/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/201119.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Thursday, November 19, 2020, Vol. 21, No. 232 Headlines C R O A T I A HRVATSKA ELEKTROPRIVREDA: Moody's Upgrades LT CFR to Ba1 F I N L A N D FINNAIR OYJ: Egan-Jones Lowers Senior Unsecured Ratings to CCC F R A N C E RENAULT S.A.: DBRS Lowers Issuer Rating to BB (high) G E R M A N Y WIRECARD AG: Creditors' Claims Total at Least EUR12.5 Billion WIRECARD AG: Ex-Boss Must Testify in Person Before Parliament G R E E C E EUROBANK SA: Moody's Assigns (P)Caa1 Rating to Sr. Unsec. Notes I T A L Y ALBA 10 SPV: Moody's Affirms Ba2 Rating on EUR75MM Cl. C Notes BANCA CARIGE: Fitch Affirms B- LT IDR, Outlook Negative FINO 1: DBRS Confirms BB (high) Rating on Class B Notes N E T H E R L A N D S AIRBUS SE: Egan-Jones Lowers Senior Unsecured Ratings to BB N O R W A Y NORWEGIAN AIR: Asks Irish Court to Oversee Debt Restructuring R U S S I A ENEL RUSSIA: Fitch Affirms BB+ LT IDRs, Outlook Stable PUBLIC BANK: Bank of Russia Terminates Provisional Administration ROSCOSMOSBANK JSC: Bank of Russia Okays Bankruptcy Plan Amendments S P A I N ABERTIS INFRAESTRUCTURAS: Fitch Rates New Sub. Capital BB+(EXP) CAIXABANK PYMES 12: DBRS Gives Prov. B (low) Rating to B Notes CELLNEX TELECOM: S&P Affirms 'BB+' LT ICR, Outlook Stable FTA SANTANDER SCSA 2014-1: DBRS Confirms C Rating on Class E Notes HAYA REAL ESTATE: S&P Downgrades ICR to 'CC', On Watch Negative MIRAVET 2020-1: DBRS Gives Provisional BB Rating to Class D Notes U N I T E D K I N G D O M BOPARAN HOLDINGS: Moody's Upgrades CFR to B3, Outlook Stable BOPORAN HOLDINGS: Fitch Assigns B-(EXP) LT IDR, Outlook Stable BRITISH AIRWAYS: S&P Affirms 'BB' ICR, Outlook Negative INTERNATIONAL CONSOLIDATED AIRLINES: S&P Affirms 'BB' Rating MARKS AND SPENCER: Fitch Affirms IDR and Sr. Unsec. Rating at BB+ NEWDAY FUNDING VFN-F1 V2: Fitch Affirms Bsf Rating on Cl. F Notes VIP SKI: Parent Enters Administration Due to Impact of COVID-19 - - - - - ============= C R O A T I A ============= HRVATSKA ELEKTROPRIVREDA: Moody's Upgrades LT CFR to Ba1 -------------------------------------------------------- Moody's Investors Service upgraded Hrvatska Elektroprivreda d.d.'s (HEP) long-term corporate family rating (CFR) to Ba1 from Ba2, the probability of default rating to Ba1-PD from Ba2-PD, and the senior unsecured debt rating to Ba1 from Ba2. Concurrently, Moody's has changed the outlook on the ratings to stable from positive. The rating action follows Moody's upgrade of the long-term rating of the Government of Croatia to Ba1 from Ba2 and the concurrent change in outlook to stable from positive on 13 November 2020. RATINGS RATIONALE The upgrade of the rating to Ba1 from Ba2 and the change of the outlook to stable from positive reflect the fact that HEP's current rating is aligned with the sovereign rating of the Government of Croatia (Ba1 stable). Given its 100% ownership by the Government of Croatia and HEP's strategic importance to the country, HEP's rating would normally incorporate an uplift from its standalone credit quality expressed as a Baseline Credit Assessment (BCA) of ba1, to reflect the strong likelihood of extraordinary support from the government in case of financial distress. However, as the company derives most of its earnings from Croatia, it is exposed to domestic regulatory oversight and local economic conditions, so its rating would not be expected to exceed that of the Government. The BCA of ba1 is supported by (1) HEP's position as the vertically integrated incumbent in the Croatian electricity market and its leading position as supplier, enjoying around 90% market share; (2) its electricity generation mix, with a high share of low cost and low CO2 hydro and nuclear output; and (3) a strong contribution from lower risk regulated electricity distribution and transmission activities, which in aggregate contribute around half of EBITDA. HEP's BCA continues to reflect the company's lack of diversification in terms of market presence. Moreover, it takes account of a developing track record in regulation, with a framework that is less transparent and predictable than for Western European peers. Certain smaller business segments, such as district heating and gas retail and distribution, have a history of very low or even negative returns. In recent years, the company has demonstrated a flexible dividend policy, aligned to its net profit, which reflects the supportive stance of the Government. The BCA also factors that HEP remains exposed to fluctuating hydro levels and hence variable output from its hydro-dominated fleet, which normally generates slightly less than half of its production. As a consequence, the company purchases an additional 20-40% of energy on the market to balance its supply and trading needs. This creates some earnings volatility, as the company's exposure to imports and more expensive input costs of its own thermal fleet increases in dry years. The BCA additionally reflects Moody's expectation that the company will continue to demonstrate a strong financial profile, building on its solid track record in recent years. The financial profile, as reflected in funds from operations (FFO)/net debt of 216% as of December 2019, is likely to weaken through a larger investment programme than in the recent past, which includes planned new generation capacity and investments to upgrade its ageing asset base and expand its existing networks. Notwithstanding the capital expenditure programme, Moody's expects HEP to retain its robust credit metrics, such as FFO/net debt in the strong double digits in percentage terms over the next few years. HEP falls under Moody's rating methodology for Government-Related Issuers. The Ba1 rating incorporates (1) HEP's BCA of ba1; (2) its 100% ownership by the Ba1-rated Croatian government; (3) the strong likelihood of extraordinary support in case of financial distress; and (4) high default dependence, reflecting the company's strong domestic focus with around 90% of sales emanating from Croatia. RATIONALE FOR THE STABLE OUTLOOK Moody's would not expect HEP's rating to be higher than that of the government. The rating outlook is stable, in line with that of the sovereign and reflects Moody's expectation that HEP will continue to operate with a solid business and financial profile commensurate with the current BCA. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS An upgrade in the rating of the Government of Croatia would likely result in an upgrade of HEP's rating, assuming no major deterioration in the company's business or financial profile in the meantime. Downward pressure could develop on HEP's rating in the event (1) that the sovereign rating was downgraded; or (2) of a significant deterioration in the company's financial or liquidity profile or business risk characteristics, potentially as a result of a more challenging operating or regulatory environment. A corporate family rating is an opinion of the HEP group's ability to honor its financial obligations and is assigned to HEP as if it had a single class of debt and a single consolidated legal structure. The Ba1 senior unsecured rating of HEP's outstanding global notes is the same rating level as HEP's CFR, and reflects the absence of structural and contractual subordination of noteholders to the claims of other HEP group lenders. The methodologies used in these ratings were Unregulated Utilities and Unregulated Power Companies published in May 2017. Headquartered in Zagreb, Croatia, HEP is the parent company for Croatia's incumbent vertically-integrated utility group. HEP operates across three main segments: (1) electricity generation, transmission, distribution and supply; (2) district heating generation, distribution and supply; as well as (3) natural gas distribution and supply. The legally and operationally separate power transmission subsidiary, HOPS d.o.o., is part of the consolidated group. HEP reported EBITDA of some HRK2,285 million (around EUR302 million) in the six-month period ended June 30, 2020. ============= F I N L A N D ============= FINNAIR OYJ: Egan-Jones Lowers Senior Unsecured Ratings to CCC -------------------------------------------------------------- Egan-Jones Ratings Company, on November 10, 2020, downgraded the foreign currency and local currency senior unsecured ratings on debt issued by Finnair Oyj to CCC from CCC+. Headquartered in Vantaa, Finland, Finnair Oyj operates scheduled passenger traffic, technical and ground handling operations, catering, travel agencies, and reservation services. =========== F R A N C E =========== RENAULT S.A.: DBRS Lowers Issuer Rating to BB (high) ---------------------------------------------------- DBRS Limited downgraded the Issuer Rating of Renault S.A. (Renault or the Company) to BB (high) from BBB. The trend is Negative. (Concurrently, DBRS Morningstar also made the decision to discontinue and withdraw Renault's Senior Unsecured Debt rating.) Pursuant to the moderate scenario outlined in the DBRS Morningstar commentary titled "Global Macroeconomic Scenarios: Application to Credit Ratings" (initially dated April 22, 2020, and most recently updated on September 10, 2020, as indicated in the subsequent document titled "Global Macroeconomic Scenarios: September Update"), DBRS Morningstar projects the Company's financial risk assessment (FRA) and associated credit metrics to decline to levels markedly weaker relative to the former ratings as a result of the global escalation of the Coronavirus Disease (COVID-19) pandemic. The Negative trend also reflects the ongoing challenges facing the automotive industry given the uncertainty about the continued progression of the coronavirus pandemic across various jurisdictions and its potential further impact on sales or production levels. With this rating action, DBRS Morningstar removed Renault's Issuer Rating from Under Review with Negative Implications, where it was placed on March 27, 2020. DBRS Morningstar notes that prior to the pandemic, the Company's FRA was at solid levels (providing some cushion in the context of the former rating), significantly reflecting Renault's conservative financial policy. However, earnings were progressively softening in line with moderating sales volumes, weaker product mix and pricing amid cost headwinds in the form of alternative powertrain development (i.e., the progressive electrification of its product portfolio), and emissions regulatory costs. Moreover, Renault's alliance (substantially) with Nissan Motor Co., Ltd. (Nissan; rated BBB (low) with a Negative trend by DBRS Morningstar) had been undergoing increasing scrutiny as a result of meaningful challenges confronting Nissan, including, among others, sharply deteriorating operating performance and prior corporate governance issues. Consistent with other original equipment manufacturers (OEMs), Renault's financial results this year have been adversely affected by the coronavirus pandemic; DBRS Morningstar further notes that the Company's earnings decline exceeded that of most of its peers. More specifically, in H1 2020, Renault reported a 36% decrease in automotive revenues to EUR 16.9 billion, with the segment's operating income being materially negative in the amount of EUR 2.5 billion. Currently, DBRS Morningstar anticipates Renault's annual automotive revenues in 2020 to decline by approximately 25% compared with 2019 levels, with the operating margin estimated to remain at materially negative levels. DBRS Morningstar also expects free cash flow generation to be negative for the year given the decline in earnings, with such likely being exacerbated by material working capital cash usage. As a result, DBRS Morningstar projects the Company's credit metrics to weaken considerably in 2020, followed by only a moderate recovery in the following year. Despite the above, DBRS Morningstar notes that Renault has taken a number of meaningful and proactive measures to bolster its cash and liquidity position in response to the coronavirus pandemic. These include implemented cost reduction measures, a moderation in capital expenditures, and the cancellation of its previously proposed 2019 dividend (such payments recently averaging approximately EUR 1.1 billion annually). Additionally, to supplement confirmed backup credit lines that previously totalled EUR 3.5 billion, the Company in June 2020 obtained an additional credit line of EUR 5 billion (of which 90% is guaranteed by the French State); Renault indicated that it had drawn EUR 3 billion from this facility as of September 30, 2020. As a result of the above, notwithstanding significant cash burn resulting from the coronavirus, DBRS Morningstar deems the Company's liquidity position over the near term to be sound. While the effects of the coronavirus pandemic on the sales and production levels of OEMs were initially substantially negative, DBRS Morningstar notes that the ensuing sales recovery across major jurisdictions so far has moderately exceeded its expectations. The recovery thus far has been strongest in China and the United States, to which Renault's direct collective exposure is very modest. While the Company does have meaningful indirect exposure to these markets by way of its ownership stake in Nissan, DBRS Morningstar does not expect Renault to receive any material dividends from Nissan over the near term (given the latter's weak projected earnings performance over such time period). However, DBRS Morningstar notes that in September 2020, European monthly automotive sales also reverted to growth (compared with similar prior-year periods) for the first time since the onset of the pandemic. However, this sales recovery could yet be undermined by the trajectory of the pandemic, which (with the apparent exception of China) shows no signs of abating across several major markets. Consistent with the Negative trend on the rating and recognizing the ongoing uncertainty regarding the ultimate severity and duration of the coronavirus pandemic, DBRS Morningstar notes that an additional progression of the pandemic (such that it readily approximates the adverse scenario as outlined in the above-cited commentary) or sustained further erosion in Renault's operating margins could result in additional downward rating pressures. Conversely, should the worst effects of the coronavirus pandemic be significantly contained in 2020 and followed by a meaningful recovery notwithstanding lingering remnants of the pandemic across various jurisdictions, the trend on the rating could be changed to Stable. Notes: All figures are in Euros unless otherwise noted. ============= G E R M A N Y ============= WIRECARD AG: Creditors' Claims Total at Least EUR12.5 Billion ------------------------------------------------------------- Joern Poltz at Reuters reports that a German court said on Nov. 18 creditors of the collapsed German payments company Wirecard have made claims for at least EUR12.5 billion (US$14.85 billion). Wirecard, in a dramatic fall from grace and blow to Germany's reputation, filed for insolvency earlier this year after disclosing that EUR1.9 billion it claimed to hold in accounts was missing, Reuters relates. The firm's assets are in the process of being sold off around the globe, Reuters discloses. According to Reuters, the claims were made against Wirecard's holding company at a meeting of creditors and the company's insolvency administrator in a Munich beer hall. Creditors are likely to see only a fraction of their claims repaid, Reuters states. Claims beyond the EUR12.5 billion were also made against various subsidiaries, but they were not made public, Reuters notes. WIRECARD AG: Ex-Boss Must Testify in Person Before Parliament ------------------------------------------------------------- Holger Hansen at Reuters reports that the former head of collapsed payments services provider Wirecard was scheduled to appear in person before a German parliamentary inquiry last Nov. 12 after a court rejected his lawyers' motion for him to be allowed to testify by video link. The Federal Court of Justice rejected the request from Markus Braun, who has been detained since July pending a trial on charges of fraud and embezzlement, according to a letter, seen by Reuters, sent by the court to the parliamentary committee that will hear him. The ruling means that former Chief Executive Braun, held on suspicion of defrauding investors through false accounting, could be brought to Berlin to appear before the committee in handcuffs, Reuters states. Mr. Braun, and several other accused, deny any wrongdoing, Reuters notes. According to Reuters, his laywers had argued that the circumstances of the coronavirus pandemic made it unnecessarily risky for him to testify in person, especially when the necessity of providing prisoner transport was considered. Munich-based Wirecard collapsed in June after auditors EY refused to sign off on its 2019 accounts because it could not verify EUR1.9 billion (US$2.2 billion) supposedly held abroad in escrow by third-party partners, Reuters recounts. =========== G R E E C E =========== EUROBANK SA: Moody's Assigns (P)Caa1 Rating to Sr. Unsec. Notes --------------------------------------------------------------- Moody's Investors Service assigned local and foreign currency long-term senior unsecured and junior senior unsecured ratings of (P)Caa1 and (P)Caa2 respectively to Eurobank S.A.'s Medium Term Note (MTN) programme. This rating assignment follows Eurobank's update of its EUR5 billion MTN programme, under which the bank can issue debt designated as "Senior Preferred Instruments" and "Senior Non-Preferred Instruments " in the documentation. The junior senior unsecured debt would rank junior to other senior unsecured obligations and senior to subordinated debt (or Tier 2 bonds) in resolution and insolvency. All other outstanding ratings and assessments of the bank remain unchanged, including the positive deposit rating outlook. RATINGS RATIONALE -- ASSIGNMENT OF SENIOR UNSECURED PROGRAMME RATING The (P)Caa1 rating assigned to Eurobank's long-term senior unsecured MTN programme reflects (1) the bank's caa1 Adjusted Baseline Credit Assessment (BCA); and (2) no rating uplift from Moody's Advanced Loss Given Failure (LGF) analysis that indicates the relatively low loss absorption buffer provided in the bank's liability structure with limited to none other senior unsecured obligations outstanding and EUR950 million of state-subscribed subordinated Tier 2 bonds available as more junior instruments. Moody's notes that these Tier 2 bonds are recognised as instruments for the purpose of minimum requirement for own funds and eligible liabilities (MREL), which has yet to be officially announced and be a publicly available requirement for Greek banks, including Eurobank. Moody's understands that Greek banks will have an extended timeline to meet their MREL requirements by the end of 2025. The rating agency assumes a low probability of support from the Government of Greece (Ba3, stable) in favour of the senior unsecured debt holders of the bank, which does not translate into any rating uplift. Eurobank's standalone and Adjusted BCA of caa1 takes into consideration the completion of its transformational plan in Q1 2020, which has radically improved its asset quality and its prospects for stronger earnings generation. Eurobank's nonperforming exposures (NPE) remain relatively high at around 15.3% of gross loans as of June 2020, although the ratio is the lowest among its local peers (NPE ratio for the system is around 36% as of June 2020) and has significantly reduced from the 33% in June 2019. Its BCA also reflects the bank's phased-in Common Equity Tier 1 (CET1) capital ratio of around 13% as of June 2020, which declined from 16.7% in December 2019 following the completion of its transformation plan. Additional challenges include the incorporation of a high proportion of deferred tax credits (DTCs) in the bank's capital structure, which limits its tangible loss absorbing buffer, and the potential accumulation of new NPEs due to the coronavirus pandemic. -- ASSIGNMENT OF JUNIOR SENIOR UNSECURED PROGRAMME RATING The (P)Caa2 rating assigned to the junior senior unsecured MTN programme reflects (1) Eurobank's Adjusted BCA of caa1; and (2) Moody's Advanced LGF analysis, which indicates likely higher loss severity for these instruments in the event of the bank's failure, leading to a positioning of one notch below the bank's Adjusted BCA. The rating of Eurobank's junior senior unsecured instrument does not benefit from any government support uplift in line with Moody's assumption of a low probability of support for the bank. Moody's applies its Advanced LGF analysis in order to determine the loss-given-failure of the junior senior (or senior non-preferred) debt, which is also eligible as MREL instrument and is senior to its Tier 2 notes. In assigning the rating, Moody's has taken into consideration the potential funding plans of the bank over the next 2-3 years. However, the additional volume of such instruments does not really change the potential loss severity for its senior preferred and senior non-preferred instruments, other than benefiting its customer deposits. A potential rating uplift in the bank's deposit ratings, is already captured by the existing positive outlook that the rating agency has on the bank's deposit ratings, which signals a possible upgrade over the next 12-18 months. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Upward pressure on Eurobank's ratings could arise once economic conditions normalise and there is evidence that the improvement in the bank's financial fundamentals are sustainable. Also, tangible improvements in the bank's core profitability and capital will benefit its ratings, while any material shift in the bank's liability structure through the raising of senior or junior senior or subordinated debt could also trigger rating upgrades through the rating agency's Advanced LGF analysis. Eurobank's deposit and senior debt ratings could be downgraded in the event of significant and prolonged negative impact on domestic consumption and economic activity from the coronavirus pandemic, to the extent that it will materially delay the bank's recovery plan or cause a deterioration in its underlying financial fundamentals. In addition, the deposit ratings could be downgraded if the bank's NPEs increase significantly as a result of the pandemic. LIST OF AFFECTED RATINGS Issuer: Eurobank S.A. Assignments: Junior Senior Unsecured Medium-Term Note Program, Assigned (P)Caa2 Senior Unsecured Medium-Term Note Program, Assigned (P)Caa1 PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Banks Methodology published in November 2019. ========= I T A L Y ========= ALBA 10 SPV: Moody's Affirms Ba2 Rating on EUR75MM Cl. C Notes -------------------------------------------------------------- Moody's Investors Service upgraded the ratings of Class C notes in Alba 9 SPV S.r.l. and Class B notes in Alba 10 SPV S.r.l. These rating actions reflect the increased levels of credit enhancement for the affected Notes. Moody's also affirmed the ratings of the notes that had sufficient credit enhancement to maintain their respective current ratings. Issuer: Alba 9 SPV S.r.l. EUR233.8M Class A2 Notes, Affirmed Aa3 (sf); previously on Jan 14, 2020 Affirmed Aa3 (sf) EUR145.8M Class B Notes, Affirmed Aa3 (sf); previously on Jan 14, 2020 Affirmed Aa3 (sf) EUR100.2M Class C Notes, Upgraded to A2 (sf); previously on Jan 14, 2020 Upgraded to Baa1 (sf) Issuer: Alba 10 SPV S.r.l. EUR408.4M Class A1 Notes, Affirmed Aa3 (sf); previously on Jan 14, 2020 Affirmed Aa3 (sf) EUR200.0M Class A2 Notes, Affirmed Aa3 (sf); previously on Jan 14, 2020 Affirmed Aa3 (sf) EUR130.0M Class B Notes, Upgraded to Aa3 (sf); previously on Jan 14, 2020 Upgraded to A2 (sf) EUR75.0M Class C Notes, Affirmed Ba2 (sf); previously on Jan 14, 2020 Affirmed Ba2 (sf) Maximum achievable rating is Aa3 (sf) for structured finance transactions in Italy, driven by the corresponding local currency country ceiling of the country. In these two transactions, the current Eligible Investments definition would also limit further upgrades above Aa3(sf) for the junior and mezzanine notes. RATINGS RATIONALE The rating action is prompted by an increase in credit enhancement for the affected tranches. Revision of Key Collateral Assumptions As part of the rating action, Moody's reassessed its default probability and recovery rate assumptions for the portfolios reflecting the collateral performance to date. The performance of the transactions deteriorated since last rating action. Total delinquencies have increased in the past year, with 90 days plus arrears currently standing at 2% and 1.3% of current pool balance in Alba 9 SPV S.r.l. and Alba 10 SPV S.r.l. respectively. Cumulative defaults currently stand at 3.3% and 2.3% of original pool balance in Alba 9 SPV S.r.l. and Alba 10 SPV S.r.l. up from 2.4% and 1.1% correspondingly a year earlier. A significant portion of the pool in both transactions is currently in moratorium according to the Law Decree "Cura Italia". Moody's has increased the default probability assumption in Alba 9 SPV S.r.l. to 12% from 9.1% of the current portfolio balance and has kept unchanged the fixed recovery rate assumption at 30% and the PCE at 20.6%. Moody's has increased the default probability assumption in Alba 10 SPV S.r.l. to 12% from 9.45% of the current portfolio balance and has kept unchanged the fixed recovery rate assumption at 30% and the PCE at 21%. Increase in Available Credit Enhancement Sequential amortization led to the increase in the credit enhancement available in both transactions. For instance, the credit enhancement for Class C in Alba 9 SPV S.r.l. increased to 37.4% from 28.5% since the last rating action and the credit enhancement for Class B in Alba 10 SPV S.r.l. increased to 36.7% from 29.2% in the same period. The analysis takes into account the likelihood of interest deferral for Class C notes in both transactions due to the cumulative default trigger and the position of this tranche in the capital structure. The coronavirus outbreak, the government measures put in place to contain it, and the weak global economic outlook continue to disrupt economies and credit markets across sectors and regions. Its analysis has considered the effect on the performance of corporate assets from the current weak global economic activity and a gradual recovery for the coming months. Although an economic recovery is underway, it is tenuous and its continuation will be closely tied to containment of the virus. As a result, the degree of uncertainty around its forecasts is unusually high. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety Principal methodology The principal methodology used in these ratings was "Moody's Approach to Rating ABS Backed by Equipment Leases and Loans" published in July 2020. Factors that would lead to an upgrade or downgrade of the ratings: Factors or circumstances that could lead to an upgrade of the ratings include (1) performance of the underlying collateral that is better than Moody's expected, (2) an increase in available credit enhancement and (3) improvements in the credit quality of the transaction counterparties and (4) a decrease in sovereign risk. Factors or circumstances that could lead to a downgrade of the ratings include (1) an increase in sovereign risk (2) performance of the underlying collateral that is worse than Moody's expected, (3) deterioration in the notes' available credit enhancement and (4) deterioration in the credit quality of the transaction counterparties. BANCA CARIGE: Fitch Affirms B- LT IDR, Outlook Negative ------------------------------------------------------- Fitch Ratings has affirmed Banca Carige S.p.A. - Cassa di Risparmio di Genova e Imperia's (Carige) Long-Term Issuer Default Rating (IDR) at 'B-' and Viability Rating (VR) at 'b-' and removed them from Rating Watch Negative. The Outlook on the Long-Term IDR is Negative. The affirmation reflects its view that while Carige has entered the crisis from a position of weakness relative to peers, the bank's recent and significant balance sheet clean-up and the ongoing business relaunch result in some limited near-term financial flexibility to absorb shocks. However, the Negative Outlook reflects its view that risks remain clearly tilted to the downside in the medium term, especially if capital buffers over regulatory requirements, which Fitch views as tight relative to Carige's rating, are eroded more than currently expected. For example, Carige might be unable to relaunch the business, achieve planned revenue growth or incur larger-than-expected credit losses, if the recession proves deeper or the economic recovery weaker than its base case. KEY RATING DRIVERS VR, IDRs AND SENIOR DEBT The ratings primarily reflect Carige's weak profitability as the bank reported a net loss of EUR121.9 million in the eight months to end-September 2020 and was also loss making on a pre-impairment operating level, meaning that revenues were insufficient to cover costs. This was primarily due to the bank's still damaged franchise and weak competitive position outside its home region of Liguria, as well as subdued business volumes during the national lockdown in March and April 2020 and negative interest rates, although the overall financial performance improved slightly in 3Q20. Carige's new management is now focusing on relaunching the bank commercially, including in fee-generating activities like wealth management. While this should lead to a gradual improvement in revenue generation and diversification, Fitch expects Carige to remain loss making in the foreseeable future, with the magnitude of operating losses being highly sensitive to developments of the health crisis and the economic effect of possible lockdowns on borrowers' quality. The successful execution of the bank's commercial relaunch and business plan also remain highly vulnerable to the economic environment, in its view, and weigh highly on the rating. Carige's weak capitalisation relative to regulatory requirements also has high importance in determining the ratings. Carige's EUR700 million capital increase in December 2019 restored compliance with minimum capital requirement. However, capital buffers are tight and operating losses are likely to erode them. Carige's total capital ratio of 14.4% at end-September 2020 was 115bp above the bank's overall total capital requirement of 13.25%, which includes a capital conservation buffer of 2.5%. Fitch therefore believes that Carige's total capital ratio is at risk of falling below the overall total capital requirement over the next few quarters unless the bank is able to further reduce risk-weighted assets, improve profitability or raise Tier 2 debt. While the ECB has allowed banks to pierce their capital conservation buffers until end-2022 in response to the pandemic, Fitch believes that Carige's tight buffers represent a rating weakness relative to peers and that the bank's margin of manoeuvre and available options to contrast capital erosion are limited, given it is still structurally loss making. Asset quality has improved markedly following the sale of EUR2.8 billion gross impaired loans (including about EUR100 million leasing exposures to be disposed in 1Q21) to government-owned debt servicer AMCO - Asset Management Company S.p.A. (BBB-/Stable). Carige reported an impaired loan ratio of 5.3% at end-September 2020, which is well below the peak of about 24% at end-2016 and lower than the Italian industry average of 7.6% at end-June 2020. Fitch expects asset quality to deteriorate in 2021 as a result of the economic downturn, but to a lesser extent than in the past thanks to Carige's stricter underwriting standards and improved risk controls. Funding has stabilised following the completion of the capital increase and de-risking transaction. Deposits continued to grow throughout the health emergency, supported by higher saving rates and the ECB's expansionary monetary policy. However, Fitch believes that Carige's liquidity is still at risk of deterioration if the bank reports large unexpected losses or capital ratios are eroded below minimum requirements, due to the reputational damage suffered from past financial distress and moderate reliance on less-stable and confidence-sensitive corporate deposits. Access to the debt markets is also highly uncertain, with the exception of secured funding sources like covered bonds. Liquidity is adequate thanks to large cash balances deposited at the ECB, but Carige's already material recourse to secured funding sources reduces its financial flexibility relative to peers. Carige's 'B' Short-Term IDR is in line with the 'B-' Long-Term IDR under Fitch's rating correspondence table. Carige's long-term senior debt is rated two notches below the Long-Term IDR based on an estimated Recovery Rating of 'RR6'. Poor recovery prospects for senior unsecured bond holders in a liquidation (its central assumption should Carige be in distress) are the result of full depositor preference in Italy and Carige's liability structure relying heavily on customer deposits and secured funding. The short-term senior debt rating is in line with the bank's Short-Term IDR. DEPOSIT RATINGS Carige's long-term deposit rating is in line with the bank's Long-Term IDR because resolution debt buffers are below the threshold of 10% of risk-weighted assets required to grant an uplift under its criteria and Fitch has limited visibility around the level of Carige's minimum requirement for own funds and eligible liabilities (MREL) and its plans to comply with it over the medium term. Carige's short-term deposit rating of 'B' is in line with the bank's 'B-' long-term deposit rating under Fitch's rating correspondence table. SUPPORT RATING AND SUPPORT RATING FLOOR The Support Rating of '5' and Support Rating Floor of 'No Floor' reflect Fitch's view that although external support from the government is being provided and further support is possible, this cannot be relied upon in the longer term. In the event that the bank is deemed by the authorities to have become insolvent and unviable, external sovereign support in the form of a precautionary recapitalisation would not be available. The EU's Bank Recovery and Resolution Directive and the Single Resolution Mechanism for eurozone banks provide a framework for the resolution of banks that requires senior creditors to participate in losses, if necessary, instead of or ahead of a bank receiving sovereign support. RATING SENSITIVITIES VR, IDRs AND SENIOR DEBT Factors that could, individually or collectively, lead to negative rating action/downgrade: - Carige's ratings could be downgraded if the bank's regulatory capital ratios, especially the total capital ratio, are eroded without the bank having credible options to restore buffers (including the capital conservation buffer) above minimum requirements that do not encompass extraordinary external support. - The ratings could also be downgraded if Carige is unable to improve profitability to more acceptable levels or if it incurs in prolonged and substantial asset quality deterioration caused by the economic downturn. - The ratings could also be downgraded if the bank experiences renewed funding instability or liquidity pressures. Factors that could, individually or collectively, lead to positive rating action/upgrade: Carige's Outlook could be revised to Stable and the ratings eventually upgraded if the bank shows progress in strengthening its domestic franchise and Fitch deems the achievement of operating break-even as being within reach and sustainable. Business growth would also need to be sustainable and not driven by excessive risk taking. - Any rating upside would be conditional on Carige materially strengthening capital buffers above current levels, for example thanks to further risk-weighted assets optimisation or positive internal capital generation. - Positive rating action would also require evidence of stable funding, strong liquidity and possibly improved access to the debt markets. - The ratings could be upgraded if Cassa Centrale Banca, Italy's ninth-largest bank and Carige's shareholder with 8.3% of the share capital with a call option on another 80% currently owned by the Italian Deposits Guarantee Scheme, substantially increases its stake in the bank and becomes a reference shareholder. Carige would then benefit from being part of a group with a comparatively stronger national franchise to relaunch business activity and better capitalisation (common equity Tier 1 ratio of 19.7% at end-2019). DEPOSIT RATINGS Carige's deposits ratings are primarily sensitive to changes in the bank's IDRs. The long-term deposit rating could be upgraded by one notch if Fitch expects that Carige will be able to achieve and sustainably maintain compliance with its MREL requirements over the medium term. This would require greater clarity on the MREL requirement and the bank's plans to mitigate any potential shortfalls. SUPPORT RATING AND SUPPORT RATING FLOOR An upgrade of the Support Rating and upward revision of the Support Rating Floor would be contingent on a positive and sustainable change in the sovereign's propensity to support Carige in the longer term. While not impossible, this is highly unlikely, in Fitch's view. REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING The principal sources of information used in the analysis are described in the Applicable Criteria. ESG CONSIDERATIONS Fitch has revised its ESG Relevance Score for Governance Structure to '3' from '4' to reflect that corporate governance no longer limits its assessment of the bank's credit profile after the termination of ECB's temporary administration in January 2020 and the appointment of a new board of directors and Chief Executive Officer in February 2020. The highest level of ESG credit relevance is now a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. FINO 1: DBRS Confirms BB (high) Rating on Class B Notes ------------------------------------------------------- DBRS Ratings Limited confirmed its ratings on the Class A, Class B, and Class C notes issued by Fino 1 Securitization S.r.l. (the Issuer) at BBB (high) (sf), BB (high) (sf), and BB (sf), respectively. The trend remains Negative on all ratings. The transaction represents the issuance of Class A, Class B, Class C, and Class D notes (collectively, the Notes). At issuance, the notes were backed by a EUR 5.37 billion portfolio by gross book value (GBV) consisting of secured and unsecured nonperforming loans (NPLs) originated by UniCredit S.p.A. The loans are serviced by doValue S.p.A. (doValue), which acts as the master servicer, special servicer, and administrative servicer. As of the cut-off date, the portfolio consisted of secured commercial and residential loans (51.9% of total GBV) and unsecured loans (48.1% of total GBV) granted mostly to Italian small and medium-size enterprises (SMEs; 93.0% of total GBV). RATING RATIONALE The rating confirmations follow the third annual review of the transaction and are based on the following analytical considerations: -- Transaction performance: assessment of portfolio recoveries as of June 30, 2020, focusing on: (1) a comparison between actual gross collections and the servicer's initial business plan forecast; (2) the collection performance observed over the past six months, including the period following the outbreak of the Coronavirus Disease (COVID-19); and (3) a comparison between the current performance and DBRS Morningstar's expectations. -- The Servicer's updated business plan: prepared as of December 2019 and received in October 2020, compared with doValue's initial collection expectations. -- Portfolio characteristics: loan pool composition as of June 30, 2020 and evolution of its core features since issuance. -- Transaction liquidating structure: the order of priority entails a fully sequential amortization of the notes (i.e., the Class B notes will begin to amortize following the full repayment of the Class A notes, and the Class C notes will amortize following the repayment of the Class B notes). -- Liquidity support: the transaction benefits from an amortizing cash reserve providing liquidity to the structure, covering potential interest shortfalls on the Class A notes and senior fees. The cash reserve target amount is equal to 5% of the principal outstanding on the Class A notes and is currently fully funded. TRANSACTION AND PERFORMANCE According to the latest July 2020 investor report, the principal amounts outstanding of the Class A, Class B, Class C, and Class D notes were equal to EUR 277.0 million, EUR 29.6 million, EUR 40.0 million, and EUR 50.3 million, respectively. The balance of the Class A notes has amortized by 57.4% since issuance. As of June 2020, the transaction was performing below the servicer's initial expectations. The actual cumulative gross collections equaled EUR 620.4 million, whereas doValue's initial business plan estimated cumulative gross collections of EUR 657.3 million for the same period. Therefore, as of 30 June 2020, the transaction was underperforming by roughly EUR 36.9 million compared with the servicer's initial expectations (-5.6%). At issuance, DBRS Morningstar estimated cumulative gross collections for the same period of EUR 288.2 million in the BBB (high) (sf) stress scenario. Therefore, as of June 30, 2020 the transaction was performing above DBRS Morningstar's stressed expectations. In 2020, doValue provided DBRS Morningstar with a revised business plan. The sum of the amount of total actual collections as of June 2020 (EUR 620.4 million) and expected total GDPs from July 2020 onwards based on the updated business plan (EUR 985.8 million) equals to EUR 1,606.2 million and it is higher than the total GDPs estimated by the servicer in the initial business plan (EUR 1,567.4 million). This is the result of an increase by 8.3% of the total amount of collections expected from July 2020 to maturity compared with the initial business plan. DBRS Morningstar's BBB (high) (sf) rating stress assumes a haircut of 28.0% to the servicer's updated business plan (considering actual collections to date and expected future collections). DBRS Morningstar's CCC (sf) rating scenario assumes no haircut to the servicer's updated business plan and was only adjusted in terms of timing. In its rating review, DBRS Morningstar used the Italian residential market value decline (MVD) rates outlined in the "Master European Residential Mortgage-Backed Securities Rating Methodology and Jurisdictional Addenda" methodology published on September 21, 2020. DBRS Morningstar notes that the currently proposed Italian residential MVDs in the "European RMBS Insight: Italian Addendum - Request for Comment" methodology published on November 2, 2020 are not likely to lead to a further rating action. The final maturity date of the transaction is October 2045. The Coronavirus Disease (COVID-19) and the resulting isolation measures have resulted in a sharp economic contraction, increases in unemployment rates, and reduced investment activities. DBRS Morningstar anticipates that collections in European nonperforming loan (NPL) securitizations will continue to be disrupted in the coming months and that the deteriorating macroeconomic conditions could negatively affect recoveries from NPLs and the related real estate collateral. The rating is based on additional analysis and adjustments to expected performance as a result of the global efforts to contain the spread of the coronavirus. For this transaction, DBRS Morningstar incorporated its expectation of a moderate medium-term decline in property prices, but gave partial credit to house price increases from 2023 onwards in non-investment-grade rating stress scenarios. DBRS Morningstar updated its estimated gross cash flow (from July 2020 onwards) at the BBB (high) (sf) scenario to EUR 534.7 million (a discount of 45.8% from the updated business plan considering expected future collections); at the BB (high) (sf) scenario to EUR 609.0 million (a discount of 38.2% from the updated business plan); and at the BB (sf) scenario to EUR 625.2 million (a discount of 36.6% from the updated business plan). Notes: All figures are in Euros unless otherwise noted. ===================== N E T H E R L A N D S ===================== AIRBUS SE: Egan-Jones Lowers Senior Unsecured Ratings to BB ----------------------------------------------------------- Egan-Jones Ratings Company, on November 9, 2020, downgraded the foreign currency and local currency senior unsecured ratings on debt issued by Airbus SE to BB from BB+. Headquartered in Leiden, Netherlands, Airbus SE manufactures airplanes and military equipment. =========== N O R W A Y =========== NORWEGIAN AIR: Asks Irish Court to Oversee Debt Restructuring ------------------------------------------------------------- Terje Solsvik at Reuters reports that Norwegian Air on Nov. 18 said it has asked an Irish court to oversee a restructuring of its massive debt as it seeks to stave off collapse amid the coronavirus pandemic. According to Reuters, Norway's government on Nov. 9 rejected the airline's plea for another injection of state funds, and the company said the following day it was at risk of having to halt operations in early 2021 unless it got access to more cash. Growing rapidly to become Europe's third-largest low-cost airline and the biggest foreign carrier serving New York and other major U.S. cities, Norwegian's debt and liabilities stood at NOK66.8 billion (US$7.4 billion) at the end of September, Reuters discloses. "Norwegian has chosen an Irish process since its aircraft assets are held in Ireland," Reuters quotes the company as saying in a statement. "Based on Norwegian's current cash position and the projections going forward, the company believes it has sufficient liquidity to go through the above-mentioned process." =========== R U S S I A =========== ENEL RUSSIA: Fitch Affirms BB+ LT IDRs, Outlook Stable ------------------------------------------------------ Fitch Ratings has affirmed Enel Russia's Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'BB+'. The Outlook is Stable. The affirmation reflects its expectation that the company will be able to deleverage following a leverage spike in 2021-2022 due to capex in wind and modernisation projects for gas plants. Fitch expects that its renewables and modernisation projects will largely, albeit gradually, offset the negative impact on its EBITDA from the Reftinskaya coal plant sale, and the phasing-out of thermal capacity sales under capacity supply agreements (CSAs) by end-2020. Fitch also forecasts Enel Russia will show similar business risk to Public Joint Stock Company Territorial Generating Company No. 1 (TGC-1, BBB/Stable) and slightly weaker business risk than PJSC Mosenergo (BBB/Stable) on the back of stable cash flows in the medium term, once all new wind capacities are commissioned. The company is subject to execution risk, as projects are at different stages and Fitch expects them to be commissioned in 2021-2024; however, this is mitigated by the knowhow of the Enel group KEY RATING DRIVERS EBITDA Weakness Temporary: Fitch forecasts a reduction in EBITDA in 2020-2022 to average about RUB9 billion (2019: about RUB15 billion), mainly on the back of the Reftinskaya disposal in 4Q19 and CSA expiration by end-2020. The 2020 results will also be affected by the likely sharp contraction of the Russian economy (around 5%) due to the pandemic. Fitch expects the company to gradually commission new wind capacities in 2021-2024, which should improve EBITDA and cash flows from 2023. Enel Russia won the auctions for the construction of wind parks of a total 362MW. This will result in a shift of its business mix to renewables projects, which Fitch forecasts to account for more than a third of EBITDA in 2023 of aboutRUB12 billion. Lower Scale, Cleaner Energy Mix: The Reftinskaya sale has reduced Enel Russia's scale by about 40% of installed capacity and is the main contributor to its expectation of about a 44% yoy fall in electricity output in 2020. Enel Russia is now comparable to TGC-1, but smaller than Mosenergo. However, its operational mix will shift towards cleaner energy with gas and renewables (eg wind). Higher Tariffs for Renewable CSAs: Similar to thermal generation in Russia, the renewables CSAs envisage stable earnings and a guaranteed return for capacity sold under the approved tariff mechanism with a favourable base rate of return of 12%, adjusted according to Russian bond yields. CSA tariffs for wind projects are still untested, but Fitch expects them to be almost 10x higher than capacity auction (KOM) tariffs and 1.5x higher than existing thermal CSA tariffs. Supportive Regulations: In 2019, Enel Russia's units totalling 330MW (to rise to 370MW after modernisation) were selected at modernisation CSA auctions, with expected commissioning over 2022-2025 and a base rate of return of 14%, adjusted according to Russian bond yields. The consistent application of the CSA framework, modernisation CSAs and auctions on the competitive capacity market over a six-year period, adds to cash-flow predictability. Fitch estimates that in the medium term substantially more than half of the company's EBITDA will derive from some form of contracted capacity. Credit Metrics Weakening Temporary: Fitch forecasts funds from operations (FFO) net leverage to rise in 2021-2022 to above its negative rating sensitivity on the back of high capex, lower EBITDA and its expectations that all new wind capacities will be commissioned by end-2024. Increasing EBITDA and reducing capex would support gradual deleveraging to below 2.5x from 2023. Its forecasts are based on total capex for its wind projects at EUR495 million until 2024, CSA modernisation capex at about RUB11 billion until 2025 as well as RUB 3 billion annual dividend payment in line with the dividend policy. Negative FCF: Fitch expects Enel Russia to see negative free cash flow (FCF) over 2020-2023, before it turns neutral or slightly positive on the back of capex moderation and improved operating cash flows. Negative FCF will add to funding requirements. DERIVATION SUMMARY Following the disposal of Reftinskaya power station, Enel Russia will be comparable in scale to TGC-1 but smaller than Mosenergo. Fitch expects its business profile to benefit from newly constructed renewable capacity under renewables CSAs along with modernisation CSAs, which would support predictability of cash flows in the medium term. This would make Enel Russia's business profile more akin to that of TGC-1 and only slightly weaker than Mosenergo. Fitch forecasts deterioration of Enel Russia's credit metrics during the intensive capex phase and business transformation but expect a gradual improvement thereafter. Enel Russia has a record of strong financial performance compared with Russian peers. Enel Russia's 'BB+' rating does not incorporate any parental support from ultimate majority shareholder, Enel S.p.A. (A-/Stable), while Mosenergo's and TGC-1's incorporate a one-notch uplift to the companies' Standalone Credit Profiles of 'bbb-'. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer - Net power output to decline 5% in 2020 (excluding the effect of Reftinskaya sale) before gradually recovering in 2021-2024 - Gas tariff indexation of around 3.5% a year over 2020-2024 - Power price to decline around 5% in 2020 and grow in line with gas price over 2021-2024 - Regulated electricity tariffs to increase in line with inflation annually up to 2024 - Dividends in line with management expectations of RUB3billion annually over 2020-2022 - Capex in line with management expectations for wind projects and an additional Fitch estimate of around RUB11 billion for CSA modernisation projects till 2025. The Outlook on the senior unsecured notes was not renewed as it was erroneously assigned on December 6, 2019. Obligation ratings typically do not carry Outlooks. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Implementation of business transformation and completion of wind and modernisation projects leading to a recovery in EBITDA - Continuous record of a supportive regulatory framework, coupled with Enel Russia's strong financial profile and disciplined financial policy resulting in FFO net leverage declining below 2.0x and FFO interest coverage rising above 6.0x Factors that could, individually or collectively, lead to negative rating action/downgrade: - Generous dividend distributions and/or an ambitious capex programme leading to a weakening of the financial profile with FFO net leverage rising above 2.5x and FFO interest coverage falling below 5x on a sustained basis. - Negative FCF on a sustained basis. LIQUIDITY AND DEBT STRUCTURE Comfortable Liquidity, No FX Debt: At end-9M20 Enel Russia has comfortable liquidity, with cash of RUB12.2 billion and mostly uncommitted unused credit facilities of RUB59 billion (available for more than a year, but including committed RUB16billion of wind-project financing). This compares with short-term debt of RUB2 billion at end-9M20 and Fitch-expected negative FCF of about RUB10 billion in the next 12 months. The credit facilities include loan agreements with the largest local banks, international bank subsidiaries and an international development bank. Fitch expects funding from these banks to be available to the company. Enel Russia has repaid all of its remaining foreign-currency-denominated debt, and its debt is fully denominated in Russian roubles. Moreover, the company continues to hedge most of its foreign-currency capex. REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING The principal sources of information used in the analysis are described in the Applicable Criteria. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. PUBLIC BANK: Bank of Russia Terminates Provisional Administration ----------------------------------------------------------------- On November 16, 2020, the Bank of Russia terminated the activity of the provisional administration appointed to manage Public bank (JSC) (hereinafter, the Bank). From the moment the provisional administration was appointed to the Bank, its work was obstructed by the Bank's executives. The provisional administration detected that the activities of the Bank's former management and owners had signs of actions aimed at the preferential satisfaction of certain creditors' claims and withdrawing liquid assets through the sale of property and precious metal coins, as well as through lending to borrowers incapable to fulfil their obligations. The provisional administration filed complaints to the law enforcement bodies regarding the facts revealed. The provisional administration's objective was to recover overdue debt. Specifically, it sent recovery claims and letters before action to borrowers, sureties and pledgers, as well as filed recovery suits to courts. According to the provisional administration, the Bank's assets amounting to approximately RUR0.6 billion are insufficient for it to meet its obligations to creditors totalling RUR1.14 billion. On October 30, 2020, the Arbitration Court of the City of Moscow recognised the Bank as insolvent (bankrupt) and initiated a bankruptcy proceeding against it. The State Corporation Deposit Insurance Agency was appointed as receiver. More details about the work of the provisional administration are available on the Bank of Russia website. Settlements with the Bank's creditors will be made in the course of the bankruptcy proceeding as the Bank's assets are sold (enforced). The quality of these assets is the responsibility of the Bank's former management and owners. ROSCOSMOSBANK JSC: Bank of Russia Okays Bankruptcy Plan Amendments ------------------------------------------------------------------ The Bank of Russia has approved amendments to the Plan for the Participation of the State Corporation Deposit Insurance Agency in the Implementation of Measures to Prevent the Bankruptcy of JSC ROSCOSMOSBANK (hereinafter, the Bank). Within these measures, Promsvyazbank PJSC will acquire 100% of the Bank's equity from State Space Corporation ROSCOSMOS and the Bank will be restructured by way of merger with Promsvyazbank PJSC by 1 May 2021. After the acquisition of the Bank's equity and until the completion of the Bank's restructuring, Promsvyazbank PJSC will act as an investor. ========= S P A I N ========= ABERTIS INFRAESTRUCTURAS: Fitch Rates New Sub. Capital BB+(EXP) --------------------------------------------------------------- Fitch Ratings has assigned Abertis Infraestructuras Finance B.V. (Abertis Finance) proposed callable deeply subordinated capital securities an expected rating of 'BB+(EXP)'. The Outlook is Negative. The proposed securities would qualify for a 50% equity credit. The final rating is contingent on the receipt of final documents conforming materially to the preliminary documentation reviewed. The hybrid notes are issued by Abertis Finance and unconditionally and irrevocably guaranteed by Abertis Infraestructuras S.A. (Abertis, BBB/Negative) which will borrow the net proceeds of the issuance via an intercompany loan and will use the funds for general corporate purposes of the group, including the repayment or the refinancing of the group's indebtedness. RATING RATIONALE The notes are deeply subordinated and will rank senior only to Abertis Finance's share capital, while coupon payments can be deferred at the option of the issuer. These features are reflected in the 'BB+(EXP)' rating, which is two notches lower than Abertis's senior unsecured rating. The 50% equity credit reflects the hybrid's cumulative interest coupon, a feature that is more debt-like in nature. KEY RATING DRIVERS Ratings Reflect Deep Subordination The proposed notes are rated two notches below Abertis's senior unsecured rating of 'BBB', given their deep subordination relative to senior obligations. The notes only rank senior to the claims of equity shareholders. Fitch believes Abertis intends to maintain a consistent number of hybrids in the capital structure of up to EUR2 billion, and therefore apply the 50% equity content to the full amount of the new proposed hybrid. Equity Treatment The securities will qualify for 50% equity credit as they are deeply subordinated, have a remaining effective maturity of at least five years, and a full discretion to defer coupons for at least five years and limited events of default. These are key equity-like characteristics, affording Abertis's greater financial flexibility. The interest coupon deferrals are cumulative, a feature more debt-like in nature, resulting in 50% equity treatment and 50% debt treatment of the hybrid notes by Fitch. Despite the 50% equity treatment, Fitch treats coupon payments as 100% interest. The company will be obliged to make a mandatory settlement of deferred interest payments under certain circumstances, including the declaration of a cash dividend. Under the existing shareholders agreement, the dividend policy is flexible and may be adjusted to maintain a certain rating threshold. But Fitch cautions that perceived deterioration in the shareholders agreement, leading to decreasing flexibility in the dividend policy, may negatively affect the equity credit of the hybrid notes. Effective Maturity Date While the proposed hybrid is perpetual, Fitch deems its effective remaining maturity as the date from which the issuer will no longer be subject to replacement language (February 2046), which discloses the company's intent to redeem the instrument at its reset date with the proceeds of a similar instrument or with equity. This is defined even if the coupon step-up is within Fitch's aggregate threshold of 100bp. The equity credit of 50% would change to 0% five years before the effective maturity date. The issuer has the option to redeem the notes in the three months immediately preceding and including the first reset date, which is at least 5.25 years from the issue date, and on any coupon payment date thereafter. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - A faster-than-expected traffic rebound leading to consolidated net debt-to-EBITDA consistently below 6.0x under the Fitch rating case, provided there is a clearer view on medium-term traffic evolution. This would lead to a revision in the Outlook to Stable. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Failure to improve Fitch-adjusted leverage to below 6.0x by FY24 under the FRC which also assumes two Spanish concessions will expire in 2021. Abertis is controlled by its parent Atlantia, but the linkage is deemed as "weak" due to the absence of guarantees and the joint venture nature of Abertis's holding company, among others. Abertis's rating could be impacted should Atlantia opt to, and manage to, re-leverage Abertis and extract higher-than-expected cash in the future. CRITERIA VARIATION The analysis includes a variation from the "Rating Criteria for Infrastructure and Project Finance" to determine how to notch the hybrid instruments relative to Abertis IDR, and how to apply the equity credit. Fitch allocates hybrids to the following categories: 100% equity, 50% equity and 50% debt, or 100% debt. The decision to use only three categories reflects Fitch's view that the allocation of hybrids into debt and equity components is a rough and qualitative approximation, and is not intended to give the impression of precision. The focus on viability means Fitch will typically allocate equity credit (EC) to instruments that are subordinated to senior debt and have an unconstrained ability for at least five years of consecutive coupon deferral. To benefit from EC, the terms of the instrument should not include mandatory payments, covenant defaults, or events of default (EODs) that could trigger a general corporate default or liquidity need. Structural features that constrain a company's ability to activate equity-like features of a hybrid make an instrument more debt-like. Hybrids that qualify for EC are typically subordinated instruments with very low recovery prospects in liquidation or bankruptcy. Such instruments will therefore be treated as being highly loss-absorbing and rated at least two notches below the IDR for most issuers. A hybrid's features will determine whether such notching will be reduced or, more likely, increased. ADDITIONAL NOTES ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Asset Description Abertis is a large Spanish-based infrastructure group with network under management predominantly located in Spain, France, Brazil, Chile and Mexico. CAIXABANK PYMES 12: DBRS Gives Prov. B (low) Rating to B Notes -------------------------------------------------------------- DBRS Ratings GmbH assigned provisional ratings to the following series of notes to be issued by CaixaBank PYMES 12, FT (the Issuer): -- Series A Notes at AA (low) (sf) -- Series B Notes at B (low) (sf) The transaction is a cash flow securitization collateralized by a portfolio of secured and unsecured loans originated by CaixaBank, S.A. (CaixaBank or the Originator; rated "A" with a Stable trend by DBRS Morningstar) to corporate, small and medium-size enterprises (SME) and self-employed individuals based in Spain. As of October 20, 2020, the transaction's provisional portfolio included 31,024 loans to 28,623 obligor groups, totalling EUR 2.70 billion. At closing, the Originator will select the final portfolio of EUR 2.55 billion from the provisional pool. The rating of the Series A Notes addresses the timely payment of interest and the ultimate payment of principal on or before the legal maturity date in September 2062. The rating of the Series B Notes addresses the ultimate payment of interest and principal on or before the legal maturity date. Interest and principal payments on the Notes will be made quarterly on the 16th of March, June, September, and December, with the first payment date on March 16, 2021. The Notes will pay a fixed interest rate equal to 0.30% and 0.50% for the Series A Notes and Series B Notes, respectively. The provisional pool is well diversified across industries and in terms of borrowers. There is some concentration of borrowers in Catalonia (26.8% of the portfolio balance), which is to be expected given that Catalonia is the Originator's home region. The top one, ten and 20 obligor groups represent 1.2%, 6.5% and 9.4% of the portfolio balance, respectively. The top three industry sectors according to DBRS Morningstar's industry definition are Building and Development, Farming and Agriculture, and Food Products, representing 14.4%, 10.7%, and 10.3% of the portfolio outstanding balance, respectively. The Series A Notes benefit from 19.0% credit enhancement through subordination of the Series B Notes and the presence of a reserve fund. The Series B Notes benefit from 5.0% credit enhancement provided by the reserve fund. The reserve fund will be funded through a subordinated loan and is available to cover senior fees and interest and principal on the Series A Notes and, once the Series A Notes are fully amortized, interest and principal on the Series B Notes. The cash reserve will amortize subject to the target level being equal to 5.0% of the outstanding balance of the Series A and Series B notes. The Series B Notes interest and principal payments are subordinated to the Series A Notes payments. The ratings are based on DBRS Morningstar's "Rating CLOs Backed by Loans to European SMEs" methodology and the following analytical considerations: -- The probability of default (PD) for the portfolio was determined using the historical performance information supplied. DBRS Morningstar compared the internal rating distribution of the portfolio with the internal rating distribution of the loan book and concluded that the portfolio was of marginally better quality than the overall loan book. DBRS Morningstar assumed an annualized PD of 0.78% for secured loans to SME and self-employed individuals, 1.47% for unsecured loans to SME and self-employed individuals, 2.11% for secured corporate loans, 1.86% for unsecured corporate loans, and 1.95% for pre-approved loans. Additional adjustments were applied in the context of the current Coronavirus Disease (COVID-19) pandemic. -- The assumed weighted-average life (WAL) of the portfolio is 3.3 years. -- The PD and WAL were used in the DBRS Morningstar Diversity Model to generate the hurdle rates for the respective ratings. -- The recovery rate was determined by considering the market value declines for Spain, the security level, and the type of collateral. For the Series A Notes, DBRS Morningstar applied a 48.0% recovery rate for secured loans and a 15.8% recovery rate for unsecured loans. For the Series B Notes, DBRS Morningstar applied a 70.3% recovery rate for secured loans, and a 21.5% recovery rate for unsecured loans. -- The break-even rates for the interest rate stresses and default timings were determined using the DBRS Morningstar cash flow tool. The transaction structure was analyzed in a proprietary excel tool, considering the default rates at which the Notes did not return all specified cash flows. The Coronavirus Disease (COVID-19) and the resulting isolation measures have caused an economic contraction, leading to sharp increases in unemployment rates and income reductions for many borrowers. DBRS Morningstar anticipates that delinquencies may increase in the coming months for many SME transactions, some meaningfully. The ratings are based on additional analysis and adjustments to expected performance as a result of the global efforts to contain the spread of the coronavirus. For this transaction, DBRS Morningstar increased the expected default rate for obligors in certain industries based on their perceived exposure to the adverse disruptions of the coronavirus. Notes: All figures are in Euros unless otherwise noted. CELLNEX TELECOM: S&P Affirms 'BB+' LT ICR, Outlook Stable --------------------------------------------------------- S&P Global Ratings affirmed its 'BB+' long-term issuer credit rating on Cellnex Telecom S.A. (Cellnex). S&P said, "The outlook is stable because we assume that Cellnex will smoothly integrate the acquired assets and maintain a solid operating track record, while keeping leverage well below 7x--the maximum level we believe is commensurate for the rating, factoring in the positive business risk profile contribution of the transaction." The acquisition will further strengthen Cellnex's business risk profile. The acquisition of about 25,000 telecom sites leads to a considerable increase in scale, and will underpin a higher operating margin. Together with the recent entry in Poland, the announced deal further expands Cellnex's geographic reach. The sites span six countries, of which three are new markets (Austria, Denmark, and Sweden) and three existing markets (the U.K., Italy, and Ireland), where Cellnex will meaningfully strengthen its market positions, pending required competition authorities' approvals. S&P estimates that the company's site portfolio will expand by about 40%, to about 84,400 from about 59,800 (including distributed antenna systems [DAS] nodes), pro forma at year-end 2020. Adding agreed upon build-to-suit projects, the company expects to have about 103,000 operating sites, making it by far the largest European tower company, and second only to U.S.-based American Tower globally. The transaction strengthens Cellnex's positioning within the excellent business risk category. Cellnex's business risk profile is well ahead of its European competitors', given its larger scale and diversity within the European continent, solid operating track record, and independence from telecom operators. It also compares favorably with U.S. peers. Pro forma the deal, Cellnex's tower count will meaningfully exceed U.S. No. 2 and No. 3 tower operators Crown Castle and SBA Communications. It also has broader client and market diversity than all of its peers, and no exposure to risky, low-rated countries. In S&P's view, American Towers remains the strongest player, however, due to its superior scale as well as the more favorable characteristics of the U.S. market--including its higher maturity, consolidation, and colocation rates--compared with the more fragmented European market. In particular, the latter remains less mature because network operators continue to hold a significant share of their portfolios, which may lead to increased competition. S&P continues to view the telecom tower industry as credit supportive. Telecom tower services benefit from long-term and protective contracts, strong local market shares, high barriers to entry, and steadily increasing demand from telecom operators to expand 4G coverage. There is also the need to increase the density of capillary cellular networks (local networks using short-range radio-access technologies to provide local connectivity to things and devices) to facilitate timely 5G deployments. Recent 5G frequency auctions across Europe have also come with added coverage obligations for operators, which further enhances the high revenue visibility of tower companies. Aggressive growth entails execution risks, but the company's track record is solid. S&P sees potential execution risks related to the significant influx of new assets and delivery of a large number of planned custom-made projects to clients. Cellnex is pursuing an aggressive mergers and acquisitions (M&A) strategy to spur industry consolidation across Europe. Nevertheless, it has a strong operating track record established through smooth integration of acquired businesses, and a well-managed growth and geographic expansion plan. In addition, regular increases in organic colocation reflect successful ongoing optimization of its tower portfolio and efficiency gains. S&P expects a continuously supportive financial policy. S&P said, "At this stage, we forecast leverage shooting up toward 6.5x by 2022, which is still well within the maximum of 7.0x we think is commensurate with the rating, factoring in the business risk benefits from the announced transaction. Headroom for additional deals will be significantly lower at this stage. Nevertheless, we believe financial policy will remain supportive in the future, as illustrated by the recent EUR4 billion capital increase and the two capital increases, worth EUR3.8 billion, in 2019, which have allowed Cellnex to execute very aggressive M&A within the rating. "The outlook is stable because we anticipate that Cellnex will benefit from its increasing scale and diversity, smoothly integrate acquired businesses and transferred sites, and maintain its adjusted debt to EBITDA at comfortably less than 7x. We also forecast sustainable ratios of funds from operations (FFO) to debt higher than 10% and discretionary cash flow (DCF) to debt at more than 6%. "We could lower our rating on Cellnex if we anticipate that our adjusted debt to EBITDA metric would not stay below 7x, our adjusted FFO-to-debt ratio would fall below 10%, or DCF to debt would remain below 6%. We think underperformance could result from additional debt-funded acquisitions, higher-than-expected shareholder remuneration, or weaker organic revenue growth than we currently anticipate in our base case, owing in particular to setbacks in integrating acquired assets. "We could raise the rating if our adjusted debt to EBITDA metric for Cellnex stayed consistently lower than 6x, FFO to debt above 13%, and DCF to debt above 9%. We see ratings upside as remote at this stage, however, based on our view of likely additional consolidation opportunities in the European towers market and Cellnex's aggressive stance toward M&A, along with the current financial policy." FTA SANTANDER SCSA 2014-1: DBRS Confirms C Rating on Class E Notes ------------------------------------------------------------------ DBRS Ratings GmbH took the following rating actions on the notes issued by FTA Santander Consumer Spain Auto 2014-1 (SCSA 2014-1) and FT Santander Consumer Spain Auto 2016-1 (SCSA 2016-1): SCSA 2014-1: -- Class A confirmed at A (high) (sf) -- Class B confirmed at A (high) (sf) -- Class C upgraded to A (sf) from A (low) (sf) -- Class D upgraded to A (low) (sf) from BBB (sf) -- Class E confirmed at C (sf) SCSA 2016-1: -- Series A confirmed at AA (sf) -- Series B confirmed at AA (sf) -- Series C upgraded to AA (low) (sf) from A (high) (sf) -- Series D upgraded to A (sf) from A (low) (sf) For SCSA 2014-1, the rating on the Class A Notes addresses the timely payment of interest and the ultimate payment of principal on or before the legal final maturity date in June 2032. The ratings on the Class B, Class C, Class D, and Class E Notes address the ultimate payment of interest and principal on or before the legal final maturity date. For SCSA 2016-1, the rating on the Series A Notes addresses the timely payment of interest and the ultimate payment of principal on or before the legal final maturity date in April 2032. The ratings on the Series B, Series C, and Series D Notes address the ultimate payment of interest and principal on or before the legal final maturity date. The rating actions follow an annual review of the transactions and are based on the following analytical considerations: -- Portfolio performance, in terms of delinquencies, defaults, and losses as of the most recent payment dates; -- Probability of default (PD), loss given default (LGD), and expected loss assumptions on the remaining receivables. -- Current available credit enhancement to the rated notes to cover the expected losses at their respective rating levels; -- Current economic environment and an assessment of sustainable performance, as a result of the Coronavirus Disease (COVID-19) pandemic. -- The rating of the Class E Notes issued by SCSA 2014-1 is based on DBRS Morningstar's review of the following considerations: (1) the Class E Notes are in the first-loss position and, as such, are highly likely to default, and (2) given the characteristics of the Class E Notes as defined in the transaction documents, the default most likely would only be recognized at the maturity or early termination of the transaction. SCSA 2014-1 and SCSA 2016-1 are securitizations of Spanish auto loan receivables originated and serviced by Santander Consumer E.F.C., S.A. (SC, the Servicer, or the Originator), a subsidiary of Santander Consumer Finance, S.A. (SCF). SCSA 2014-1 closed in November 2014 with an initial portfolio of EUR 760.0 million and included a four-year revolving period, which ended in December 2018. SCSA 2016-1 closed in March 2016 with an initial portfolio of EUR 765.0 million and included a 40-month revolving period, which ended in July 2019. PORTFOLIO PERFORMANCE -- SCSA 2014-1: As of the September 2020 payment date, loans 30 to 60 days and 60 to 90 days in arrears represented 0.8% and 0.6% of the outstanding portfolio balance, while loans greater than 90 days in arrears represented 1.8%. Gross cumulative defaults amounted to 1.0% of the aggregate initial portfolios balance, of which 27.6% has been recovered to date. -- SCSA 2016-1: As of the October 2020 payment date, loans 30 to 60 days and 60 to 90 days in arrears represented 1.1% and 0.7% of the outstanding portfolio balance, while loans greater than 90 days in arrears represented 2.1%. Gross cumulative defaults amounted to 0.9% of the aggregate initial portfolios balance, of which 20.4% has been recovered to date. PORTFOLIO ASSUMPTIONS AND KEY DRIVERS DBRS Morningstar conducted a loan-by-loan analysis of the remaining pool of receivables and updated its base case PD and LGD assumptions as follows: -- For SCSA 2014-1, the base case PD and LGD assumptions were updated to 4.9% and 41.3%, respectively. -- For SCSA 2016-1, the base case PD and LGD assumptions were updated to 4.9% and 41.9%, respectively. CREDIT ENHANCEMENT The subordination of the respective junior obligations and cash reserves provides credit enhancement to the rated notes. The transactions continue to deleverage steadily, resulting in increased credit enhancement available to the rated notes. As of the September 2020 payment date, credit enhancement to the Class A, Class B, Class C, and Class D Notes in SCSA 2014-1 increased to 27.9%, 19.9%, 15.4%, and 11.2%, respectively, from 17.3%, 12.3%, 9.6%, and 6.9%, respectively, at the time of the last annual review. The Class E Notes, which were used to fund the cash reserve, do not benefit from any credit enhancement. As of the October 2020 payment date, credit enhancement to the Series A, Series B, Series C, and Series D Notes in SCSA 2016-1 increased to 29.7%, 22.7%, 13.1%, and 7.9%, respectively, from 21.2%, 16.2%, 9.3%, and 5.6%, respectively, at the time of the last annual review. SCSA 2014-1 benefits from an amortizing reserve fund, funded to EUR 38.0 million at closing, available to cover senior fees, interest, and principal payments on the Class A through Class D notes. Once four years have passed since the end of the revolving period, the reserve will begin to amortize to a target of 10% of the outstanding balance of the Class A through Class D Notes, subject to a floor of EUR 19.0 million. As of the September 2020 payment date, the reserve was at its target level of EUR 38.0 million. SCSA 2016-1 benefits from a nonamortizing reserve fund, funded to EUR 15.3 million at closing, available to cover senior fees, interest, and principal payments on the Series A through Series D Notes. As of the October 2020 payment date, the reserve was at its target level of EUR 15.3 million. To mitigate any disruptions in payments due to the replacement of the Servicer or the risk that the Servicer fails to transfer the collections, the transaction documents include the provision for the funding of liquidity and commingling reserves. These were unfunded at closing and will only be funded if the DBRS Morningstar rating of SC's parent company, SCF, falls below specific thresholds, or SCF's ownership share in SC decreases below a certain threshold. These reserves continue to be unfunded, as none of the rating triggers have been breached to date. SCF acts as the account bank for the transactions. Based on the DBRS Morningstar private rating of SCF, the downgrade provisions outlined in the transaction documents, and other mitigating factors inherent in the transaction structures, DBRS Morningstar considers the risk arising from the exposure to the account bank to be consistent with the ratings assigned to the notes, as described in DBRS Morningstar's "Legal Criteria for European Structured Finance Transactions" methodology. The transaction structures were analyzed in Intex DealMaker. The Coronavirus Disease (COVID-19) and the resulting isolation measures have caused an economic contraction, leading to sharp increases in unemployment rates and income reductions for many borrowers. DBRS Morningstar anticipates that delinquencies may increase in the coming months for many ABS transactions, some meaningfully. The ratings are based on additional analysis and adjustments to expected performance as a result of the global efforts to contain the spread of the coronavirus. For these transactions, DBRS Morningstar applied an additional haircut to its base case recovery rate and conducted an additional sensitivity analysis to determine that the transactions benefits from sufficient liquidity support to withstand high levels of payment moratoriums in the portfolios. Actual payment moratoriums are currently at a low level: -- For SCSA 2014-1, moratoriums are equal to 5.8% of the outstanding portfolio balance as of September 2020. -- For SCSA 2016-1, moratoriums are equal to 6.6% of the outstanding portfolio balance as of October 2020. Notes: All figures are in Euros unless otherwise noted. HAYA REAL ESTATE: S&P Downgrades ICR to 'CC', On Watch Negative --------------------------------------------------------------- S&P Global Ratings lowered its long-term issuer credit rating on Spanish based Haya Real Estate S.A.U. and its issue ratings on the senior notes to 'CC' from 'B-', and placed them on CreditWatch with negative implications. S&P said, "The CreditWatch placement indicates our expectation that we could lower the issuer credit rating to 'SD' (selective default) and the issue credit ratings on the senior notes to 'D' (default) following this tender offer. "We view the proposed transaction as a distressed exchange. Haya announced on Nov. 16 its planned tender offer to purchase up to EUR60 million of their senior secured notes. The company intends to run an auction-style tender with participating investors. We expect that noteholders will receive less than the original promise on the senior secure notes and in line with our criteria we consider this a distressed exchange. "The CreditWatch placement reflects our view that there is at least a one-in-two likelihood of a default within 90 days. We aim to resolve the CreditWatch placement following completion of this tender offer in the coming week, which could result in us lowering our issuer credit rating on the group to 'SD', and our issue ratings on the senior secured debt to 'D'. "If the exchange offer does not go through, we will assess the group's creditworthiness based on our view of the likelihood of a further distressed exchange offer." MIRAVET 2020-1: DBRS Gives Provisional BB Rating to Class D Notes ----------------------------------------------------------------- DBRS Ratings GmbH assigned the following provisional ratings to the notes to be issued by Miravet 2020-1 (the Issuer): -- AAA (sf) to the Class A notes -- A (sf) to the Class B notes -- BBB (low) (sf) to the Class C notes -- BB (sf) to the Class D notes -- B (low) (sf) to the Class E notes (collectively with the Class A, B, C, and D notes, the Rated Notes) DBRS Morningstar does not rate the Class X Notes or Class Z Notes. The rating of the Class A notes addresses the timely payment of interest and ultimate payment of principal by the final legal maturity date in 2065. The ratings of the Class B notes, Class C notes, Class D notes, and Class E notes address the ultimate payment of interest and principal. The Class A notes and Class X Notes benefit from an amortizing liquidity reserve fund in case of interest shortfalls, which will be funded at closing with the proceeds from the Class Z Notes and the priority of payments thereafter. The reserve fund will be equal to 3.95% of the outstanding balance of the Class A notes and will be floored at 3% of the Class A notes' initial balance. The excess amounts from the liquidity reserve fund will form part of the available funds and may provide additional credit support. Proceeds from the issuance of the Rated Notes and part of the proceeds from the Class Z Notes will be used to purchase re-performing Spanish residential mortgage loans represented by mortgage participations and mortgage transfer certificates. The mortgage loans were originated by Catalunya Banc, S.A. (CX), Caixa d'Estalvis de Catalunya, Caixa d'Estalvis de Tarragona, and Caixa d'Estalvis de Manresa. The latter three entities were merged into Caixa d'Estalvis de Catalunya, Tarragona i Manresa, which was subsequently transferred to Catalunya Banc, S.A. by virtue of a spin-off on 27 September 2011. During 2011 and 2012, CX received a capital investment from the Fund for Orderly Bank Restructuring (FROB), effectively nationalizing the bank. As part of its later divestment from CX, the FROB sold a portfolio of loans that was transferred to a securitization fund, FTA 2015, Fondo de Titulizacion de Activos (the 2015 Fund) via the issuance of mortgage participation and mortgage transfer certificates. Following the sale of the mortgage loans in 2015, Banco Bilbao Vizcaya Argentaria, S.A. (BBVA; DBRS Morningstar Critical Obligations Rating (COR) of AA (low)/ R-1 (middle) with Stable trends) acquired CX on 24 April 2015. Subsequently, CX was absorbed and merged with BBVA. BBVA will act as Collection Account Bank and Master Servicer with servicing operations delegated to Anticipa Real Estate, S.L.U. (Anticipa or the Servicer). As of August 31, 2020, the current balance of the mortgage portfolio was EUR 627,747,285, with 78.8% restructured loans and 9.3% 90+ days past due delinquencies. The seasoning of the portfolio is 12.4 years. The portfolio currently has about 4.9% loans with prior ranking mortgages in the portfolio and about 1.3% loans with unknown prior ranks. The weighted-average (WA) indexed current loan-to-value (LTV) of the mortgage portfolio is 59.2%, calculated based on loans with known liens as per DBRS Morningstar's methodology. DBRS Morningstar has assessed the historical performance of the mortgage loans and factored restructuring arrangements into its analysis by selecting an underwriting score of 4 in the European RMBS Insight Model. The portfolio is largely concentrated in the autonomous region of Catalonia (73.5% by loan amount). CX, as the originator, was headquartered in Barcelona and focused its lending strategy in Catalonia. The concentration in Catalonia exposes the transaction to risks relating to potential regional house-price fluctuations and poor economic performance, as well as changes in regional laws. In December 2019, a decree law was approved by the Catalan Parliament with the intention to provide measures to improve access to housing in Catalonia and, in particular, to individuals in risk of "residential exclusion". These provisions may affect the Issuer's ability to recover proceeds on the mortgage loans; therefore, DBRS Morningstar has performed additional sensitivity analysis increasing the recovery period of part of the portfolio to assess the impact of the Catalonia law on the provisional ratings. Multicredit loans represent 51% of the pool and permit the borrower to make additional drawdowns of up to EUR 136.9 million. The borrower may not draw down in excess of the amounts stated in the mortgage agreement. Borrower eligibility for additional drawdowns is subject to key conditions. Generally, a borrower must not be in default and restrictions are also placed on the debt-to-income ratios. Once eligibility has been established, drawdown is subject to additional criteria such as caps on the maximum drawdown amounts, maturity restrictions, and LTV caps. Because of the historically low drawdowns seen in the previously rated SRF transactions and strict drawdown conditions in this transaction, DBRS Morningstar did not consider drawdowns in its analysis. However, it stressed the servicing fees to assess the liquidity stress on the available funds. The transaction is exposed to unhedged basis risk with the assets linked to 12-month Euribor (84.2%), Mibor (0.2%), and IRPH (15.3%). The remaining portion (0.3%) pays a fixed rate of interest. The notes are linked to three-month Euribor. The WA interest rate of the portfolio is calculated at 1.3% with the WA margin equal to 1.4%.The Servicer can renegotiate the loan terms within the portfolio, loan modifications are subject to a limit of 5% of the initial balance of the portfolio. The margin can be reduced to 50 basis points (bps) for loans linked to Euribor and -40 bps for loans linked to IRPH. The maturity of the loan cannot be extended beyond 48 months before the maximum maturity date of the mortgage loans (2059). As of July 1, 2016, interest rate floors were no longer applied on loans from borrowers classified as consumers. There are about 97 loans with interest rate floors, amounting to 0.7% of the total portfolio outstanding balance. BBVA is appointed Master Servicer and Collection Account Bank. At or post-closing, the servicer is expected to change from Anticipa to Pepper upon BBVA's approval. If BBVA approves but there is a delay in the servicing transfer after closing, the servicing fees step up depending on the length of delay. However, if BBVA does not approve the transfer, Anticipa will continue servicing the portfolio with a step-up in servicing fees after five years; this step-up payment ranks junior to the repayment of the Rated Notes. BBVA will deposit amounts received that arise from the mortgage loans with the Issuer Account Bank within one business day. Elavon Financial Services DAC (Elavon) is the Issuer Account Bank and Paying Agent for the transaction. DBRS Morningstar privately rates Elavon and has concluded that Elavon meets its minimum criteria to act in such capacity. The transaction contains downgrade provisions relating to the account bank whereby, if Elavon is downgraded below "A", the Issuer will replace the account bank. The downgrade provision is consistent with DBRS Morningstar's criteria for the AAA (sf) rating assigned to the Class A notes in this transaction. To hedge the interest rate risk in the transaction, an interest rate cap with a strike rate at 2.5% will be provided by BNP Paribas (BNP Paribas; rated COR AA (high)/ R-1 (high) with Stable trends by DBRS Morningstar). DBRS Morningstar has concluded that BNP Paribas meets its minimum criteria to act in such capacity. The transaction contains downgrade provisions relating to the interest rate cap provider whereby, if BNP Paribas is downgraded below "A", the Issuer will replace the interest rate cap provider. The downgrade provision is consistent with DBRS Morningstar's criteria for the AAA (sf) rating assigned to the Class A notes in this transaction. DBRS Morningstar based its rating primarily on the following analytical considerations: -- The transaction's capital structure, including the form and sufficiency of available credit enhancement and liquidity provisions. -- The credit quality of the mortgage portfolio and the ability of the servicer to perform collection and resolution activities. DBRS Morningstar calculated probability of default (PD), loss given default (LGD), and expected loss outputs on the mortgage portfolio, which are used as inputs into the cash flow tool. The mortgage portfolio was analyzed in accordance with DBRS Morningstar's "European RMBS Insight Methodology" and "European RMBS Insight: Spanish Addendum" methodologies. -- The transaction's ability to withstand stressed cash flow assumptions and repay investors in accordance with the Terms and Conditions of the notes. The transaction structure was analyzed using Intex Dealmaker. -- The consistency of the transaction's legal structure with DBRS Morningstar's "Legal Criteria for European Structured Finance Transactions" and the presence of legal opinions addressing the assignment of the assets to the Issuer. The Coronavirus Disease (COVID-19) and the resulting isolation measures have caused an economic contraction, leading to sharp increases in unemployment rates and income reductions for many borrowers. DBRS Morningstar anticipates that payment holidays and delinquencies may increase in the coming months for many structured finance transactions, some meaningfully. The ratings are based on additional analysis and, where appropriate, additional stresses to expected performance as a result of the global efforts to contain the spread of the coronavirus. The DBRS Morningstar Sovereign group released on April 16, 2020, a set of macroeconomic scenarios for the 2020-22 period in select economies. These scenarios were last updated on September 10, 2020. Notes: All figures are in Euros unless otherwise noted. =========================== U N I T E D K I N G D O M =========================== BOPARAN HOLDINGS: Moody's Upgrades CFR to B3, Outlook Stable ------------------------------------------------------------ Moody's Investors Service upgraded Boparan Holdings Limited's corporate family rating (CFR) to B3 from Caa1 and probability of default rating (PDR) to B3-PD from Caa1-PD. Concurrently, Moody's has assigned a B3 instrument ratings on the proposed GBP475 million senior secured notes due 2025 to be issued by Boparan Finance plc. The ratings of the company's existing euro and pound notes will be withdrawn upon refinancing. The outlook remains stable. "Today's action reflects significant profit improvements over the last few quarters, which we expect to continue in the next 12-18 months as well as the beneficial impact on leverage resulting from the lower debt quantum needed after factoring in use of the Fox disposal proceeds. The planned refinancing also removes the maturity risk for the existing notes that are coming due in July 2021" -- says Egor Nikishin, a Moody's analyst. RATINGS RATIONALE Boparan recorded like-for-like quarterly EBITDA (pro-forma for the Fox disposal) of GBP34 million in the fourth quarter of the fiscal year ending July 2020, fiscal 2020, up from the trough of GBP11 million in the second quarter of fiscal 2019, making a fourth quarter of growth in a row. The improvement was driven by the company's core poultry business turnaround. Over the last several years Boparan has undertaken a number of measures to enhance profitability and cash flow generation including improved product mix, automation, labour cost reduction and better working capital management. However, despite the recent improvement, the company's like-for-like EBITDA margin remains low at 4.3% as of July 2020, which reflects the highly commoditised nature of the poultry industry. In early November Boparan announced closing of its Fox Biscuits business disposal for GBP246 million which helped the company to strengthen its liquidity position and allowed it to reduce net leverage ahead of the planned refinancing. Although the company's business diversification has somewhat reduced, the disposal allows Boparan to focus on its key poultry business in line with the previously announced strategy. Moody's estimates the company's gross leverage, measured as Moody's-adjusted debt to EBITDA, was around 8.5x at the end of its fiscal 2020. The lower debt quantum required in the refinancing, thanks to the use of the Fox disposal proceeds, means leverage will improve to around 7x pro-forma for the planned refinancing. Moody's expects the leverage to reduce further towards 6x in fiscal 2021 and the rating agency understands that Boparan is committed to further deleveraging over the medium term. The rating action assumes that the planned refinancing will be successful and hence will remove the maturity risk of the existing 2021 notes. The company's free cash flow (FCF) - calculated after interest expense, taxes, working capital changes and capex - has historically been negative, due to declining margins, restructuring costs which were driven by redundancies on its closed factories and significant investments in the turnaround plan. In addition, the company contributes around GBP20-25 million per annum to the pension deficit. However, Moody's expects Boparan's FCF to turn positive from fiscal 2021 on the back of increasing margins and phasing out of restructuring costs. As the coronavirus pandemic spread and consumers started panic buying Boparan experienced an uplift in demand for its UK poultry and biscuits divisions. However, the company's EU poultry division, which largely supplies the foodservice industry has seen a reduction in volumes and demand for ready meals has also decreased. Moreover, Moody's expects that the company will have to continue investing in health and safety to ensure uninterrupted production at its facilities. Overall, the company's management estimated approximately GBP14 million negative impact on EBITDA in fiscal 2020 due to reduction in volumes for foodservice and extra costs related to health and safety and factory closures. ENVIRONMENTAL, SOCIAL AND GOVERNANCE The poultry sector is exposed to avian flu outbreaks, campylobacter and food scares. Historically Boparan's production was disrupted by outbreaks of this nature which also resulted in the need for additional investments to ensure health and safety. The current coronavirus pandemic also adds extra challenges to the business as Boparan needs to maximise the output to meet the increased demand while ensuring social distancing measures are followed and all employees are safe. In recent months separate localised coronavirus outbreaks have led the company to temporarily close production facilities in Wales and Scotland for two weeks periods in each case. The company's owner, Ranjit Boparan, is directly involved in running the business and in the past has held several different positions within the group, including CEO, President and, most recently, a managing director for the core Poultry division. Moody's also notes several changes in the company's board of directors in the last 18 months, including the appointment of Richard Pennycook, the former CEO of Co-op Group, as new Chairman in January 2020. LIQUIDITY The company's liquidity is adequate, supported by GBP47 million cash on its balance sheet pro-forma for the refinancing and new GBP80 million super senior revolving credit facility (RCF), which is expected to be undrawn at closing. The notes are covenant-lite while the RCF benefits from a minimum EBITDA springing covenant of GBP75 million which is expected to continue to have an adequate headroom. STRUCTURAL CONSIDERATIONS Pro-forma for the refinancing the group's debt capital structure consists of GBP475 million of senior secured notes due July 2025 rated in line with the CFR at B3 and a GBP80 million super senior RCF due in January 2025 in place at Boparan Holdings Limited. The notes and the RCF are issued on a senior pari passu basis, secured with the floating charge on the UK poultry business and guaranteed by operating subsidiaries accounting in aggregate for around 90% of EBITDA as of the issuance date. However, the RCF benefits from a first priority on enforcement pursuant to the intercreditor agreement, and hence is effectively senior to all the group's other debt including the notes. RATIONALE FOR STABLE OUTLOOK The stable outlook reflects Moody's expectation that Boparan will continue to successfully execute its turnaround plan, further improving its profitability and cash flow generation. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded in the event of sustained improvement in operating performance, leading to (1) the Moody's-adjusted EBITA/ Interest improving to 1.5x, (2) the Moody's-adjusted debt to EBITDA reducing sustainably below 6.0x, and (3) an improved liquidity profile including positive free cash flow generation after pension contributions Downward pressure could materialise if (1) any liquidity pressure arises, including inability to refinance its debt ahead of maturity; (2) Moody's-adjusted debt to EBITDA is sustainably above 7.0x; (3) a Moody's-adjusted EBITA interest coverage is sustainably below 1x. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Protein and Agriculture published in May 2019. PROFILE Boparan Holdings Limited is the parent holding company of 2 Sisters Food Group, one of UK's largest food manufacturers with operations in poultry and ready meals among other things. The group reported revenues of GBP2.7 billion in its fiscal 2020. BOPORAN HOLDINGS: Fitch Assigns B-(EXP) LT IDR, Outlook Stable -------------------------------------------------------------- Fitch Ratings has assigned Boparan Holdings Limited a Long-Term Foreign-Currency Issuer Default Rating (IDR) of 'B-(EXP)' with Stable Outlook. Fitch also has assigned a 'B(EXP)'/RR3 rating to the planned GBP475 million senior secured notes due in 2025 to be issued by Boparan Finance plc. Final ratings are contingent upon the receipt of final documentation conforming materially to information already received. The 'B-(EXP)' rating reflects the group's strong positions with relatively large scale within the UK poultry market, with some diversification into growing and more profitable ready meals segment. Fitch also factors the benefits from the planned reduction in Boparan's total debt with proceeds from the recent Fox's biscuits divestment and its expectations of a stabilisation of EBITDA margin at a higher than historical level of 4.8%-5.0% from FY22 (ending July 2022). This is balanced by high starting leverage and by weak profitability compared with global protein processors, with projected improvements in profitability still remaining subject to execution and external risks, including COVID-19 and Brexit impacts. The expected ratings assume the planned repayment of more than GBP200 million of debt out of Boparan's current GBP330 million and EUR300 million senior unsecured notes, GBP35 million super senior facility and GBP80 million revolving credit facility (RCF, GBP78 million drawn as of June 2020) due in 2021 and refinancing of the rest with a new GBP80 million RCF and GBP475 million senior secured notes will proceed as planned. KEY RATING DRIVERS Profitability Turnaround Plans: Fitch expects Boparan's latest operational turnaround plan, which started in 2019, to generate improvements in profitability over FY20-FY24. The company is demonstrating good momentum in its turnaround plan with subsequent quarterly improvements to 4Q20. Fitch projects the EBITDA margin to increase to 4.8% in FY20 from 3.2% in FY19 and trend toward 5% by FY23 due to a mix of central cost reduction, operating efficiencies and commercial initiatives. In its view, this will bring the operating margin for the company's core business closer to industry averages and close the gap with competitors, such as Moy Park in the UK. Divestment of Fox's Biscuits: In October 2020, Boparan divested its Fox's biscuits business for net cash proceeds of GBP235 million before pension contributions. The company plans to use most of the proceeds for debt repayment, which Fitch estimates will lead to debt reducing toward GBP500 million in FY21 from an estimated GBP713 million at end FY20. This is likely to drive a reduction in funds from operations (FFO) gross leverage to 6.8x in FY21 from 8.2x estimated at end-FY20 and 11.5x in FY19. FY21 EBITDA Under Pressure. Fitch cautiously assumes EBITDA margin to decline to 4.2% in FY21, pressured by the risk of a repetition of similar events to those that led to a temporary pandemic-related closures of a production site in August 2020, additional operating costs and scope for weaker performance of some key accounts both in retail and foodservice channels. Fitch expects temporary pressure on Boparan's ready meals sales from the COVID-19 pandemic in FY20-21. In addition, Fitch sees a degree of execution risk in the turnaround plan along with uncertainty around Brexit and future market conditions in the challenging European and UK poultry markets. These aspects currently constrain the rating at 'B-'. Lower profitability is one of the key factors for FFO leverage remaining above its positive sensitivity of 6.0x in FY21. Profitability to Drive Deleveraging: Once the EBITDA margin stabilises at around 4.8%-5.0%, which Fitch expects in FY22-FY24, FFO gross leverage could decline below its positive sensitivity of 6.0x, building momentum for an upgrade. Due to its projection of neutral free cash flow (FCF), Fitch estimates leverage should remain in the range of 5.7x to 6.0x in FY22-24, with a slight improvement mainly coming from its assumption of progress in Boparan's turnaround plan and consequent improvement in EBITDA. Neutral FCF: Fitch projects FCF will return to neutral territory by FY22, following several years in strong negative territory, which eroded the group's liquidity position and increased leverage. Fitch anticipates that cash flow improvement will result from enhanced profitability, moderate capital expenditure of around 2% of revenues, as well as a lower interest burden after repaying part of Boparan's debt with the proceeds from Fox's biscuits divestment. Nevertheless, Fitch projects the FCF margin will remain below 1% of sales in the medium term, in light of pension contribution costs of GBP22 million to GBP27 million per year as well as potential outflows to fund working capital needs. Leading UK Poultry Player: Boparan has a leading position in the UK poultry market (2019: 31% market share) stemming from its large-scale operations in the country and established relationships with key customers, including grocery chains, the food service channel and packaged food producers. The company also benefits from an integrated supply chain via its joint venture with P D Hook, the UK's largest supplier of broiler chicks, which adds to the stability of livestock supply and sufficient processing capacity utilisation. Limited Diversification: Fitch estimates Boparan's protein business contributed 72% to its FY20 revenue, with poultry the core animal protein type processed. After divestments of the biscuits business in October 2020, product diversification beyond poultry is now limited to the ready chilled meals category. Generally, Boparan is exposed to key customers concentration risks in poultry and ready meals in the UK, particularly with sales to Marks and Spencer Group plc (BB+/Stable) representing more than 20% of the group's revenue in FY19. In terms of geographical diversification, Boparan also has operations in the EU (FY19: 23% of group's revenue), as it is the second-largest poultry producer in the Netherlands and among the top five in Poland, the largest poultry producing country in the EU. Favourable Market Fundamentals: Boparan operates in food categories that Fitch expects to benefit from good fundamental growth prospects. Fitch assumes resilient low-to-mid single digit growth in poultry consumption, which is the fastest growing protein globally due to its lower cost compared with other proteins, as well as consumers' perception that it represents a healthier option than beef and pork. DERIVATION SUMMARY Boparan's credit profile is constrained by high starting leverage and its modest size, in terms of EBITDAR below USD200 million, the median for the 'b' rating category in Fitch's Rating Navigator for protein companies, as well as by its regional focus in the UK with only moderate diversification in the EU. In addition, the company has lower profitability than the majority of peers, such as JBS S.A. (BB-/Stable) and Pilgrim's Pride Corporation (BB+/Stable), which in its view is explained by a limited vertical integration and some operating inefficiencies which the group is addressing. Boparan has also smaller EBITDA and weaker financial metrics and veterinary standards track record compared with vertically integrated Ukrainian poultry producer MHP S.A. (B+/Stable). Nevertheless, Fitch expects the turnaround plan to result in improved profitability more in line with the median for 'B' category companies over the next three years. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer: - Poultry and Meals revenue to increase by an average annual increase of 2.0% over the following three years. - EBITDA margin to increase from 3.4% expected in FY19 to 4.9% by FY23 - Annual capex at GBP48 million-GBP50 million in FY21-FY23 - No M&A or dividend payments over FY20-FY23 - Annual cash pension contribution of GBP20 million to GBP25 million in FY20-FY23 KEY RECOVERY RATING ASSUMPTIONS: The recovery analysis assumes that Boparan would be reorganised as a going-concern (GC) in bankruptcy rather than liquidated. Fitch has assumed a 10% administrative claim. Boparan's GC EBITDA is based on expected FY20 pro-forma EBITDA excluding Fox's Biscuits, discounted by 10% to reflect Fitch's view of a sustainable, post-reorganisation EBITDA level, upon which Fitch bases the enterprise valuation. This level of GC EBITDA equates to slightly higher EBITDA margins relative to FY18-FY19 when Boparan was under intense financial and cash flows stress. An enterprise value/EBITDA multiple of 4.5x is used to calculate a post-reorganisation valuation and reflects a mid-cycle multiple consistent with other protein business peers particularly in terms of market shares and brand. After deducting 10% for administrative claims, its principal waterfall analysis generated a ranked recovery in the 'RR3' band for the planned GBP475 million senior secured notes ranking after a GBP80 million of committed RCF which Fitch assumes would be fully drawn in the event of distress. This indicates a 'B'/'RR3' instrument rating for the senior secured debt with an output percentage based on current metrics and assumptions at 63%. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Positive momentum from the operational turnaround, resulting in sustained EBITDA margin improvement above 5% and positive FCF; - FFO leverage below 6.0x on a sustained basis; - FFO interest coverage of above 2x; - Sufficient liquidity to cover all operational needs (working capital and capex) with limited intra-year drawings under the RCF. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Renewed operating underperformance leading to EBITDA margin below 3.5% with negative FCF eroding the liquidity position; - FFO leverage remaining above 7x on a sustained basis; - FFO interest coverage of below 1.5x. ESG Factors The highest level of ESG credit relevance, if present, is a score of 3. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity(ies), either due to their nature or to the way in which they are being managed by the entity(ies). LIQUIDITY AND DEBT STRUCTURE Adequate Opening Liquidity: GBP65 million pro-forma liquidity position post refinancing, along with the new GBP80 million undrawn RCF, gives the company sufficient liquidity to finance operations. Fitch expects neutral to slightly negative FCF over FY21-23, leading to an overall stable liquidity profile over the rating horizon. Following the refinancing, main financial debt will not mature before FY25, leading to a manageable refinancing risk over the next four years. In addition to the refinancing, improved liquidity position in 2020 is also a result of over GBP300 million proceeds from the disposal of Fox's biscuits and Manton Wood sandwich businesses. BRITISH AIRWAYS: S&P Affirms 'BB' ICR, Outlook Negative ------------------------------------------------------- S&P Global Ratings affirmed its 'BB' issuer credit rating on British Airways PLC (BA), following the same rating action on its parent IAG. At the same time, S&P affirmed BA's SACP at 'bb-'. S&P said, "We are also affirming our 'A (sf)' issue rating on BA's 2013-1 class A Enhanced Equipment Trust Certificates (EETC) and our 'A+ (sf)' issue ratings on BA's 2019-1 class AA EETCs. We are lowering our issue ratings on BA's 2019-1 class A EETCs to 'BBB- (sf)' from 'BBB (sf)'." The negative outlook mirrors that on IAG given the airline's integral relationship with the group. A spike in COVID-19 cases, triggering a new round of lockdowns and government-imposed travel restrictions, continues to weigh on passenger demand and confidence. There is considerable uncertainty regarding the overall outlook for air travel; however, we now believe that 2020 traffic as measured by revenue passenger kilometers (RPKs) and revenues is likely to be 65%-80% lower than in 2019 (compared with our previous estimate of 60%-70% lower). S&P said, "We see a weak recovery in 2021, with traffic and revenues still 40%-60% lower than in 2019 (compared with our previous estimate of 30%-40% lower). This estimate incorporates the recent consensus among health experts that a vaccine will be widely available by the middle of 2021. We also lowered our expectations for 2022, to 20%-30% below 2019 levels (compared with 15%-20% previously)." S&P Global Ratings believes there remains a high degree of uncertainty about the evolution of the coronavirus pandemic. Reports that at least one experimental vaccine is highly effective and might gain initial approval by the end of the year are promising, but this is merely the first step toward a return to social and economic normality; equally critical is the widespread availability of effective immunization, which could come by the middle of next year. S&P said, "We use this assumption in assessing the economic and credit implications associated with the pandemic. As the situation evolves, we will update our assumptions and estimates accordingly." S&P said, "We anticipate a slow recovery of long-haul and corporate bookings, which are typically BA's most-profitable segments. Under normal operating conditions, BA deploys about 80% of its capacity on long-haul international flights. Travel, entry, and quarantine restrictions have been in place between the U.K. and the U.S. since March this year, which has had a significant impact on BA's key transatlantic network while undermining its revenue generation and profitability, compared to 2019. BA cut its capacity (available seat kilometres [ASK]) by 95% in the second quarter when the U.K. was under lockdown. Although its capacity has recovered to almost 20% in the third quarter, we expect full year ASK to be about 70% below 2019 levels. Combined with soft load factors of below 50% since the pandemic outbreak, passenger numbers for 2020 will be likely more depressed than we previously forecast. We have incorporated this into our base case." S&P forecasts significantly negative EBITDA, substantial although reducing cash burn, and new debt accumulation in 2020, all combining to weaken BA's credit metrics. Although BA is cutting costs, executing operating-efficiency initiatives, and slashing capacity, among other measures, and should benefit from a lower fuel bill we think these factors will be insufficient to counterbalance the collapse in revenue in 2020. The airline is reducing the size of its operations including a target to cut employee expenses by 30%, mainly through voluntary redundancies. The airline has already furloughed its staff through government employee support schemes--now extended to March 2021. BA has also reduced salaries, including those of management and the board. It plans to reduce its route network in noncore markets and adjust its BA CityFlyer capacity in line with the lower demand for business travel. S&P said, "Although BA's steep capacity cut will reduce its fuel bill, it also resulted in an over-hedged fuel volume position this year. Together with the sharp decline in fuel prices, this means BA faces significant fuel-hedging losses, which we treat as an operating expense and which will depress its negative EBITDA even further this year. We forecast that BA's S&P Global Ratings-adjusted EBITDA this year will be about negative GBP2 billion (weaker than our previous forecast of negative GBP1.0 billion-GBP1.5 billion), compared with its positive adjusted EBITDA of GBP3.1 billion in 2019. "The situation will likely be aggravated by high working capital needs because of ongoing ticket refunds and a very gradual recovery in bookings, but we believe that BA could counterbalance this by actively managing its receivables. It has also reduced capital expenditure (capex) and retained access to external funding since the pandemic began. It issued a GBP300 million COVID corporate financing facility (CCFF) in April and drew a $750 million secured bridge loan in May. Notwithstanding these measures, we still forecast OCF to be significantly negative in 2020 and adjusted debt to rise to about GBP6.0 billion-GBP6.5 billion by end-2020 (from GBP3.7 billion in 2019) and remain at this level in 2021. "We assume a significant rebound in air traffic in second-half 2021. This is underpinned by our current view that an effective vaccine for COVID-19 will become widely available by the middle of next year and help to lessen or lift travel restrictions and restore passenger confidence in flying. We envisage BA's operating performance improving in 2021, albeit slower than we projected in September because of our slashed air traffic assumptions--with adjusted EBITDA rising to GBP0.8 billion-GBP1.0 billion (weaker than our previous forecast GBP1.4 billion-GBP1.5 billion). Our revised base-case still supports our forecast that credit measures will rebound, with adjusted funds from operations (FFO) to debt near 20% in 2022, but still well below 71% in 2019. However, lack of clarity regarding the pandemic and recessionary trends and the effect on passenger volumes adds significant uncertainty to our forecasts. "We expect that BA will rely on liquidity support from IAG as the cash burn continues, although reducing due to extensive restructuring and cost-saving measures. BA is the largest airline owned by International Consolidated Airlines Group, S.A. (IAG). We consider that IAG will retain the financial capacity and be willing to provide liquidity support to BA as the cash burn continues. Based on our forecast, we estimate that BA would require over GBP1 billion in liquidity support from IAG in 2021. We view IAG as one of the financially strongest groups in the airline industry, with total liquidity of EUR6.1 billion as of Sept. 30, 2020, as adjusted by S&P Global Ratings. IAG's liquidity was further boosted by EUR2.74 billion in gross proceeds from the capital increase IAG completed in October 2020, to a pro forma total liquidity position of about EUR8.85 billion, as adjusted by S&P Global Ratings. "Our outlook on BA is driven by that on IAG, because of the airline's integral relationship with the group. "The negative outlook reflects our view that IAG's financial metrics will be under considerable pressure for the next few quarters due to difficult operating conditions. In addition, there is high uncertainty regarding the pandemic and economic recession, and their impact on air traffic demand and IAG's financial position and liquidity. "We would lower the rating if the recovery of passenger demand is further delayed or appears to be structurally weaker than expected, placing additional pressure on IAG's credit metrics; and if we expect that adjusted FFO to debt won't recover to about 12% in 2021 and improve further in 2022. This could occur if the pandemic cannot be contained, resulting in prolonged lockdowns and travel restrictions, or if passengers remain reluctant to book flights. "While we currently don't see liquidity as a near-term risk, we would lower the rating if air traffic does not recover in line with our expectations, external funding becomes unavailable for IAG, and management's proactive efforts to adjust operating costs and capital investments are insufficient to preserve at least adequate liquidity, such that liquidity sources exceed uses by more than 1.2x in the coming 12 months. "We could also lower the rating if industry fundamentals weaken significantly for a prolonged period, impairing IAG's competitive position and profitability. "To revise the outlook to stable, we would need to be more certain that demand is normalizing and the recovery is robust enough to enable IAG to partly restore its financial strength, such that adjusted FFO to debt increases sustainably to at least 12%, alongside a stable liquidity position. Prudent capital spending and shareholder returns are also necessary for a return to a stable outlook." INTERNATIONAL CONSOLIDATED AIRLINES: S&P Affirms 'BB' Rating ------------------------------------------------------------ S&P Global Ratings affirmed its 'BB' ratings on International Consolidated Airlines Group S.A. (IAG) and its unsecured debt. The negative outlook reflects S&P's view that IAG's financial metrics will be under considerable pressure in coming quarters due to sluggish trading conditions. Additionally, there is high uncertainty regarding the pandemic and economic recession, and their impact on air traffic demand and IAG's financial position and liquidity. A spike in COVID-19 cases, triggering a new round of lockdowns and travel restrictions imposed by national governments continues to weigh on passenger demand and confidence. S&P said, "There is considerable uncertainty regarding the overall outlook for air travel; however, we now believe that 2020 traffic as measured by revenue passenger kilometers (RPKs) and revenues are likely to be 65%-80% lower than in 2019 (compared with our previous estimate of 60%-70% lower). We see a weak recovery in 2021, with traffic and revenues still 40%-60% lower than in 2019 (compared with our previous estimate of 30%-40% lower). This estimate incorporates the recent consensus among health experts that a vaccine will be widely available by the middle of 2021. We also lowered our expectations for 2022, to 20%-30% below 2019 levels (compared with 15%-20% previously)." IAG cut its flying network in response to the gloomy demand prospects for the for the next few quarters. The group lowered its planned capacity (available seat kilometers [ASK]) guidance for the fourth quarter of 2020 to a maximum of 30% of the 2019 ASK, from 54% in early September, resulting in a full-year ASK of at most 35% of 2019 levels. S&P said, "Combined with soft-load factors below 50% since the pandemic outbreak, passenger numbers for 2020 will be likely more depressed than we previously forecast, which we incorporated in our base case. IAG's bookings across Europe started to recover in June, albeit from a nearly complete halt during April and May, but flattened in July and are being hurt by the renewed travel restrictions since September. Ongoing bumpy traffic conditions are likely for the next quarters, depending on local travel constraints, including quarantine rules or mandatory testing for COVID-19, in particular in IAG's home markets. Furthermore, we anticipate a delayed and sluggish recovery of international long-haul bookings to North- and South America, as well as business and corporate traffic, which typically are IAG's most profitable segments." S&P said, "We expect IAG will report a substantial OCF deficit and accumulate new debt in 2020 while its credit metrics remain under considerable pressure. Although IAG is cutting costs, executing operating-efficiency initiatives, and drastically reducing capacity, among other measures, and should benefit from a lower fuel bill--which S&P Global Ratings forecasts at EUR3.6 billion-EUR3.8 billion in 2020 (versus EUR6.0 billion in 2019)--we think these factors will be insufficient to counterbalance the collapse in revenue in 2020. Our fuel-cost forecast includes losses from ineffective fuel hedges (EUR1.6 billion in the first nine months of 2020), which we treat as operating expenses caused by lower fuel prices, and an over-hedged fuel position after a significant cut in capacity. Based on the negative EBITDA (after exceptional items) of EUR3.62 billion reported for the first nine months of 2020, we estimate that IAG's adjusted EBITDA will exceed the negative EUR4.0 billion this year, compared with a strong EUR5.4 billion in 2019. This, aggravated by working capital needs, which could be material because of potential ongoing ticket refunds and sluggish forward bookings, will result in significantly negative OCF and rising debt in 2020. We forecast IAG's S&P Global Ratings-adjusted debt will reach EUR12.0 billion-EUR12.5 billion by year-end 2020 from about EUR7.4 billion in 2019." IAG's efforts to contain costs, bolster its capital structure, and safeguard cash should offset the slower rebound in passenger volumes, contribute to the group's financial recovery in 2021, and help to preserve the 'BB' rating. The surge in adjusted debt will be hindered to some extent by delays or cuts to capital expenditure (capex) for new planes and other discretionary projects (total spending up to EUR2.7 billion in 2020 down from the EUR4.2 billion scheduled before the pandemic), and a capital increase of EUR2.74 billion in gross proceeds completed in October. S&P said, "Furthermore, we envisage IAG's operating performance improving in 2021, albeit at slower pace than we projected in September because of our slashed air traffic assumptions, with adjusted EBITDA rising to EUR2.0 billion-EUR2.2 billion (September forecast EUR2.8 billion-EUR2.9 billion). We assume a significant rebound in air traffic in second-half 2021, underpinned by our current view that an effective vaccine for COVID-19 will become widely available by the middle of next year and help to lessen or lift travel restrictions and restore passenger confidence in flying. Our revised base case still supports our view that adjusted funds from operations (FFO) to debt will rebound to the rating-commensurate level, with just about 12% in 2021 (September forecast 15%-20%), improving further to about 20% in 2022, but staying far below the 2019 level of 65%. However, low visibility regarding the pandemic, recessionary trends and their impact on passenger volumes adds a significant degree of uncertainty to our forecasts." IAG started 2020 with more financial leeway and a larger liquidity buffer than many peers and was able to maintain strong liquidity thus far. S&P said, "We continue to view IAG as one of the financially strongest groups in the airline industry, with total liquidity of EUR6.1 billion as of Sept. 30, 2020, comprising EUR5.0 billion of cash and deposits and EUR1.1 billion of undrawn committed general and aircraft facilities maturing beyond 12 months, as adjusted by S&P Global Ratings. Liquidity received another boost from EUR2.74 billion in gross proceeds from the capital increase IAG completed in October 2020, to a pro forma total liquidity position of about EUR8.85 billion. IAG demonstrates its proactive treasury management, continued access to capital markets, and ability to safeguard liquidity, underpinned by its most recent equity raising. We also acknowledge IAG's determination and flexibility to defer capex for new planes and suspend shareholder remuneration, with a focus on preserving cash and restoring its credit measures." S&P said, "The negative outlook reflects our view that IAG's financial metrics will be under considerable pressure for the next few quarters due to difficult operating conditions. In addition, there is high uncertainty regarding the pandemic and economic recession, and their impact on air traffic demand and IAG's financial position and liquidity. "We would lower the rating if the recovery of passenger demand is further delayed or appears to be structurally weaker than expected, placing additional pressure on IAG's credit metrics; and if we expect that adjusted FFO to debt won't recover to about 12% in 2021 and improve further in 2022. This could occur if the pandemic cannot be contained, resulting in prolonged lockdowns and travel restrictions, or if passengers remain reluctant to book flights. "While we currently don't see liquidity as a near-term risk, we would lower the rating if air traffic does not recover in line with our expectations, external funding becomes unavailable for IAG, and management's proactive efforts to adjust operating costs and capital investments are insufficient to preserve at least adequate liquidity, such that liquidity sources exceed uses by more than 1.2x in the coming 12 months. "We could also lower the rating if industry fundamentals weaken significantly for a prolonged period, impairing IAG's competitive position and profitability. "To revise the outlook to stable, we would need to be more certain that demand is normalizing and the recovery is robust enough to enable IAG to partly restore its financial strength, such that adjusted FFO to debt increases sustainably to at least 12%, alongside a stable liquidity position. Prudent capital spending and shareholder returns are also necessary for a return to a stable outlook." MARKS AND SPENCER: Fitch Affirms IDR and Sr. Unsec. Rating at BB+ ----------------------------------------------------------------- Fitch Ratings has affirmed Marks and Spencer Group Plc's (M&S) Issuer Default Rating (IDR) and senior unsecured rating at 'BB+' and Short-Term IDR at 'B'. The Outlook is Stable. The affirmation reflects M&S's well-established position in clothing and food, improving omni-channel capabilities, notably in food, and deleveraging capacity supported by a prudent financial policy. This is balanced against a prolonged period of operating weakness that has been exacerbated by the coronavirus pandemic, leading to credit metrics below levels consistent with an investment grade rating in the medium term. The Stable Outlook reflects M&S's adequate liquidity to withstand the current period of business disruptions, resilient performance in the food division, and cost-cutting measures to adapt to the highly competitive environment that will remain post pandemic. KEY RATING DRIVERS Coronavirus Weighs on Margin: Fitch anticipates M&S's EBIT margin to fall towards breakeven level in FY21 (to March 2021) due to UK lockdowns. Cost-saving measures, including a reduction in the number of staff and marketing costs, along with the UK government support measures on business rates has enabled the company to preserve liquidity. Nevertheless, Fitch expects the margin deterioration seen in FY16-FY19 to persist, with the EBIT margin remaining below 5% (pre-IFRS 16), a profitability profile in line with a 'BB+' rating, also reflecting the business mix biased toward food offering. Disciplined Financial Policy: M&S demonstrated good financial discipline by suspending the final dividend in 2020, following the decision in 2019 to reset the dividend to 40% below previous years. This will help save about GBP130 million in FY21, which along with a reduction of capex, supports the company's financial flexibility. Fitch does not forecast any meaningful shareholder-friendly actions, including dividends being reinstated to the detriment of the liquidity position. Elevated Leverage in FY21: Fitch anticipates funds from operations (FFO) net adjusted leverage to peak at 5.4x in FY21 from 3.8x in FY20 on the back of EBIT margin deterioration, exhausting the current rating headroom. However, Fitch expects net leverage to return below its negative sensitivity, set at 4.0x, by FY22 trending towards 3.5x by FY23, led by sales and profitability recovery. Fitch forecasts deleveraging will be facilitated by its assumption that gross debt, excluding leases, will reduce by GBP200 million over FY20-FY23. Ocado JV Critical for Omnichannel: M&S launched its food product range online with Ocado (operational from September 1, 2020) supported by the introduction of new product lines. Fitch views this channel as vital for M&S, both to withstand fierce competition and to maintain its relevance as the shift in customer shopping preferences towards online has accelerated since the first UK lockdown, even though sales of M&S products via Ocado.com will not increase revenues at the group level since they are not recognised as such in M&S's accounts. In addition, while Fitch does not expect sizeable net cash inflows from the JV during the next 24 months due to the planned investments in expanding capacity, the JV has unlocked the online channel for M&S food products at a crucial time, providing format diversification and a stronger competitive position. Food Division Remains Resilient: The food division experienced flat revenues in 1H21 (fiscal year) despite overall UK grocery sales performing strongly in the same period. The closure of hospitality sites (cafes and food-to-go) offset the strong (6%+) LFL sales in the rest of the division, a trading dynamic that is likely to persist for the rest of the financial year. Looking beyond FY21, Fitch expects the food division to grow in the low single digits reflecting food inflation and the resumption of comparatively normal operating conditions for hospitality sites. C&H Recovery Less Certain: The contraction in clothing and home (C&H) division sales for 1H21 was in line with its prior expectations given the extent of the lockdowns, and Fitch still retains its assumption that C&H sales for FY21 will be down by at least 25% yoy. More positively, online sales were up substantially in the period and M&S have built on this momentum through the establishment of the "MS2" division, which seeks to accelerate M&S's online clothing presence, driving 40% of clothing sales through the website within the next three years. The recovery in the C&H division back towards pre-pandemic levels will remain challenging, based on its expectation of weaker consumer sentiment in FY22, and considering the division's historical performance in a highly competitive UK sector now characterised by even higher levels of online competition. Strong Position to Defend: M&S benefits from strong brand recognition in food and a well-established market position in clothing. M&S Food is recognised for its excellent quality by UK customers and Fitch expects the group to continue adapting its product offer to changing customer demands and towards more affordable products for families. In addition, M&S remains a market leader in the GBP35 billion UK clothing market, despite suffering from continued market shares losses. DERIVATION SUMMARY M&S is rated in line with Spanish retailer El Corte Ingles S.A. (BB+/Negative), reflecting similar scale, diversified offer and similar multi-channel capabilities. M&S is slightly less exposed to discretionary spending, but more vulnerable to online competition. Both companies are expected to experience elevated levels of leverage for their 'BB+' rating in the near term, with metrics broadly converging with each other and the rating level in 2022. M&S is rated one notch higher than US department stores Macy's Inc. (BB/Negative) and Dillard's, Inc (BB/Negative), Fitch expects both to be more affected by the downturn in discretionary spending despite Macy's larger scale and stronger financial profile prior to the pandemic. KEY ASSUMPTIONS Fitch's Key assumptions for the issuer include: Revenue declining by 8 to 9% in FY21, on the back of a sharp decline of C&H sales. Revenue to rebound towards FY20's level of sales (GBP10 billion) by FY23; - EBIT margin contracting towards breakeven level in FY21 from 4.5% in FY20. EBIT margin to recovering towards 4.0% in FY22, and above in FY23; - Capex reduced to GBP200 million in FY21, returning towards GBP400 million in FY22 and FY23; - Strong working capital outflows in FY21, mainly due to inventories related to the C&H business; - No dividends paid in FY21. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Improving like-for-like sales in both Food and C&H on the back of a successful turnaround plan, without impacting profitability - Stabilisation of FFO margin above 8% - FFO fixed charge cover above 3.0x on a sustained basis - FFO adjusted net leverage below 3.5x Factors that could, individually or collectively, lead to negative rating action/downgrade: - Prolonged decline in like-for-like sales post FY21, together with market share losses - FFO margin declining below 6% on a sustained basis - FFO Fixed charge cover below 2.5x on a sustained basis - FFO adjusted net leverage above 4.0x beyond March 2022 LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: As of September 28, 2020, M&S's liquidity was satisfactory, with GBP1.1 billion of available undrawn committed revolving facilities and GBP211million of available cash and cash equivalents; more than sufficient to cover the short-term liabilities due in FY21. In addition, Fitch expects the company to maintain adequate liquidity during the current business disruption period thanks to the UK government measures, including business rate relief and deferred VAT payment, and up to GBP300 million of additional short-term financing available if needed from the Bank of England's Covid Corporate Financing Facility. REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING The principal sources of information used in the analysis are described in the Applicable Criteria. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. NEWDAY FUNDING VFN-F1 V2: Fitch Affirms Bsf Rating on Cl. F Notes ----------------------------------------------------------------- Fitch Ratings has taken the following rating actions on NewDay Funding's (Funding) series VFN F1 V2 notes following an amendment. RATING ACTIONS NewDay Funding VFN-F1 V2 Class A; LT BBBsf Downgrade; previously AAAsf VFN-F1 V2 Class B; LT WDsf Withdrawn; previously AAsf VFN-F1 V2 Class C; LT WDsf Withdrawn; previously Asf VFN-F1 V2 Class D; LT WDsf Withdrawn; previously BBBsf VFN-F1 V2 Class E; LT BBsf Affirmed; previously BBsf VFN-F1 V2 Class F; LT Bsf Affirmed; previously Bsf TRANSACTION SUMMARY Funding's notes are collateralised by a pool of non-prime UK credit card receivables. Funding's series VFN F1 V2 notes provide funding flexibility, which is necessary for credit card trusts. Under Funding's amendment, the commitment of the class A notes in the relevant series increased to GBP150million while its credit enhancement reduced to 16.3 from 49.8%. Additionally, the class B, C and D notes were cancelled while class E credit enhancement reduced to 8.8% from 8.9%. The amendment allows for the note commitment amounts and margins to vary according to a specified schedule and also for the extension of the scheduled maturity date of the notes. Due to the nature of the variations, Fitch will analyse the rating impact when the changes occur. Fitch has withdrawn Funding's VFN F1 V2 class B, C and D notes as the notes were cancelled. KEY RATING DRIVERS Asset Assumptions Unchanged As this rating action only addresses the impact of the amendment, asset assumptions remain unchanged. Fitch maintains a steady-state charge-off rate of 18%, a steady-state monthly payment rate (MPR) of 10% and a steady state yield of 30% for the trust. Due to the non-prime nature of the underlying assets, the portfolio has a higher charge-off rate, a lower MPR and a higher portfolio yield than other Fitch-rated UK credit card trusts. Key Counterparties Unrated The NewDay Group acts in several capacities through its various entities, most prominently as originator, servicer and cash manager to the securitisation. In most other UK trusts, these roles are fulfilled by large institutions with strong credit profiles. The degree of reliance is mitigated in this transaction by the transferability of operations, agreements with established card service providers, a back-up cash management agreement and a series-specific liquidity reserve. Negative Asset Performance Outlook Fitch has a negative asset performance outlook for the UK consumer ABS sector. This reflects the economic impact from the coronavirus pandemic, as well as the heightened uncertainty and urgency over Brexit negotiations. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: Long-term asset performance improvement such as decreased charge-offs, increased MPR or increased portfolio yield driven by a sustainable positive change of the underlying asset quality would contribute to positive revisions of Fitch's asset assumptions which could positively affect the notes' ratings. Factors that could, individually or collectively, lead to negative rating action/downgrade: Long-term asset performance deterioration, such as increased charge-offs, reduced MPR or reduced portfolio yield, which could be driven by changes in portfolio characteristics, macroeconomic conditions, business practices, credit policy or legislative landscape, would contribute to negative revisions of Fitch's asset assumptions that could negatively affect the notes' ratings. This section provides insight into the model-implied sensitivities the transaction faces when one assumption is modified, while holding others equal. The modelling process uses the modification of these variables to reflect asset performance in upside- and downside environments. The results should only be considered as one potential outcome, as the transaction is exposed to multiple dynamic risk factors. It should not be used as an indicator of future performance. Rating sensitivity to increased charge-off rate: Increase steady state by 25% / 50% / 75% VFN F1 V2 Class A: 'BB+sf' / 'BBsf' / 'BB-sf' VFN F1 V2 Class E: 'Bsf' / 'Bsf' / NA VFN F1 V2 Class F: NA / NA / NA Rating sensitivity to reduced MPR Reduce steady state by 15% / 25% / 35% VFN F1 V2 Class A: 'BBB-sf' / 'BB+sf' / 'BBsf' VFN F1 V2 Class E: 'BB-sf' / 'BB-sf' / 'B+sf' VFN F1 V2 Class F: 'Bsf' / NA / NA Rating sensitivity to reduced purchase rate (i.e. aggregate new purchases divided by aggregate principal repayments in a given month) Reduce purchase rate by 50% / 75% / 100% VFN F1 V2 Class A: 'BBB-sf' / 'BBB-sf' / 'BBB-sf' VFN F1 V2 Class E: 'BBsf' / 'BB-sf' / 'BB-sf' VFN F1 V2 Class F: 'Bsf' / 'Bsf' / NA Rating sensitivity to increased charge-off rate and reduced MPR Increase steady-state charge-offs by 25% and reduce MPR by 15% / Increase steady-state charge-offs by 50% and reduce MPR by 25% / Increase steady-state charge-offs by 75% and reduce MPR by 35% VFN F1 V2 Class A: 'BBsf' / 'B+sf' / 'Bsf' VFN F1 V2 Class E: 'B+sf' / NA / NA VFN F1 V2 Class F: NA / NA / NA SUMMARY OF FINANCIAL ADJUSTMENTS No financial statement data used in the rating analysis. USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Prior to the transaction closing, Fitch reviewed the results of a third-party assessment conducted on the asset portfolio information and concluded that there were no findings that affected the rating analysis. Prior to the transaction closing, Fitch conducted a review of a small targeted sample of the originator's origination files and found the information contained in the reviewed files to be adequately consistent with the originator's policies and practices and the other information provided to the agency about the asset portfolio. Overall, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING The principal sources of information used in the analysis are described in the Applicable Criteria. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. VIP SKI: Parent Enters Administration Due to Impact of COVID-19 --------------------------------------------------------------- Business Sale reports that the parent company of UK-based ski business VIP Ski has announced that it has entered administration due to the impact of COVID-19 and government-issued travel restrictions. According to Business Sale, parent company APS-Select Ltd said that the company, which has been operating for 30 years, would cease trading with immediate effect, Business Sale relates. The company catered to the higher end of the ski holiday market, offering holidays in France and Austria. It owned and operated 60 chalets in the Alps across 10 different resorts. The firm held an Atol license to carry slightly over 8,000 passengers per year, largely from March to May. Mark Supperstone and Simon Jagger from ReSolve Advisory have been appointed as joint administrators for the company, Business Sale discloses. The company has also issued information for customers who have booked for next winter or who are owed money, Business Sale states. Package customers are protected by Atol, non-flight or accommodation customers are protected by ABTOT or their credit/debit card issuer while direct customers who paid with credit or debit card will need to claim a refund from their card issuer, Business Sale notes. "Since the day that COVID was added to our lexicon we have tried desperately to wrestle a path through incoherent, inconsistent and sometimes deeply unhelpful government guidance on refunds and travel restrictions, a patchwork of European lockdowns, flight cancellations and a complete and absolute lack of specific government support for our sector," Business Sale quotes VIP Ski Managing Director Andy Sturt as saying in a blog post. "Despite the support of our guests and many of our partners, it has proved impossible to navigate a way through this. Without a sea change in booking behaviour, for which I can see no reasonable expectation in the short term, I cannot in good faith continue to trade and put our colleagues, guests, landlords and partners through the absolute chaos, personal misery and additional financial loss that would ultimately occur were our failure to happen in the middle of the ski season." ********* 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 2020. 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 * * *