 LT AAAsf New Rating Transaction Summary Capital Four CLO XI 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 the portfolio with a target par of EUR400 million. The portfolio is actively managed by Capital Four CLO Management II K/S. The CLO has a 4.6-year reinvestment period and a 7.5-year weighted average life (WAL) test covenant at closing. KEY RATING DRIVERS Average Portfolio Credit Quality (Neutral): Fitch assesses the average credit quality of obligors at 'B'. The Fitch weighted average rating factor of the identified portfolio is 24. 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 62.3%. Diversified Asset Portfolio (Positive): The transaction includes various concentration limits, including a top 10 obligor concentration limit of 20% and a maximum exposure to the three largest Fitch-defined industries in the portfolio of 40%. These covenants ensure the asset portfolio will not be exposed to excessive concentration. Portfolio Management (Neutral): The transaction includes four Fitch matrices. Two closing matrices correspond to a 7.5-year WAL, and two forward matrices correspond to a seven-year WAL, which can be selected starting from 18 months after closing, subject to the reinvestment target par condition and a rating agency confirmation. Each matrix set corresponds to two different fixed-rate asset limits at 5% and 10%. The transaction has a reinvestment period of 4.6 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. WAL Step-Up Feature (Neutral): The transaction can extend the WAL test by one year no earlier than one year after closing. The WAL extension is subject to conditions, including passing the collateral quality tests, coverage tests, portfolio profile tests and the collateral principal amount with defaulted assets carried at their collateral value being equal to, or greater than, the reinvestment target par. Cash Flow Modelling (Positive): The WAL used for the transaction's Fitch-stressed portfolio and matrix analysis is 12 months less than the WAL covenant at the issue date, to account for the strict reinvestment conditions envisaged by the transaction after its reinvestment period. These include passing the coverage tests and the Fitch 'CCC' bucket limit test, and a WAL covenant that gradually steps down, before and after the end of the reinvestment period. These conditions would reduce the effective risk horizon of the portfolio in stress periods. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade An increase of the default rate (RDR) in the identified portfolio by 25% of the mean RDR and a decrease of the recovery rate (RRR) by 25% at all rating levels would have no impact on the class A-1 and A-2 notes, lead to downgrades of one notch each for the class D and E notes, two notches each for the class B and C notes and to below 'B-sf' for the class F notes. Downgrades, which are based on the identified portfolio, may occur if the loss expectation is larger than assumed, due to unexpectedly high levels of default and portfolio deterioration. The class C notes have a one-notch rating cushion, and the class B, D, E and F notes each have a two-notch rating cushion, due to the better metrics and shorter life of the identified portfolio than the Fitch-stressed portfolio. 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 either due to manager trading or negative portfolio credit migration, a 25% increase of the mean RDR and a 25% decrease of the RRR across all ratings of the Fitch-stressed portfolio would lead to downgrades of up to four notches each 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 result in upgrades of up to three notches each for all notes, except for the 'AAAsf' rated notes. Upgrades during the reinvestment period, which are based on the Fitch-stressed portfolio, may result from 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. Upgrades after the end of the reinvestment period 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. HARVEST CLO XXXVIII: S&P Assigns B- (sf) Rating to Class F Notes ---------------------------------------------------------------- S&P Global Ratings assigned its credit ratings to Harvest CLO XXXVIII DAC's class A-1, A-2, B, C, D, E, and F notes. At closing, the issuer also issued unrated subordinated notes. The transaction has a 1.6 year noncall period and the portfolio's reinvestment period ends 4.6 years after closing. Under the transaction documents, the rated notes pay quarterly interest unless there is a frequency switch event. Following this, the notes will switch to semiannual payment. The ratings reflect S&P's assessment of: -- The diversified collateral pool, which primarily comprises broadly syndicated speculative-grade senior secured term loans and bonds that are governed by collateral quality tests. -- The credit enhancement provided through the subordination of cash flows, excess spread, and overcollateralization. -- The collateral manager's experienced team, which can affect the performance of the rated notes through collateral selection, ongoing portfolio management, and trading. -- The transaction's legal structure, which is bankruptcy remote. -- The transaction's counterparty risks, which are in line with S&P's counterparty rating framework. Portfolio benchmarks S&P Global Ratings' weighted-average rating factor 2,594.21 Default rate dispersion 584.58 Weighted-average life (years) 5.13 Obligor diversity measure 120.46 Industry diversity measure 22.02 Regional diversity measure 1.30 Transaction key metrics Total par amount (mil. EUR) 400 Defaulted assets (mil. EUR) 0 CCC rated assets ('CCC+','CCC', and 'CCC-') (%) 0.00 Number of performing obligors 142 Portfolio weighted-average rating derived from S&P's CDO evaluator B Target 'AAA' weighted-average recovery (%) 37.28 Target weighted-average coupon (%) 3.05 Target weighted-average spread (net of floors, %) 3.49 The portfolio is well diversified at closing, primarily comprising broadly syndicated speculative-grade senior secured term loans and senior secured bonds. Therefore, S&P has conducted our credit and cash flow analysis by applying our criteria for corporate cash flow collateralized debt obligations. S&P said, "In our cash flow analysis, we modeled the EUR400 million target par amount, the covenanted weighted-average spread of 3.40%, the covenanted weighted-average coupon of 3.00%, and the target weighted-average recovery rates for all rated notes except the class A notes, where we used the covenanted WARR of 36.28%. We applied various cash flow stress scenarios, using four different default patterns, in conjunction with different interest rate stress scenarios for each liability rating category. "Until the end of the reinvestment period on July. 22, 2030, the collateral manager may substitute assets in the portfolio for so long as our CDO Monitor test is maintained or improved in relation to the initial ratings on the notes. This test looks at the total amount of losses that the transaction can sustain as established by the initial cash flows for each rating, and it compares that with the current portfolio's default potential plus par losses to date. As a result, until the end of the reinvestment period, the collateral manager may through trading deteriorate the transaction's current risk profile, as long as the initial ratings are maintained. "Following the application of our structured finance sovereign risk criteria, we consider the transaction's exposure to country risk is limited at the assigned ratings, as the exposure to individual sovereigns does not exceed the diversification thresholds outlined in our criteria. The transaction's documented counterparty replacement and remedy mechanisms adequately mitigate its exposure to counterparty risk under our current counterparty criteria. "The transaction's legal structure is bankruptcy remote, in line with our legal criteria. "The operational risk associated with key transaction parties (such as the collateral manager) that provide an essential service to the issuer is in line with our operational risk criteria. "Our credit and cash flow analysis indicates that the class B to E notes could withstand stresses commensurate with higher ratings than those assigned. However, as the CLO will have a reinvestment period, during which the transaction's credit risk profile could deteriorate, we have capped our assigned ratings on these notes. "Our credit and cash flow analysis indicates that the available credit enhancement for the class F notes could withstand stresses commensurate with a lower rating. However, we have applied our 'CCC' rating criteria and assigned a 'B- (sf)' rating to this class of notes. The ratings uplift for the class F notes reflects several key factors, including: -- The class F notes' available credit enhancement, which is in the same range as that of other CLOs we have rated and that have recently been issued in Europe. -- The portfolio's average credit quality, which is similar to other recent CLOs. -- S&P's model generated break-even default rate at the 'B-' rating level of 25.10% (for a portfolio with a weighted-average life of 5.13 years), versus if it was to consider a long-term sustainable default rate of 3.2% for 5.13 years, which would result in a target default rate of 16.42%. -- S&P does not believe that there is a one-in-two chance of this note defaulting. -- S&P does not envision this tranche defaulting in the next 12-18 months. S&P said, "Following this analysis, we consider that the available credit enhancement for the class F notes is commensurate with the assigned 'B- (sf)' rating. "Following our analysis of the credit, cash flow, counterparty, operational, and legal risks, we believe that our ratings are commensurate with the available credit enhancement for the class A-1 to F notes. "In addition to our standard analysis, to indicate how rising pressures among speculative-grade corporates could affect our ratings on European CLO transactions, we have also included the sensitivity of the ratings on the class A-1 to E notes in four hypothetical scenarios. "As our ratings analysis makes additional considerations before assigning ratings in the 'CCC' category, and we would assign a 'B-' rating if the criteria for assigning a 'CCC' category rating are not met, we have not included the above scenario analysis results for the class F notes." Environmental, social, and governance S&P said, "We regard the exposure to environmental, social, and governance (ESG) credit factors in the transaction as being broadly in line with our benchmark for the sector. Primarily due to the diversity of the assets within CLOs, the exposure to environmental credit factors is viewed as below average, social credit factors are below average, and governance credit factors are average. For this transaction, the documents prohibit assets from being related to certain activities. Since the exclusion of assets from these industries does not result in material differences between the transaction and our ESG benchmark for the sector, no specific adjustments have been made in our rating analysis to account for any ESG-related risks or opportunities." Harvest CLO XXXVIII DAC is a European cash flow CLO securitization of a revolving pool, comprising primarily euro-denominated senior secured loans and bonds. Investcorp Credit Management EU Ltd. manages the transaction. Ratings Amount Credit Class Rating* (mil. EUR) enhancement (%) Interest rate§ A-1 AAA (sf) 236.00 41.00 3mE +1.29% A-2 AAA (sf) 14.00 37.50 3mE +1.75% B AA (sf) 40.00 27.50 3mE +1.95% C A (sf) 23.00 21.75 3mE +2.20% D BBB- (sf) 30.00 14.25 3mE +3.00% E BB- (sf) 18.00 9.75 3mE +5.25% F B- (sf) 13.00 6.50 3mE +8.45% Sub NR 33.20 N/A N/A *The ratings assigned to the class A-1, A-2, and B notes address timely interest and ultimate principal payments. The ratings assigned to the class C, D, E, and F notes address ultimate interest and principal payments. §The payment frequency switches to semiannual and the index switches to six-month Euro Interbank Offered Rate (EURIBOR) when a frequency switch event occurs. NR--Not rated. Subordinated--Subordinated notes. N/A--Not applicable. 3mE--Three-month EURIBOR. MADISON PARK XXI: Fitch Assigns B-sf Rating to Class F Notes ------------------------------------------------------------ Fitch Ratings has assigned Madison Park Euro Funding XXI final ratings. Madison Park Euro Funding XXI DAC Class A Loan LT AAAsf New Rating Class A Notes XS3178569540 LT AAAsf New Rating Class B Notes XS3178569896 LT AAsf New Rating Class C Notes XS3178570126 LT Asf New Rating Class D Notes XS3178570472 LT BBB-sf New Rating Class E Notes XS3178570639 LT BB-sf New Rating Class F Notes XS3178570803 LT B-sf New Rating Class M Sub. Notes XS3178570985 LT NRsf New Rating Transaction Summary Madison Park Euro Funding XXI DAC is a securitisation of mainly senior secured loans and secured senior bonds with a component of senior unsecured, mezzanine, and second-lien loans. The transaction has a target par of EUR400 million. The portfolio is actively managed by Credit Suisse Asset Management Limited. The CLO has a 4.5-year reinvestment period and an 8.5-year weighted average life (WAL) test at closing. KEY RATING DRIVERS Average Portfolio Credit Quality (Neutral): Fitch assesses the average credit quality of obligors to be in the 'B+'/'B' category. The Fitch weighted average rating factor of the identified portfolio is 23.2. High Recovery Expectations (Positive): At least 96% 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 62.2%. Diversified Portfolio (Positive): The transaction includes four matrices. Two are effective at closing (the closing matrices) with a fixed-rate limit of 5% and 12.5%, and two will be effective 12 months after closing (the forward matrices) with the same fixed-rate limits of the closing matrices. The closing matrices correspond to an 8.5-year WAL test, while the forward matrices correspond to a 7.5-year WAL test. The manager can switch to the forward matrices provided the portfolio balance (with defaults carried at the Fitch collateral value) is greater than or equal to target par. The transaction also includes various concentration limits, including the maximum exposure to the three largest (Fitch-defined) industries in the portfolio at 42.5% and a top 10 obligor concentration limit at 20%. These covenants ensure the asset portfolio will not be exposed to excessive concentration. Portfolio Management (Neutral): The transaction has a 4.5-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 matrix and stress portfolio analysis is 12 months less than the WAL covenant. This reduction to the risk horizon accounts for the strict reinvestment conditions envisaged by the transaction after its reinvestment period. These include, among others, passing both the coverage tests and the Fitch 'CCC' bucket limitation test post reinvestment as well 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 the stress period. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A 25% increase of the mean default rate (RDR) across all ratings and a 25% decrease of the recovery rate (RRR) across all ratings of the identified portfolio would have no impact on the class A loan or the class A, B, D and E notes and would lead to a downgrade of one notch for the class C notes and to below 'B-sf' for the class F notes. Based on the actual 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, the class B to E notes display rating cushions of two notches and the class F notes of three notches. Should the cushion between the identified portfolio and the stress portfolio be eroded either due to manager trading or negative portfolio credit migration, a 25% increase of the mean RDR across all ratings and a 25% decrease of the RRR across all ratings of the stressed portfolio would lead to downgrades of up to three notches for the class A loan and the class A and B notes, up to four notches for the class C notes, up to two notches for the class D notes and to below 'B-sf' for class E and F notes. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade A 25% reduction of the mean RDR across all ratings and a 25% increase in the RRR across all ratings of Fitch's stress portfolio would lead to upgrades of up to three notches for the notes, except the 'AAAsf' rated notes, which are at the highest level on Fitch's scale and cannot be upgraded. During the reinvestment period, based on Fitch's stress portfolio, upgrades may occur on better-than-expected portfolio credit quality and a shorter remaining WAL test, leading to the ability of the notes to withstand larger than expected losses for the remaining life of the transaction. After the end of the reinvestment period, upgrades may occur in case of stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread available to cover for losses on the remaining portfolio. DATA ADEQUACY Madison Park Euro Funding XXI DAC The majority of the underlying assets or risk presenting entities have ratings or credit opinions from Fitch and/or other Nationally Recognized Statistical Rating Organizations and/or European Securities and Markets Authority registered rating agencies. Fitch has relied on the practices of the relevant groups within Fitch and/or other rating agencies to assess the asset portfolio information or information on the risk presenting entities. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. NASSAU EURO I: Fitch Affirms B-sf Rating on Class F Notes --------------------------------------------------------- Fitch Ratings has upgraded Nassau Euro CLO I DAC class B and D notes. Ratings Prior ------- ----- Nassau Euro CLO I DAC A XS2400033333 LT AAAsf Affirmed AAAsf B-1 XS2400033507 LT AA+sf Upgrade AAsf B-2 XS2400033762 LT AA+sf Upgrade AAsf C XS2400033929 LT Asf Affirmed Asf D XS2400034141 LT BBBsf Upgrade BBB-sf E XS2400034497 LT BB-sf Affirmed BB-sf F XS2400034653 LT B-sf Affirmed B-sf KEY RATING DRIVERS Stable Performance, Shorter Risk Horizon: The portfolio's credit quality has remained stable over the last 12 months. Exposure to assets with a Fitch-Derived Rating of 'CCC+' and below was 2.8% versus a limit of 7.5%, according to the latest trustee report dated November 2025. The portfolio has no defaulted assets. The transaction is about 1.2% below par (calculated as the current par difference over the original target par). However, losses are within our rating-case assumptions. The transaction is also passing all its collateral-quality, portfolio-profile and coverage tests. The stable performance of the transaction, combined with a shortened weighted average life (WAL) test covenant since the last review in December 2024, resulted in today's upgrades and affirmations. Sufficient Cushion: All rated notes have retained sufficient buffer to support their current ratings, even though the par erosion has reduced the default-rate cushion, and should be capable of absorbing further defaults in the portfolio. This underlines the Stable Outlooks on the class A to F notes. Limited Refinancing Risk: The transaction has manageable near- and medium-term refinancing risk, with no assets maturing in 2025 or 2026 and 0.4% maturing in 2027, as calculated by Fitch. 'B'/'B-' Portfolio: Fitch assesses the average credit quality of the underlying obligors at 'B'. The weighted average rating factor of the current portfolio is 24.4 as calculated by Fitch under its latest criteria. About 13.4% of the portfolio is currently on Negative Outlook. High Recovery Expectations: Senior secured obligations comprise 99.4% of the portfolio. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. The Fitch-calculated weighted average recovery rate of the current portfolio is 62.7%. Diversified Portfolio: The portfolio is well-diversified across obligors, countries and industries. The top 10 obligor concentration, as calculated by Fitch, is 11.4%, and no obligor represents more than 1.3% of the portfolio balance. Exposure to the three largest Fitch-defined industries is 33.2% as calculated by Fitch. Fixed-rate assets reported by the trustee are at 6.3%, compared with a limit of 10% Transaction Inside Reinvestment Period: Given the manager's ability to reinvest, Fitch's analysis is based on a stressed portfolio and tested the notes' achievable ratings across all Fitch test matrices, as the portfolio can still migrate to different collateral quality tests and the level of fixed-rate assets could change. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Downgrades may occur if the loss expectation is larger than assumed, due to unexpectedly high levels of default and portfolio deterioration. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Upgrades may result from stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread available to cover losses in the remaining portfolio. NORTH WESTERLY VI: Fitch Puts B-sf Final Rating to Class F-R Notes ------------------------------------------------------------------ Fitch Ratings has assigned North Westerly VI ESG CLO DAC reset notes final ratings. North Westerly VI ESG CLO DAC Rating Prior ------ ----- A XS2083211370 LT PIFsf Paid In Full AAAsf A-1 XS3211783918 LT AAAsf New Rating AAA(EXP)sf A-2 XS3231805048 LT AAAsf New Rating AAA(EXP)sf B-1 XS2083212006 LT PIFsf Paid In Full AAAsf B-2 XS2083212857 LT PIFsf Paid In Full AAAsf B-R XS3211784056 LT AAsf New Rating AA(EXP)sf C XS2083213152 LT PIFsf Paid In Full A+sf C-R XS3211784213 LT Asf New Rating A(EXP)sf D XS2083213749 LT PIFsf Paid In Full BBB+sf D-R XS3211784486 LT BBB-sf New Rating BBB-(EXP)sf E XS2083214473 LT PIFsf Paid In Full BB+sf E-R XS3211784726 LT BB-sf New Rating BB-(EXP)sf F XS2083214713 LT PIFsf Paid In Full Bsf F-R XS3211785020 LT B-sf New Rating B-(EXP)sf X XS3211783678 LT AAAsf New Rating AAA(EXP)sf Transaction Summary North Westerly VI ESG CLO DAC is a securitisation of mainly senior secured obligations (at least 90%) with a component of senior unsecured, mezzanine, second-lien loans and high-yield bonds. Note proceeds were used to redeem all the existing notes and to fund the portfolio with a target par of EUR400 million. The portfolio is actively managed by Aegon Asset Management UK PLC and North Westerly Holding BV, a wholly-owned subsidiary of Aegon Asset Management Holding B.V.. The CLO has an approximately five-year reinvestment period and a nine-year weighted average life (WAL). KEY RATING DRIVERS Average Portfolio Credit Quality (Neutral): Fitch assesses the average credit quality of obligors to be at 'B'/'B-'. The Fitch weighted average rating factor of the identified portfolio is 24.7. 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 61.7%. Diversified Portfolio (Positive): The transaction has a concentration limit for the 10 largest obligors at 20%. The transaction also includes various other concentration limits, including 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 includes six matrices. Two are effective at closing, corresponding to a nine-year WAL, two are effective nine months after closing, corresponding to a 8.25-year WAL, and two are effective two years after closing, corresponding to a seven-year WAL. Each matrix set corresponds to two different fixed-rate asset limits, at 5% and 10%. Switching to the forward matrices is subject to the reinvestment target par condition. The transaction has a reinvestment period of about five 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. These conditions include passing the coverage tests and the Fitch 'CCC' bucket limitation test, and a WAL covenant that gradually 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 three notches on the class E-R notes, two notches each on the class B-R and C-R notes, one notch on the class D-R notes, and have no impact on the classes X, A-1 and A-2. Downgrades, which are based on the identified portfolio, may occur if the loss expectation is larger than assumed, due to unexpectedly high levels of default and portfolio deterioration. The class D-R and E-R notes each have a rating cushion of two-notches and the class B-R, C-R and F-R notes each have a cushion of one notch, due to the better metrics and shorter life of the identified portfolio than the Fitch-stressed portfolio. The class X, 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 each 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 four notches each, except for the 'AAAsf' rated notes. Upgrades during the reinvestment period, 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. Upgrades after the end of the reinvestment period 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. ST. PAUL'S XI: Fitch Affirms B-sf Rating on Class F Notes --------------------------------------------------------- Fitch Ratings has upgraded St. Paul's CLO XI DAC C-1-R, C-2-R and D-R tranches and affirmed the rest. Rating Prior ------ ----- St. Paul's CLO XI DAC A-R XS2388195120 LT AAAsf Affirmed AAAsf B-1-R XS2388195633 LT AA+sf Affirmed AA+sf B-2-R XS2388195807 LT AA+sf Affirmed AA+sf C-1-R XS2388196102 LT A+sf Upgrade Asf C-2-R XS2388196441 LT A+sf Upgrade Asf D-R XS2388196870 LT BBBsf Upgrade BBB-sf E XS2007341576 LT BBsf Affirmed BBsf F XS2007341816 LT B-sf Affirmed B-sf Transaction Summary St. Paul's CLO XI is a cash flow CLO comprising mostly senior secured obligations. The transaction is out of the reinvestment period and the portfolio is actively managed by Intermediate Capital Managers Limited. KEY RATING DRIVERS Transaction Deleveraging: About EUR33 million of the A-R notes have been repaid since our last review in January 2025. This deleveraging has resulted in an increase in credit enhancement across the capital structure. The upgrades of the class C-1-R, class C-2-R and class D-R notes and their Stable Outlooks reflect sufficient default-rate cushions at their current ratings. Portfolio Deterioration; Losses within Assumptions: Exposure to assets with a Fitch-Derived Rating of 'CCC+' and below rose to 9.9% of the portfolio compared with a limit of 7.5%, up from 4.8% at the last review, based on the latest trustee report dated November 2025. However, defaulted assets in the portfolio decreased to about EUR9 million, from around EUR20 million at the last review, and the transaction has recovered some of its par value. The portfolio was about 1% below par (calculated as the current par difference over the original target par) compared with 2% below par at the last review. 'B'/'B-' Portfolio: Fitch assesses the average credit quality of the underlying obligors at 'B'/'B-'. The weighted average rating factor of the current portfolio is 28.04 as calculated by Fitch under its latest criteria. About 23.9% of the portfolio is on Negative Outlook. High Recovery Expectations: Senior secured obligations comprise 97.8% of the portfolio. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. The Fitch-calculated weighted average recovery rate of the current portfolio is 61.8%, Diversified Portfolio: The portfolio is well-diversified across obligors, countries and industries. The top 10 obligor concentration, as calculated by Fitch, is 20.8%, and no obligor represents more than 2.9% of the portfolio balance. Exposure to the three largest Fitch-defined industries is 27.7% as calculated by trustee. Fixed-rate assets reported by the trustee are at 9.1%, within the limit of 15%. Transaction Outside Reinvestment Period: The transaction exited its reinvestment period in January 2024, and the most senior notes are deleveraging. The transaction is failing its 'CCC' test from Fitch and another rating agency, which is required to be satisfied before reinvestment, and therefore cannot purchase assets. It is also failing the weighted average life test, which is on a maintain-or-improve basis. However, if the manager were to cure the failing 'CCC' test, they could continue to reinvest proceeds from the sale of credit risk obligations and unscheduled principal proceeds. Given the potential for the manager to continue reinvesting, Fitch's analysis is based on a stressed portfolio and tested the notes' achievable ratings across the Fitch matrix, since the portfolio can still migrate to a different collateral quality test. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Downgrades may occur if the loss expectation is larger than assumed, due to unexpectedly high levels of default and portfolio deterioration. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Upgrades may result from stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread available to cover losses in the remaining portfolio. =========== L A T V I A =========== ELEVING GROUP: Fitch Affirms 'B' LongTerm IDR, Outlook Positive --------------------------------------------------------------- Fitch Ratings has affirmed Eleving Group's Long-Term Issuer Default Rating (IDR) at 'B' with a Positive Outlook. Fitch also affirmed Eleving's senior secured debt rating at 'B' with a Recovery Rating of 'RR4'. The Positive Outlook reflects Fitch's expectation that Eleving will strengthen its franchise through improved business volumes, diversification and profitability, which alongside a now extended debt maturity profile following its refinancing in October 2025 at reasonable funding cost and stable or improving leverage, could support an upgrade over the next 12 months. Key Rating Drivers Modest Franchise, High Risk Appetite: Eleving's ratings reflect its modest franchise in a niche market (assets of EUR519 million at end-3Q25) and high-risk appetite as a predominant high-cost vehicle financier for second-hand cars and new motorcycles, and consumer loans in eastern Europe, central Asia and Africa. The ratings also capture the company's large, but declining, exposure to currency risk and recently increased leverage. Rating strengths include strong profitability, adequate funding and liquidity, and an experienced management team. Successful Bond Refinancing: Eleving's near-term refinancing risk has abated following its refinancing in October 2025. Eleving issued EUR275 million of senior secured notes due in November 2030, materially extending its debt maturity. Proceeds from the new bonds were used to refinance the remaining October 2026 bond maturities that were not exchanged in an exchange offer launched in October 2025, refinance Mintos Marketplace platform liabilities and for general corporate purposes. Funding remains concentrated by instrument, but the extended maturity has significantly reduced refinancing risk compared with the previous structure. Increased Leverage: Eleving's gross debt/tangible equity ratio increased to 5.0x at end-3Q25 from 4.1x at end-2024, which is higher than Fitch's previous expectation of 4.3x-4.5x. The leverage increase primarily reflects dividend payments in 9M25 and debt-funded balance sheet growth. Fitch now expects leverage to stabilise at about 5.5x- 5.7x over the medium term, reflecting continued debt-funded business expansion and a 50% dividend payout policy. Sustained Strong Profitability: Eleving's pre-tax income/average assets ratio remained robust at 8.9% in 9M25 (2024: 8.6%), reflecting its high-yield consumer finance business model. Profitability continues to benefit from strong interest margins that compensate for inherently higher credit costs. However, margins are vulnerable to sudden increases in loan impairment charges, regulatory interventions including interest rate caps, and material FX losses. High-Risk Client Base: Eleving's high-risk appetite is reflected in its higher-risk target client base, which is exacerbated by historically rapid growth. The company focuses on non-prime clients in emerging markets who are mostly underserved by mainstream banks. In addition, Eleving has an improving, but still large, open foreign-currency position at 1.1x tangible equity at end-3Q25 (compared with 1.2x at end-2024 and 2.1x at end-2023), due to the combined effect of its reduced open position and an increased equity base due to increased earnings retention. Normalised Credit Costs: Eleving's loan impairment charges increased to 11.7% of average gross loans at end-3Q25 from 9.6% at end-2024, more consistent with its 2021-2024 historical average of 12%. The increase primarily reflects ongoing portfolio expansion in higher-yielding unsecured consumer finance and presence in more volatile emerging markets. The company manages these risks through risk-based pricing, effective collection capabilities and, for vehicle finance products, tangible collateral backing. Maturity Concentration Remains High: Maturity concentration remains high, despite its recent refinancing. It has EUR275 million due in November 2030 and EUR90 million due in October 2028, representing the bulk of Eleving's bond debt. High asset encumbrance also constrains financial flexibility, as the notes are secured by pledges over subsidiaries' equity and loan portfolios. These factors are partly mitigated by Eleving's demonstrated capital markets access, underscored by multiple successful bond issuance since 2021. Eleving maintains access to Mintos Marketplace, a Latvian-licensed peer-to-peer lending platform, which provides funding flexibility but is confidence-sensitive given its retail investor base and has become materially more expensive in recent periods. Modest Liquidity Coverage: Eleving's liquid assets, consisting primarily of cash and cash equivalents, covered 0.3x short-term borrowings at end-3Q25, below the median for rated finance and leasing peers. However, the company's ability to match Mintos funding with short-term loan maturities and its positive operating cash flow generation, supported by high portfolio yields, partly offset this constraint. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Inability to increase business volumes and improve profitability in line with management projections could lead to a revision of the Outlook to Stable - A marked and sustained increase in Eleving's gross debt/tangible equity ratio to above 6.5x, reducing its buffers to absorb credit and FX losses, would likely result in a downgrade of its Long-Term IDR - A marked deterioration in asset quality or further FX losses, ultimately threatening its solvency, would also lead to a downgrade - Unexpected difficulties in accessing capital markets or alternative funding sources, or a material increase in funding costs that significantly erodes profitability Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Sustained franchise growth combined with stable or improving core profitability and asset quality, together with maintaining Eleving's open FX position below 1x total tangible equity on a sustained basis - Eleving's gross debt/tangible equity ratio approaching 4.5x DEBT AND OTHER INSTRUMENT RATINGS: KEY RATING DRIVERS Eleving's senior secured debt rating of 'B' reflects the bonds' structural subordination to outstanding debt at operating entities. This leads to only average recoveries expectations, despite the bonds' secured nature. This is reflected in the 'RR4' Recovery Rating and in the equalisation of the debt rating with the company's Long-Term IDR. DEBT AND OTHER INSTRUMENT RATINGS: RATING SENSITIVITIES An upgrade of Eleving's Long-Term IDR would likely be mirrored on its senior secured bond rating. Higher recovery assumptions due to, for instance, operating entity debt falling in importance compared with rated debt instruments, could lead to above-average recoveries and Fitch to notch up the rated debt from Eleving's Long-Term IDR. A downgrade of Eleving's Long-Term IDR would likely be mirrored on its senior secured bond rating. Lower recovery assumptions due to, for instance, operating entity debt increasing in importance relative to rated debt or worse-than-expected asset-quality trends (which could lead to larger asset haircuts), could lead to below-average recoveries and Fitch to notch down the rated debt from Eleving's Long-Term IDR. ADJUSTMENTS The 'b' business profile score is below the 'bb' implied score due to the following adjustment reason: business model (negative). The 'b' asset quality score is above the 'ccc and below' implied score due to the following adjustment reason: collateral and reserves (positive). The 'bb-' earnings and profitability score is below the 'bbb' implied score due to the following adjustment reason: earnings stability (negative). The 'b+' funding, liquidity and coverage score is above the 'ccc and below' implied score due to the following adjustment reason: funding flexibility (positive). ESG Considerations Eleving has an ESG Relevance Score of '4' for group structure, reflecting our view about the appropriateness of Eleving's organisational structure relative to the company's business model, intra-group dynamics and risks to its creditors. This has a moderately negative impact on the credit profile and is relevant to the rating in conjunction with other factors. Eleving has an ESG Relevance Score for Customer Welfare of '4'. Eleving's exposure to high-cost credit means that its business model is sensitive to regulatory changes, like lending caps, and conduct-related risks. These issues have a moderately negative impact on the credit profile and are relevant to the rating in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on Eleving, either due to their nature or the way in which they are being managed. 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. Rating Prior ------ ----- Eleving Group LT IDR B Affirmed B ST IDR B Affirmed B senior secured LT B Affirmed RR4 B =========== R U S S I A =========== ASIA INSURANCE: S&P Affirms 'B' Fin'l. Strength Rating ------------------------------------------------------ S&P Global Ratings affirmed its 'B' long-term financial strength rating on Asia Insurance Sug'urta Kompaniyasi JSC. The outlook is stable. In December 2025, Asia Insurance Sug'urta Kompaniyasi JSC completed an Uzbekistani som (UZS) 27.3 billion share issuance to replenish its authorized capital in line with tightening regulatory requirements. The insurer also revaluated its investment property at fair value, with a positive impact on capital. Asia Insurance also posted a UZS19 billion net loss over the first nine months of 2025 on higher reserve requirements and increased operating expense. S&P thinks the insurer's increased capitalization will easily absorb a potential net loss for the full year. Asia Insurance increased its authorized capital to meet tightening regulatory capital requirements. According to the Presidential Decree on Comprehensive Measures for the Further Development of the Insurance Market, signed March 1, 2024, the minimum size of insurers' statutory fund to perform reinsurance operations is set to increase to UZS80 billion by end-2025 from UZS45 billion in in 2024. To meet this requirement, Asia Insurance recapitalized its 2024 profit and registered a new issuance of UZS27.3 billion of equity in December 2025. The issuance is financed by the same ultimate shareholders. The deal is to be fully completed by the end of 2025. S&P considers the probability of this capitalization high and include it in its forecast. Asia Insurance revaluated its investment property at fair value, which led to a material increase in tangible assets and equity. According to unaudited interim accounts as of Oct. 1, 2025, the insurer's property, plant, and equipment increased by about UZS75 billion (about $6 million), or more than twice, from end-2024 levels and its total equity increased 2x through an increase in reserve capital by the same amount. This supported Asia Insurance's regulatory solvency margin, which improved to 2.3x as of Oct. 1, 2025, from about 1.05x as of July 1 (and compared with the 1.0x minimal requirements). While it could affect the company's risk-based capital adequacy according to our capital model due to higher risk-charges associated with a higher portion of property on balance sheet (36% of total assets as of Oct. 1, 2025, from 25% in 2024), the simultaneous increase in total adjusted capital offsets the adverse effect on risk charges. Asia Insurance's net technical performance over the first nine months of 2025 was weaker than expected. The company showed a UZS19 billion loss over the first nine months of 2025, compared with UZS 8.2 billion net income over the same period in 2024. A notable 316% increase in the company's gross premiums written and a 229% increase in net premiums written mainly resulted from an increase in credit and financial risk insurance and inward reinsurance, which require a 100% unearned premium reserve according to the local regulation. Therefore, its net premium earned increased only 34% over the first nine months of 2025 (year over year), while operating expense almost doubled over the same period. As a result, the company's net combined ratio exceeded 170% over the first nine months of 2025 (116% in 2024), which was higher than our previous expectation of 105%-110% and the sector average of 100%-105% (a ratio exceeding 100% means a loss from operating activity). S&P said, "We anticipate that Asia Insurance's capital adequacy will be able to absorb higher growth and a potential loss in 2025. We expect it will remain in line with our 99.99% benchmark, supported by the recapitalization and property revaluation. Our forecast assumes growth in net premiums earned of 45%-50% and a net combined ratio to stabilize at 149%-155% for 2025 before improving to 110%-115% in 2026-2027. This is somewhat higher than the market average level of 105% but broadly in line with Asia Insurance's historical average for the past four years, supported by an expected unearned premium reserve release and a decline in expense ratio. We forecast higher losses associated with Asia Insurance's expansion into new insurance classes. We expect the company's net loss to decline to about UZS15 billion by end-2025, and its bottom line to turn positive in 2026-2027. We assume zero dividends over 2025 due to the loss, and potential dividends of up to 50% of net income in 2026-2027." Asia Insurance's small absolute capital size below $15 million makes it susceptible to single-event losses. This continues capping our capital and earnings assessment at the satisfactory level. Moreover, although not our base-case scenario, a negative bottom-line result if continues in 2026, could affect capitalization and indicate a vulnerability of the current business model. The stable outlook reflects our expectation that Asia Insurance will maintain its competitive standing and capital adequacy over the next 12 months. S&P expects that the company's projected capital buffers will be able to absorb its higher growth and potential losses from its fast expansion into new insurance products. S&P could consider a downgrade over the next 12 months if: -- Asia Insurance could not return to profitable financial performance by end-2026, which could signal a potential vulnerability in its business model; -- The company's capital base deteriorated materially due to weaker-than-expected operating performance and investment losses; -- Asia Insurance's regulatory solvency margin deteriorated due to higher-than-expected growth or a lack of capital injections to meet tightening regulatory requirements; or -- S&P observed deficiencies in management and governance, including financial reporting or risk controls. S&P said, "We consider a positive rating action unlikely over the next 12 months. However, we could raise the rating if Asia Insurance's competitive standing improved, supported by positive operating performance and capital buildup in absolute and relative terms. "For a positive rating action, we also expect no significant deficiencies in management and governance, whether in financial reporting standards or risk controls, including related-party transactions." ========= S P A I N ========= CELSA OPCO: Fitch Assigns 'BB-' LongTerm IDR, Outlook Stable ------------------------------------------------------------ Fitch Ratings has assigned Celsa Opco, S.A.U. a final Long-Term Issuer Default Rating (IDR) of 'BB-' and senior secured rating of 'BB' for its EUR1.2 billion senior secured notes issuance. The Outlook on the Long-Term IDR is Stable. The Recovery Rating is 'RR3'. The proceeds from the notes' issuance will be used to refinance existing indebtedness and put in place a sustainable capital structure post reorganisation of the group. The notes are guaranteed by material subsidiaries and benefit from security, including pledges over shares of Celsa Opco and the guarantors and material bank accounts. In an enforcement scenario, bondholders rank after super senior creditors, which includes the super senior revolving credit facility (RCF). Celsa's rating reflects its vertically integrated business model for long-products including scrap recycling and some downstream processing; a very low carbon production footprint that will benefit from tighter European environmental legislation and steel safeguards; concentrated exposure to construction (85%-90%) and automotive (below 10%); and strong market positions in local markets. Fitch expects EBITDA gross leverage to fall from 5x at end-2025 to about 3.2x at end-2027. Pre-dividend FCF should rise towards EUR150 million by end-2027 due to limited capex needs to support existing operations. Key Rating Drivers Strong Local Market Positions: Celsa is a leading European integrated long-steel producer with output of about 4.5 million tonnes in 2025 (7.3 million tonnes of capacity). Across rebar, merchant bar, sections and (high-grade) wire rod, it holds top-three positions in local markets near its facilities (with market shares of about 25%-35%), as logistics costs are material in the commoditized longs market. The company is mostly exposed to cyclical end-markets, with about 85%-90% of sales to residential (particularly Spain) and infrastructure construction (particularly Poland) and less than 10% to the automotive sector. Celsa benefits from partial vertical integration, as about 35% of scrap comes from its own scrap yards in Spain and Poland, and around 20% of sales comes from downstream businesses like mesh production and wire drawing. This supports incremental margin capture (usually taken by third-party intermediaries) and closer relationships, and reduces reliance on distributors. EU Moves to Protect Steel Market: Amid weak European demand, a supply glut from China and rising trade barriers in the U.S. and elsewhere, the European Commission announced in October 2025 its plan to tighten steel-sector safeguards in 2026. The proposals include cutting tariff-free import quotas by 47%, raising tariffs to 50% from 25%, and implementing origin‑traceability procedures. Further consultations will refine the regulations, with potential carve-outs or adjustments. The measures are scheduled for mid-2026 and likely to lift steel prices and earnings in the common market. Improving Market Fundamentals: Profitability for steel producers in Europe fell in 2024. Fitch expects fixed investment growth to average 2.0% in 2025-2027, up from -2.0% in 2024 (per Fitch's Global Economic Outlook, December 2025). This includes a modest recovery in construction and government infrastructure spending to support growth. The anticipated reduction in tariff-free import quotas from 2026 is likely to shift around 1.5 million tonnes of production in rebar, wire rod, merchant bar and sections to European steelmakers, versus 2024 production of 44.5 million tonnes (Eurofer), relevant to Celsa's product portfolio. Mid-Cycle Earnings Rising: The company is executing a value-creation plan to optimise its product portfolio, procurement, manufacturing, capture growth and reduce administration costs. The programme delivered an EBITDA uplift of about EUR80 million in 2025, which we assume will rise to EUR150 million over the medium term as implemented savings phase in over 12 months and incremental measures are added. Overall, we expect Fitch-adjusted EBITDA to increase to about EUR475 million by end-2027 from about EUR320 million for 2025. Deleveraging Underway: Fitch adjusted EBITDA gross leverage (treating factoring as debt, but not leases, which are considered operating expenditure) is estimated to be around 5x at YE 2025 (amid lower debt levels post refinancing). Fitch expects visible improvements over the next 24 months to around 3.2x, or EBITDA net leverage at around 2.7x, reflecting expected earnings growth. We have factored shareholder distributions from 2027, given net debt to EBITDA drops below 2.0x, based on company-defined metrics. Positive FCF In Sight: Once Celsa's value creation plan is fully implemented, we expect capex to fall to about EUR140 million-EUR150 million per year from 2026. Operational efficiency and flexibility, higher capacity utilisation and rising prices linked to European safeguard measures and CBAM will lift earnings. Fitch said, "We expect pre-dividend FCF to rise towards EUR150 million by 2027. Celsa has significantly lower investment requirements to address the energy transition compared to European peers, many of which use blast furnaces. This financial flexibility can be used to initially de-lever and later pursue accretive growth projects or consider shareholder distributions." Competitive in Europe: Celsa's assets maintain competitive positions on the European cost curve: Castellbisbal in the second quartile for crude steel and in the first/second quartile for rebar; Santander in the low third quartile for crude steel (on the global cost curve this corresponds to the 4th quartile). Electricity constitutes around 40% of procurement costs when excluding scrap and ferroalloys. Celsa only has a long-term power purchase agreement for 10% of volumes. This may create variability of EBITDA per tonne achieved throughout the year. At times of high energy prices, the company can shift production away from peak times using operational flexibility of the EAF route. Low Carbon Steel: Celsa's production in Spain has a carbon footprint of 0.2t of CO2 per tonne of steel and in Poland 0.57t for operational emissions (Scope 1 in both countries stands at 0.12t and Scope 2 differences reflect electricity mix available from the grid in those countries). The group targets to reduce carbon emissions by 50% by 2030 (versus 2021). Around 94% of input materials are recycled materials. Peer Analysis Fitch said, "We view Commercial Metals Company (CMC; 'BB+'/Stable) as the closest peer. CMC shipped 4.1 million tonnes of finished products in the U.S. and 1.2 million tonnes in Poland in 2025, including rebar, merchant bar, wire rod and fabricated downstream products. The group operates an integrated value chain, with recycling capacity exceeding U.S. production needs, located near its 10 electric‑arc‑furnace mills, and with steel fabrication and processing plants and construction‑related product warehouses across a wide footprint." CMC and Celsa have similar steelmaking carbon footprints and high recycled content. CMC benefits from broader U.S. geographic diversification, higher margins given U.S. market protections under Section 232 since 2018, and a larger downstream scale. CMC also operates ancillary businesses, such as Tensar (ground and soil stabilization solutions), and expects two precast‑concrete manufacturing acquisitions to close in the coming months. CMC has a long track record of conservative leverage, maintaining EBITDA leverage below 2.0x over the last five years. Following closing of pending acquisitions leverage will be higher and expected to trend closer to 2.8x through the financial year to September 2026. CMC is rated two notches higher than Celsa due to lower leverage and stronger business profile. Fitch's Key Rating-Case Assumptions -- Production of 4.5 million tonnes in 2025, 5.05 million tonnes in 2026, 5.3 million tonnes in 2027 and subsequent years across rebar, merchant bar, wire rod, sections and other products, reflecting capacity utilisation increasing from 62.3% to almost 73% in 2028; -- Fitch adjusted EBITDA per tonne of EUR72 in 2025 improving to EUR96 by 2028 (EBITDA differs from reported numbers, given that IFRS 16 leases are reflected as operating expense, we have assumed EUR10 million of advisory and restructuring costs per annum as recurring, ongoing expense and have reduced earnings by discounts to customers for early settlement of trade receivables) based on improving market fundamentals, savings achieved through the value creation plan and dilution of fixed costs with higher capacity utilization; -- Exceptional, non-recurring advisory and restructuring costs of EUR36 million in 2025 and EUR15 million in 2026; -- EUR140 million -150 million of capital expenditure over 2026- 2028; -- Net debt of EUR1,472 million at YE 2025, including EUR275 million of factoring; -- Multi-tranche issuance of EUR1.2 billion senior secured notes due December 2030; -- Commencement of dividend payments once reported net debt / EBITDA drops to 2x, equivalent to Fitch adjusted EBITDA gross leverage of slightly above 3x or Fitch adjusted EBITDA net leverage of slightly below 3x. RATING SENSITIVITIES Factors Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - EBITDA gross leverage above 3.7x on a sustained basis (EBITDA net leverage above 3.2x); - EBITDA per tonne below EUR90 for an extended period of time; - EBITDA interest coverage below 4.5x. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - EBITDA gross leverage below 3x on a sustained basis, linked to a distribution policy that safeguards the conservative financial profile (EBITDA net leverage below 2.5x); - EBITDA per tonne above EUR100 on a sustained basis; - EBITDA interest coverage above 6x; - Track record of positive free cash flow. Liquidity and Debt Structure The group will hold around EUR200 million cash post-refinancing and have available EUR150 million under a super senior RCF with a maturity in 2030. From 2026 onwards the business should be free cash flow positive. As such refinancing risk post transaction will be limited over the medium term. Issuer Profile Celsa is a major European electric arc furnace steelmaker with around 4.5 million tonnes of long steel production in 2025. The group produces low carbon steel from recycled input materials in Spain, France and Poland where it has strong market positions. Rating Prior ------ ----- Celsa Opco, S.A.U. LT IDR BB- New Rating BB-(EXP) senior secured LT BB New Rating RR3 senior secured LT BB New Rating RR3 BB(EXP) =========== S W E D E N =========== POLESTAR AUTOMOTIVE: Secures $600M Term Loan for Corporate Purposes ------------------------------------------------------------------- Polestar Automotive Holding UK PLC disclosed in a Form 8-K Report filed with the U.S. Securities and Exchange Commission that it entered into the credit agreement in relation to a USD600,000,000 term loan facility with Geely Sweden Automotive Investment AB, as original lender and agent. GSAI is a wholly-owned subsidiary of Geely Sweden Holdings AB, the parent company of Volvo Car AB (publ), and one of Polestar's affiliates. The first USD 300,000,000 of the Term Loan Facility is committed and the second USD 300,00,000 is uncommitted and therefore available only with lender consent. The Term Loan Facility consists of a term loan denominated in U.S. dollars available for general corporate purposes. The Term Loan Facility is available for utilization until 31 March 2026 and is required to be repaid on the Termination Date falling six months from the Utilization Date, subject to GSAI exercising an option to convert all or part of the loan and accrued interest into shares of Polestar at an equity conversion price calculated based on an average closing price as reported by NASDAQ for the Class A American Depositary Shares of the Borrower over the 5 trading days immediately preceding the date of the Equity Conversion Exercise Notice (as defined in the Term Loan Facility). The Term Loan is subordinated to the EUR 340,000,000 and USD 583,489,000 multicurrency green term loan facilities agreement entered into by Polestar as Borrower and amongst others, the Original Lenders (as defined in the agreement) as lenders and Standard Chartered Bank as security agent and agent on February 22, 2024. Repayment of Loans and accrued interest on the Termination Date is subject to the lenders under the Club Loan Facilities Agreement having consented to releasing the liabilities owed by the Borrower under the Term Loan Facility from the subordination. The interest rate applicable to borrowings under the Term Loan Facility is Term SOFR (as described in the Term Loan Facility and subject to a zero floor) plus 3.00%. The interest period of the Term Loan Facility is one month and default interest is calculated as an additional 1% on the overdue amount. Polestar may voluntarily prepay loans or reduce commitments under the Term Loan Facility, in whole or in part, subject to minimum amounts, with prior notice but without premium or penalty. Polestar has an obligation to prepay the loan on the occurrence of a change of control or illegality. Polestar's obligations under the Term Loan Facility are not guaranteed or secured. The Term Loan Facility contains customary negative covenants, including, but not limited to, restrictions on Polestar's ability to make certain acquisitions, loans and guarantees. The Term Loan Facility also contains certain affirmative covenants, including, but not limited to, certain information undertakings and access to senior management. The Term Loan Facility contains certain customary representations and warranties, subject to certain customary materiality, best knowledge and other qualifications, exceptions and baskets, and with certain representations and warranties being repeated, including: (i) status; (ii) binding obligations; (iii) non-conflict with constitutional documents, laws or other obligations; (iv) power and authority; (v) validity and admissibility in evidence; (vi) governing law and enforcement; (vii) ranking; and (viii) financial information. The Term Loan Facility provides that, upon the occurrence of certain events of default, Polestar's obligations thereunder may be accelerated. Such events of default include payment defaults to GSAI thereunder, material inaccuracies of representations and warranties, covenant defaults, cross acceleration with respect to our other indebtedness, corporate arrangement, winding-up, liquidation or similar proceedings, creditors' process affecting assets over a certain minimum amount, and other customary events of default. The Term Loan Facility is governed by English law. As promptly as practicable following the Equity Conversion Date (as defined in the Term Loan Facility), the Borrower and the Lender will enter into a registration rights agreement that is, in form and substance, similar to the registration rights agreement dated 27 September 2021, as later amended, among the Borrower and other parties. Polestar has agreed to include any Conversion Shares issued by Polestar to GSAI pursuant to exercise of the Conversion Right pursuant to the Term loan Facility in the definition of "Registrable Securities" in the Registration Rights Agreement. Polestar also agreed, within 90 days following the Equity Conversion Date, to file a new shelf registration statement on Form F-3 in view of registering the resale of any Conversion Shares and cause such registration statement to become effective as soon as practicable after such filing. A full text copy of the Term Loan Facility is available at https://tinyurl.com/26x5k26m About Polestar Automotive Polestar (Nasdaq: PSNY) is the Swedish electric performance car brand with a focus on uncompromised design and innovation, and the ambition to accelerate the change towards a sustainable future. Headquartered in Gothenburg, Sweden, its cars are available in 27 markets globally across North America, Europe and Asia Pacific. Gothenburg, Sweden-based Deloitte AB, the Company's auditor since 2021, issued a "going concern" qualification in its report dated May 9, 2025, attached to the Company's Annual Report on Form 10-K for the year ended December 31, 2024, citing that the Company requires additional financing to support operating and development activities that raise substantial doubt about its ability to continue as a going concern. As of June 30, 2025, the Company had $3.6 billion in total assets, $7.9 billion in total liabilities, and a total deficit of $4.3 billion. =========== T U R K E Y =========== ANADOLU EFES BIRACILIK: Fitch Alters Outlook on BB IDR to Neg. -------------------------------------------------------------- Fitch Ratings has revised Anadolu Efes Biracilik ve Malt Sanayii A.S.'s (Efes) Outlooks to Negative from Stable, while affirming its Foreign and Local-Currency Issuer Default Ratings (IDRs) and senior unsecured rating at 'BB' and the National Long-Term rating at 'AAA(tur)'. The Recovery Rating is 'RR4'. The Negative Outlook reflects Efes's stretched leverage due to extended pressure on operating margin from a weaker operating and inflationary environment in Turkiye, and intensive capex driving negative free cash flow (FCF) and a debt increase. We estimate EBITDA leverage at 3.8x by end-2025 under Fitch's rating scope, with only gradual deleveraging to below 3x by 2027. The 'BB' rating is supported by the company's strong position in its core markets, public commitment to deleveraging and to restoring FCF, together with a strategy of diversifying across products categories and markets. Deviations from this financial policy or weaker-than-expected operating performance may lead to a downgrade. Key Rating Drivers Stretched Leverage: The deconsolidation of Efes's large, higher-margin joint venture (JV) in Russia from the rated scope has reduced scale and operating base, resulting in higher gross leverage of 4.9x at end 2024. Fitch said, "We expect gross leverage to remain high at 3.8x at end-2025 with deleveraging towards 2.7x only by 2027. The slower deleveraging to below our negative sensitivity of 3x is mainly driven by weaker operating performance and EBITDA margin and increased short-term debt to finance growth capex and assumed acquisitions." Temporarily Negative FCF: Fitch said, "We expect Efes's FCF to remain negative in 2025 due to a heavy interest burden, weakened trading in Turkiye and intensive growth capex to meet strong seasonal demand. We project FCF to improve to break-even in 2026 and to turn positive from 2027 as investment is completed, working capital requirements fall and short-term debt is reduced. We anticipate Efes's new distribution agreements in spirits and expansion into new markets to provide only modest EBITDA growth in 2026-2027, with more tangible contributions emerging only over the medium term." Russian Operations Fully Deconsolidated: Fitch fully deconsolidated the Russian business from Efes's rated scope, after the Russian decree in January 2025 transferred management of ABI Efes's Russian operations into a new Russian company. The assets are under temporary management, and Fitch sees uncertainty over Efes's ability to regain full access and control. Russia was the main contributor to international beer operations (EBI), at around two thirds of EBITDA based on a proportionate consolidation basis. Fitch assumes these restrictions will remain in place for longer, which is reflected in its full deconsolidation of the Russian operations. Conservative Financial Policy: The rating is supported by Efes's reaffirmation of a disciplined financial policy, despite currently high leverage and negative FCF. Fitch's rating analysis factors in the company's adherence to a target EBITDA net leverage of 2.0x (based on the company's reporting). Fitch expects improved operating performance and expansion in new products and markets drive deleveraging, while FCF will continue to be supported by dividends from Coca-Cola Icecek Company (CCI), in which Efes owns a 50.3% stake. Kazakhstan Country Ceiling Applicable: Efes is incorporated in Turkiye (BB-/Stable) but generated about 15% of its 2024 TRY14.2 billion consolidated EBITDA in Kazakhstan (BBB/Stable), which has a higher Country Ceiling of 'BBB+' than Turkiye's 'BB-'. Fitch projects hard-currency interest expenses at about TRY700 million-900 million a year, which will be covered by cash flow from Kazakhstan with sufficient and rising headroom. This leads us to apply the Kazakhstan Country Ceiling to Efes's Long-Term Foreign-Currency IDR, based on Fitch's Corporate Rating Criteria. Peer Analysis Efes is smaller and less geographically diversified than large international beer groups, such as Carlsberg Breweries A/S (BBB+/Negative), and Asian beer and spirits peer Thai Beverage Public Company Limited (BBB-/Stable). However, Efes has historically had a much more conservative capital structure - which is consistent with the 'A' category - than Thai Beverage, which is more aligned with that of Carlsberg. Fitch's Key Rating-Case Assumptions - Revenue growth of around 28% in 2025 and moderating to around 18% by 2028 - Gradual Improvement of EBITDA margin of toward 16% by 2028 - Capex at 8.5% of revenue in 2025, gradually declining to around 5% by 2028 - Annual common dividends at about TRY2 billion - M&A of about USD63 million in 2026 RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Deteriorating liquidity with no prospects of refinancing options - More aggressive financial policy leading to EBITDA gross leverage remaining permanently above 3.0x or higher than 2.0x net of readily available cash (calculated by deconsolidating CCI) - Inability to generate sustainably positive FCF margins - Increasing macroeconomic and/or political instability affecting trading performance - Deterioration in the operating environment in the company's key markets, leading to a more significant impact on Efes's IDRs Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Regaining sustained access to assets and cash flow and resuming operational control of the Russian JV ABI Efes - EBITDA gross leverage below 2.5x on a sustained basis or below 1.5x net of readily available cash (calculated by deconsolidating CCI) - EBITDA margin improving towards 15% and positive FCF margin Liquidity and Debt Structure Efes's liquidity is adequate, with near-term maturities of TRY30.7 billion as of September 2025, only partly covered by cash balances and access to uncommitted lines. Its hard-currency USD500 million bond is due in 2028. Committed bank facilities are not commonly available in Turkiye. As of end-2024, Efes had no committed credit facilities, but had access to USD1.2 billion (equivalent) of uncommitted credit limits, including USD161 million (equivalent) of available loans from banks. Issuer Profile Efes is the fifth-largest brewer in Europe and 10th globally. Efes is the largest brewer in its home country, Turkiye, with a market share of around 50%. Efes also operates in Kazakhstan, Moldova, and Georgia with number one market positions and strong market position in Ukraine and exports beer to more than 80 countries. Summary of Financial Adjustments Adjustments to Consolidation Perimeter: Until January 2025, Efes fully consolidated the JV with Anheuser Bush Inbev, which we consolidated proportionally. Following the placement of the assets under Russian authorities management, Fitch has fully deconsolidated the business from Efes's rated scope (adjustment applied in FY24). Efes also fully consolidates the 50% stake it owns in CCI, the sixth largest bottler of the Coca-Cola Company globally. We consider Efes's credit profile excluding CCI's operations, accounting for CCI using the equity method. Anadolu Efes Biracilik ve Malt Sanayii A.S. Rating Prior ------ ----- LT IDR BB Affirmed BB LC LT IDR BB Affirmed BB Natl LT AAA(tur) Affirmed AAA(tur) senior unsecured LT BB Affirmed RR4 BB ISTANBUL METROPOLITAN: Fitch Affirms 'BB-' IDRs, Outlook Stable --------------------------------------------------------------- Fitch Ratings has affirmed Istanbul Metropolitan Municipality's Long-Term Foreign and Local-Currency Issuer Default Ratings (IDRs) at 'BB-' The Outlook is Stable. The affirmation reflects Fitch's expectations that Istanbul's operating performance will remain resilient, despite a high but declining inflationary operating environment, further lira depreciation and ongoing pressure on opex and an expected increase in debt financing under Fitch's rating case. Its debt metrics will remain commensurate with a 'bbb-' Standalone Credit Profile (SCP) over the medium term. Istanbul's IDRs are capped by the Turkiye's sovereign ratings (BB-/Stable) and the Stable Outlooks reflect that on the sovereign. KEY RATING DRIVERS Standalone Credit Profile Istanbul's 'bbb-' SCP results from a 'Weaker' risk profile and a 'aaa' financial profile. The SCP also factors in comparison with its national and international peers in the same rating category. Istanbul's IDRs are not affected by any other rating factors but are capped by the Turkish sovereign IDRs. Risk Profile: 'Weaker' The 'Weaker' risk profile is driven by four 'Weaker' key risk factors and two 'Midrange' factors , which are unchanged since the last review. The assessment reflects Fitch's view that there is a high risk of the issuer's ability to cover debt service with the operating balance weakening unexpectedly over the scenario horizon (2025-2029) due to lower revenue, higher expenditure, or an unexpected rise in liabilities or debt service requirements. Revenue Robustness: 'Midrange' Istanbul has a well-diversified and vibrant local economy with GDP per capita about 64% above the national average, leading to a tax revenue base with low volatility and robust tax revenue growth prospects. This makes the city resilient to economic slowdown, which Fitch expects to continue over the forecast horizon. Fitch expects tax revenue growth to outpace national nominal GDP CAGR, expected at 28%, and operating revenue to increase to about TRY460.7billion by 2029 from TRY136.2 billion in 2024, leading to a resilient operating margin of about 28%. Taxes represent about 79% of operating revenue while non-tax revenue, such as charges and fees, make up about 9%. Transfers from the central government comprise about 11.6% of operating revenue, a low share compared with national peers due to the city's high socioeconomic wealth indicators. Revenue Adjustability: 'Weaker' Istanbul's ability to generate additional revenue is constrained by nationally pre-defined tax rates. At end-2024, nationally set and collected taxes were 76% of Istanbul's total revenue. Local taxes over which Istanbul has control were a low 0.1% of total revenue, implying negligible tax flexibility, which is also constrained by central government limits. This is partly compensated for by the fees and charges over which Istanbul has some control and scope for asset sales. These accounted for 9% and 4%, respectively, of total revenue, in 2024. Expenditure Sustainability: 'Weaker' This reflects a persistently high inflationary operating environment, which would erode expenditure control despite Istanbul's moderately cyclical and counter-cyclical responsibilities that enable it to control expenditure growth. Operating revenue growth (CAGR: 62.4%) slightly lagged operating revenue growth (CAGR: 63.3%) in 2020-2024 and led to robust operating balances. We expect Istanbul to continue to provide large subsidies to its loss-making transportation company, IETT, as the cost increases are not expected to be fully compensated by adjustments in tariffs. Istanbul's large and essential investment programme, which is focused on the construction of a near 62km metro line within the next five years, will account for roughly 34% of total expenditure. We expect recent cost-cutting measures introduced by the central government and the expected decline in inflation from 2026 to help Istanbul to restore its capacity to control expenditure growth. Expenditure Adjustability: 'Midrange' Istanbul has a low share of inflexible costs versus its international peers, below 55% of total expenditure, which is in line with other Fitch-rated Turkish metropolitan municipalities. Capex constitutes 44% of totex at end 2024, which can be postponed or reduced given the city's reasonable infrastructure, which increases its capacity to reduce expenditure during times of economic downturn. Spending flexibility is constrained by Istanbul's weak history of balanced budgets, mainly due to high capex, which led to net deficits before financing over the past three years, peaking at 33% of total revenue in 2024. The city's ability to reduce these deficits is limited by current service levels and ongoing investment needs. 3Q25 results show lower capex realisation, partly due to a volatile political and macro-economic environment, which slowed the implementation of investment strategy. We expect this to reverse from 2026, with capex averaging 34% of total expenditure between 2025 and 2029. Fitch expects Istanbul's essential investment programme, driven by rapid urbanisation and population growth, to continue increasing expenditure and result in large pre-financing deficits, averaging about 12% of total revenue, in line with 2020-2024. Liabilities and Liquidity Robustness: 'Weaker' Nearly 92% of Istanbul's debt is in foreign currency and unhedged, resulting in significant FX risk, due to large lira volatility. By end-2025, we expect FX volatility to increase Istanbul's debt by TRY27 billion, or roughly 20%. Fitch forecasts the debt service coverage ratio will average 1.4x mainly due to bond redemptions due 2025, 2027 and 2028. At end-2024, the weighted average life of debt was 3.3 years, and the majority of debt was amortising, while about 41% of its debt was bonds with a bullet repayment. Most debt is at fixed interest rates (54%), mitigating interest-rate risk. Istanbul is not exposed to material off-balance-sheet risk. Contingent liabilities mostly comprise borrowings of its water affiliate, ISKI, which is a self-sustaining entity, underpinned by its strong payback ratio, which is nearly zero due to its negligible debt and its strong debt service coverage above 4x. Liabilities and Liquidity Flexibility: 'Weaker' Istanbul's counterparty risk stems from domestic liquidity providers rated below 'BBB-', which coupled with the short tenor of loans, limits our assessment to 'Weaker', like its Turkish peers. Istanbul had TRY17.4 billion cash at end-2024, down from TRY28.3 billion in 2023, but it remains restricted as it is earmarked for the settlement of payables or spending, such as payments to contractors for its metro line investments. However, Istanbul can generate additional liquidity through asset sales and benefits from very good access to international and domestic financial and capital markets. Turkish local and regional governments (LRG) do not benefit from treasury lines or cash-pooling, making it challenging to fund unexpected increases in debt liabilities or spending. Financial Profile: 'aaa category' Fitch assesses Istanbul's financial profile assessment in the 'aaa' category. Robust tax revenue growth will drive the operating revenue towards TRY572.2 billion, supported by expected real GDP growth of 3.5% on average. However, we expect the operating margin to remain under pressure over 2025-2029, averaging 28% due to persistent high inflation, and declining from an average 40% in 2020-2024. Under Fitch's rating case for 2025-2029, Istanbul's operating balance will be about TRY147.4 billion with adjusted debt of TRY587.9 billion in 2029, leading to a robust debt payback ratio (net adjusted debt/operating balance) at 4.0x, in line with a 'aaa' financial profile This is further supported by a robust actual debt service coverage ratio at 1.4x in 2029. The fiscal debt burden (net adjusted debt to operating revenue) remains slightly above 100%, in line with a 'a' financial profile. Other Rating Factors Istanbul's Long-Term IDR is capped by the Turkish sovereign. In its assessment, Fitch does not apply extraordinary support from upper government tiers or asymmetric risk. Short-Term Ratings The 'B' Short-Term IDR is the only option for a 'BB-' Long-Term IDR. National Ratings Istanbul's National Ratings are driven by its Long-Term Local-Currency IDR, which maps to 'AAA(tur)' on the Turkish National Rating Correspondence Table based on a peer comparison. Istanbul's National Long-Term Rating reflects its budgetary flexibility benefiting from a valuable asset base unlike its national peers, which may be used to generate additional liquidity, in case of need, and very good access to domestic and international financial markets. Debt Ratings The long-term ratings on Istanbul's senior unsecured USD305 million 10.75% bond due in April 2027 and USD715 million 10.5% bond due in December 2028 are in line with Istanbul's Long-Term IDR. Peer Analysis All Turkish metropolitan municipalities and international peers such as Yerevan City and Tashkent City have 'Weaker' risk profiles driven by a volatile economic environment and evolving institutional framework, resulting in high volatility in operational cash flows. Among Turkish LRGs, Istanbul is mostly comparable with Izmir Metropolitan Municipality and Ankara Metropolitan Municipality in terms of demographic trends and higher GDP per capita. Istanbul's 'bbb- 'SCP is the same as Izmir's (bbb-) reflecting similar debt metrics, but weaker than Ankara (SCP; 'bbb'). Relative to other Turkish LRGs Istanbul has a lower payback and actual debt service coverage ratio than Konya Metropolitan Municipality (SCP bb+). Among international peers, Istanbul's debt metrics are similar to those of Yerevan City with a 'bbb-'SCP. Istanbul's IDRs are not affected by any other rating factors but are capped by the Turkish sovereign IDRs, reflecting high fiscal interdependence between the central government and Turkish LRGs, which results in a sovereign rating ceiling. Issuer Profile Istanbul is the largest city in Turkiye, with about 15.7 million inhabitants. It has a crucial role in the economy, due its strategic location as an international junction of land and sea trade routes, contributing an average 30.5% of national GDP. Key Assumptions Risk Profile: 'Weaker' Revenue Robustness: 'Midrange' Revenue Adjustability: 'Weaker' Expenditure Sustainability: 'Weaker' Expenditure Adjustability: 'Midrange' Liabilities and Liquidity Robustness: 'Weaker' Liabilities and Liquidity Flexibility: 'Weaker' Financial Profile: 'aaa' Asymmetric Risk: 'N/A' Support (Budget Loans): 'N/A' Support (Ad Hoc): 'N/A' Rating Cap (LT IDR): 'BB-' Rating Cap (LT LC IDR) 'BB-' Rating Floor: 'N/A' Quantitative assumptions - Issuer Specific Fitch's rating action is driven by the following assumptions for reference metrics under the 2025-2029 rating case scenario. - Payback ratio: 4.0x - Actual debt service coverage ratio: 1.4x - Fiscal debt burden: 102.7% Fitch's through-the-cycle rating case incorporates a combination of revenue, cost and financial risk stresses. It is based on 2020-2024 published figures and our expectations for 2025-2029: - Operating revenues CAGR of 27.2% in 2025-2029 (62.4% year on year for 2020-2024) due to expected high but declining nominal GDP growth of about 24% on average in 2025-2029 - Tax revenue CAGR of 27.6% in 2025-2029 (64.0% in 2020-2024) - Current transfers CAGR of 26.6% in in 2025-2029 (59.7% in 2020- 2024) - Opex CAGR of 28.1% in 2025-2029 (63.3% year on year for 2020- 2024) due to expected high but declining inflation of about 25% on average in 2025-2029 - Negative net capital balance of TRY135.3 billion in 2025-2029 - Apparent cost of debt on average 9.0%, above the average cost of debt in 2020-2024 based on increased local-currency borrowing - Average USD/TRY assumptions based on Fitch's sovereign estimate for 2025 at USD/TRY43, 2026 at USD/TRY48, 2027 at USD/TRY54.5 and with annual additional depreciation of 10% for 2028-2029 Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A downgrade of the Turkish sovereign's IDRs or a downward revision of Istanbul's SCP resulting from a debt payback of more than 9x on a sustained basis would lead to a downgrade of the city's IDRs. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade An upgrade of the Turkish sovereign IDRs would lead to an upgrade of Istanbul's IDRs, if the city maintains its debt payback ratio below 5x. =========================== U N I T E D K I N G D O M =========================== AQUEDUCT EUROPEAN 8: Fitch Puts B-sf Final Rating to Cl. F-R Notes ------------------------------------------------------------------ Fitch Ratings has assigned Aqueduct European CLO 8 DAC's reset notes final ratings. Aqueduct European CLO 8 DAC Class A Loan LT PIFsf Paid In Full AAAsf Class A Notes XS2809255602 LT PIFsf Paid In Full AAAsf Class A-R Notes XS3219310144 LT AAAsf New Rating AAA(EXP)s Class B Notes XS2809255867 LT PIFsf Paid In Full AAsf Class B-R Notes XS3219310490 LT AAsf New Rating AA(EXP)sf Class C Notes XS2809256246 LT PIFsf Paid In Full Asf Class C-R Notes XS3219310730 LT Asf New Rating A(EXP)sf Class D Notes XS2809256592 LT PIFsf Paid In Full BBB-sf Class D-R Notes XS3219310904 LT BBB-sf New Rating BBB-(EXP) Class E Notes XS2809256758 LT PIFsf Paid In Full BB-sf Class E-R Notes XS3219311118 LT BB-sf New Rating BB-(EXP)sf Class F Notes XS2809256915 LT PIFsf Paid In Full B-sf Class F-R Notes XS3219311381 LT B-sf New Rating B-(EXP)sf Class Z-1 Notes XS3219312199 LT NRsf New Rating NR(EXP)sf Class Z-2 Notes XS3219312942 LT NRsf New Rating NR(EXP)sf Class Z-3 Notes XS3219314567 LT NRsf New Rating NR(EXP)sf Sub. Notes XS3219314724 LT NRsf New Rating Transaction Summary Aqueduct European CLO 8 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 purchase a portfolio with a target par of EUR400 million. The portfolio is actively managed by HPS Investment Partners CLO (UK) LLP. The collateralised loan obligation (CLO) has a 4.6-year reinvestment period and an 8.5-year weighted average life test (WAL). KEY RATING DRIVERS Average Portfolio Credit Quality (Neutral): Fitch assesses the average credit quality of obligors at 'B'. The Fitch weighted-average rating factor (WARF) of the identified portfolio is 24.2. 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 (WARR) of the identified portfolio is 61.3%. Diversified Portfolio (Positive): The transaction includes various concentration limits, including a maximum 40% exposure to the three largest Fitch-defined industries in the portfolio 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 has two matrices that are effective at closing and two that are effective 18 months after closing, with fixed-rate limits of 5% and 12.5% respectively. The closing matrices correspond to an 8.5-year WAL test while the forward matrices correspond to a seven-year WAL test. The transaction has a 4.6-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 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. These conditions include passing the coverage tests and the Fitch 'CCC' bucket limitation test, and a WAL covenant that gradually steps down during and after 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 have no impact on the class A-R to C-R notes, result in downgrades of one notch each for the class D-R and E-R notes and to below 'B-sf' for the class F-R notes. Downgrades, which are based on the identified portfolio, may occur if the loss expectation is larger than assumed, due to unexpectedly high levels of default and portfolio deterioration. The class B-R to F-R notes each have a rating cushion of two notches, due to the better metrics and shorter life of the identified portfolio than the Fitch-stressed portfolio. Should the cushion between the identified portfolio and the Fitch-stressed portfolio be eroded either due to manager trading or negative portfolio credit migration, a 25% increase of the mean RDR and a 25% decrease of the RRR across all ratings of the Fitch-stressed portfolio would lead to downgrades of three notches for the class A-R notes, four notches for the class B-R to D-R notes and to below 'B-sf' for the class E-R and F-R 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 four notches each for the rated notes, except for the 'AAAsf' rated notes. Upgrades during the reinvestment period, 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 remaining life of the transaction. Upgrades after the end of the reinvestment period may result from a stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread available to cover losses in the remaining portfolio. ASIMI FUNDING 2024-1: S&P Affirms 'BB (sf)' Rating on F-Dfrd Notes ------------------------------------------------------------------ S&P Global Ratings raised to 'AAA (sf)' from 'AA (sf)', 'AAA (sf)' from 'A (sf)', 'AA+ (sf)' from 'A- (sf)', and to 'A (sf) ' from 'BBB (sf)' its credit ratings on Asimi Funding 2024-1 PLC's class B, C-Dfrd, D-Dfrd, and E-Dfrd notes, respectively. At the same time, S&P affirmed its 'BB (sf)' and 'CCC (sf)' ratings on the class F-Dfrd and G-Dfrd notes, respectively. The transaction closed in July 2024 and, as of the October 2025 servicer report, the pool factor had declined to 41.4%. Cumulative gross losses were 6.00%, which are below our initial expectations. S&P has therefore lowered our gross loss base-case assumption for the remaining pool, default stress multiple, as well as its recovery haircut assumption for 'BB' and below ratings. Credit risk stress assumptions Rating level AAA AA A BBB BB B Cumulative gross 14.00 14.00 14.00 14.00 14.00 14.00 loss base-case (%) Stress multiple 3.50 3.00 2.10 1.50 1.25 1.00 Stressed cumulative 49.00 42.00 29.40 21.00 17.50 14.00 gross losses (%) Recovery rate 15.00 15.00 15.00 15.00 15.00 15.00 base-case (%) Recovery rate 55 50 45 40 25 20 haircut (%) Stressed 6.75 7.5 8.25 9 11.25 20.5 recovery rate (%) Stressed cumulative 59.7 49.3 34.3 24.3 20.5 16.7 net losses (%) Since closing, the class A and X-Dfrd notes have fully redeemed, and the class B notes are the most senior in the capital structure. Our ratings address the timely payment of interest once the class B to X-Dfrd notes becomes the most senior. However, all previously deferred interest is not due until the final maturity date, or any earlier date on which the issuer has sufficient funds to pay such amounts. S&P said, "We performed our cash flow analysis to test the effect of the portfolio's deleveraging and the resultant increase in credit enhancement. Our cash flow analysis indicates the available credit enhancement for the class B, C-Dfrd, D-Dfrd, E-Dfrd, and F-Dfrd notes is sufficient to withstand the credit and cash flow stresses that we apply at the relevant rating levels. We therefore raised our ratings on these classes of notes and affirmed our ratings on the remaining classes of notes. "Based on their repayment profile, we expect the class B notes to redeem over the next few months, and while these notes remain outstanding our analysis indicates the class C-Dfrd notes are receiving timely interest. We therefore raised our rating on the class C-Dfrd notes to 'AAA (sf)' and their interest payments will be due on a timely basis once they are the most senior tranche. "Additionally, the class G-Dfrd notes continue to fail our 'B' rating scenario, therefore we applied our 'CCC' ratings criteria. Under our steady state scenario, if we apply a multiple of 1.0x to our base-case default assumptions with no recovery haircuts to our base-case recovery rates, as well as assuming an expected prepayment rate of 15%, the notes fail to achieve any rating in our cash flows. Therefore, we affirmed our 'CCC (sf)' rating to reflect that the notes rely on favorable business, financial, and economic conditions. "Payments into the collection account are swept within two business days into the transaction account in the issuer's name. A declaration of trust applies to the collection account, as well as downgrade language, which mitigates the risk of funds being lost. Under our counterparty criteria, we no longer model a commingling loss in our cash flow analysis." Sovereign, counterparty, and operational risks do not constrain the ratings. Legal risks continue to be adequately mitigated, in our view. Asimi Funding 2024-1 PLC is an ABS transaction that securitizes a portfolio of unsecured consumer loans originated and serviced by Plata Finance Ltd. in the U.K. BARINGS EURO 2024-1: Fitch Affirms Bsf Rating on Class F Notes -------------------------------------------------------------- Fitch Ratings has upgraded Barings Euro Middle Market CLO 2024-1 DAC's class B, C and D notes and affirmed the others. Barings Euro Middle Market CLO 2024-1 DAC Rating Prior ------ ----- A Notes XS2940527554 LT AAAsf Affirmed AAAsf A-1 Loan LT AAAsf Affirmed AAAsf A-2 Loan LT AAAsf Affirmed AAAsf B XS2940528446 LT AA+sf Upgrade AAsf C XS2940528792 LT A+sf Upgrade Asf D XS2940528958 LT BBB+sf Upgrade BBBsf E XS2940529170 LT BBsf Affirmed BBsf F XS2940529337 LT Bsf Affirmed Bsf Transaction Summary Barings Euro Middle Market CLO 2024-1 DAC is a static middle-market (MM) CLO that is managed by Barings (U.K.) Limited. Net proceeds from the issuance of notes were used to finance a static portfolio of approximately EUR380 million of primarily senior direct lending loans originated by Barings. The portfolio also included a residual share of broadly syndicated loans (BSL). The transaction has a remaining weighted average life (WAL) of four years as of the November 2025 report. KEY RATING DRIVERS Deleveraging Transaction: Around EUR51.2 million of the most senior notes have been repaid since the transaction closed in December 2024. This has resulted in an increase in credit enhancement across the capital structure, which drives the upgrades and affirmations. The comfortable break-even default rate cushions for all notes ratings support the Stable Outlooks. Static Portfolio Stable Performance: The transaction does not have a reinvestment period and discretionary sales are only permitted if there is no event of default and are subject to a limit. Credit-risk obligations and defaulted obligations may be sold at any time provided that no event of default has occurred. Since issue date, the performance has been stable, with only one asset with a Fitch rating of 'CCC+' and below, as shown in the latest trustee report. The transaction has no defaulted assets and is slightly above par. Low Refinancing Risks: The transaction has manageable exposure to near- and medium-term refinancing risk, with no portfolio assets maturing in 2026 and 3.3% maturing in 2027. 'B'/'B-' Portfolio Credit Quality: Fitch has assigned credit opinions to all MM loan issuers. The average credit quality of obligors is 'B'/'B-'. The Fitch weighted average rating factor (WARF) of the current portfolio is 27.3. This is higher than the average WARF of 24.5 for BSL CLO portfolios at end-November 2025. High Recovery Expectations: The portfolio comprises senior secured obligations. Fitch views the recovery prospects for these assets as more favourable than for senior unsecured assets. Fitch assesses the weighted average recovery rate of the current portfolio at 60%. Diversified Portfolio: The largest three industries represent 35.9% of the portfolio balance, the top 10 obligors represent 24.8% of the portfolio balance and the largest obligor represents 2.5% of the portfolio. This is comparable with BSL CLOs, despite the smaller number of obligors in the portfolio. Maturity Extensions: The manager may vote in favour of a maturity amendment on collateral obligations, if the obligations do not become long dated and the maturity amendment's WAL test is satisfied. If the WAL test is not satisfied, any amendment is subject to a cumulative limit of 5%. Assets for which the maturity is extended to within two years of the maturity of the notes are accounted at Fitch's collateral value in the coverage tests. In our view, these provisions provide flexibility for the manager and the underlying corporate borrowers, while providing an incentive to avoid extension when possible. Permitted Deferrable Obligation: About 56% of the portfolio consists of MM loans for which the terms allow the borrower to defer part of the loan margin in excess of a minimum of 4%. In addition, less than 5% of the portfolio allows borrowers to defer the full coupon. The deferred interest component is capitalised. Fitch tested the transaction cash flows by applying a haircut to the portfolio's weighted average spread, based on the minimum applicable spread, for 36 months and found that the ratings remain resilient and maintain a positive break-even default rate cushion. Deviation from MIR: The ratings for the class B, D, E and F notes are one notch below their model-implied ratings (MIR) due to insufficient break-even default-rate at the higher ratings, allowing some cushion against performance deterioration. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade 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. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Upgrades may result from stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread available to cover losses in the remaining portfolio. EVOKE PLC: Fitch Cuts LongTerm IDR to 'B', Outlook Negative ----------------------------------------------------------- Fitch Ratings has downgraded evoke plc's Long-Term Issuer Default Rating (IDR) to 'B' from 'B+'. The Rating Outlook remains Negative. Fitch has also downgraded the senior secured ratings assigned to debt issued by evoke's fully owned subsidiaries 888 Acquisitions LLC and 888 Acquisitions Limited to 'B+' with a Recovery Rating of 'RR3' from 'BB-'/'RR3'. The downgrade reflects Fitch's view that the recent fiscal changes in the UK market will materially slow down the deleveraging pace of evoke which will no longer be consistent with a 'B+' rating. The Negative Outlook takes into account execution risks related to mitigating actions initiated by the company and potential increased competitive pressure from larger or less leveraged market participants. Key Rating Drivers Fiscal Pressure Impact on Deleveraging: Fitch expects that the recently announced increase in gaming and online sports betting (OSB) duties in the UK coming into effect from 2026 and from 2027, respectively, will materially slow down evoke's deleveraging pace, leading to leverage beyond our negative sensitivities of 5.5x until 2028. We assume that management's cost optimization actions will mitigate around GBP45 million of impact on EBITDA in 2026, and around GBP60 million in 2026. Fitch said, "We expect that despite the mitigating actions, evoke's revenue will face a mid-single-digit decline in 2026, and EBITDA margins will decline to 18.8% from 19.5% expected in 2025. We assume some execution risk for the contemplated mitigating measures, and unsuccessful efforts that would result in sharper profitability deterioration would put further pressure on the ratings." Geographic Concentration Risks: evoke has high revenue concentration in the UK with around two-thirds of revenue generated in that market. Aside from the new fiscal challenges, Fitch expects minimal impact from the new regulation on spin limits introduced in April-May 2025, as management reported substantial compliance with these limits as early as 2024. However, any additional responsible gaming requirements in the UK are considered an event risk that could further erode profitability build-up potential and would be negative for the ratings. FCF Generation Still Challenged: evoke has comparable operating profitability with higher-rated gaming and bookmaking operators, although this does not translate into similar FCF generation. This is primarily due to a high interest burden but also sizeable one-off items. Fitch's forecast incorporates a decline in one-off items to about GBP30 million from 2025 (from about GBP80 million in 2024), although FCF margins will remain negative, in the low single digits in 2025, before turning towards neutral in 2026, and mildly positive in 2027. Higher-than-anticipated one-off costs, if deemed recurring, would underline inconsistent cash flow generation and affect the rating. iGaming Performance Drives Turnaround: evoke's gaming performance has been stronger than in OSB, where revenues deteriorated in 2024 and in 2025. Fitch views OSB as more commoditised and therefore prone to competition, especially from larger operators such as Flutter Entertainment plc and Entain plc. "We are cautious in our forecast on OSB growth, which will offset iGaming's expansion, at an overall mid-single-digit increase for the online division before the impact of the new gaming duties. Retail has also been underperforming in 1H 2025, but we expect the trend to reverse in 2H 2025, supported by improvements in hardware and in-store experience," Fitch said. Low Fixed-Charge Cover Headroom: Fitch's rating case forecasts fixed-charge cover (FCC) staying at 1.6x in 2025 before improving to 1.8x in 2026, driven by a high interest burden and sizeable lease expense. This limits available cash flow to support expanding operations and capex that partially consists of less discretionary labour costs related to software development. Evoke mitigates potential interest rate increases by hedging — at end-June 2025, only 6% of debt was effectively subject to floating interest rates. Recreational Players Affecting Profitability: An increasing focus on a recreational player base provides higher revenue visibility over the long term, as this revenue is less susceptible to regulatory policies. However, higher-spending players typically drive greater profitability. Maintaining a more recreational-based structure of active players will continue challenges to turning around profitability, offsetting synergies gained from the acquisition of William Hill. Peer Analysis evoke's business profile is weaker than that of Flutter Entertainment plc (BBB-/Stable) and Entain plc (BB/Negative), as its similar portfolio of strong brands is offset by its smaller scale and slightly weaker geographical diversification with no sizeable US presence. Fitch also projects evoke to have higher leverage and lower profitability over 2025-2026, which translates into its rating difference with Flutter and Entain. All three entities have high exposure to the UK market and are vulnerable to regulatory risk, which is factored into their ratings. Of these three, evoke has the highest exposure to the UK and highest share of online gaming revenue, making it more vulnerable to adverse regulations and fiscal pressure. Fitch's Key Rating-Case Assumptions - Low-single-digit net gaming revenue (NGR) growth in 2025, followed by mid-single-digit NGR decline in 2026 driven by gaming duty impact and optimization of retail portfolio, neutral revenue evolution in 2027 with international markets growth offsetting further negative impact from betting duty impact - EBITDAR margin of 19.5% to contract to 18.8% in 2026 and 18.6% in 2027 - Around GBP45 million of mitigating actions in 2026 and around GBP60 million in 2027-2028 - Capex of around GBP105 million in 2025, moderating at GBP80 million to GBP85 million in 2026-2028 - Cash flows from non-recurring items of GBP30 million in 2025-2026 Recovery Analysis Fitch assumes evoke would be considered a going concern (GC) in bankruptcy and that it would be reorganised rather than liquidated. The GC EBITDA estimate reflects our view of a sustainable, post-reorganisation EBITDA level on which we base the enterprise valuation (EV). In our bespoke GC recovery analysis, we considered an estimated post-restructuring EBITDA available to creditors of about GBP220 million. Fitch said, "We applied a distressed EV/EBITDA multiple of 5.5x, closer to the higher range of multiples we use for the corporate portfolio outside the US. In our view, the high intangible value of evoke's brands and historical multiples of B2C brand acquisitions, including William Hill International, support an above-average multiple. This multiple is higher than the 5.0x we use for Inspired Entertainment, Inc. (B-/Stable) and in line with 5.5x we use for Meuse Bidco SA (B+/Stable). "After deducting 10% for administrative claims, our principal waterfall analysis generated a ranked recovery for the senior secured debt, including the GBP200 million senior secured revolving credit facility (RCF), assumed fully drawn at default, in the 'RR3' band, indicating a 'B+' instrument rating for the senior secured debt of 888 Acquisitions Limited and 888 Acquisitions LLC." RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Persisting execution challenges due to regulatory pressures in core markets or inability to stabilise revenue and profitability sufficiently, leading to EBITDAR leverage above 6.0x - Erosion of liquidity headroom with consistent material reduction in RCF availability and persistently negative FCF - EBITDAR FCC consistently below 1.5x Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Consistent organic revenue expansion and improvement of EBITDAR margins - Sustained positive low-single-digit FCF margins - EBITDAR leverage trending below 5.5x - EBITDAR FCC above 1.8x on a sustained basis Liquidity and Debt Structure Liquidity of evoke is satisfactory, with Fitch-calculated available cash of around GBP60 million and of GBP119 million available under its RCF as of end-June 2025. Debt maturities in 2025-2027 are represented by legacy William Hill notes maturing in 2026 (GBP10.5 million outstanding) and insignificant amortisation of the term loan B, and we assume existing liquidity sources will be used to address these principal repayments. Fitch expects evoke's FCF generation to stay neutral in 2026 before turning positive in 2027, but the margin will remain in low single digits, leading to Fitch's assumptions that most of 2028 debt will have to be refinanced. Issuer Profile Gibraltar-based gaming operator evoke plc is a global online gaming and sports betting operator focused on casino and poker, with retail operations in the UK. Rating Prior ------ ----- 888 Acquisitions Limited senior secured LT B+ Downgrade RR3 BB- evoke plc LT IDR B Downgrade B+ 888 Acquisitions LLC senior secured LT B+ Downgrade RR3 BB- GRAINGER PLC: S&P Affirms 'BB+' LT ICR, Alters Outlook to Positive ------------------------------------------------------------------ S&P Global Ratings revised the outlook on the long-term rating on Grainger PLC to positive from stable. S&P also affirmed its 'BB+' long-term issuer credit rating on Grainger and its 'BBB-' issue rating on its senior secured bond. The recovery rating remains unchanged at '1'. S&P said, "The positive outlook reflects that we could raise the ratings in the next 12-24 months if Grainger continues to reduce its exposure to sales, increases rental income earnings, and gradually implements its financial policy, so that it achieves an EBITDA interest coverage ratio comfortably above 2.4x, debt to annualized EBITDA trending toward 9.5x, and debt to debt plus equity well below 40%." Grainger's private rental segment (PRS) significantly strengthened in fiscal 2025 (ended Sept. 30), driven by strong net rental growth of 12% following a net portfolio growth of almost 300 units. PRS now contributes about 70%-75% of Grainger's annual reported EBITDA, up from about 45% in 2022, demonstrating greater stability than its sales business, now accounting for 25%-30% of annual EBITDA. Therefore, S&P revised its rating thresholds and forecast Grainger's financial metrics will trend closer to its upside thresholds. In addition, Grainger announced plans to deleverage, targeting a reported loan-to-value (LTV) ratio of about 30% by 2029, translating into our adjusted debt-to-debt-plus-equity ratio of about 32%. S&P said, "We expect asset sales will continue to decline as a proportion of Grainger's total annual revenues. Over our forecast horizon through 2027 we project that sales will contribute, on average, 20%-25% to EBITDA, compared to roughly 55% in 2022. This represents a significant shift for the company and demonstrates the resilience of Grainger's rental portfolio, which has continued to grow over the years, achieving a 10-year compound annual growth rate of about 14%. The rental business' strong performance has allowed Grainger to maintain EBITDA growth despite the long-term decline in average sales, driven by the regulated portfolio naturally winding down. Grainger has on average added 700-800 units annually to its private rental sector (PRS) portfolio since 2022, enhancing its scale and scope to GBP2.8 billion as of fiscal 2025, versus GBP2.2 billion in fiscal 2022. In addition, the company reduced its regulated tenancies portfolio to GBP503 million from GBP812 million, in line with its strategy to increase its rental business income. The U.K. residential market is experiencing an ongoing demand-supply imbalance, with the government aiming to build 1.5 million homes by 2029--a challenging target. Therefore, we expect Grainger to continue growing its PRS segment, in line with our expectation that like-for-like rental income will grow by 2%-3% per year over our forecast horizon (versus 3.6% in fiscal 2025 and 6.3% in fiscal 2024). We forecast gross rental income, including the impact of investments and disposals, will grow by 2.5%-3.5% during 2026 and 2027, compared to about 10% in 2025. We further assume the company will sustain high and stable occupancy rates above 95% and that valuations will remain stable, thanks to stabilizing rental yields. This will likely position Grainger more comfortably in our current business risk profile." Grainger's updated financial policy, including a deleveraging plan, will strengthening its capital structure over the medium term. Management's deleveraging plan of GBP300 million-GBP350 million in net debt by fiscal 2029 is a prudent measure to maintain a strong balance sheet and financial metrics. S&P said, "The company's reported LTV target will fall to about 30% over the deleveraging period, translating into our adjusted debt-to-debt-plus-equity ratio of about 32%. This exercise will help keep the company's absolute interest cost broadly stable over the medium term despite an anticipated increase in the average cost of debt. Grainger has GBP350 million in nonbank loans, partly maturing in 2026, 2027, and 2029 (with an average interest rate of 2.4%), and a GBP350 million bond with a 3.375% coupon maturing in April 2028. As these debt instruments mature, we expect some to be refinanced at higher rates, while others may be repaid with cash. We believe this deleveraging will allow Grainger to optimize its debt to debt plus equity to 38%-40% over our forecasted horizon and debt to annualized EBITDA of 9.5x-11.0x. Depending on the gradual implementation of its financial policy target, Grainger may benefit from further improvements in its financial risk profile as early as 2026 and 2027." S&P said, "We anticipate Grainger's EBITDA interest coverage ratio will remain broadly stable, supported by its deleveraging plans in the medium term. In our base case, we forecast the company's EBITDA interest coverage will remain at or about 2.4x-2.6x over the forecast horizon, compared to 2.4x in September 2025. We believe coverage will gradually improve toward 2.6x-2.8x as the company deleverages and continues to generate increasing EBITDA from its private rental portfolio." Grainger's funding and liquidity profile will remain robust. Grainger has a solid liquidity position, with about GBP65 million of cash on hand as of Sept. 30, 2025, and about GBP467 million in available undrawn bank lines. This will be sufficient to cover its estimated committed investments and capital expenditure (capex) of about GBP113 million over the next 12 months, as well as the forecasted dividends of GBP60 million-GBP70 million. The company does not face any significant debt repayments over the coming 12 months, which only includes a GBP75 million fixed-rate loan maturing in July 2026. S&P said, "The next significant maturity is the GBP350 million bond due in April 2028, and we will monitor the refinancing progress. Grainger's weighted average debt maturity sits at 3.9 years as of September 2025, which has reduced from 4.7 years at the same time last year. For real estate ratings we require this to be maintained above three years. We also note that Grainger has various maturities on smaller facilities between July 2027 and November 2028, which we will monitor closely as well as their potential impact on our liquidity assessment." S&P said, "The positive outlook reflects our view that Grainger should continue to benefit from solid rental growth, stable valuations, and a growing EBITDA contribution from its core PRS segment. We forecast the company will maintain an S&P Global Ratings-adjusted debt-to-debt-plus-equity ratio of 38%-40%, EBITDA interest coverage of 2.4x-2.6x, and debt to annualized EBITDA of 10x-11x over the next 12-24 months. "We could revise our outlook back to stable if Grainger fails to deleverage as planned or if PRS income does not meet our expectations. If sales contributions as a proportion of earnings increases, we believe it could result in less predictable earnings and less cash flow resilience compared to our current base case." This would also occur if Grainger deviates from its financial policy and fails to delivery it planned deleveraging, such that: -- The EBITDA interest coverage ratio does not comfortably exceed 2.4x (comfortably above 1.8x excluding property sales); -- Debt to debt plus equity does not reduce to well below 40%; and -- Debt to annualized EBITDA remains well above 9.5x. S&P could also take a negative rating action if the company fails to maintain a sufficient cushion to cover its liquidity needs. HEATHROW FINANCE: Fitch Affirms BB+ Rating on High Yield Notes -------------------------------------------------------------- Fitch Ratings has affirmed Heathrow Funding Limited's class A bonds at 'A-' and class B bonds at 'BBB'. Fitch has also affirmed Heathrow Finance plc's outstanding high-yield (HY) notes at 'BB+'. The Outlooks are Stable. RATING RATIONALE The affirmation reflects Heathrow's enduring robust operating performance and projected leverage that Fitch expects will be maintained above its rating triggers, even with sizeable capital investments (averaging close to GBP 2 billion a year) expected between 2027-2029 that focus on modernising and upgrading the airport. The regulatory framework and management's ability to flex distributions should keep Heathrow's leverage profile consistent with the current ratings even in a downside scenario with weak traffic growth. For the HY notes, the rating reflects the distributions from Heathrow (SP) Limited (opco), which allows payments to Heathrow Finance plc (holdco) to support servicing the HY notes. The HY notes have a 'Midrange' debt structure, but a lower rating due to their deep structural subordination to the class A and B notes and holdco's reliance on a single asset. KEY RATING DRIVERS Revenue Risk - Volume - Stronger Large Hub; Resilient Traffic: Heathrow is a large hub airport serving a strong origin and destination (O&D) market within a wealthy catchment area. Its traffic has demonstrated strong resilience to economic downturns with peak-to-trough decline of only 4.4% through the 2008 economic crisis. This reflects the attractiveness of London as a world business centre; the role of Heathrow as a primary hub offering strong yield for its resident airlines; its location and connectivity with the well-off western and central districts of the city; and unsatisfied demand, as underlined by capacity constraint, which also helps absorb shocks. Revenue Risk - Price - Midrange Regulated and Inflation-Linked: Heathrow is subject to economic regulation, with a price cap calculated under a single till methodology. The price cap, set by the Civil Aviation Authority (CAA), is established to offset Heathrow's significant market power and is highly sensitive to assumptions made by the regulator on cost of capital, traffic forecast and operational efficiency. The regulatory process that leads to the cap determination is transparent but creates material uncertainty each time it is reset. The final regulatory framework for 2022-2026 (H7) is in line with our previous assumptions. Heathrow submitted its business plan for the new regulatory period (2027-2031) to the CAA and formal feedback is expected in March 2026. Infrastructure Development & Renewal - Stronger Sufficient Medium-Term Capacity: Heathrow has maintained and developed its infrastructure to a high level. Medium-term capacity growth of terminal and runway can be achieved with focused incremental projects. Heathrow has predictable maintenance capex requirements. Obsolescence risk is minimised through its competitive position in the area and its role as a global hub. Heathrow has a record of delivering capex projects with market funding. The regulator's mandate to ensure financeability of capex in addition to affordability to end-users is supportive, despite some uncertainty on timing and price-recovery of the investment. Heathrow will make some initial investments related to planning of the third runway expansion in 2026. Further spending in 2026 will depend on clarity from the CAA related to recovery of early expansion cost. Debt Structure - Class A, B and HY - Midrange Refinancing Risk Mitigated: The class A debt benefits from its senior position in the waterfall, security, and protective debt structure (ring-fencing of all cash flows and a set of covenants limiting leverage). It is exposed to some floating-rate risk in the current regulatory period, with at least 75% having a fixed or inflation-linked rate of interest, in addition to some refinance risk, which is mitigated by Heathrow's strong capital market access, due to an established multi-currency debt platform and the use of diverse maturities. The class B notes benefit from many of the strong structural features of the class A notes. The HY notes are rated lower for their deep structural subordination to the class A and B notes. HY Notes Structurally Subordinated: Fitch said, "We notch the HY notes' rating down from the consolidated group profile, which includes holdco, opco and opco's subsidiaries. Holdco's full ownership of and dependency on the group, underlined by the one-way cross-default provision with the group as well as holdco's covenants tested at the consolidated level, drive the consolidated approach." "We assess the group's consolidated rating at 'BBB' and apply a two-notch downward adjustment to arrive at the HY notes' 'BB+' rating. The two-notch difference reflects structural subordination of the HY notes to the class A and B debt, and opco's reliance on a single asset. The notching difference also reflects the ring-fencing structure at Heathrow SP Group, which may restrict distributions to holdco level, but also financial metrics well above lock-up covenants, as well as the security available to HY noteholders and the liquidity buffer available at Heathrow Finance Plc," Fitch said. Financial Profile The Fitch rating case (FRC) assumes a traffic in line with 2025 over the forecast horizon. It also assumes moderate increases for aero and commercial yields as well as variable opex in line with traffic projections and Fitch inflation assumptions. The FRC assumes an H8 investment plan that includes GBP5.7billion between 2027-2029, but excludes investments in the Expanding Heathrow plan given the uncertainties around the scope and scale of investment. The FRC also assumes GBP900 million dividend distribution from the consolidated group in the forecast horizon, reflecting management's flexibility in adjusting distributions. Under the Fitch rating case (FRC), projected net debt to EBITDA reaches 8.0x, 8.6x and 10.0x for class A, class B and consolidated profile, respectively, over 2025-2029 and stays sustainably below Fitch's downgrade sensitivities. PEER GROUP Heathrow is one of the most robust assets in the sector. Historically, it has higher leverage than its European peers, albeit with a much better debt structure for senior debt. Heathrow's closest peers are Aeroports de Paris S.A. (ADP; BBB+/Stable) in terms of hub status in EMEA and Gatwick Funding Limited (BBB+/Stable) and Manchester Airport Group Funding PLC (MAG, BBB+/Stable) in terms of catchment area. Compared with ADP's senior unsecured debt, Heathrow's class A and B notes have stronger and more protective features, reflected in Heathrow's higher debt capacity for any given rating. Compared with Gatwick and MAG, Heathrow's bonds benefit from a stronger revenue risk profile, justifying the rating differential. Heathrow's class B notes are a notch below Gatwick's and MAG's as Heathrow's stronger operations are offset by higher leverage. The HY notes have a lower rating due to deep structural subordination and high leverage among peers. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Class A notes: projected Fitch net debt/EBITDA above 8.0x on a sustained basis - Class B notes: projected Fitch net debt/EBITDA above 9.0x on a sustained basis - HY notes: projected Fitch net debt/EBITDA above 10.0x on a sustained basis at consolidated group level or Heathrow Funding entering dividend lock-up with insufficient liquidity at Heathrow Finance level Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Class A notes: projected Fitch net debt/EBITDA below 7.0x on a sustained basis - Class B notes: projected Fitch net debt/EBITDA below 8.0x on a sustained basis - HY notes: projected Fitch net debt/EBITDA below 9.0x on a sustained basis at consolidated group level provided Heathrow Finance maintains adequate liquidity and no dividend lock-up is triggered at Heathrow Funding Heathrow Finance plc Heathrow Finance plc/Airport Revenues - Subordinate/2 LT LT BB+ Affirmed BB+ Heathrow Funding Limited Heathrow Funding Limited/ Airport Revenues - Senior Secured Debt/1 LT. LT A- Affirmed A- Heathrow Finance plc/Airport Revenues - Junior Secured Debt/2 LT LT BBB Affirmed BBB PROJECT AURORA I: S&P Assigns 'B' LT ICR, Outlook Stable -------------------------------------------------------- S&P Global Ratings assigned its 'B' long-term issuer credit rating to U.K.-based Project Aurora Holdco 1 Ltd. S&P also assigned its 'B' issue rating to the group's new GBP1.5 billion term loan B. The '3' recovery rating reflects S&P's expectation of meaningful recovery prospects (50%-70%; rounded estimate 60%) in the event of a default. S&P said, "The stable outlook reflects our view that Spectris will continue to deliver on its business strategy and maintain credit metrics commensurate with the rating--specifically, adjusted EBITDA margins improving to about 18% in 2026. We expect the group to post positive free operating cash flow (FOCF), adjusted debt to EBITDA below 6x, and funds from operations (FFO) cash interest coverage of more than 2.5x over our 12-month outlook horizon." Private equity firm KKR & Co. Inc. has completed its acquisition of U.K.-based Project Aurora Holdco 1 Ltd. (Spectris), a leading precision measurement instrument manufacturer. Spectris has been delisted as part of the transaction and is now 100% owned by KKR. The transaction was funded through GBP3.6 billion of common equity and GBP1.5 billion of senior secured debt; no quasi equity or shareholder loans are present in the structure. Spectris' credit quality is supported by good geographic, product, and customer diversity, coupled with barriers to entry. Management continues to streamline the business and reduce costs, which should bolster profitability. The group's credit quality is constrained by its moderate scale compared with higher-rated peers, and by a tolerance for high leverage. S&P's base-case scenario assumes that the group's revenue will rise steadily to about GBP1.4 billion in 2025, and more than GBP1.5 billion in 2026, from about GBP1.3 billion in 2024. S&P said, "Due to the timing of the transaction, we expect Spectris' S&P Global Ratings-adjusted debt to EBITDA to spike to more than 7x in 2025 but improve to 5.5x-6.0x in 2026. To fund the acquisition, Spectris issued a EUR975 million term loan B and a $900 million term loan B. New owner KKR has provided GBP3.6 billion of common equity. All the group's prior debt has been repaid, leaving only GBP77 million of leases that were rolled over into the new capital structure. S&P said, "Furthermore, Spectris has raised a new GBP300 million revolving credit facility (RCF), which we understand was undrawn when the transaction was completed. We further understand that there are no noncommon equity-like instruments in the group structure at any level between Project Aurora Holdco 1 Ltd. and the KKR funds. Associated transaction fees are projected to total about GBP200 million. Despite the increase in leverage, we forecast that Spectris will generate positive FOCF and exhibit FFO to cash interest coverage of more than 2.5x in 2025 and 2026. Our calculation of Spectris' debt includes new term loans equivalent to about GBP1.5 billion, GBP77 million of lease liabilities, GBP5 million of deferred consideration, and about GBP6 million of pensions." "We anticipate that the group will realize benefits from its ongoing restructuring program and the integration of recent acquisitions, which should offset some softness in underlying markets. We expect this to translate into rising revenue and an S&P Global Ratings-adjusted EBITDA margin of about 15.5%-16.0% in 2025 and about 18% in 2026 (from 12.7% in 2024). Spectris is a well-diversified group but has exposure to some cyclical end markets that can experience persistent softness, such as automotive and metals and mining. Specifically, operating performance in the group's scientific division (where it generated 61% of its revenue in 2024) was undermined by weaker demand in life sciences, less demand for battery development, and general industrial softness. Its dynamics business (39% of total 2024 revenue) was hit by a decline in the automotive market and a cyclical slowdown in industrial machinery. That said, despite a difficult 2024, the group enjoyed a strong uptick in the first half of 2025, and its reported third-quarter sales were up 11%, year-on-year, with many of its businesses exhibiting revenue growth. We estimate that revenue increased to about GBP1.4 billion in 2025 and forecast that it will be more than GBP1.5 billion in 2026, supported by the full-year contribution of acquisitions (SciAps, Micromeritics, and Piezocryst) made toward the end of 2024. "The group invests about 7%-8% of revenue into research and development (R&D) each year and we expect this to continue. Almost all of its R&D investment is expensed and the percentage is higher than that at many similarly-rated peers. Management continues to streamline the group's cost base, for example, by rolling out a new enterprise resource planning (ERP) platform; rationalizing headcount; and realizing synergies from acquisitions. Despite our assumption that adjusted EBITDA will be depressed by material restructuring costs until at least 2027, we still anticipate that these measures will help to improve profitability and estimate adjusted EBITDA margins of 15.5%-16.0% in 2025 and about 18% in 2026. That said, the group's profitability, and therefore its credit metrics, are sensitive to any underperformance against our base case. Specifically, the ratings could come under pressure immediately if restructuring costs are higher than expected. "Improving profitability, coupled with improved working capital conditions and a capital expenditure (capex)-light business model, means that FOCF should remain strongly positive in 2025 and 2026. We forecast that Spectris will report positive FOCF of more than GBP100 million per year in 2025 and 2026. We understand that KKR and management are focused on organic growth and profitability improvement--as such, our base case does not factor in any further sizable acquisitions. During 2024, working capital was eroded by the roll out of Spectris' new ERP platform to its Malvern Pananalytical business, which caused higher-than-usual inventory levels and a temporary dent in collections and payments. Management expects a reversal or catch up in 2025 before working capital settles back into its typical pattern. Therefore, we estimate that the working capital-related cash inflow could be up to GBP20 million in 2025, before turning slightly negative in 2026 and beyond, as the business grows. After making higher-than-usual capital sites investments during 2024, including a new Particle Measuring Systems site in Boulder, U.S., we expect capex to return to about GBP35 million per year from 2025 on. "Good diversification and barriers to entry support the ratings, offset by Sprectris' moderate size and scale, relative to more highly rated peers, coupled with its exposure to some cyclical end markets. Our ratings incorporate Spectris' positions in niche markets, moderate scale, good diversity, and strong business offerings that consist of a portfolio of independently operated brands within the material preparation and testing, sensors and controls, and flow control markets. The group supplies about 67,000 customers across a wide range of industries, with no single customer accounting for more than 1% of revenue and no single supplier accounting for more than 2% of purchase spending. "Spectris is also well-diversified geographically, with a good presence in North America, Europe, and Asia. Most of the group's brands hold top positions within the niche and highly fragmented markets they serve. Most of the products the group offers are highly engineered and considered mission-critical to their customers, which creates barriers to entry and relatively high switching costs. Spectris remains exposed to some cyclical end industries--such as automotive and metals and mining--and profitability could reflect ongoing volatility. On the other hand, the group is also exposed to some industries that benefit from strong megatrends; for example, aerospace and defense, pharmaceuticals, semiconductors, and electronics. In terms of absolute revenue and EBITDA base, Spectris is smaller than some of its more highly rated peers. "We recognize the economic uncertainties arising from U.S. government policy and tariff implementation. Spectris generates about 25% of its revenue in the U.S. "S&P Global Ratings believes there is a high degree of unpredictability around policy implementation by the U.S. administration and possible responses--specifically with regard to tariffs--and the potential effect on economies, supply chains, and credit conditions around the world. As a result, our base-line forecasts carry a degree of uncertainty. As situations evolve, we will gauge the macro and credit materiality of potential and actual policy shifts and reassess our guidance accordingly. "Despite these global uncertainties, we view several factors as supportive for Spectris. First, the group has established a manufacturing base in the U.S., enabling a local-for-local production model. Second, the group demonstrates a degree of operational flexibility, allowing it to adapt its manufacturing and sourcing strategies in response to changing cost dynamics across regions. This flexibility should mitigate the potential impact of trade-related disruptions on its cost structure and overall competitiveness. "The stable outlook reflects our view that Spectris will continue to deliver on its business strategy and maintain credit metrics commensurate with the rating--specifically, adjusted EBITDA margins improving to about 18% in 2026. We expect the group to post positive FOCF, adjusted debt to EBITDA below 6x, and FFO cash interest coverage of more than 2.5x over our 12-month outlook horizon." S&P could lower the ratings if: -- The group experiences a significant reduction in sales amid an economic slowdown or posts higher-than-expected one-off costs that weigh on profitability, causing it to sustain debt to EBITDA above 7x with limited to no prospects for improvement; -- It adopts a more-aggressive financial policy that includes large debt-financed acquisition or sizable shareholder rewards; or -- FFO cash interest coverage falls below 2x. Although unlikely in the near term, S&P could raise its rating on Spectris if: -- Stronger-than-expected operating performance reduces its debt to EBITDA below 5x whilst Spectris maintains adequate liquidity and positive cash flow generation; and -- It demonstrates the size, scale, and financial policies that would allow it to sustain this reduced level of leverage. =============== X X X X X X X X =============== [] BOOK REVIEW: Taking Charge ----------------------------- Taking Charge: Management Guide to Troubled Companies and Turnarounds Author: John O. Whitney Publisher: Beard Books Softcover: 283 Pages List Price: $34.95 Order a copy today at: http://beardbooks.com/beardbooks/taking_charge.html Review by Susan Pannell Remember when Lee Iacocca was practically a national hero? He won celebrity status by taking charge at a company so universally known as troubled that humor columnists joked their kids grew up thinking the corporate name was "Ayling Chrysler." Whatever else Iacocca may have been, he was a leader, and leadership is crucial to a successful turnaround, maintains the author. Mediagenic names merit only passing references in Whitney's book, however. The author's own considerable experience as a turnaround pro has given him more than sufficient perspective and acumen to guide managers through successful turnarounds without resorting to name-dropping. While Whitney states that he "share[s] no personal war stories" in this book, it was, nonetheless, written from inside the "shoes, skin, and skull of a turnaround leader." That sense of immediacy, of urgency and intensity, makes Taking Charge compelling reading even for the executive who feels he or she has already mastered the literature of turnarounds. Whitney divides the work into two parts. Part I is succinctly entitled "Survival," and sets out the rules for taking charge within the crucial first 120 days. "The leader rarely succeeds who is not clearly in charge by the end of his fourth month," Whitney notes. Cash budgeting, the mainstay of a successful turnaround, is given attention in almost every chapter. Woe to the inexperienced manager who views accounts receivable management as "an arcane activity 'handled over in accounting.'" Whitney sets out 50 questions concerning AR that the leader must deal with – not academic exercises, but requirements for survival. Other internal sources for cash, including judiciously managed accounts payable and inventory, asset restructuring, and expense cuts, are discussed. External sources of cash, among them banks, asset lenders, and venture capital funds; factoring receivables; and the use of trust receipts and field warehousing, are handled in detail. Although cash, cash, and more cash is the drumbeat of Part I, Whitney does not slight other subjects requiring attention. Two chapters, for example, help the turnaround manager assess how the company got into the mess in the first place, and develop strategies for getting out of it. The critical subject of cash continues to resonate throughout Part II, "Profit and Growth," although here the turnaround leader consolidates his gains and looks ahead as the turnaround matures. New financial, new organizational, and new marketing arrangements are laid out in detail. Whitney also provides a checklist for the leader to use in brainstorming strategic options for the future. Whitney's underlying theme -- that a successful business requires personal leadership as well as bricks and mortar, money and machinery -- is summed up in a concluding chapter that analyzes the qualities that make a leader. His advice is as relevant in this 1999 reprint edition as it was in 1987 when first published. John O. Whitney had a long and distinguished career in academia and industry. He served as the Lead Director of Church and Dwight Co., Inc. and on the Advisory Board of Newsbank Corp. He was Professor of Management and Executive Director of the Deming Center for Quality Management at Columbia Business School, which he joined in 1986. He died in 2013. ********* 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 * * *