/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/210708.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, July 8, 2021, Vol. 22, No. 130 Headlines A R M E N I A AMERIABANK CJSC: Moody's Affirms Ba3 LongTerm Deposit Ratings C Y P R U S GLOBAL PORTS: Fitch Affirms 'BB+' IDRs, Outlook Stable F R A N C E LABORATOIRE EIMER: Fitch Affirms 'B' LT IDR, Outlook Stable MOBILUX FINANCE: Fitch Assigns Final B Rating on New Sec. Notes G E R M A N Y TELE COLUMBUS: Moody's Confirms B3 CFR Amid Kublai Takeover Bid I R E L A N D BAIN CAPITAL 2019-1: Fitch Affirms B- Rating on Class F Notes BLUEMOUNTAIN FUJI V: Fitch Affirms B- Rating on Class F Notes CAIRN CLO XI: Fitch Affirms B- Rating on Class F Notes CARLYLE EURO 2017-3: S&P Assigns B- Rating on Class E Notes CIFC HYDE 2021: Moody's Assigns (P)B3 Rating to EUR11.6MM F Notes CVC CORDATUS XVII: Moody's Assigns B3 Rating to EUR16.2MM F Notes CVC CORDATUS XVII: S&P Assigns B- Rating on Class F-R Notes DRYDEN 52 EURO 2017: Moody's Assigns B3 Rating to Class F-R Notes DRYDEN 52 EURO 2017: S&P Assigns B- Rating on Class F-R Notes JUBILEE CLO 2017-XVIII: Moody's Affirms B2 Rating on Class F Notes PENTA CLO 3: Fitch Affirms B- Rating on Class F Notes VIRGIN MEDIA: Fitch Assigns Final 'B+' LongTerm IDR, Outlook Stable L U X E M B O U R G ARMORICA LUX: Moody's Assigns First Time B3 Corp Family Rating N E T H E R L A N D S AFFIDEA BV: Moody's Affirms B2 CFR & Alters Outlook to Stable AFFIDEA BV: S&P Alters Outlook to Negative & Affirms 'B+' ICR AMMEGA GROUP: Fitch Affirms 'B-' LT IDR, Outlook Stable NOURYON HOLDING: Moody's Assigns B2 CFR Following Nobian Spin-off P O R T U G A L EDP - ENERGIAS: Egan-Jones Retains BB+ Senior Unsecured Ratings S P A I N JOYE MEDIA: Moody's Cuts CFR to Caa2 & PDR to Ca-PD/LD U N I T E D K I N G D O M BUSINESS LOAN: Creditors Support Administrator's Proposals FRISKA: Sold to Third Party Following Administration GREENSILL CAPITAL: Gov't. Applied Unusual Pressure Over Covid Loan PRECISE MORTGAGE 2017-1B: Fitch Affirms BB+ Rating on Cl. E Notes PRECISE MORTGAGE 2020-1B: Fitch Rates 2 Note Classes 'BB+sf' TOPSHOP: Philip Green's Wife Received GBP50MM From Administration VICTORY ENERGY: Put Into Voluntary Liquidation - - - - - ============= A R M E N I A ============= AMERIABANK CJSC: Moody's Affirms Ba3 LongTerm Deposit Ratings ------------------------------------------------------------- Moody's Investors Service has affirmed the Ba3 long-term local and foreign currency deposit ratings of Ameriabank CJSC and NP short-term local- and foreign currency deposit ratings. Moody's has also affirmed its b1 Baseline Credit Assessment and Adjusted BCA, Ba3 long-term and NP short-term Counterparty Risk Ratings and Ba3(cr) long-term and NP(cr) short-term Counterparty Risk Assessments (CR Assessment). At the same time Moody's has revised the outlook on the bank's long-term deposit ratings to Stable from Negative. RATINGS RATIONALE The affirmation of the banks BCA and the deposit ratings along with the change in outlook to stable from negative reflects reduced downside risk on the bank's standalone credit profile stemming from stabilizing operating conditions, bank's resilient performance in times of stress, stabilizing asset quality and strengthening profitability metrics since the beginning 2021. The rating action also considered Ameriabank's stable funding base and ample liquidity. Despite the economic disruption in 2020, Ameriabank's asset quality deterioration was relatively moderate, with problem loans increasing to 4.2% from 2.9% of gross loans in 2020 and stabilizing at around 4% of gross loans in Q1 2021. Moody's expects Ameriabank's asset quality to remain generally stable in the next 12-18 months, supported by improving economic conditions, good diversification of the bank's loan portfolio and reduced exposure to foreign currency loans. Following the pandemic-induced temporary decline in profitability in 2020, Ameriabank reported net profit of AMD3.97 billion for Q1 2021 (a 33% increase from AMD2.98 billion reported for Q1 2020) which translated into annualized return on average assets of 1.5% and return on equity of 14%. Moody's expects improving profitability trend to sustain over the next 12-18 months as credit costs normalize and business activity recovers in 2021. Moody's estimates that Ameriabank's tangible common equity ratio (TCE ratio) will remain broadly stable at around 12% over the next 12-18 months, supported by the bank's profitable performance, moderate asset growth and dividend deferrals. Moody's expects that Ameriabank's loss-absorption capacity will remain sound, underpinned by its solid pre-provision income, which provides a good buffer for absorbing expected credit losses without a weakening in the bank's capital. Ameriabank's liquidity and funding profiles will remain stable over the next 12-18 months and will be supported by good funding diversification, ample liquidity and access to alternative liquidity sources such as funding from international financial institutions (IFIs). Customer funds account for around 61% of the bank's liabilities, half of which are retail deposits. In addition, the bank maintains sufficient level of liquidity cushion comprising from cash and government securities which exceeded 27% of total assets at Q1 2021. The bank's ratings benefit from one notch of government support, based on Moody's expectation of a high level of support from the Government of Armenia (Ba3 stable). RATING OUTLOOK The stable outlook reflects the rating agency's expectation that Ameriabank will sustain the improvements in its solvency and that the bank's asset quality and capital will remain broadly stable. The stable outlook is in line with the stable outlook on the sovereign rating. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Ameriabank's deposit ratings will not likely be upgraded in next 12-18 months because they are at the same level at the sovereign ratings. The bank's BCA could be upgraded if the bank materially improves its asset quality metrics and sustained improvements in profitability, strengthening its capital buffers. At the same time, the bank's ratings could be downgraded if its financial fundamentals, notably asset quality, capitalization and profitability, were to deteriorate significantly. A negative rating action on the sovereign rating could also lead to a downgrade of the bank's ratings. LIST OF AFFECTED RATINGS Issuer: Ameriabank CJSC Affirmations: Long-term Counterparty Risk Ratings, affirmed Ba3 Short-term Counterparty Risk Ratings, affirmed NP Long-term Bank Deposits, affirmed Ba3, outlook changed to Stable from Negative Short-term Bank Deposits, affirmed NP Long-term Counterparty Risk Assessment, affirmed Ba3(cr) Short-term Counterparty Risk Assessment, affirmed NP(cr) Baseline Credit Assessment, affirmed b1 Adjusted Baseline Credit Assessment, affirmed b1 Outlook Action: Outlook changed to Stable from Negative The principal methodology used in these ratings was Banks Methodology published in March 2021. =========== C Y P R U S =========== GLOBAL PORTS: Fitch Affirms 'BB+' IDRs, Outlook Stable ------------------------------------------------------ Fitch Ratings has affirmed Global Ports Investments Plc's (GPI) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'BB+'. Fitch has also affirmed Global Ports Finance PLC's USD700 million senior secured notes (Eurobonds) and RUB15 billion senior unsecured notes issued by JSC First Container Terminal (FCT) at 'BB+'. The Outlooks are Stable. RATING RATIONALE The affirmation reflects GPI's projected Fitch-adjusted net debt/EBITDA profile of above 2.0x in 2021-2025. GPI's credit profile benefits from its deleveraging path, strong cash flow generation, sufficient liquidity to meet short-term needs and reasonable hedging of exchange rate exposure. GPI has a dominant position in the Russian container market, albeit with high competition, limited expansion requirements due to spare capacity, and a mostly bullet maturity debt structure with covenants currently restricting dividends distributions. The Eurobonds' rating is aligned with GPI's consolidated profile, as the key consolidated operating companies and the holdco unconditionally guarantee the Eurobonds. The rating on FCT's bonds is equalised with GPI, based on parent-subsidiary linkage. KEY RATING DRIVERS Exposure to High Price Elasticity and Competition - Volume Risk: Midrange GPI maintains its dominant position as one of the largest port operators in Russia, with container handling terminals in the Baltic and Far East, each with good modal connectivity. GPI is exposed to high price elasticity of demand, as its price-over-volume strategy has reduced its competitive position in a market with spare capacity, resulting in severe container throughput volume losses over 2015 and 2016. The recent introduction of a more flexible pricing policy aimed at market share retention is supporting volume growth. As a result, during 2018-2020 GPI outperformed the Russian market and regained market share. Unregulated Tariffs - Price Risk: Midrange The regulation of container tariffs in Russia has gradually been liberalised since 2010. Previous Federal Antimonopoly Service initiatives to re-introduce tariff regulation were dropped. GPI has a moderate ability to raise tariffs and does not benefit from contracts with minimum guaranteed volumes or long-term rent-like contracts. The company's revenue per 20-foot equivalent unit (TEU) has been decreasing since 2016, mostly due to rouble depreciation, a change of cargo mix and competition. Substantial Spare Capacity - Infrastructure Development & Renewal: Stronger GPI's medium-term throughput forecast is well below capacity. Its 2020 berth capacity utilisation rate was 46% (combined for GPI's key terminals, i.e. First Container Terminal, Petrolesport, Vostochnaya Stevedoring Company, Ust Luga Container Terminal). On-site connecting infrastructure is well-developed. GPI expects to spend about USD35 million annually in maintenance capex and management also plans around USD54 million growth capex in 2021-2022. Fitch views this as manageable as it is entirely self-funded through free cash flow generation. Shareholder APM Terminals, one of the world's largest terminal operators, brings operational expertise and mitigates the risk of cost overrun on capex. Back-Ended Bullet Debt - Debt Structure: Midrange The holdco is currently free of debt. As of end-2020, USD819 million of outstanding and consolidated debt was senior and fixed-rate with balanced FX hedging position. Bullet debt accounted for about 99% with majority represented by US dollar-denominated Eurobonds. The leverage profile has a strong deleveraging trend, although material refinancing risk due to bullet maturities in 2022 and 2023 weaken the structure. The covenant package is loose. Solid Liquidity GPI has a strong liquidity position with available cash at USD131 million as of June 2021. The company also recently secured a RUB7 billion (USD93 million) committed credit line. The closest maturity is a USD200 million outstanding Eurobond in January 2022, which Fitch expects to be refinanced with rouble bonds. Financial Profile Under the Fitch base case (FBC) and Fitch rating case (FRC), projected net debt to EBITDA remains above 2.0x in 2021-2025, deleveraging from 2.4x to 2.0x under the FBC and from 2.6x to 2.0x under the FRC. The FRC does not factor in any shareholder distributions until 2.0x leverage is reached, due to the lock up covenant in the Eurobonds. Fitch also assumes no asset acquisitions. Finance and operating leases are captured as an operating expense, reducing EBITDA. PEER GROUP Russian port operator DeloPorts (consolidated rating of 'B+' and Standalone Credit Profile at 'bb') is the closest peer. GPI's container throughput is over 4x greater than Deloports. GPI has a dominant position in Russian container market, while Deloports has a weaker assessment of volume risk as it is a secondary port of a call with business segment concentration. However, Deloports benefits from a more balanced export/import mix with grain exports partially offsetting the import-oriented container business. GPI also benefits from more transparent corporate governance, as it is listed on the LSE. Deloports has a slightly higher average leverage at 2.7x compared with GPI's 2.2x. Mersin Uluslararasi Liman Isletmeciligi A.S. (BB-/Stable) is a similar size to GPI and also plays a dominant role in its home market. Its cargo export/import mix is more balanced than GPI, which is more exposed to the Russian concentrated economy. Mersin's current higher leverage (average 3.3x over a five-year forecast) than GPI supports the rating differentiation. Mersin's rating is also capped at Turkey's Country Ceiling. Mersin also demonstrated more aggressive shareholder distribution, which is in contrast to GPI's policy of deleveraging. Compared to DP World (BBB-/Stable), GPI is a small regional container operator with significant exposure to Russian domestic market, but with much lower average leverage of 2.2x than DP World's 5.8x. DP World's higher rating is supported by a more diversified and balanced export/import cargo mix, a more resilient O&D traffic structure and strategic location of Dubai's Jebel Ali port serving as the key gateway to the middle East, India and Africa. RATING SENSITIVITIES Factor that could, individually or collectively, lead to positive rating action/upgrade: -- An upgrade is unlikely, but projected Fitch adjusted net debt/EBITDA sustainably below 2.0x under the FRC accompanied by shareholders commitment to not re-leverage the group could result in positive rating action. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Projected Fitch adjusted net debt/EBITDA sustainably above 3.5x under the rating case, due to, among other factors, falling operating cash flows, high shareholder returns, asset acquisitions. -- Failure to prefund its bullet debt well in advance if maturities could be credit negative. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Sovereigns, Public Finance and Infrastructure issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of three notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. TRANSACTION SUMMARY GPI is a holding company and the leading container terminal operator serving Russian cargo flows in the Baltic and the Far-East basins. The group's main business is container handling. In addition, the group handles a number of other types of cargo, including cars and other types of roll-on roll-off cargo and bulk cargoes. Its three main subsidiaries are the container terminals FCT, Petrolesport and Vostochnaya Stevedoring Company, which are 100% owned by the group. CREDIT UPDATE GPI's container volumes grew by 6.6% in 2020 vs 2019 in contrast to the overall market fall in Russia of 1%. Consolidated marine bulk throughput grew 38% yoy to 5.1 million tonnes in 2020. Consolidated revenue increased by 6.2% to USD 384.4 million, but like-for-like revenue (excluding the impact of ramp up of new VSC transportation services) declined by 8.2%, driven by a decrease in both consolidated container and non-container revenue. Like-for-like revenue per TEU (tariff) decreased by 17% to USD155 as a result of rouble depreciation, change of mix (growing share of full export containers) and additional free storage days. Like-for-like revenue per TEU adjusted for FX decreased by 2.7%, mostly due to minor discounts provided to customers. Adjusted EBITDA decreased by 7.6% to USD209.7 million as cost control improvements and volume growth could not offset the decline in revenue per TEU and US dollar equivalent of rouble-denominated bulk handling tariffs. GPI continued to reduce net debt, which fell by USD134.9 million over the year. As a result, leverage decreased to 2.9x in 2020 from 3.3x in 2019. FINANCIAL ANALYSIS Fitch Cases The FBC assumes average 2.5% yoy growth of volumes in line with Fitch's forecast for Russian GDP. Fitch assumes that average revenue per TEU increases 1.1% over 2021-2025. Over the forecast horizon, Fitch also revised upward management's projections on capex. No shareholder distributions are assumed until 2.0x leverage target is reached. FRC assumes average 1.2% yoy growth of volumes, average revenue per TEU on containers to be generally flat to reflect competitive pressure. Capex stress slightly higher compared with the FBC and dividend assumptions are similar to the base case. SUMMARY OF FINANCIAL ADJUSTMENTS Finance and operating leases are captured as an operating expense, hence reducing EBITDA, while capital leases are reclassified from debt to other liabilities reducing debt. 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. =========== F R A N C E =========== LABORATOIRE EIMER: Fitch Affirms 'B' LT IDR, Outlook Stable ----------------------------------------------------------- Fitch Ratings has affirmed Laboratoire Eimer Selas's Long-Term Issuer Default Rating (IDR) at 'B' with a Stable Outlook. This follows the announcement of its term loan B (TLB) add-on to finance several acquisitions in, and outside of, France. The 'B' IDR assigned to Laboratoire Eimer balances its aggressive leverage with a predominantly debt-funded opportunistic, albeit well-executed, acquisitive business strategy and rapid scaling-up of operations with superior operating and free cash flow (FCF) margins, which Fitch regards as among the highest in the sector. The Stable Outlook reflects Fitch's expectation of the company's steady operating and financing profiles, supported by a reliable social infrastructure-like healthcare business model and an expected consistent financial policy to keep funds from operations (FFO) adjusted leverage at around 8.0x. KEY RATING DRIVERS Acquisitions Rating-Neutral: Fitch views Laboratoire Eimer's announced acquisitions as rating-neutral as the TLB add-on and revolving credit facility (RCF) utilisation, together with balance-sheet cash, are invested in additional revenues, earnings and cash flows. Fitch views the acquisitions as being compatible with Laboratoire Eimer's inherently stable operations, allowing the company to strengthen its market position in selected regions in France and attain meaningful market presence in other European countries. Financial Policy Drives IDR: The IDR is mainly driven by Fitch's perception of Laboratoire Eimer's more predictable financial discipline and funding mix to support the company's highly acquisitive growth strategy. Fitch assumes stronger FCF, which will fund over 30% of future acquisitions. At the same time, Fitch anticipates the company to continue with its largely debt-funded M&A strategy, which will fully exhaust leverage headroom under the 'B' IDR with FFO adjusted gross leverage remaining at around 8.0x through to 2024. M&A Poses Event Risks: M&A remains a cornerstone of Laboratoire Eimer's business strategy, and uncertainty over its magnitude and funding poses event risks. Fitch's rating case assumes around EUR800 million of M&A each year. Smaller or bolt-on M&A could be accommodated by FCF or the use of RCF (likely to eventually term-out in TLB), while mid-scale and larger acquisitions would be funded by a combination of new debt, FCF and equity, as was the case in 2019 and 2020. Departure from the established asset selection- and-integration practices, or more aggressive financial policies would put pressure on ratings. High Leverage, Deleveraging Potential: Based on Fitch's M&A (and funding) assumptions and steady organic performance, Fitch projects FFO adjusted gross leverage to remain at around 8.0x in the medium term, supporting the Stable Outlook. Strong internal cash generation provides scope for deleveraging, although growing cash reserves will likely be reinvested in M&A instead of debt reduction. Its temporarily lower FFO gross leverage of around 6.0x in 2020 and 2021 is a one-off driven by material Covid-19 related testing activity, whose contribution will reduce after this year to less significant levels. Adequate Financial Flexibility: Despite higher cash debt service requirements with the growing amount of debt, Laboratoire Eimer's FFO fixed charge cover should remain adequate for the rating at above 2.0x. Defensive Business Model: Laboratoire Eimer's business model is defensive with stable, non-cyclical revenues and high and resilient operating margins. The company benefits from scale-driven operating efficiencies and well-rehearsed M&A execution and integration, in addition to high barriers to entry as it operates in a highly regulated market. Acquisitions in other geographies reduce the impact of adverse regulatory changes in any single country. Additionally, an envisaged extension of its services to specialty tests with the current acquisitions will improve revenue defensibility. Healthy Cash Flow Generation: Last year's M&A, particularly the transformational acquisition of CMA-Medina in Belgium, together with high Covid-19 related testing will lead to another record year with FCF margins projected at double digits in 2021. Pandemic-induced service volumes will reduce from 2021 onward, but the business will continue to feature high profitability. Given contained trade working capital and low capital intensity, this translates into sustained sizeable FCF and high FCF margins estimated in the low double digits, which are solid for the rating. Strong cash-flow profitability remains a key factor, mitigating periods of excessive leverage. Temporary Benefit from Covid-19: Fitch expects Covid-19 testing to remain a substantial profit and cash- flow contributor also in 2021 given the ongoing high volume of testing, despite recent PCR tariff cuts in France. Despite the good vaccination progress in Europe achieved in 2Q21, Fitch still expects infection resurgence after 2021, given ongoing virus mutations and global travel. The prospect of coronavirus becoming a recurring infection akin to other seasonal viral diseases implies testing will become a permanent means of virus control and prevention. Fitch therefore projects some residual testing demand to remain after 2021, albeit with considerably reduced volumes and pricing, leading to a lower contribution to Laboratoire Eimer's profits and cash flows in the medium term than in 2020-2021. DERIVATION SUMMARY Similar to other sector peers, such as Synlab AG (BB/Stable) and Inovie Group (B/Stable), Laboratoire Eimer benefits from a defensive, non-cyclical business model with stable demand given the infrastructure-like nature of lab-testing services. This has been reinforced by strongly improved trading during the pandemic. Laboratoire Eimer's high and stable operating and cash-flow margins are the highest in peer comparison, which Fitch largely attributes to the particularities of the French regulatory regime and the company's exposure to the private lab-testing market. The lab-testing market in Europe has attracted significant private equity investment, leading to highly leveraged financial profiles. The three-notch rating difference between Laboratoire Eimer and Inovie Group against Synlab is due to the latter's more conservative financial risk profile, following debt prepayments from asset-disposal proceeds and its recent IPO, leading to approximately 4x lower leverage than its 'B' rated peers'. KEY ASSUMPTIONS Fitch's key assumptions within its rating case for the issuer include: -- Organic sales growth at 0.6% per year for 2021-2025, reflecting Laboratoire Eimer's triennial agreement renewal in France; -- 2020 and 2021 acquisition to drive above 50% and 15% increases in sales in 2021 and 2022, respectively; -- Strong Covid-19 activity in 2021, estimated up by around 70% yoy, before gradually normalising in the following four years; -- M&A of EUR800 million per year in 2022-2023, using a mix of additional debt, FCF and new equity; -- EUR10 million-EUR15 million of recurring expenses (above FFO) and general expenses and EUR10 million of M&A-driven transaction fees a year until 2025; -- Reduction of large 2020 trade working-capital outflows in 2021 following purchase in new Covid-19 related supplies and one off delays with social health insurance payments; reversal of trade working-capital requirements in 2022-2023 as Covid-19 related activity is projected to decline; neutral trade working capital thereafter to 2025; -- Excluding Covid-19 activity, EBITDA margin to improve following planned business additions and as low-risk synergies materialise on earlier acquisitions; -- Capex on average at around 1.5% of revenues per year until 2025; and -- No dividend payments throughout the life of Laboratoire Eimer's debt facilities. Recovery Ratings Assumptions: Fitch follows a going-concern approach over balance-sheet liquidation given the quality of Laboratoire Eimer's network and strong national market position: -- Going-concern (GC) EBITDA reflects break-even FCF, implying a 30% discount to projected 2020 EBITDA, adjusted for a 12-month contribution of all 2020 acquisitions, as well as additional Covid-19 testing activity normalising over the medium term; -- Distressed enterprise value (EV)/EBITDA multiple of 5.5x, which reflects Laboratoire Eimer's strong market position albeit with exposure to only two geographies currently, including its dominant exposure to France. This implies a discount of 0.5x against Synlab's previously applied distressed EV/EBITDA multiple of 6.0x when the company was rated in the 'B' rating category; -- Structurally higher-ranking super senior debt of around EUR29 million at operating companies to rank on enforcement ahead of RCF and TLB; -- The senior secured TLB and senior secured notes jointly at around EUR2.25 billion and the RCF of EUR271 million, which we assume to be fully drawn upon distress, rank pari passu after super senior debt; its unsecured senior bond ranks third in priority; -- After deducting 10% for administrative claims from the estimated post-restructuring EV, Fitch's waterfall analysis generates a ranked recovery for the senior secured debt in the Recovery Rating 'RR3' band leading to a senior secured rating of 'B+' with an output percentage of 54%; for the senior unsecured notes Fitch estimates their recovery in the 'RR6' band with a waterfall generated recovery computation (WGRC) of 0%, corresponding to a 'CCC+' senior unsecured note rating; -- Following the completion of the EUR300 million TLB add-on we expect WGRC to increase to 61% from 54%. This increase in recovery percentage is linked to the revised GC EBITDA to include the 2021 planned acquisitions, and an expected revision in the distressed EV/EBITDA multiple to 6.0x to account for the increased scale, geographic and product diversification; -- The ranked recovery for the senior secured debt post TLB add on will, therefore, remain unchanged in the 'RR3' band leading to a 'B+' senior secured debt rating; -- The senior unsecured notes rating and its WGRC will remain unaffected by the TLB add-on at 'RR6' with a WGRC output percentage of 0%, corresponding to a 'CCC+' senior unsecured note rating. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: A larger scale, increased product/geographical diversification, full realisation of contractual savings and synergies associated with acquisitions and/or voluntary prepayment of debt from excess cash flow, followed by: -- Maintaining double-digit FCF margins; -- FFO adjusted gross leverage (pro-forma for acquisitions) below 7.0x on a sustained basis; -- FFO fixed charge cover (pro-forma for acquisitions) trending above 2.5x on a sustained basis. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Weak operating performance with flat to negative like-for-like sales growth and declining EBITDA margins due to a delay in M&A integration, competitive pressures or adverse regulatory changes; -- Failure to show significant deleveraging towards 8.0x on an FFO adjusted gross basis at least two years before major contractual debt maturities due to lost discipline in M&A; -- FCF margin reducing towards mid-single digits such that FCF/total debt declines to low single digits; and -- FFO fixed charge cover below 2.0x (pro-forma for acquisitions) on a sustained basis. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE Comfortable Liquidity: Fitch views Laboratoire Eimer's liquidity as comfortable. This is based on a high freely available cash balance of EUR320 million (net of EUR20 million that Fitch treats as the minimum cash required in daily cash operation and unavailable for debt service) in December 2020. Fitch projects improvements to internal liquidity generation - boosted by Covid-19 related testing activity and the credit-accretive CMA-Medina acquisition - which the company can use at its discretion for bolt-on M&A. A recent refinancing by Laboratoire Eimer has widened its funding mix and extended its debt maturity profile to 2028-2029. An upsized RCF to EUR271 million from EUR120 million has also enhanced liquidity headroom and financial flexibility. ESG Considerations Laboratoire Eimer has an ESG Relevance Score of '4' for Exposure to Social Impacts due to high risks of tightening healthcare regulation constraining its ability to maintain operating profitability and cash flows. This has a negative impact on its credit profile and is relevant to the rating in conjunction with other factors. 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. ISSUER PROFILE Laboratoire Eimer is one of Europe's largest providers of routine diagnostic tests in the private lab-testing market in France and Belgium. MOBILUX FINANCE: Fitch Assigns Final B Rating on New Sec. Notes --------------------------------------------------------------- Fitch Ratings has assigned Mobilux Finance S.A.S.'s new senior secured notes a final rating of 'B' with a Recovery Rating of 'RR4'. Mobilux 2 SAS's (BUT) 'B' IDR continues to reflect the execution of its strategic plan and strong demand conditions during the pandemic, despite high leverage. The company's business profile benefits from an extensive network in France and good value proposition anchored in affordable products that will likely remain resilient in deteriorated macroeconomic conditions. In addition, the IDR reflects satisfactory liquidity with an expected new revolving facility increased to EUR140 million from EUR100 million. Proceeds from the EUR500 million notes redeemed the existing EUR380 million senior secured notes and funded shareholder distributions. Fitch has withdrawn Mobilux Finance S.A.S. (B+/RR3) as the bonds were redeemed. KEY RATING DRIVERS Strong Current Trading Amid Pandemic: BUT has demonstrated resilience over the past year, helped by strong demand for home improvement, and gained market share as the company maintained sufficient inventory with a targeted product offering to meet to meet demand. BUT also continued enhancing its procurement process during this period. This allowed it to take advantage of strong pent-up demand, reduce sales promotions, and improve profitability through tight cost monitoring. Overall, Fitch estimates that BUT will generate a record FY21 (ending June 2021) with sales above EUR2 billion and a Fitch-adjusted EBITDA margin above 11%. Normalisation Expected from FY22: BUT remains exposed to discretionary spending, and Fitch expects a gradual recovery of consumer spending in France in 2021 and 2022. Fitch also expects that further lifting of pandemic restrictions will redirect consumer spending to leisure and hospitality services, pressuring BUT's revenue after the high growth over FY21. Fitch expects revenue to decline by 13% in FY22. Conforama Synergies Will Help Profitability: Fitch expects BUT will be able to achieve some cost savings by FY22-FY24 as it cooperates with Conforama on purchasing, marketing, facility management and logistics. Fitch expects this will lift BUT's Fitch adjusted EBITDA margins to 7.0% in FY24 from 6.2% in FY22. In 2020, BUT's co-owners, WM Holding, an affiliate of furniture retailer XXXLutz, and private equity fund CD&R acquired French furniture retailer Conforama France from Steinhoff. Conforama will be located outside of the BUT restricted group and will not affect BUT's financial strategy. In Fitch's view, the transaction will reduce competitive pressure, but Fitch does not expect the company's strategy to materially change. BUT's shareholders have sufficient experience in the furniture market to continue executing strategy. Shareholder Distributions Reduce Liquidity: BUT has used around EUR200 million of its cash and EUR100 million of its new senior secured notes to fund a EUR215 million dividend distribution and a EUR85 million shareholder loan repayment. In October 2020, BUT had repaid EUR70 million of its shareholder loan. Fitch anticipates that these payments paired with an expected large working capital outflow will reduce BUT's readily available liquidity to EUR50 million from EUR370 million in March 2021. The high cash cushion has been supporting the rating with low net leverage metrics and has proved useful during the lockdown phases. Leverage Remains High: Fitch forecasts FFO adjusted leverage to reduce to 4.8x in FY21 amid exceptional trading, then bouncing back to 6.9x in FY22 on the new financing and stabilizing to around 6.5x by FY24. Fitch considers that this is high for the rating, and leaves limited rating headroom to BUT at the 'B' level. FFO net leverage is also expected to be high in FY22 at 6.5x trending to 6x by FY24. Adequate Business Profile: Fitch believes that BUT has a satisfactory business profile for the IDR. The company has improved its product offering over the last years, and affordable prices will remain appealing. BUT benefits from strong brand awareness, supported by its extensive store network that covers a large portion of France. A large store network and moderate footfall will be a strength while social distancing and sanitary measures continue. BUT increased the share of online sales to 10% in the 12 months to March 2021 (excluding the marketplace contribution), but Fitch views this neutral for the rating as it is in line with the market trend. DERIVATION SUMMARY BUT's closest peer is Maxeda DIY Holding (B/Stable), the Dutch DIY retailer. Both companies have a satisfactory business profile for the 'B' category, with market leading positions in concentrated geographies. Fitch expects BUT to generate lower margins than Maxeda, which has almost completed its turnaround plan. Leverage for both companies is high and comparable, with expected FFO adjusted gross leverage at 6.9x for BUT for June 2022 and 6.4x for Maxeda in February 2022. BUT is rated one notch above The Very Group (B-/Positive), the UK-based pure online retailer. The Very Group is similar in size and has similar margins than BUT. Fitch expects The Very Group should be able to deleverage towards 6.5x in FY22 from around 8.0x in FY20 on a FFO adjusted gross leverage basis, close to BUT's expected metrics, as reflected in the Positive Outlook. BUT shows weaker profitability and more vulnerable leverage metrics than other larger peers such as Kingfisher plc (BBB/Stable), the European DIY retailer. BUT's overall profit margins and gross leverage, which are more commensurate with a 'B-' rating, are offset by a satisfactory business model, satisfactory liquidity and resilience amid the pandemic, which support the 'B'IDR. KEY ASSUMPTIONS -- Revenue increasing by 26% in FY21, then reducing by 12% in FY22, followed by 0.3% decline in 2023, followed by a slight increase of 0.6% for 2024. Revenue growth coming from the expansion of the store network. Fitch assumes no new lockdowns in France and continued lift of the pandemic restrictions in 2021; -- Fitch-adjusted EBITDA margin of 11.2% in FY21, then declining amid normalised activity to 6.2%, growing to 7.0% and taking into account some synergies with Conforama on purchases and logistics; -- Capex representing 2.4% to 2.5% of revenue; -- No further dividend distribution to shareholders assumed over the next four years; -- Large working capital outflow of around EUR70 million in FY21, including EUR45 million reduction in customers deposit; -- EUR80 million restricted cash in FY20, then reduced to EUR35 million (related to reduction in customer deposit adjustment). KEY RECOVERY RATING ASSUMPTIONS Fitch assumes that BUT would be considered a going-concern in bankruptcy and that it would be reorganised rather than liquidated. Fitch has assumed a 10% administrative claim in the recovery analysis. In Fitch's bespoke going-concern (GC) recovery analysis Fitch considered an estimated post-restructuring EBITDA available to creditors of around EUR75 million, increased from Fitch's previous analysis (61 million). The increase in GC EBITDA reflects sustainable margin improvement achieved pre-pandemic, following turnaround and cost-cutting implementation. Fitch has maintained the distressed enterprise value/EBITDA multiple at 5.0x. This is in line with multiple used for Maxeda. Based on the principal waterfall, the enlarged EUR140 million RCF ranks super senior to the senior secured debt. Basing Fitch's analysis on the new higher amount of the senior secured notes (EUR500 million vs. EUR380 million) and after deducting 10% for administrative claims, Fitch's waterfall analysis generates a waterfall generated recovery computation output percentage of 39%, indicating a 'B' instrument rating. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Further improvement in scale and diversification together with better visibility on macroeconomics conditions that would lead to a FFO margin above 5% and FCF margin above 3% on a sustained basis; -- FFO fixed charge cover sustained above 1.9x; -- FFO adjusted gross leverage below 5x on a sustained basis. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- A significant deterioration in revenue and profitability reflecting, for example, an increasingly competitive operating environment or a new prolonged period of lockdown or meaningful delay in recovery of economic conditions; -- FFO fixed charge cover below 1.4x on a sustained basis; -- FFO adjusted gross leverage sustainably above 7x; -- FFO margin sustainably below 3.5%; -- Evidence that liquidity is tightening due to operational under-performance or additional distribution to shareholders perpetuating high leverage. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE Satisfactory Liquidity: Fitch expects BUT to have around EUR50 million (excluding restricted cash) cash on balance sheet by end of FY21, following completion of the dividend recapitalisation and sizable working capital outflow expected in 4Q21. Fitch views this level of cash paired with the new EUR140 million RCF sufficient to sustain short-term potential disruptions. BUT will has no material debt maturity until 2028. 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. ISSUER PROFILE BUT is one of the leading home equipment (furniture, decoration and electrical goods) retailers in France. SUMMARY OF FINANCIAL ADJUSTMENTS EUR9.7 million subtracted from EBITDA and added to other financial expenses (interest on free credits). ============= G E R M A N Y ============= TELE COLUMBUS: Moody's Confirms B3 CFR Amid Kublai Takeover Bid --------------------------------------------------------------- Moody's Investors Service has confirmed Tele Columbus AG's B3 corporate family rating, B3-PD probability of default rating, and the B3 ratings on the outstanding EUR462 million senior secured bank credit facilities due 2024 and EUR650 million guaranteed senior secured notes due 2025. The outlook has been changed to stable from ratings under review. This rating action concludes the review for upgrade initiated by Moody's on December 23, 2020, following a takeover bid by Kublai GmbH ("Kublai") that concluded in April 2021, and the EUR475 million equity rights issue in May 2021. "We now expect that the company will need more investments than initially anticipated in order to improve its competitive position and successfully execute its Fiber Champion strategy," says Agustin Alberti, a Moody's Vice President -- Senior Analyst and lead analyst for Tele Columbus. "As a result, adjusted leverage will exceed 6.0x at least over the next 2 years and deleveraging will be slower than expected, removing the potential near term upward pressure on the B3 rating," adds Mr Alberti. RATINGS RATIONALE In April 2021, Kublai became the main shareholder of the company with an equity stake of around 92% following a voluntary public takeover offer. In May 2021, the company announced [1] the completion of a EUR475 million capital increase, fully guaranteed by Kublai, which increased its shareholding to above 94%. Proceeds from the capital increase were used to repay EUR360 million of debt and to pay transaction fees, while the remaining cash will be used to fund capex for the implementation of its Fiber Champion strategy. Kublai has also agreed to make available additional equity capital of up to EUR75 million over the next 2 years. Moreover Kublai issued a statement on June 25 regarding its intention to delist Tele Columbus in due course. Moody's now expects that the positive impact on credit metrics derived from the debt reduction with proceeds from the capital increase will be offset by the negative impact caused by increased investments to ensure the successful execution of the Fiber Champion strategy. As a result, Moody's expects that the company's adjusted debt/EBITDA ratio will exceed 6.0x, the threshold for upward pressure on the rating, until at least 2022. In May 2021, the German government approved a new telecoms law. As per the new law, the current practice of including basic TV fees in rental costs (around EUR8- EUR10 per month) will be discontinued for all new housing association contracts and from July 2024 for all existing contracts. The new transition period until July 2024 is longer than the two years initially envisaged, which should provide enough time to shift from existing bulk TV contracts to individual contracts. However, retaining TV customers will become more challenging given the increasing consumption of TV platforms at the expense of linear TV, mitigated by the fact that the company has already a premium TV offer. The rating agency believes that the implementation of the "Fiber Champion" strategy is key to the sustainability of Tele Columbus' business model. The upgrade of its current network footprint from coaxial to FTTB/H, as well as opening the network to other telecom operators will provide an attractive value proposition to housing association landlords and tenants. Growth from retail and wholesale broadband, as well as B2B opportunities should more than compensate for the decline in TV revenues. Tele Columbus' B3 CFR reflects (1) its solid market position, especially in its core regions of eastern Germany; (2) its long-standing customer relationships with housing associations; (3) the credible "Fiber Champion" strategy, based on the modernisation of the network from coaxial to FTTB/H and an open access model, enhancing the sustainability of its business model; (4) the growth opportunities in the broadband wholesale and B2B markets; and (5) the financial flexibility provided by the recent capital increase and further equity injection committed by Kublai. The rating also reflects (1) its relatively small scale compared with that of its rated peers; (2) the continued high competition from other telecom and cable operators, particularly in the housing association segment, which accounts for more than 90% of Tele Columbus' end customers; (3) a declining legacy cable TV business, accounting for 48% of total revenues in 2020, exacerbated by recent regulatory changes and increasing customer viewership of streaming TV platforms; (4) the execution risks of the "Fiber Champion" plan, including potential delays or operational issues associated with the network upgrade; (5) its high Moody's adjusted gross leverage of between 6.0x-7.0x over the next 12-18 months; and (6) its high capital spending requirements, which will lead to negative free cash flow over the next 4 years and will constrain deleveraging. LIQUIDITY Following the capital increase and associated debt repayments, Moody's estimates that the company has cash balance of around EUR150 million. Moody's assessment of Tele Columbus' adequate liquidity to cover its needs over the next 12 to 18 months factors in Kublai's commitment to further inject EUR75 million to fund the discretionary capex growth plan, which is mostly discretionary and could be curtailed if needed. While the company will not have any large debt maturities until 2024 when the term loan matures, Moody's expects Tele Columbus to be free cash flow negative until at least 2025 and the company does not currently have access to a revolving credit facility. STRUCTURAL CONSIDERATIONS Tele Columbus' probability of default rating is B3-PD, in line with the CFR. The company's capital structure comprises an outstanding EUR462 million term loan (maturing in 2024), and a EUR650 million senior secured bond (maturing in 2025). The B3-rated bond benefits from the same security and guarantee structure as the B3-rated bank debt. All of Tele Columbus' debt is secured against share pledges of key operating subsidiaries and benefits from guarantees from operating entities accounting for 80% of group EBITDA/90% of group assets. RATIONALE FOR STABLE OUTLOOK The stable outlook reflects Moody's expectation that the company (1) will continue to improve its operations and network, translating into a more sustainable business profile, (2) will be able maintain adequate leverage levels, and (3) will manage its liquidity in a prudent manner. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Upward rating pressure could arise if: (1) the company continues to show improvement in its operating metrics, including growth in the overall number of customers; (2) returns to sustained revenue and EBITDA growth; and (3) maintains Moody's-adjusted gross debt/EBITDA below 6.0x on a sustained basis and generates positive FCF (after capital spending and dividends). The ratings could be downgraded if (1) Tele Columbus' Moody's-adjusted gross debt/EBITDA leverage deteriorates and remains above 7.0x on a sustained basis; (2) the execution of the turnaround plan is unsuccessful, such that the business fails to return to growth; or (3) its liquidity deteriorates. LIST OF AFFECTED RATINGS Issuer: Tele Columbus AG Confirmations: Probability of Default Rating, Confirmed at B3-PD LT Corporate Family Rating, Confirmed at B3 Senior Secured Bank Credit Facilities, Confirmed at B3 Senior Secured Regular Bond/Debenture, Confirmed at B3 Outlook Action: Outlook, Changed To Stable From Rating Under Review PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Pay TV published in December 2018. COMPANY PROFILE Tele Columbus AG is a holding company, which through its subsidiaries offers basic cable television services (CATV), premium TV services and, where the network is migrated and upgraded, internet and telephony services in Germany. It is the second largest cable operator in terms of homes connected in Germany with 3.3 million. In 2020, Tele Columbus reported revenue of EUR480 million and EBITDA of EUR233 million (including IFRS16). Headquartered in Berlin (Germany), the company is listed in the German stock exchange and is majority-owned by Kublai, an investment vehicle owned by Morgan Stanley Infrastructure Partners and United Internet, with a 94.4% equity stake. ============= I R E L A N D ============= BAIN CAPITAL 2019-1: Fitch Affirms B- Rating on Class F Notes ------------------------------------------------------------- Fitch Ratings has affirmed Bain Capital Euro CLO 2019-1 DAC and revised the Outlooks on the class D, E and F notes to Stable from Negative. DEBT RATING PRIOR ---- ------ ----- Bain Capital Euro CLO 2019-1 DAC A XS2075846811 LT AAAsf Affirmed AAAsf B XS2075847462 LT AAsf Affirmed AAsf C XS2075848940 LT Asf Affirmed Asf D XS2075849674 LT BBB-sf Affirmed BBB-sf E XS2075850094 LT BB-sf Affirmed BB-sf F XS2075850250 LT B-sf Affirmed B-sf TRANSACTION SUMMARY Bain Capital Euro CLO 2019-1 DAC is a securitisation of mainly senior secured obligations (at least 90%) with a component of senior unsecured, mezzanine, and second-lien loans. The transaction is still in its reinvestment period and the portfolio is actively managed by Bain Capital Credit U.S. CLO Manager, LCC. KEY RATING DRIVERS Outlooks Revised to Stable: The revision of the Outlooks on the class D to F notes to Stable from Negative reflects that Fitch longer runs its coronavirus baseline stress to determine the Outlook. The Stable Outlooks on the class D and E notes reflect the default rate cushion that the tranches benefit from at the current rating. For the class F notes it reflects the significant margin of safety given the credit enhancement level. Performance Stable Since Last Review: The transaction was below par by 77bp as of the latest investor report dated 8 June 2021. The transaction was passing all portfolio profile tests, collateral quality tests and coverage tests. As of the same report, the transaction had two defaulted assets and the exposure to assets with a Fitch-derived rating (FDR) of 'CCC+' and below was 3.8%. 'B'/'B-' Portfolio: Fitch assesses the average credit quality of the obligors in the 'B'/'B-' category. The Fitch-calculated weighted average rating factor (WARF) and the WARF calculated by the trustee were 33.42 and 33.28, respectively, below the maximum covenant of 34.40. High Recovery Expectations: Senior secured obligations comprise 99.6% of the portfolio. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. As of the latest investor report, the Fitch weighted average recovery rate (WARR) of the current portfolio is 66.6%, above the minimum covenant of 65.97%. Well-diversified Portfolio: The portfolio is well diversified across obligors, countries and industries. The top 10 obligor concentration is 12%, and no obligor represents more than 1.5% of the portfolio balance. Deviation from Model-implied Rating: The class F notes have been affirmed at 'B-sf', which is a deviation from the model-implied rating of 'CCCsf'. The deviation reflects Fitch's view that the tranche has a significant margin of safety given the credit enhancement level. The notes do not represent a "real possibility of default", which is the definition of a 'CCC' rating in Fitch's Rating Definitions. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- At closing, Fitch used a standardised stress portfolio (Fitch's stress portfolio) that was customized to the portfolio limits as specified in the transaction documents. Even if the actual portfolio shows lower defaults and smaller losses (at all rating levels) than Fitch's stressed portfolio assumed at closing, an upgrade of the notes during the reinvestment period is unlikely. This is because the portfolio credit quality may still deteriorate, not only by natural credit migration, but also because of reinvestment and the manager has the possibility to update the Fitch collateral quality tests. -- After the end of the reinvestment period, upgrades may occur in the event of better-than-expected portfolio credit quality and deal performance, leading to higher credit enhancement and excess spread available to cover for losses in the remaining portfolio. Factor that could, individually or collectively, lead to negative rating action/downgrade: -- Downgrades may occur if build-up of the notes' credit enhancement following amortisation does not compensate for a higher loss expectation than initially assumed due to an unexpectedly high level of defaults and portfolio deterioration. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Structured Finance transactions have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of seven notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of seven notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings are based on historical performance. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. The majority of the underlying assets or risk-presenting entities have ratings or credit opinions from Fitch and/or other Nationally Recognized Statistical Rating Organisations and/or European Securities and Markets Authority-registered rating agencies. Fitch has relied on the practices of the relevant groups within Fitch and/or other rating agencies to assess the asset portfolio information or information on the risk-presenting entities. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. BLUEMOUNTAIN FUJI V: Fitch Affirms B- Rating on Class F Notes ------------------------------------------------------------- Fitch Ratings has affirmed BlueMountain Fuji EUR CLO V DAC's notes and revised the Outlooks on the class D, E and F notes to Stable from Negative. DEBT RATING PRIOR ---- ------ ----- BlueMountain Fuji EUR CLO V DAC A XS2073824851 LT AAAsf Affirmed AAAsf B XS2073825403 LT AAsf Affirmed AAsf C XS2073825742 LT Asf Affirmed Asf D XS2073826120 LT BBB-sf Affirmed BBB-sf E XS2073826559 LT BBsf Affirmed BBsf F XS2073826633 LT B-sf Affirmed B-sf X XS2073824778 LT AAAsf Affirmed AAAsf TRANSACTION SUMMARY The transaction is a cash flow CLO, mostly comprising senior secured obligations. It is still within its reinvestment period and is actively managed by BlueMountain Fuji Management, LLC. KEY RATING DRIVERS Outlooks Revised to Stable: Fitch has revised the Outlooks on the class E and F notes to Stable from Negative as it no longer considers the coronavirus baseline scenario as a driver of the Outlook. The Stable Outlook reflects the default rate cushion on each tranche, except the class F notes which display a minor shortfall in a single scenario. Stable Asset Performance: BlueMountain Fuji EUR CLO V DAC was above par by 0.08% as of the latest investor report dated 10 June 2021. It was passing all portfolio profile tests, collateral quality tests and coverage tests except for the Fitch weighted average recovery rating (WARR) test (66.0 versus a maximum of 67.9). However, there are viable Fitch matrix points that would bring the transaction into compliance if the manager chose to shift matrix points. It had no exposure to defaulted assets. 'B'/'B-' Portfolio: Fitch assesses the average credit quality of the obligors in the 'B' category. The Fitch weighted average rating factor (WARF) calculated by Fitch (assuming unrated assets are CCC) and by the trustee was 34.39 and 34.92, respectively, versus the maximum covenant of 35.00. High Recovery Expectations: Senior secured obligations comprise at least 98.7% of the portfolio. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. The Fitch WARR of the current portfolio by Fitch's calculation is 66.03%, versus the minimum covenant of 67.90%. Diversified Portfolio: The portfolio is well-diversified across obligors, countries and industries. The top 10 obligor concentration is no more than 12.17%, and no obligor represents more than 1.46% of the portfolio balance. Model-implied Ratings Deviation: The class F notes' ratings are one notch higher than the model-implied ratings (MIR). The current ratings are supported by the stable asset performance since the last rating action in September 2020 and available credit enhancement. The class F notes' deviation from the MIR reflects Fitch's view that the tranche has a significant margin of safety due to available credit enhancement. The notes do not present a "real possibility of default", which is the definition of 'CCC' in Fitch's Rating Definitions. The class F notes displayed only a marginal shortfall in a single scenario. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- At closing, Fitch used a standardised stress portfolio (Fitch's stressed portfolio) that was customised to the portfolio limits as specified in the transaction documents. Even if the actual portfolio shows lower defaults and smaller losses (at all rating levels) than Fitch's stressed portfolio assumed at closing, an upgrade of the notes during the reinvestment period is unlikely. This is because the portfolio credit quality may still deteriorate, not only by natural credit migration, but also because of reinvestment. In addition, the manager may choose to update the Fitch collateral quality tests. -- After the end of the reinvestment period, upgrades may occur in the event of better-than-expected portfolio credit quality and deal performance, leading to higher credit enhancement and excess spread available to cover for losses in the remaining portfolio. Factor that could, individually or collectively, lead to negative rating action/downgrade: -- Downgrades may occur if build-up of the notes' credit enhancement following amortisation does not compensate for a larger loss expectation than initially assumed due to unexpectedly high levels of defaults and portfolio deterioration. Fitch will update the sensitivity scenarios in line with the view of its leveraged finance team. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Structured Finance transactions have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of seven notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of seven notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings are based on historical performance. 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 BlueMountain Fuji EUR CLO V DAC Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. The majority of the underlying assets or risk presenting entities have ratings or credit opinions from Fitch and/or other Nationally Recognized Statistical Rating Organizations and/or European Securities and Markets Authority registered rating agencies. Fitch has relied on the practices of the relevant groups within Fitch and/or other rating agencies to assess the asset portfolio information or information on the risk presenting entities. Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. CAIRN CLO XI: Fitch Affirms B- Rating on Class F Notes ------------------------------------------------------ Fitch Ratings has affirmed Cairn CLO XI DAC and revised the Outlooks on the class E and F notes to Stable from Negative. DEBT RATING PRIOR ---- ------ ----- Cairn CLO XI DAC A XS2076107718 LT AAAsf Affirmed AAAsf B XS2076108369 LT AAsf Affirmed AAsf C XS2076108526 LT Asf Affirmed Asf D XS2076109250 LT BBB-sf Affirmed BBB-sf E XS2076109920 LT BB-sf Affirmed BB-sf F XS2076109847 LT B-sf Affirmed B-sf TRANSACTION SUMMARY Cairn CLO XI DAC is a cash flow collateralised loan obligation (CLO) of mostly European leveraged loans and bonds. The transaction is in its reinvestment period and the portfolio is actively managed by Cairn Loan Investments II LLP. KEY RATING DRIVERS Outlooks Revised to Stable (Positive): Fitch has revised the Outlooks on the class E and F notes to Stable from Negative as the coronavirus baseline stress no longer drives the Outlook. The Stable Outlook reflects the default rate cushion that each tranche benefit from at its current rating. Asset Performance Resilient to the Pandemic (Neutral): Asset performance has been stable since Fitch's last review. It is 0.7% above par as of the latest investor report available. All coverage tests are passing. Exposure to assets with a Fitch-derived rating of 'CCC+' and below is 6.9%, compared with the 7.5% limit. There is no exposure to defaulted assets. Average Credit-quality Portfolio (Neutral): Fitch assesses the average credit quality of the obligors to be in the 'B'/'B-' category. The Fitch weighted average rating factor (WARF) calculated by Fitch of the current portfolio as of 26 June 2021 is 34.7, while it was reported as 34.86 against a maximum of 35.0 in the 8 June 2021 monthly report. High Recovery Expectations (Positive): The portfolio comprises senior secured obligations. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. The Fitch weighted average recovery rate (WARR) of the current portfolio is reported by the trustee at 64.1% as of 8 June 2021 compared with a minimum of 63.1%. Diversified Portfolio (Positive): The portfolio is well diversified across obligors, countries and industries despite the amortisation. The top 10 obligor concentration is 11.1% and no obligor represents more than 1.2% of the portfolio balance. The largest Fitch industry as calculated by Fitch represents 15.2% and the three largest Fitch industries 38.1%, both within their respective limits of 17.5% and 40.0%. RATING SENSITIVITIES Factor that could, individually or collectively, lead to positive rating action/upgrade: -- At closing, Fitch used a standardised stress portfolio (Fitch's Stressed Portfolio) that was customised to the portfolio limits as specified in the transaction documents. Even if the actual portfolio shows lower defaults and smaller losses (at all rating levels) than Fitch's Stressed Portfolio assumed at closing, an upgrade of the notes during the reinvestment period is unlikely as the portfolio credit quality may still deteriorate, not only through natural credit migration, but also through reinvestments and since the manager has the possibility to update the Fitch collateral quality tests. -- Upgrades may occur after the end of the reinvestment period on better-than-expected portfolio credit quality and deal performance, leading to higher credit enhancement and excess spread available to cover for losses in the remaining portfolio. Factor that could, individually or collectively, lead to negative rating action/downgrade: -- Downgrades may occur if the build-up of credit enhancement following amortisation does not compensate for a larger loss expectation than initially assumed due to unexpected high levels of defaults and portfolio deterioration. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Structured Finance transactions have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of seven notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of seven notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings are based on historical performance. 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 Cairn CLO XI DAC Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. The majority of the underlying assets or risk presenting entities have ratings or credit opinions from Fitch and/or other Nationally Recognized Statistical Rating Organizations and/or European Securities and Markets Authority registered rating agencies. Fitch has relied on the practices of the relevant groups within Fitch and/or other rating agencies to assess the asset portfolio information or information on the risk presenting entities. Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. CARLYLE EURO 2017-3: S&P Assigns B- Rating on Class E Notes ----------------------------------------------------------- S&P Global Ratings assigned its 'AAA (sf)' credit rating to Carlyle Euro CLO 2017-3 DAC's class A-1-R notes. At the same time, S&P affirmed its ratings on the class A-2-A, A-2-B, B-1, B-2, C, D, and E notes. On June 29, 2021, the issuer refinanced the original class A-1 notes by issuing replacement notes of the same notional. The replacement notes are largely subject to the same terms and conditions as the original notes, except for the following: -- The replacement notes have a lower spread over Euro Interbank Offered Rate (EURIBOR) than the original notes. -- The new non-call period will end on Sept. 29, 2022. -- The portfolio shall consist of not more than 5.0% of current pay obligations, an increase from 2.5%. The rating assigned to Carlyle Euro CLO 2017-3's refinanced notes reflect its assessment of: -- The diversified collateral pool, which consists primarily of broadly syndicated speculative-grade senior secured term loans and bonds that are governed by collateral quality tests. -- The credit enhancement provided through the subordination of cash flows, excess spread, and overcollateralization. -- The collateral manager's experienced team, which can affect the performance of the rated notes through collateral selection, ongoing portfolio management, and trading. -- The transaction's legal structure, which S&P considers to be bankruptcy remote. -- The transaction's counterparty risks, which are in line with S&P's counterparty rating framework. Under the transaction documents, the rated notes pay quarterly interest unless there is a frequency switch event. Following this, the notes will permanently switch to semiannual payment. The portfolio's reinvestment period will end in July 2022. S&P said, "In our cash flow analysis, we used a EUR390.99 million adjusted collateral principal amount and the actual weighted-average spread, weighted-average coupon, and weighted-average recovery rates for all rating levels. "We applied various cash flow stress scenarios, using four different default patterns, in conjunction with different interest rate stress scenarios for each liability rating category. "Elavon Financial Services DAC is the bank account provider and custodian. We consider the documented downgrade remedies to be in line with our counterparty criteria. "Following the application of our structured finance sovereign risk criteria, we consider the transaction's exposure to country risk to be limited at the assigned rating, as the exposure to individual sovereigns does not exceed the diversification thresholds outlined in our criteria. "At closing, we consider the transaction's legal structure to be bankruptcy remote and in line with our legal criteria. "Following our analysis of the credit, cash flow, counterparty, operational, and legal risks, we believe that our rating is commensurate with the available credit enhancement for the class A-1-R notes. We have therefore assigned our 'AAA (sf)' rating to these refinanced notes. At the same time, we have affirmed our ratings on the class A-2-A, A-2-B, B-1, B-2, C, D, and E notes. Our credit and cash flow analysis indicates that the available credit enhancement for the class A-2-A to E notes could withstand stresses commensurate with higher ratings than those we have assigned. However, as the CLO is in its reinvestment phase, during which the transaction's credit risk profile could deteriorate, we have capped our assigned ratings on the notes." Environmental, social, and governance (ESG) credit factors S&P said, "We regard the exposure to ESG credit factors in the transaction as being broadly in line with our benchmark for the sector. Primarily due to the diversity of the assets within CLOs, the exposure to environmental credit factors is viewed as below average, social credit factors are below average, and governance credit factors are average. For this transaction, the documents prohibit assets for which the obligor's primary business activity is related to tobacco and tobacco products. Accordingly, since the exclusion of assets from these industries does not result in material differences between the transaction and our ESG benchmark for the sector, no specific adjustments have been made in our rating analysis to account for any ESG-related risks or opportunities." S&P Global Ratings believes there remains high, albeit moderating, uncertainty about the evolution of the coronavirus pandemic and its economic effects. Vaccine production is ramping up and rollouts are gathering pace around the world. Widespread immunization, which will help pave the way for a return to more normal levels of social and economic activity, looks to be achievable by most developed economies by the end of the third quarter. However, some emerging markets may only be able to achieve widespread immunization by year-end or later. S&P said, "We use these assumptions about vaccine timing in assessing the economic and credit implications associated with the pandemic. As the situation evolves, we will update our assumptions and estimates accordingly." Carlyle Euro CLO 2017-3 is a broadly syndicated CLO managed by CELF Advisors LLP. Ratings Assigned CLASS RATING AMOUNT REPLACEMENT ORIGINAL SUB(%) (MIL. EUR) NOTES NOTES INTEREST INTEREST RATE* RATE A-1-R AAA (sf) 234.00 Three-month Three-month 40.40 EURIBOR EURIBOR plus 0.70% plus 0.74% RATINGS AMOUNT AFFIRMED RATING (MIL. EUR) NOTES INTEREST RATE A-2-A AA (sf) 29.50 Three-month EURIBOR plus 1.18% A-2-B AA (sf) 15.00 1.90% B-1 A (sf) 26.50 Three-month EURIBOR plus 1.70% B-2 A (sf) 10.00 Three-month EURIBOR plus 1.70% C BBB (sf) 20.50 Three-month EURIBOR plus 2.50% D BB (sf) 23.50 Three-month EURIBOR plus 4.58% E B- (sf) 11.10 Three-month EURIBOR plus 6.25% *The payment frequency switches to semiannual and the index switches to six-month EURIBOR when a frequency switch event occurs. EURIBOR--Euro Interbank Offered Rate. N/A--Not applicable. CIFC HYDE 2021: Moody's Assigns (P)B3 Rating to EUR11.6MM F Notes ----------------------------------------------------------------- Moody's Investors Service announced that it has assigned the following provisional ratings to the notes to be issued by CIFC Hyde Park European Funding 2021 DAC (the "Issuer"): EUR248,000,000 Class A Senior Secured Floating Rate Notes due 2035, Assigned (P)Aaa (sf) EUR27,000,000 Class B-1 Senior Secured Floating Rate Notes due 2035, Assigned (P)Aa2 (sf) EUR14,000,000 Class B-2 Senior Secured Fixed Rate Notes due 2035, Assigned (P)Aa2 (sf) EUR26,000,000 Class C Senior Secured Deferrable Floating Rate Notes due 2035, Assigned (P)A2 (sf) EUR26,000,000 Class D Senior Secured Deferrable Floating Rate Notes due 2035, Assigned (P)Baa3 (sf) EUR20,200,000 Class E Senior Secured Deferrable Floating Rate Notes due 2035, Assigned (P)Ba3 (sf) EUR11,600,000 Class F Senior Secured Deferrable Floating Rate Notes due 2035, Assigned (P)B3 (sf) RATINGS RATIONALE The rationale for the ratings is based on a consideration of the risks associated with the CLO's portfolio and structure as described in Moody's methodology. The Issuer is a managed cash flow CLO. At least 90% of the portfolio must consist of senior secured obligations and up to 10% of the portfolio may consist of senior unsecured obligations, second-lien loans, mezzanine obligations and high yield bonds. The portfolio is expected to be 80% ramped up as of the closing date and to comprise of predominantly corporate loans to obligors domiciled in Western Europe. The remainder of the portfolio will be acquired during the six month ramp-up period in compliance with the portfolio guidelines. CIFC Asset Management Europe Ltd ("CIFC") will manage the CLO. It will direct the selection, acquisition and disposition of collateral on behalf of the Issuer and may engage in trading activity, including discretionary trading, during the transaction's 4.75 year reinvestment period. Thereafter, subject to certain restrictions, purchases are permitted using principal proceeds from unscheduled principal payments and proceeds from sales of credit risk obligations or credit improved obligations. In addition to the seven classes of notes rated by Moody's, the Issuer will issue EUR17,450,000 Class Y Notes due 2035 and EUR34,900,000 Subordinated Notes due 2035 which are not rated. The Class Y Notes accrue interest in an amount equivalent to a certain proportion of the subordinated management fees and its notes' payment is pari passu with the payment of the subordinated management fee. The transaction incorporates interest and par coverage tests which, if triggered, divert interest and principal proceeds to pay down the notes in order of seniority. Methodology underlying the rating action: The principal methodology used in these ratings was "Moody's Global Approach to Rating Collateralized Loan Obligations" published in December 2020. Factors that would lead to an upgrade or downgrade of the ratings: The rated notes' performance is subject to uncertainty. The notes' performance is sensitive to the performance of the underlying portfolio, which in turn depends on economic and credit conditions that may change. The collateral manager's investment decisions and management of the transaction will also affect the notes' performance. Moody's modeled the transaction using a cash flow model based on the Binomial Expansion Technique, as described in Section 2.3 of the "Moody's Global Approach to Rating Collateralized Loan Obligations" rating methodology published in December 2020. Moody's used the following base-case modeling assumptions: Par Amount: EUR400,000,000 Diversity Score: 45 Weighted Average Rating Factor (WARF): 2950 Weighted Average Spread (WAS): 3.60% Weighted Average Coupon (WAC): 4.50% Weighted Average Recovery Rate (WARR): 44.00% Weighted Average Life (WAL): 9.15 years CVC CORDATUS XVII: Moody's Assigns B3 Rating to EUR16.2MM F Notes ----------------------------------------------------------------- Moody's Investors Service announced that it has assigned the following definitive ratings to notes issued by CVC Cordatus Loan Fund XVII DAC (the "Issuer"): EUR334,800,000 Class A-R Senior Secured Floating Rate Notes due 2033, Definitive Rating Assigned Aaa (sf) EUR32,350,000 Class B-1-R Senior Secured Floating Rate Notes due 2033, Definitive Rating Assigned Aa2 (sf) EUR20,300,000 Class B-2-R Senior Secured Fixed Rate Notes due 2033, Definitive Rating Assigned Aa2 (sf) EUR33,750,000 Class C-R Senior Secured Deferrable Floating Rate Notes due 2033, Definitive Rating Assigned A2 (sf) EUR39,150,000 Class D-R Senior Secured Deferrable Floating Rate Notes due 2033, Definitive Rating Assigned Baa3 (sf) EUR25,650,000 Class E-R Senior Secured Deferrable Floating Rate Notes due 2033, Definitive Rating Assigned Ba3 (sf) EUR16,200,000 Class F Senior Secured Deferrable Floating Rate Notes due 2033, Definitive Rating Assigned B3 (sf) RATINGS RATIONALE The rationale for the ratings is based on a consideration of the risks associated with the CLO's portfolio and structure as described in Moody's methodology. As part of this reset, the Issuer has increased the target par amount by EUR250 million to EUR540 million. In addition, the Issuer has amended the base matrix and modifiers that Moody's will take into account for the assignment of the definitive ratings. The Issuer is a managed cash flow CLO. At least 92.5% of the portfolio must consist of senior secured obligations and up to 7.5% of the portfolio may consist of senior unsecured obligations, second-lien loans, mezzanine obligations and high yield bonds. The portfolio is approximatively 80% ramped up as of the closing date and comprises of predominantly corporate loans to obligors domiciled in Western Europe. The remainder of the portfolio will be acquired during the six month ramp-up period in compliance with the portfolio guidelines. CVC Credit Partners European CLO Management LLP ("CVC") will manage the CLO. It will direct the selection, acquisition and disposition of collateral on behalf of the Issuer and may engage in trading activity, including discretionary trading, during the transaction's 4.4 years reinvestment period. Thereafter, subject to certain restrictions, purchases are permitted using principal proceeds from unscheduled principal payments and proceeds from sales of credit risk obligations and credit improved obligations. In addition to the seven classes of notes rated by Moody's, the Issuer originally issued EUR46,100,000 of Subordinated notes which will remain outstanding The transaction incorporates interest and par coverage tests which, if triggered, divert interest and principal proceeds to pay down the notes in order of seniority. Methodology Underlying the Rating Action: The principal methodology used in these ratings was "Moody's Global Approach to Rating Collateralized Loan Obligations" published in December 2020. Factors that would lead to an upgrade or downgrade of the ratings: The rated notes' performance is subject to uncertainty. The notes' performance is sensitive to the performance of the underlying portfolio, which in turn depends on economic and credit conditions that may change. The collateral manager's investment decisions and management of the transaction will also affect the notes' performance. Moody's modeled the transaction using a cash flow model based on the Binomial Expansion Technique, as described in Section 2.3 of the "Moody's Global Approach to Rating Collateralized Loan Obligations" rating methodology published in December 2020. Moody's used the following base-case modeling assumptions: Par Amount: EUR540,000,000 Diversity Score: 50 Weighted Average Rating Factor (WARF): 3100 Weighted Average Spread (WAS): 3.70% Weighted Average Coupon (WAC): 4.75% Weighted Average Recovery Rate (WARR): 44.5% Weighted Average Life (WAL): 8.5 years CVC CORDATUS XVII: S&P Assigns B- Rating on Class F-R Notes ----------------------------------------------------------- S&P Global Ratings assigned credit ratings to the class A-R to F-R European cash flow CLO notes issued by CVC Cordatus Loan Fund XVII DAC. At closing, the issuer also issued unrated subordinated notes. The transaction is a reset of the existing CVC Cordatus Loan Fund XVII DAC, which closed in June 2020. The issuance proceeds of the reset notes will be used to redeem the notes (class A, B, C, D, and E of the original CVC Cordatus Loan Fund XVII DAC transaction), and pay fees and expenses incurred in connection with the reset. The ratings reflect our assessment of: -- The diversified collateral pool, which primarily comprises broadly syndicated speculative-grade senior secured term loans and bonds that are governed by collateral quality tests. -- The credit enhancement provided through the subordination of cash flows, excess spread, and overcollateralization. -- The collateral manager's experienced team, which can affect the performance of the rated notes through collateral selection, ongoing portfolio management, and trading. -- The transaction's legal structure, which is bankruptcy remote. -- The transaction's counterparty risks, which is in line with S&P's counterparty rating framework. Under the transaction documents, the rated notes will pay quarterly interest unless there is a frequency switch event. Following this, the notes will permanently switch to semiannual payment. The portfolio's reinvestment period will end approximately 4.4 years after closing, and the portfolio's maximum average maturity date will be eight and a half years after closing. This transaction has a EUR1.5 million liquidity facility provided by The Bank of New York Mellon for a maximum of four years with the drawn margin of 2.50%. For the purpose of our cash flows, we have added this amount to the class A-R notes' balance, since the liquidity facility payment amounts rank senior to the interest payments on the rated notes. Portfolio Benchmarks CURRENT S&P Global Ratings weighted-average rating factor 2,882.45 Default rate dispersion 523.87 Weighted-average life (years) 5.323 Obligor diversity measure 143.764 Industry diversity measure 21.584 Regional diversity measure 1.282 Transaction Key Metrics CURRENT Total par amount (mil. EUR) 540.0 Defaulted assets (mil. EUR) 0 Number of performing obligors 176 Portfolio weighted-average rating derived from S&P's CDO evaluator 'B' 'CCC' category rated assets (%) 2.81 'AAA' weighted-average recovery (covenanted) (%) 35.75 Covenanted weighted-average spread (%) 3.70 Reference weighted-average coupon (%) 4.75 Workout loan mechanics Under the transaction documents, the issuer can purchase workout loans, which are bonds or loans the issuer acquired in connection with a restructuring of a related defaulted obligation or credit impaired obligation, to improve its recovery value. The purchase of workout loans is not subject to the reinvestment criteria or the eligibility criteria. It receives no credit in the principal balance definition, although where the workout loan meets the eligibility criteria with certain exclusions and is either (1) acquired using principal proceeds or (2) designated a declared principal proceeds workout loan, it is accorded defaulted treatment in the par coverage tests. The cumulative exposure to loss mitigation loans purchased using interest or principal proceeds is limited to 10.0% of target par. The issuer may purchase workout loans using either interest proceeds, principal proceeds, or amounts in the collateral enhancement account. The use of interest proceeds to purchase workout loans are subject to (i) all the interest and par coverage tests passing following the purchase, and (ii) the manager determining there are sufficient interest proceeds to pay interest on all the rated notes on the upcoming payment date. The use of principal proceeds is subject to passing par coverage tests, and the manager having built sufficient excess par in the transaction so that the aggregate collateral amount is equal to or exceeding the portfolio's reinvestment target par balance after the acquisition. To protect the transaction from par erosion, any distributions received from workout loans will form part of the issuer's principal account proceeds. S&P said, "The portfolio is well-diversified, primarily comprising broadly syndicated speculative-grade senior secured term loans and senior secured bonds. Therefore, we have conducted our credit and cash flow analysis by applying our criteria for corporate cash flow CDOs. As such, we have not applied any additional scenario and sensitivity analysis when assigning ratings to any classes of notes in this transaction. "In our cash flow analysis, we used the EUR540 million target par amount, the covenanted weighted-average spread (3.70%), the reference weighted-average coupon (4.75%), and the covenanted weighted-average recovery rates. We applied various cash flow stress scenarios, using four different default patterns, in conjunction with different interest rate stress scenarios for each liability rating category." Principal transfer test This transaction also features a principal transfer test. Following the expiry of the non-call period, and following the payment of deferred interest on the class F-R notes, interest proceeds above 101% of the class F-R interest coverage amount can be paid into the principal account. As this is at the discretion of the collateral manager, S&P has considered scenarios in its cash flow analysis where such amounts are not made. Under S&P's structured finance sovereign risk criteria, it considers that the transaction's exposure to country risk is sufficiently mitigated at the assigned ratings. The transaction's documented counterparty replacement and remedy mechanisms adequately mitigate its exposure to counterparty risk under S&P's current counterparty criteria. The transaction's legal structure is bankruptcy remote, in line with our legal criteria. S&P said, "Following our analysis of the credit, cash flow, counterparty, operational, and legal risks, we believe our ratings are commensurate with the available credit enhancement for the class A-R to E-R notes. Our credit and cash flow analysis indicates that the available credit enhancement for the class B-1-R to E-R notes could withstand stresses commensurate with higher rating levels than those we have assigned. However, as the CLO will be in its reinvestment phase starting from closing, during which the transaction's credit risk profile could deteriorate, we have capped our ratings assigned to the notes. "The class F-R notes' current break-even default rate (BDR) cushion is -0.01%. Based on the portfolio's actual characteristics and additional overlaying factors, including our long-term corporate default rates and the class F-R notes' credit enhancement, this class is able to sustain a steady-state scenario, in accordance with our criteria." S&P's analysis further reflects several factors, including: -- The class F-R notes' available credit enhancement is in the same range as that of other CLOs we have rated and that have recently been issued in Europe. -- S&P's model-generated portfolio default risk at the 'B-' rating level is 28.64% (for a portfolio with a weighted-average life of 5 years) versus 16.50% if it was to consider a long-term sustainable default rate of 3.1% for 5.3 years. -- Whether the tranche is vulnerable to nonpayment in the near future -- If there is a one-in-two chance for this note to default. -- If S&P envisions this tranche to default in the next 12-18 months. -- Following this analysis, S&P considers that the available credit enhancement for the class F-R notes is commensurate with a 'B- (sf)' rating. -- The transaction securitizes a portfolio of primarily senior secured leveraged loans and bonds, and is managed by CVC Credit Partners European CLO Management LLP. S&P said, "In addition to our standard analysis, to provide an indication of how rising pressures among speculative-grade corporates could affect our ratings on European CLO transactions, we have also included the sensitivity of the ratings on the class A-R to F-R notes to five of the 10 hypothetical scenarios we looked at in our recent publication. The results shown in the chart below are based on the actual weighted-average spread, coupon, and recoveries. "For the class E-R and F-R notes, our ratings analysis makes additional considerations before assigning ratings in the 'CCC' category, and we would assign a 'B-' rating if the criteria for assigning a 'CCC' category rating are not met." Environmental, social, and governance factors S&P said, "We regard the exposure to ESG credit factors in the transaction as being broadly in line with our benchmark for the sector. Primarily due to the diversity of the assets within CLOs, the exposure to environmental credit factors is viewed as below average, social credit factors are below average, and governance credit factors are average. For this transaction, the documents prohibit assets from being related to the following industries: production or marketing of controversial weapons, tobacco or tobacco-related products, nuclear weapons, thermal coal production, speculative extraction of oil and gas, pornography or prostitution, or opioid manufacturing and distribution. Accordingly, since the exclusion of assets from these industries does not result in material differences between the transaction and our ESG benchmark for the sector, no specific adjustments have been made in our rating analysis to account for any ESG-related risks or opportunities." Ratings List CLASS RATING AMOUNT INTEREST RATE CREDIT (MIL. EUR) ENHANCEMENT(%) A-R AAA (sf) 334.80 Three/six-month EURIBOR 38.00 plus 0.94% B-1-R AA (sf) 32.35 Three/six-month EURIBOR 28.25 plus 1.60% B-2-R AA (sf) 20.30 2.00% 28.25 C-R A (sf) 33.75 Three/six-month EURIBOR 22.00 plus 2.15% D-R BBB- (sf) 39.15 Three/six-month EURIBOR 14.75 plus 3.15% E-R BB- (sf) 25.65 Three/six-month EURIBOR 10.00 plus 6.12% F-R B- (sf) 16.20 Three/six-month EURIBOR 7.00 plus 8.56% Sub. notes NR 46.10 N/A N/A EURIBOR--Euro Interbank Offered Rate. NR--Not rated. N/A--Not applicable. DRYDEN 52 EURO 2017: Moody's Assigns B3 Rating to Class F-R Notes ----------------------------------------------------------------- Moody's Investors Service announced that it has assigned the following definitive ratings to refinancing notes issued by Dryden 52 Euro CLO 2017 DAC (the "Issuer"): EUR1,500,000 Class X-R Senior Secured Floating Rate Notes due 2034, Definitive Rating Assigned Aaa (sf) EUR246,000,000 Class A-R Senior Secured Floating Rate Notes due 2034, Definitive Rating Assigned Aaa (sf) EUR16,000,000 Class B-1-R Senior Secured Floating Rate Notes due 2034, Definitive Rating Assigned Aa2 (sf) EUR20,000,000 Class B-2-R Senior Secured Fixed Rate Notes due 2034, Definitive Rating Assigned Aa2 (sf) EUR26,000,000 Class C-R Mezzanine Secured Deferrable Floating Rate Notes due 2034, Definitive Rating Assigned A2 (sf) EUR28,000,000 Class D-R Mezzanine Secured Deferrable Floating Rate Notes due 2034, Definitive Rating Assigned Baa3 (sf) EUR20,000,000 Class E-R Mezzanine Secured Deferrable Floating Rate Notes due 2034, Definitive Rating Assigned Ba3 (sf) EUR15,400,000 Class F-R Mezzanine Secured Deferrable Floating Rate Notes due 2034, Definitive Rating Assigned B3 (sf) RATINGS RATIONALE The rationale for the ratings is based on a consideration of the risks associated with the CLO's portfolio and structure as described in Moody's methodology. Interest and principal amortisation amounts due to the Class X-R Notes are paid pro rata with payments to the Class A-R Notes. The Class X-R Notes amortise by 25% or EUR375,000 over the 4 payment dates, starting on the second payment date. As part of this reset, the Issuer has amended the base matrix and modifiers that Moody's has taken into account for the assignment of the definitive ratings. The Issuer is a managed cash flow CLO. At least 90% of the portfolio must consist of senior secured obligations and up to 10% of the portfolio may consist of senior unsecured obligations, second-lien loans, mezzanine obligations and high yield bonds. The portfolio is expected to be 100% ramped as of the closing date and to comprise of predominantly corporate loans to obligors domiciled in Western Europe. PGIM Loan Originator Manager Limited and PGIM Limited (together "PGIM") will continue managing the CLO. It will direct the selection, acquisition and disposition of collateral on behalf of the Issuer and may engage in trading activity, including discretionary trading, during the transaction's two year reinvestment period. Thereafter, subject to certain restrictions, purchases are permitted using principal proceeds from unscheduled principal payments and proceeds from sales of credit risk obligations or credit improved obligations. The transaction incorporates interest and par coverage tests which, if triggered, divert interest and principal proceeds to pay down the Notes in order of seniority. The coronavirus pandemic has had a significant impact on economic activity. Although global economies have shown a remarkable degree of resilience to date and are returning to growth, the uneven effects on individual businesses, sectors and regions will continue throughout 2021 and will endure as a challenge to the world's economies well beyond the end of the year. While persistent virus fears remain the main risk for a recovery in demand, the economy will recover faster if vaccines and further fiscal and monetary policy responses bring forward a normalization of activity. As a result, there is a heightened degree of uncertainty around Moody's forecasts. Moody's analysis has considered the effect on the performance of European corporate assets from a gradual and unbalanced recovery in European economic activity. Moody's regard the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. Methodology underlying the rating action: The principal methodology used in these ratings was "Moody's Global Approach to Rating Collateralized Loan Obligations" published in December 2020. Factors that would lead to an upgrade or downgrade of the ratings: The rated Notes' performance is subject to uncertainty. The Notes' performance is sensitive to the performance of the underlying portfolio, which in turn depends on economic and credit conditions that may change. The collateral manager's investment decisions and management of the transaction will also affect the Notes' performance. Moody's modeled the transaction using a cash flow model based on the Binomial Expansion Technique, as described in Section 2.3 of the "Moody's Global Approach to Rating Collateralized Loan Obligations" rating methodology published in December 2020. Moody's used the following base-case modeling assumptions: Par Amount: EUR400,000,000 Diversity Score: 53 Weighted Average Rating Factor (WARF): 3143 Weighted Average Spread (WAS): 3.80% Weighted Average Coupon (WAC): 4.05% Weighted Average Recovery Rate (WARR): 41.50% Weighted Average Life (WAL): 8.5 years DRYDEN 52 EURO 2017: S&P Assigns B- Rating on Class F-R Notes ------------------------------------------------------------- S&P Global Ratings assigned credit ratings to Dryden 52 Euro CLO 2017 DAC's class X-R, A-R, B-1-R, B-2-R, C-R, D-R, E-R, and F-R notes. The issuer also issued subordinated notes. The transaction is a reset of the existing Dryden 52 Euro CLO 2017 transaction which originally closed in July 2017. The issuance proceeds of the refinancing notes were used to redeem the refinanced notes (the class A-1, B-1, B-2, C-1, C-2, D, E, and F notes), pay fees and expenses incurred in connection with the reset, and fund the acquisition of additional assets. The ratings reflect S&P's assessment of: -- The diversified collateral pool, which primarily comprises broadly syndicated speculative-grade senior-secured term loans and bonds that are governed by collateral quality tests. -- The credit enhancement provided through the subordination of cash flows, excess spread, and overcollateralization. -- The collateral manager's experienced team, which can affect the performance of the rated notes through collateral selection, ongoing portfolio management, and trading. -- The transaction's legal structure is considered bankruptcy remote. -- The transaction's counterparty risks are in line with its counterparty rating framework. Portfolio Benchmarks CURRENT S&P weighted-average rating factor 2,917.25 Default rate dispersion 622.15 Weighted-average life (years) 4.42 Obligor diversity measure 92.25 Industry diversity measure 18.48 Regional diversity measure 1.28 Transaction Key Metrics CURRENT Portfolio weighted-average rating derived from S&P's CDO evaluator B 'CCC' category rated assets (%) 6.86 'AAA' weighted-average recovery (%) 34.90 Covenanted weighted-average spread (%) 3.85 Covenanted weighted-average coupon (%) 4.15 Loss mitigation obligations Under the transaction documents, the issuer can purchase loss mitigation obligations, which are assets of an existing collateral obligation held by the issuer offered in connection with bankruptcy, workout, or restructuring of such obligation, to improve the recovery value of the related collateral obligation. Loss mitigation obligations allow the issuer to participate in potential new financing initiatives by the borrower in default. This feature aims to mitigate the risk of other market participants taking advantage of CLO restrictions, which typically do not allow the CLO to participate in a defaulted entity's new financing request. Hence, this feature increases the chance of a higher recovery for the CLO. While the objective is positive, it can also lead to par erosion, as additional funds will be placed with an entity that is under distress or in default. This may cause greater volatility in our ratings if the obligation's positive effect does not materialize. In S&P's view, the presence of a bucket for loss mitigation obligations, the restrictions on the use of interest and principal proceeds to purchase such assets, and the limitations in reclassifying proceeds received from such assets from principal to interest help to mitigate the risk. The purchase of loss mitigation obligations is not subject to the reinvestment criteria or the eligibility criteria. The issuer may purchase loss mitigation obligations using interest proceeds, principal proceeds, or amounts in the collateral enhancement account. The use of interest proceeds to purchase loss mitigation obligations is subject to: -- The manager determining that after the purchase there are sufficient interest proceeds to pay interest on all the rated notes on the upcoming payment date; and -- Following the purchase, each interest coverage test must be satisfied by at least 25%. The use of principal proceeds is subject to: -- Passing par coverage tests; -- The manager having built sufficient excess par in the transaction so that the aggregate collateral balance is equal to or exceeds the portfolio's reinvestment target par balance after the reinvestment, or, if not the case, the amount of principal proceeds to be applied to the purchase does not exceed the outstanding principal balance of the related defaulted obligation or credit impaired obligation; -- The obligation meeting the restructured obligation criteria; -- The obligation ranking senior to, or pari passu with, the related defaulted or credit impaired obligation; -- The obligation not maturing after the maturity date; and -- The obligation having a par value greater than or equal to its purchase price. Loss mitigation obligations purchased with principal proceeds, which have limited deviation from the eligibility criteria due to meeting the restructured obligation criteria, will receive collateral value credit for principal balance and overcollateralization carrying value purposes. Loss mitigation obligations purchased with interest or collateral enhancement proceeds will receive zero credit. Any distributions received from loss mitigation obligations purchased with the use of principal proceeds will form part of the issuer's principal account proceeds and cannot be recharacterized as interest. Any other amounts can form part of the issuer's interest account proceeds. The manager may, at their sole discretion, elect to classify amounts received from any loss mitigation obligations as principal proceeds. In this transaction, if a loss mitigation obligation that was originally purchased with interest subsequently becomes an eligible collateral debt obligation, the manager can designate it as such and transfer out of the principal account into the interest account the market value of the asset. S&P considered the alignment of interests for this re-designation and considered, for example, that the reinvestment criteria has to be satisfied following the re-designation and that the market value of the eligible collateral debt obligation cannot be self-marked by the manager, among other factors. The exposure to loss mitigation obligations purchased with principal is limited to 5% of the target par amount. The exposure to loss mitigation obligations purchased with principal and interest is limited to 10% of the target par amount. Rating rationale Under the transaction documents, the rated notes pay quarterly interest unless a frequency switch event occurs. Following this, the notes will switch to semiannual payments. The portfolio's reinvestment period will end approximately 2.1 years after closing. The portfolio is well-diversified, primarily comprising broadly syndicated speculative-grade senior-secured term loans and senior-secured bonds. Therefore, S&P has conducted its credit and cash flow analysis by applying our criteria for corporate cash flow CDOs. S&P said, "In our cash flow analysis, we used the EUR400 million target par amount, the covenanted weighted-average spread (3.85%), the reference weighted-average coupon (4.15%), and the actual weighted-average recovery rates. We applied various cash flow stress scenarios, using four different default patterns, in conjunction with different interest rate stress scenarios for each liability rating category. "Under our structured finance sovereign risk criteria, we consider that the transaction's exposure to country risk is sufficiently mitigated at the assigned ratings. Until the end of the reinvestment period on Aug. 15, 2023, the collateral manager may substitute assets in the portfolio for so long as our CDO Monitor test is maintained or improved in relation to the initial ratings on the notes. This test looks at the total amount of losses that the transaction can sustain as established by the initial cash flows for each rating, and it compares that with the current portfolio's default potential plus par losses to date. As a result, until the end of the reinvestment period, the collateral manager may through trading deteriorate the transaction's current risk profile, as long as the initial ratings are maintained. The transaction's documented counterparty replacement and remedy mechanisms adequately mitigate its exposure to counterparty risk under our current counterparty criteria. S&P considers the transaction's legal structure and framework bankruptcy remote, in line with our legal criteria. S&P said, "Following our analysis of the credit, cash flow, counterparty, operational, and legal risks, we believe our ratings are commensurate with the available credit enhancement for the class X-R to E-R notes. Our credit and cash flow analysis indicates that the available credit enhancement for the class B-1-R, B-2-R, C-R, and D-R notes could withstand stresses commensurate with higher ratings than those we have assigned. However, as the CLO will be in its reinvestment phase starting from closing, during which the transaction's credit risk profile could deteriorate, we have capped our ratings assigned to the notes. "For the class F-R notes, our credit and cash flow analysis indicates that the available credit enhancement is commensurate with a lower rating. However, after applying our 'CCC' criteria, we have assigned a 'B-' rating to this class of notes." The uplift to 'B-' reflects several key factors, including: -- The available credit enhancement for this class of notes is in the same range as other CLOs that we rate, and that have recently been issued in Europe. -- The portfolio's average credit quality is similar to other recent CLOs. S&P sid, "Our model generated BDR at the 'B-' rating level of 20.71% (for a portfolio with a weighted-average life of 4.43 years), versus if we were to consider a long-term sustainable default rate of 3.1% for 4.43 years, which would result in a target default rate of 13.73%. "In addition to our standard analysis, to provide an indication of how rising pressures among speculative-grade corporates could affect our ratings on European CLO transactions, we have also included the sensitivity of the ratings on the class X-R to E-R notes to five of the 10 hypothetical scenarios we looked at in our publication "How Credit Distress Due To COVID-19 Could Affect European CLO Ratings," published on April 2, 2020. "As our ratings analysis makes additional considerations before assigning ratings in the 'CCC' category, and we would assign a 'B-' rating if the criteria for assigning a 'CCC' category rating are not met, we have not included the above scenario analysis results for the class F-R notes." Environmental, social, and governance (ESG) credit factors S&P aid, "We regard the exposure to ESG credit factors in the transaction as being broadly in line with our benchmark for the sector. Primarily due to the diversity of the assets within CLOs, the exposure to environmental credit factors is viewed as below average, social credit factors are below average, and governance credit factors are average. PGIM Fixed Income factors ESG considerations throughout the investment analysis and decision-making processes for all strategies across issuers and asset classes. Since we do not consider there to be a material difference between the transaction and our ESG benchmark for the sector, no specific adjustments have been made in our rating analysis to account for any ESG-related risks or opportunities." The transaction securitizes a portfolio of primarily senior-secured leveraged loans and bonds, and it will be managed by PGIM Loan Originator Manager Ltd. Ratings List CLASS RATING AMOUNT INTEREST RATE (%) CREDIT (MIL. EUR) ENHANCEMENT (%) X-R AAA (sf) 1.50 3mE + 0.50 N/A A-R AAA (sf) 246.00 3mE + 0.86 38.50 B-1-R AA (sf) 16.00 3mE + 1.60 29.50 B-2-R AA (sf) 20.00 2.00 29.50 C-R A (sf) 26.00 3mE + 2.15 23.00 D-R BBB (sf) 28.00 3mE + 3.20 16.00 E-R BB- (sf) 20.00 3mE + 6.17 11.00 F-R B- (sf) 15.40 3mE + 8.69 7.15 Subordinated NR 44.50 N/A N/A NR--Not rated. N/A--Not applicable. 3mE--Three-month Euro Interbank Offered Rate. JUBILEE CLO 2017-XVIII: Moody's Affirms B2 Rating on Class F Notes ------------------------------------------------------------------ Moody's Investors Service has upgraded the ratings on the following notes issued by Jubilee CLO 2017-XVIII DAC: EUR50,000,000 Class B Senior Secured Floating Rate Notes due 2030, Upgraded to Aa1 (sf); previously on Jul 5, 2017 Definitive Rating Assigned Aa2 (sf) EUR22,000,000 Class C Deferrable Mezzanine Floating Rate Notes due 2030, Upgraded to A1 (sf); previously on Jul 5, 2017 Definitive Rating Assigned A2 (sf) EUR21,500,000 Class D Deferrable Mezzanine Floating Rate Notes due 2030, Upgraded to Baa1 (sf); previously on Jul 5, 2017 Definitive Rating Assigned Baa2 (sf) Moody's has also affirmed the ratings on the following notes: EUR240,000,000 Class A Senior Secured Floating Rate Notes due 2030, Affirmed Aaa (sf); previously on Jul 5, 2017 Definitive Rating Assigned Aaa (sf) EUR24,500,000 Class E Deferrable Junior Floating Rate Notes due 2030, Affirmed Ba2 (sf); previously on Jul 5, 2017 Definitive Rating Assigned Ba2 (sf) EUR12,000,000 Class F Deferrable Junior Floating Rate Notes due 2030, Affirmed B2 (sf); previously on Jul 5, 2017 Definitive Rating Assigned B2 (sf) Jubilee CLO 2017-XVIII DAC, issued in July 2017, is a collateralised loan obligation (CLO) backed by a portfolio of mostly high-yield senior secured European loans. The portfolio is managed by Alcentra Limited. The transaction's reinvestment period will end in July 2021. RATINGS RATIONALE The rating upgrades on the Class B, C and D notes are primarily a result of the benefit of the short period of time remaining before the end of the reinvestment period in July 2021. The affirmations on the ratings on the Class A, E and F notes are primarily a result of the expected losses on the notes remaining consistent with their current ratings after taking into account the CLO's latest portfolio, its relevant structural features and its actual over-collateralization (OC) levels. In light of reinvestment restrictions during the amortisation period, and therefore the limited ability to effect significant changes to the current collateral pool, Moody's analysed the deal assuming a higher likelihood that the collateral pool characteristics would maintain an adequate buffer relative to certain covenant requirements. The key model inputs Moody's uses in its analysis, such as par, weighted average rating factor, diversity score and the weighted average recovery rate, are based on its published methodology and could differ from the trustee's reported numbers. In its base case, Moody's used the following assumptions: Performing par and principal proceeds balance: EUR395,412,408 Defaulted Securities: EUR1,628,269 Diversity Score: 56 Weighted Average Rating Factor (WARF): 3001 Weighted Average Life (WAL): 4.44 years Weighted Average Spread (WAS) (before accounting for Euribor floors): 3.6447% Weighted Average Coupon (WAC): 3.9915% Weighted Average Recovery Rate (WARR): 44.82% Par haircut in OC tests and interest diversion test: 0.3823% The default probability derives from the credit quality of the collateral pool and Moody's expectation of the remaining life of the collateral pool. The estimated average recovery rate on future defaults is based primarily on the seniority of the assets in the collateral pool. In each case, historical and market performance and a collateral manager's latitude to trade collateral are also relevant factors. Moody's incorporates these default and recovery characteristics of the collateral pool into its cash flow model analysis, subjecting them to stresses as a function of the target rating of each CLO liability it is analysing. Methodology Underlying the Rating Action: The principal methodology used in these ratings was "Moody's Global Approach to Rating Collateralized Loan Obligations" published in December 2020. Counterparty Exposure: The rating action took into consideration the notes' exposure to relevant counterparties, such as account bank, using the methodology "Moody's Approach to Assessing Counterparty Risks in Structured Finance" published in May 2021. Moody's concluded the ratings of the notes are not constrained by these risks. Factors that would lead to an upgrade or downgrade of the ratings: This transaction is subject to a high level of macroeconomic uncertainty, which could negatively affect the ratings on the notes, in light of uncertainty about credit conditions in the general economy. In particular, the length and severity of the economic and credit shock precipitated by the global coronavirus pandemic will have a significant impact on the performance of the securities. CLO notes' performance may also be impacted either positively or negatively by: (1) the manager's investment strategy and behaviour; and (2) divergence in the legal interpretation of CDO documentation by different transactional parties because of embedded ambiguities. Additional uncertainty about performance is due to the following: Weighted average life: The notes' ratings are sensitive to the weighted average life assumption of the portfolio, which could lengthen as a result of the manager's decision to reinvest in new issue loans or other loans with longer maturities, or participate in amend-to-extend offerings. Moody's tested for a possible extension of the actual weighted average life in its analysis. The effect on the ratings of extending the portfolio's weighted average life can be positive or negative depending on the notes' seniority. Recovery of defaulted assets: Market value fluctuations in trustee-reported defaulted assets and those Moody's assumes have defaulted can result in volatility in the deal's over-collateralisation levels. Further, the timing of recoveries and the manager's decision whether to work out or sell defaulted assets can also result in additional uncertainty. Moody's analysed defaulted recoveries assuming the lower of the market price or the recovery rate to account for potential volatility in market prices. Recoveries higher than Moody's expectations would have a positive impact on the notes' ratings. PENTA CLO 3: Fitch Affirms B- Rating on Class F Notes ----------------------------------------------------- Fitch Ratings has affirmed Penta CLO 3 DAC's notes and revised the Outlooks on the junior notes to Stable from Negative. DEBT RATING PRIOR ---- ------ ----- Penta CLO 3 DAC A XS1692079509 LT AAAsf Affirmed AAAsf B XS1692080184 LT AAsf Affirmed AAsf C XS1692081075 LT Asf Affirmed Asf D XS1692081588 LT BBBsf Affirmed BBBsf E XS1692082479 LT BB-sf Affirmed BB-sf F XS1692082636 LT B-sf Affirmed B-sf TRANSACTION SUMMARY The transaction is a cash flow CLO, mostly comprising senior secured obligations. The transaction is still within its reinvestment period and is actively managed by Partners Group (UK) Management Ltd. KEY RATING DRIVERS Stable Asset Performance: Penta CLO 3 DAC was below par by 1.35% as of the latest investor report dated 28 May 2021. It was passing all portfolio profile tests, collateral quality tests and coverage tests. As per the trustee report, there is one defaulted asset in the portfolio, with a total principal balance of EUR0.5 million Outlooks Revised to Stable: Fitch has revised the Outlooks on the class E and F notes to Stable from Negative as it no longer runs the coronavirus baseline stress scenario as a driver of the Outlook. The Stable Outlook reflects the default rate cushion that each tranche benefits from at current rating. 'B'/'B-' Portfolio: Fitch assesses the average credit quality of the obligors in the 'B'/'B-' category. The Fitch weighted average rating factor (WARF) calculated by Fitch (assuming unrated assets are CCC) and by the trustee for Penta CLO 3 DAC's current portfolio was 35.51 and 34.93, respectively, versus the maximum covenant of 35.00. High Recovery Expectations: Senior secured obligations comprise at least 99.75% of the portfolio. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. The Fitch weighted average recovery rate (WARR) of the current portfolio by Fitch's calculation is 63.43%. Diversified Portfolio: The portfolio is well-diversified across obligors, countries and industries. The top 10 obligor concentration is no more than 11.4%, and no obligor represents more than 1.3% of the portfolio balance. Model-implied Ratings Deviation: The rating of the class F notes is one notch higher than the model-implied rating (MIR). The current rating is supported by the stable asset performance since the last rating action in October 2020 and available credit enhancement. The class F notes' deviation from the MIR reflects Fitch's view that the tranche has a significant margin of safety due to available credit enhancement. The notes do not present a "real possibility of default", which is the definition of 'CCC' in Fitch's Rating Definitions. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- At closing, Fitch used a standardised stress portfolio (Fitch's Stressed Portfolio) that was customised to the portfolio limits as specified in the transaction documents. Even if the actual portfolio shows lower defaults and smaller losses (at all rating levels) than Fitch's Stressed Portfolio assumed at closing, an upgrade of the notes during the reinvestment period is unlikely as the portfolio credit quality may still deteriorate, not only through natural credit migration, but also through reinvestments and the manager has the possibility to update the Fitch collateral quality tests. -- After the end of the reinvestment period, upgrades may occur in the event of better-than-expected portfolio credit quality and deal performance, leading to higher credit enhancement and excess spread available to cover for losses in the remaining portfolio. Factor that could, individually or collectively, lead to negative rating action/downgrade: -- Downgrades may occur if build-up of the notes' credit enhancement following amortisation does not compensate for a larger loss expectation than initially assumed due to unexpectedly high levels of defaults and portfolio deterioration. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Structured Finance transactions have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of seven notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of seven notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings are based on historical performance. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. The majority of the underlying assets or risk presenting entities have ratings or credit opinions from Fitch and/or other Nationally Recognized Statistical Rating Organizations and/or European Securities and Markets Authority registered rating agencies. Fitch has relied on the practices of the relevant groups within Fitch and/or other rating agencies to assess the asset portfolio information or information on the risk presenting entities. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. VIRGIN MEDIA: Fitch Assigns Final 'B+' LongTerm IDR, Outlook Stable ------------------------------------------------------------------- Fitch Ratings has assigned Virgin Media Ireland Limited (VMI) a final Long-Term Issuer Default Rating (IDR) of 'B+' with a Stable Outlook. Fitch has also assigned VMI's senior secured EUR900 million term loan B a final rating of 'BB' with a Recovery Rating of 'RR2'. The final ratings follow a review of the final documents which conform to information received when Fitch assigned the expected ratings on 9 June 2021. The rating reflects VMI's high leverage relative to investment-grade telecom peers' and a much higher share of advertising revenues from free-to-air (FTA) channel Virgin Media One. It also factors in VMI's weak position in mobile compared with 'BB-' rated peers' and highly competitive fixed and mobile markets. Rating strengths are VMI's leading cable position in Ireland, a sound operating profile with a converged product offering and a strong EBITDA margin. As the company has been carved out of the consolidated reporting entity Virgin Media Inc. (BB-/Stable), Fitch's analysis is based on a limited history of audited financial accounts for VMI up to 2019. KEY RATING DRIVERS Leading Irish Gigabit Operator: VMI is the main cable operator in Ireland and the second-largest fixed provider with a 25.3% share of national fixed broadband subscriptions at end-2020. Its DOCSIS 3.1 network currently provides high-speed broadband coverage to more households than any of its peers. VMI's network is capable of providing gigabit speeds to 48% of Irish homes, exceeding incumbent eircom Holdings (Ireland) Limited whose fibre-to-the home (FTTH) network roll-out covers 34% of homes. Low Penetration Offers Growth Potential: Ireland still has a low penetration of high-speed fixed broadband packages above 100 Mbps with 57% of subscribers receiving less than this at end-2020. Fitch expects subscription growth in these higher average revenue per user (ARPU) packages to continue to outpace lower-speed packages. An unprecedented number of people are working from home due to the pandemic. This has created demand for high-speed connections and VMI's national speed leadership makes it well-placed to capture future market share. As FTTH operators continue their national roll-out, Fitch believes pricing pressure in the high-speed packages and higher customer churn are possible. Limited Covid-19 Impact: Revenue was down 2.6% yoy in 2020, reflecting weaker advertising revenue, lower mobile ARPU and B2B revenue. Lower programming, handset and commercial costs during the year contributed to an EBITDA increase of around 3%. Increased demand for high-speed broadband as people continue to work from home, TV subscriber growth with the launch of TV360 and continued mobile-user growth should see a return to revenue growth in 2021, with margins remaining broadly flat. Highly Competitive Market: The total number of fixed-broadband subscribers in Ireland increased 11% between 2016 and 2020 but national fixed-line retail revenues fell 3% in the same period. This was due partly to a decline in legacy-voice revenues but also reflected an intensely competitive environment. VMI is disciplined in its approach to pricing and upgrading its network to gigabit speeds, while maintaining consistent fixed-line ARPU growth since 1Q20. Increasing Supply of Fibre: National fibre roll-outs by eir, Siro and the National Broadband Plan will increase competition in the high-speed broadband market. eir plans to reach 1.8 million homes with FTTH by 2024 or roughly 75% national coverage. Fixed-mobile convergence is likely to be critical to maintaining market share. VMI's triple-play fixed penetration (voice, broadband and TV services) was reasonably strong at 46.9% at end-2020. However, a growing overlap in coverage with FTTH, its low market share in mobile and a growing national fixed-mobile convergence (FMC) trend mean customer churn for VMI could increase. Low Mobile Market Share: VMI's national share of mobile subscribers is growing but still less than 5%. VMI's EUR10 per month unlimited sim-only contract is one of the cheapest in the market and should support continued market-share growth. If sim-only penetration rises subscriber growth may come at the expense of ARPU, which was around EUR21 in 2020. A meaningful scale in mobile offers greater potential for FMC, which typically leads to increased customer loyalty. At end-2020, VMI's FMC penetration of 11% was low compared with more converged peers'. Volatile Advertising Revenues: Around 12% of 2020 revenue was from advertising on VMI's FTA channel Virgin Media One. TV revenue in 2020 was down EUR14 million or 16.7%, as a result of a decline in TV advertising budgets in Ireland. Advertising revenue is common for converged telecom companies but VMI's advertising revenue represents a higher proportion of sales than 'B+'/'BB-' telecom peers'. FTA revenue carries greater risk of volatility than subscription-based channels where revenue is protected by contracts. High Initial Leverage: Fitch expects controlling shareholder LG to manage leverage at around 5x, which is consistent with their financial policy across some of their other assets. Fitch expects LG to manage cash centrally and see free cash flow (FCF) generation being up-streamed to LG up to a limit of 5x net debt/EBITDA. Fitch expects funds from operations (FFO) net leverage to be maintained at close to around 5x-5.2x, slightly above Fitch's 'B+' upgrade threshold, over the next four years. Low Capex Commitments: Unlike eir and Siro, VMI has not committed to an expansive national fibre roll-out. Where eir is extending their network by up to 300,000 houses per year Fitch expects VMI to increase their footprint modestly at around 20,000 homes passed each year. VMI will likely focus its build on new developments in urban towns and cities. Without the significant footprint expansion of FTTH rollout, VMI's capex is around 20%-21% of revenue. This will likely decline as the company completes the roll-out of its new TV360 set-top boxes to customers over the next three years. DERIVATION SUMMARY VMI's ratings reflect the company's position as the leading cable operator in Ireland with the widest coverage of high-speed broadband homes passed in the country and more than domestic peer eircom Holdings (Ireland) Limited (B+/Positive). Fitch expects healthy FCF generation to support a leveraged balance sheet. Leverage relative to other investment-grade western European telecom operators' is high and a constraint on ratings. VMI has lower EBITDA than other LG assets such as Telenet Group Holding N.V (BB-/Stable) and VodafoneZiggo Group B.V. (B+/Stable). VMI also has a much smaller scale in mobile than its peers with revenue from volatile FTA TV advertising representing a larger share of its total revenue base. KEY ASSUMPTIONS Fitch's key assumptions within its rating case for the issuer include: -- Revenue to grow 1%-2% per year in 2021-2024; -- Fitch-defined EBITDA margin stable at around 38% in 2021-2024; -- Capex at around 21% of revenue in 2021-2024; -- Negative change in working capital at 1.5% of revenue through to 2024; -- Shareholder distributions of EUR30 million-EUR50 million per year in 2021-2024. KEY RECOVERY RATING ASSUMPTIONS -- The recovery analysis assumes that VMI would be considered a going concern (GC) in bankruptcy and that it would be reorganised rather than liquidated; -- A 10% administrative claim; -- Fitch's GC EBITDA estimate of EUR140 million reflects Fitch's view of a sustainable, post-reorganisation EBITDA level upon which Fitch bases the valuation of the company; -- An enterprise value multiple of 6x is used to calculate a post-reorganisation valuation and reflects a distressed multiple; -- Fitch estimates the total amount of debt claims at EUR1 billion, which includes full drawings on an available revolving credit facility (RCF) of EUR100 million. Our recovery analysis indicates a 76% recovery percentage for the senior secured debt, resulting in an instrument rating and a Recovery Rating of 'BB' and 'RR2' respectively. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Strong and stable FCF generation together with a more conservative financial policy resulting in FFO net leverage sustainably below 5.0x; -- Cash flow from operations less capex/gross debt consistently above 5%; -- No deterioration in the competitive or regulatory environment. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- FFO net leverage sustainably above 5.8x; -- Further intensification of competitive pressures leading to deterioration in operational performance. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE Strong Liquidity: All debt is long dated with an EUR900 million term loan having a bullet maturity in 2029. Until then Fitch expects positive FCF generation and access to an undrawn EUR100 million revolving credit facility. Fitch expects VMI to keep its cash at low levels as LG has a record of upstreaming excess cash from subsidiaries. ISSUER PROFILE VMI is the largest cable operator in Ireland with a fully converged product offering covering fixed line and mobile. 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. =================== L U X E M B O U R G =================== ARMORICA LUX: Moody's Assigns First Time B3 Corp Family Rating -------------------------------------------------------------- Moody's Investors Service has assigned a first-time B3 corporate family rating and a B3-PD probability of default rating to Armorica Lux S.ar.l. (idverde), the parent company of idverde, a leading provider of landscaping creation and maintenance services headquartered in France. Concurrently, Moody's has also assigned a B3 rating to the EUR335 million senior secured first lien term loan B due 2028 and to the EUR50 million senior secured first lien revolving credit facility due 2028 to be issued by idverde. Moody's has assigned a stable outlook. Net proceeds from the new term loan, together with EUR35 million of new equity, will be used to refinance the existing EUR350 million term loan, pay transaction fees and increase the cash on balance by EUR11 million. "idverde's B3 rating reflects the company's leading positions in the highly fragmented landscaping services markets in some core European countries " says Lorenzo Re, a Moody's Vice President -- Senior Analyst and lead analyst for Armorica Lux S.ar.l.. "The rating also reflects idverde's narrow business focus, its high leverage and some execution risk related to its acquisitive policy " adds Mr. Re. RATINGS RATIONALE The B3 CFR assigned to idverde reflects its modest scale and narrow business focus, as well as some geographical concentration with more than 80% of revenue generated in France and UK. This is, however, mitigated by the company's large and diversified customer base, including both public and private customers, and by the good revenue visibility, because of good levels of recurring revenues and very high customer retention rates of c.95%. The rating also reflects idverde's initial high leverage, with Moody's adjusted gross debt EBITDA at above 7.0x in 2021 (9.2x in 2020 because it was negatively impacted by Covid). Moody's expects that leverage will decline just below 6.0x at the end of 2022, but this improvement will be dependent on the company growing revenues organically at a mid-single-digit rate and an improvement in its EBITDA margin. EBITDA growth will also be subject to the successful integration of bolt-on acquisitions, where there is a degree of execution risk. While the track record of idverde's operating performance has been limited, the company's recent performance has been good with regards to revenue growth, with double-digit revenue CAGR in the last three years. This was supported by solid underlying market trends, strong execution capabilities and acquisitions. However, idverde's profitability is structurally very low, with Moody's adjusted EBITA margin at 1.6% in 2020. Moody's expects this will slightly improve over time to around 3.6% by 2022 because of synergies from acquisitions and higher operating efficiencies. Notwithstanding low margins, the company has good cash flow generation potential because of modest working capital and capex requirements. Moody's expects free cash flow to remain modest compared to the debt quantum, with FCF / Debt remaining below 3% in the next 12 to 18 months. In addition, continued acquisitions to strengthen market positions, or expand in international markets such as Germany, may strain cash flow generation. Moody's assumes that bolt-on acquisitions will mostly be funded with excess cash, although larger acquisitions, exceeding the cash generation potential of the company, could be supported by cash injections from the shareholder, which would limit the impact on leverage. The commitment to reduce leverage and the potential support from the shareholder were key credit considerations in evaluating the company's financial policy. The rating is supported by the company's solid market position as the leading service provider for commercial landscaping in some European markets, including France, UK the Netherlands, Denmark and, more recently, Germany. idverde is 3.5x times the size of its nearest competitor in its highly fragmented market and benefits from some economies of scale. LIQUIDITY idverde's liquidity is adequate, supported by a EUR45 million cash position pro-forma the transaction and the fully available new EUR50 million RCF. Working capital needs are modest. Moody's expects idverde to maintain positive free cash flow after capital spending of around EUR45 million- EUR50 million per year (including leases). This would leave idverde modest capacity to finance bolt-on-acquisitions through excess cash. The RCF has a maximum senior secured net leverage springing covenant of 7.4x to be tested if the RCF is drawn by more than 40%. Moody's does not expect the covenant to be tested over the next 12-18 months. idverde would have ample capacity under this covenant, in case it is tested. STRUCTURAL CONSIDERATIONS The B3 ratings assigned to the proposed EUR335 million senior secured TLB and EUR50 million RCF are in line with the CFR, reflecting the fact that these instruments represent most of the financial debt and rank pari passu among themselves. The facilities are secured only by pledges on shares, bank accounts and intercompany receivables of material subsidiaries and are guaranteed by all material subsidiaries with a guarantor coverage of at least 80% of the group's EBITDA. The PDR of B3-PD reflects Moody's assumption of a 50% family recovery rate, consistent with an all-loan debt structure with a single financial maintenance covenant. The capital structure includes a EUR76 million shareholder loan that is eligible for equity credit under Moody's criteria. RATIONALE FOR THE STABLE OUTLOOK The stable outlook reflects the company's good revenue and EBITDA growth prospects with Moody's expectation that the company will deleverage from currently high levels of around 7.0x and that EBITDA growth will allow leverage to strengthen to around 6x by year-end 2022. The stable outlook also incorporates the expectation of disciplined capital allocation until the company operates within a more comfortable leverage level for the current rating category of below 7.0x. Large debt-funded acquisitions would exert immediate negative pressure on the rating. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Positive pressure on the rating could develop in case idverde 1) reduces its Moody's-adjusted debt/EBITDA sustainably below 6.0x; 2) maintains positive cash flow generation with FCF/debt of around 5%; and 3) maintains adequate liquidity. Negative pressure on the rating could occur in case of 1) leverage remaining sustainably above 7.0x; 2) negative free cash flow generation; 3) liquidity deterioration such that liquidity becomes weak; or 4) debt-funded acquisitions that would evidence a more aggressive financial policy than reflected in the rating. LIST OF AFFECTED RATINGS Assignments: Issuer: Armorica Lux S.àr.l. LT Corporate Family Rating, Assigned B3 Probability of Default Rating, Assigned B3-PD Senior Secured Bank Credit Facilities, Assigned B3 Outlook Action: Issuer: Armorica Lux S.àr.l. Outlook, Assigned Stable PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. COMPANY PROFILE Armorica Lux S.ar.l. is the parent company of idverde, a leading provider landscaping services in Europe offering a broad range of services for public or private clients across all segments (creation and maintenance) and service types (e.g. design, mowing, gritting). The company has a network of approximately 150 branches covering France, United Kingdom, Netherlands, Denmark and recently Germany, employing more than 7,100 employees. Idverde has a highly diversified customer base, with approximately 14,000 customers, including both large and small public and private entities. In 2020 the company generated EUR671 million of sales and EUR51 million EBITDA (Moody's adjusted). ===================== N E T H E R L A N D S ===================== AFFIDEA BV: Moody's Affirms B2 CFR & Alters Outlook to Stable ------------------------------------------------------------- Moody's Investors Service has changed the outlook of Affidea B.V. to stable from negative. Concurrently, Moody's has affirmed the company's B2 corporate family rating and its probability of default rating at B2-PD. At the same time, Moody's has affirmed the company's B2 rating assigned to the EUR450 million senior secured term loan B and EUR130 million senior secured multi currency revolving credit facility, both due in 2026. RATINGS RATIONALE The rating action reflects the improvement in Affidea's performance since the first wave of the coronavirus pandemic, including higher revenues and earnings over 2020 than the agency initially anticipated in June 2020, and the agency's expectation that key credit metrics will remain adequately positioned for the company's rating category over the next 12 to 18 months, including Moody's adjusted gross leverage to return below 6x by year end-2022, positive Moody's adjusted free cash flow (FCF) generation throughout the horizon, and adequate liquidity. The rating incorporates an acceleration of M&A transactions over 2021. The agency estimates the company will spend a total amount of around EUR265 million in acquisitions this year, including the acquisitions announced in Spain, Northern Ireland and the UK during the first quarter. For the remainder of the 2021 acquisitions, Moody's has considered a mix of debt to equity and cash of around 67% to 33%. The agency understands that Affidea has drawn down its revolving credit facility (RCF) before refinancing any drawdowns with additional debt, and that Affidea's sponsor has supported the recently announced acquisition of Gruppo CDC with a cash injection of EUR50 million. After 2021, the agency has assumed acquisitions amounting to around 7.5% of revenue over the following two years. Affidea's rating is supported by its position as the largest provider of advanced diagnostic imaging (ADI) services in Europe, with leading positions in its main markets; a relatively high level of geographic diversification; favorable demand for Affidea's services, given the demographic and outsourcing trends; and its position to continue the consolidation of the European diagnostic imaging industry. Conversely, the B2 CFR is constrained by the company's high Moody's adjusted gross leverage of 8.4x as of year-end 2020, with deleveraging dependent on earnings growth and adequate integration of acquisitions; limited size and scale with a high fixed-cost base; significant exposure to public-sector clients, which could potentially limit its pricing power; and execution risk related to organic EBITDA growth, given a mixed track record in the past, but improving since 2019 and post-pandemic. RATING OUTLOOK The stable outlook reflects Moody's expectation that Affidea's operating performance will continue to improve over the next 12 to 18 months, and together with an adequate integration of acquisitions, will allow earnings growth, positive FCF generation and a decrease in Moody's adjusted gross leverage to below 6x by year-end 2022. The outlook assumes that the company will not undertake any shareholder distributions, or any major debt-funded acquisitions besides those considered in Moody's assumptions, and that its debt-funding mix will not materially differ from the agency's expectations. LIQUIDITY PROFILE Affidea has adequate liquidity, with cash balances of EUR65million as of March 31, 2021. Affidea has access to a revolving credit facility (RCF) of EUR130 million, of which around EUR10 million is used for bank guarantees. Moody's understands Affidea has drawn the remaining portion of its RCF to fund recent acquisitions. The agency's assessment of adequate liquidity assumes the company will successfully refinance the drawn portion of its RCF before year-end. The company has no immediate debt maturities. The RCF is subject to a net leverage financial covenant set at 5.75x tested if more than 40% of the RCF is drawn. Moody's expects the company to have capacity under the covenant, if tested. STRUCTURAL CONSIDERATIONS The B2 rating of both the EUR450 million senior secured term loan B and the EUR130 million senior secured RCF reflects their pari passu ranking in the capital structure and the upstream guarantees from material subsidiaries of the group. The B2-PD probability of default rating (PDR) -- in line with the CFR -- reflects Moody's assumption of a 50% family recovery rate typical for bank debt structures, with a loose set of financial covenants. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Positive pressure could emerge if (1) the company's Moody's-adjusted (gross) leverage ratio falls to well below 5.0x on a sustained basis while delivering solid operating performance, including the efficient integration of bolt-on acquisitions; (2) Affidea maintains a strong liquidity profile, including Moody's-adjusted FCF to debt improving to 10% on a sustained basis; (3) Affidea significantly increases its scale such that it can achieve greater economies of scale and reduce its significant operating leverage. Conversely, downward rating pressure could emerge if (1) the company's Moody's-adjusted (gross) leverage ratio does not decreases below 6.0x by 2022; (2) its liquidity deteriorates or its Moody's-adjusted FCF/debt does not improve toward 5% on a sustained basis; (3) its profitability were to deteriorate because of regulatory developments, competitive pressure or significant cost inflation; or (4) the company performs large debt-financed acquisitions or engages in significant distributions to shareholders. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. COMPANY PROFILE Affidea is the leading, pan-European provider of advanced diagnostic imaging (ADI), outpatient, laboratory, and cancer care services. Headquartered in The Hague, The Netherlands, the company operates a network of 308 centers located across 15 European countries, with an asset base consisting of 1,380 units of diagnostic and care cancer equipment as of the end of June 2021. In 2020, the company generated EUR431 million in revenue and EUR85 million in company adjusted EBITDA. Affidea is 100% owned by Waypoint Capital Group since 2014. AFFIDEA BV: S&P Alters Outlook to Negative & Affirms 'B+' ICR ------------------------------------------------------------- S&P Global Ratings revised its outlook on European advanced diagnostics and cancer care services provider Affidea B.V. to negative from stable and affirmed its 'B+' issuer credit rating on the company. S&P also affirmed its 'B+' issue rating on the upsized EUR585 million term loan B due December 2026. S&P said, "The negative outlook indicates that we could lower the ratings to 'B' within the next 12 months if the company's performance deviates from our base case, with adjusted debt to EBITDA remaining above 5.5x. "The rating action reflects the limited room for underperformance relative to our base case in the next 12 months. As a result of the planned acquisition activity in 2021, we forecast adjusted debt to EBITDA to be materially above our downside rating trigger of 5.5x that we set out for the rating. Specifically, assuming the acquisitions close by the end of the second quarter (Q2) of 2021, we forecast pro rata--six months of acquisition revenue contribution--adjusted debt to EBITDA of about 6.0x-6.5x. Pro forma for the transaction, assuming smooth integration of the new assets and continued recovery in the business from the COVID-19 pandemic, we forecast adjusted debt to EBITDA of 5.0x-5.2x. Solid organic revenue growth of 15%-18% should support debt reduction in 2021. This assumes continued sequential recovery in elective procedures throughout 2021 in the advanced diagnostics side of the business (82% of revenue), which the pandemic severely harmed in 2020. The company is showing signs of recovery: In the first four months of 2021, Affidea's reported revenue and EBITDA exceeded its budgeted figures for that period by EUR5.6 million and EUR3 million, respectively. "We base our forecast for restored adjusted debt metrics on fully consolidated adjusted EBITDA--after International Financial Reporting Standard 16--reaching about EUR150 million by 2022. This further assumes prudent working capital management and slightly higher capital expenditure (capex) of EUR40 million-EUR45 million, resulting in continued solid free operating cash flow (FOCF), after lease principal payments, of more than EUR20 million and adjusted debt to EBITDA improving to 5.0x-5.2x. These metrics support the existing 'B+' rating. Our forecasts factor in normalization of acquisition spend of about EUR40 million-EUR50 million in 2022, funded through the company's free cash flow generation. "The pandemic significantly disrupted Affidea's business in 2020, but we consider the year an outlier. In 2020, Affidea reported revenue decline of about 6.5%, while adjusted EBITDA declined 27% to EUR75 million, largely reflecting the negative impact from the fixed-cost base. These metrics translated into adjusted debt to EBITDA of 8.0x because the decline in earnings offset the improved FOCF generation (after lease principal payments) of EUR24 million (up from EUR14.5 million in 2019). Following a sharp dip in performance in Q2 2020, the company registered some recovery in Q3, but this halted in Q4 following the second wave of the pandemic, with public-sector hospitals again prioritizing the treatment of COVID-19 patients and canceling elective procedures. In our adjusted debt calculations for 2020, we included about EUR175 million of operating lease obligations, EUR12.8 million of pension obligations, EUR18 million of earn-outs linked to previous acquisitions, and EUR10 million of factoring utilizations. We applied an approximate EUR24 million haircut to reported cash balances, reflecting the amounts that were not readily available for debt repayment." Affidea's strong start to 2021 suggests a bounce-back in elective procedures across key markets, supporting our forecasts for recovery in credit metrics. The company's strong performance stems from public revenue streams, where there is a large backlog of elective procedures across markets (including all therapeutic segments), which could take years to recover. For example, in Italy--Affidea's largest market, about 15% of total revenue--waiting lists in public hospitals for elective procedures more than doubled, and more than trebled in certain cases, such as orthopaedics, urology, and cardiology, compared to the pre-pandemic baseline. S&P understands the company is observing a similar trend in its other geographies of operation, which represents an area of growth opportunity. This is because private providers, such as Affidea, can easily absorb the patient volumes that public providers are unable to serve. S&P said, "Despite the strong start to 2021, we think the company is still in the early recovery stage, and that pandemic-induced headwinds could potentially resurge in the near term. We will continue to closely monitor Affidea's quarterly performance throughout the next 12 months. "The potential acquisitions are in line with the company's business strategy, but we think integration risk exists. In recent years, Affidea has been focusing on expanding its private revenue stream, which grew to about 39.5% of total revenue in 2020 from about 24% in 2017. The company has supported this expansion with bolt-on acquisitions in markets with growing private insurance coverage, which generally has lower pricing pressure than the public health sector. All the potential acquisitions in 2021 are from the company's pre-pandemic pipeline and within its existing geographies, including Italy. Furthermore, they are largely complementary to its existing business lines and are accretive in terms of scale, particularly in the footprint of the advanced diagnostics centers and laboratories. There is concentration within the acquired portfolio of assets, with a single target accounting for the vast majority of the revenue and EBITDA contribution. Therefore, we think there is some integration risk. At the same time, potential synergies could come from cost savings--notably at consolidating operations at headquarter level, including IT infrastructure. We view positively the company's track record of integrating assets in its portfolio. We do not expect the envisaged cost and revenue synergies to contribute more materially until after the next 24 months. "Our 'B+' rating incorporates continued bolt-on acquisitions to support organic growth prospects. Although the acquisition activity in 2021 represents a step up of about EUR265 million from historical levels, this includes a catch-up effect to a certain extent, given that the company halted activity in 2020 to preserve cash. We anticipate Affidea will remain acquisitive going forward, since it aims to play a leading role in the relatively fragmented advanced diagnostics market in Europe, in which it boasts a leading market share of 12%. We understand most end markets are still quite fragmented, and there is a healthy pipeline of future targets. In terms of financial policy, the company is targeting 3.5x-4.0x reported net debt to EBITDA, which we estimate will equate to approximately 4.0x-5.0x on an adjusted basis, although it is willing to deviate from this if suitable acquisition targets become available." The ownership structure supports the debt reduction prospects. The Bertarelli family, which ultimately owns Affidea through the private investment company Waypoint Capital, is a long-term investor with a track record of no dividend extraction. S&P said, "We also note positively the family's decision to inject equity to co-fund the planned acquisitions in 2021. We understand the family remains committed to increasing the business' enterprise value by reinvesting FOCF into organic and inorganic growth opportunities. Our forecasts therefore do not incorporate any dividend payments in the short to medium term." Organic growth prospects also remain sound and should support debt reduction prospects. Affidea operates in a growing market, with the global diagnostics imaging market estimated to have expanded by a constant adjusted growth rate of 4% from 2016 to 2022, while the global oncology market has expanded by 7.6% over the same period. Growth in the global diagnostics imaging market stems from the company's positioning in the overall medical value chain, since it is the connecting point between the patient, the consultant, and the required treatment. Global general population trends, such as lifestyle, drive cancer prevalence. COVID-19 pandemic created headwinds for public hospitals, which will further boost Affidea's organic growth in the short to medium term. S&P estimates that it could take years for the aforementioned huge increase in the waiting lists for elective procedures across many therapeutic areas to normalize to their pre-pandemic baselines, and it expects private providers will play a role in reducing these lists. S&P said, "The negative outlook reflects the limited room for underperformance we see under the current rating within the next 12 months, since we expect debt to EBITDA to remain above 5.5x at the end of 2021. In our view, Affidea is still in the early stages of the recovery process from the large disruption the COVID-19 pandemic outbreak had on its operations in 2020, and it is engaging in sizable merger and acquisition activity. "We could lower the rating on Affidea to 'B' within the next 12 months if we observed a material deviation from our current base case, such that adjusted debt to EBITDA remained sustainably above 5.5x. In our view, this would most likely occur if COVID-19 headwinds resurged again with uneven recovery in elective procedures, or if the company experienced operational setbacks in integrating newly acquired centres. Negative rating pressure could also occur if Affidea were to undertake further sizable acquisitions beyond our current forecasted levels. "We could revise the outlook back to stable if we thought the company could reduce its adjusted debt to EBITDA sustainably below 5.5x by the end of 2022. This would occur if the company seamlessly integrated the newly acquired centres while continuing to benefit from a sequential rebound in elective procedures across its diagnostics centres in the coming quarters. In this scenario, we would expect solid FOCF generation allowing the company to self-fund its growth initiatives, supported by prudent management of working capital." AMMEGA GROUP: Fitch Affirms 'B-' LT IDR, Outlook Stable ------------------------------------------------------- Fitch Ratings has affirmed industrial belt manufacturer Ammega Group B.V.'s Long-Term Issuer Default Rating (IDR) at 'B-' and senior secured rating at 'B-' with a Recovery Rating of 'RR4'. The Outlook on the IDR is Stable. The affirmation reflects Fitch's expectations that Ammega's leverage will remain high in the medium term, with a moderate deleveraging trajectory. This is due to lower profitability in 2020 than Fitch previously forecast, which has led Fitch to revise its forecast down. The Stable Outlook reflects Ammega's satisfactory liquidity position, supported by expected positive free cash flow (FCF) generation through the cycle. KEY RATING DRIVERS Continued High Leverage: Following higher than expected funds from operations (FFO) gross leverage at end-2020, Fitch forecasts Ammega's leverage metrics will remain high for the rating in the medium term. Supported by improving profitability, Fitch expects FFO gross leverage to recover to 8.3x in 2022, which is within Fitch's negative rating sensitivity of 8.5x. Thereafter, Fitch forecasts continued moderate deleveraging to 7.4x in 2024. Deviation from the expected deleveraging path, due to increased appetite for acquisitions, for example, could pressure the rating. Pandemic Related Underperformance: Ammega was more affected by the pandemic in 2020 than Fitch previously expected. Revenues were supported by the Midwest Industrial Rubber (MIR) acquisition finalised in January 2020, but organic growth was high single digit negative. Nevertheless, Fitch views Ammega as more resilient than many other Fitch-rated manufacturing companies due to its exposure to the non-cyclical food industry and strong replacement business. Profitability improved in 2020 due to the margin-accretive effect from MIR, synergies from it and previous transactions, and cost savings. However, the increase was smaller than Fitch's previous expectations, resulting in a downward revision of expected profitability in Fitch's rating case. Cost-savings Drive EBITDA: Fitch forecasts the Fitch-adjusted EBITDA margin will continue to improve to 17.2% in 2021 and 18.3% in 2022, which is strong for the rating, but in line with or below that of industry peers. The improvement will be partly driven by expected productivity measures and cost savings within procurement and the production footprint. Fitch expects a limited effect on 2021 EBITDA from increasing raw material prices as offsetting price increases is typical industry practice. Resilient FCF: Ammega has a profitable and cash-generative financial profile. In 2020, the low-digit FCF margin was driven by improved EBITDA, favourable working capital movements and lower capex during the pandemic. Conversely, Fitch expects FCF to be pressured in 2021 by working capital build-up, partly due to expected high growth and the related need to keep inventory levels to support the large replacement business. Fitch also forecasts capex to temporarily increase to around 5% due to an extension of the US production network. From 2022, Fitch expects FCF margins to improve to low-to mid-single digits. Fitch views healthy FCF margins as critical for the ratings, given the company's high leverage. Acquisitive Strategy: Ammega has made 12 bolt-on acquisitions since the merger of Ammeral Beltech and Megadyne in 2018 and Fitch expects the company to remain a key player in consolidation of the fragmented belt manufacturing industry. Fitch forecasts bolt-on acquisitions of EUR50 million annually, which compares well with historical figures (except the MIR acquisition) and is covered by the forecast positive FCF. Fitch would treat larger potential acquisitions as event risk and expect such transactions to be partly or fully financed by equity, as was the case for MIR. Supportive Product Demand: Fitch expects growth to come from increasing application and installation of belt products to support the rise of automation in industrial processes, and greater precision and efficiency requirements from direct end-users, as well as original equipment manufacturers and distributors. The replacement cycle for belts of up to two years drives Ammega's strong aftermarket activity. About 70% of revenue is generated from replacement and upgrading of belts. Fitch believes that Ammega's ability to cross-sell products and retain recurring replacement sales should support earnings resilience in the medium term. DERIVATION SUMMARY Ammega has market-leading positions within the niche belt-manufacturing segment, supported by its diverse product portfolio, geographical footprint and broad customer base. The group's direct competitors are larger and more diversified manufacturers, but their belting segment is smaller or equal to Ammega's production capacities. In the belt segment, the group faces direct competitors in Forbo, Rexnord Corporation and Gates. These peers are bigger and more diversified but Ammega is exposed to more stable end-markets and generates EBITDA and FCF margins in line with peers, albeit with substantially higher leverage. Ammega's profitability is higher than that of TK Elevator Holdco GmbH (B/Stable), while FCF generation is similar at low single digit numbers. The high FFO gross leverage above 10x in 2020 constrains the ratings of both companies. AI Alpine AT BidCo GmbH (B/Stable) generates higher profitability than Ammega and has somewhat lower leverage, which explains the one-notch rating difference. KEY ASSUMPTIONS -- Revenue to increase 10.3% in 2021 followed by mid-to-high single digit annual growth in 2022-2024. -- Fitch-adjusted EBITDA margin to improve to 17.2% in 2021 and further to 18.5% in 2023, driven by accretive bolt-on acquisitions, cost synergies, efficiency improvements and revenue growth. -- Capex at 5.1% in 2021 and 4.2% until 2024. -- Average working capital outflow equivalent to 1% of sales on average. -- No dividend payments. -- Acquisitions of EUR50 million annually until 2024. KEY RECOVERY ASSUMPTIONS -- The recovery analysis assumed that Ammega would be restructured as going concern rather than liquidated in a default. -- Fitch applies a distressed enterprise value/EBITDA multiple of 5.5x to calculate a going-concern enterprise value, in line with an average multiple for industrial and manufacturing peers in the 'B' rating category. The multiple reflects Ammega's high share of recurring revenue and the critical nature of Ammega's products in customers' production processes. -- Fitch estimates post-restructuring going-concern EBITDA at EUR110 million. -- After a 10% deduction for administrative claim Fitch's debt waterfall analysis generated a ranked recovery in the 'RR4' band, indicating a 'B-' instrument rating. The principal and interest waterfall analysis output percentage on current metrics and assumptions is 46%. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- FFO gross leverage below 6.5x on a sustained basis; -- FFO interest coverage above 2.0x on a sustained basis; -- FCF consistently above 5%. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- FFO gross leverage greater than 8.5x on a sustained basis; -- FFO interest coverage below 1.5x; -- EBITDA margin below 15%; -- FCF consistently neutral to negative; -- Acquisition activity increasing the group's risk profile. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE Satisfactory Liquidity: As of end-1Q21, Ammega had a Fitch-adjusted cash balance of around EUR110 million and around EUR95 million undrawn of the EUR150 million RCF. Fitch forecasts positive FCF margins in low-to-mid-single digits and Fitch expects Ammega to prioritise the RCF repayment and deleveraging. Liquidity will be eroded by expected bolt-on acquisitions before they bring accretive cash flows together with expect cost savings. Moderate Refinancing Risk: Ammega has no debt maturities in the next four to five years. Ammega's debt comprises a seven-year senior secured covenant-lite EUR980 million term loan B with maturity in 2025 and an eight-year USD186 million second-lien facility with maturity in 2026. The EUR150 million RCF (partly drawn) is due in January 2025. ISSUER PROFILE Ammega was formed in September 2018 from the merger of Ammeral Beltech and Megadyne. It has leading market positions as a global manufacturer of lightweight conveyor and power transmission belts to a number of end-markets. With reported sales of EUR782 million in 2020 Ammega operates in more than 40 countries across Europe, North America, Latin America and Asia, with a distribution network covering 150 countries. 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. NOURYON HOLDING: Moody's Assigns B2 CFR Following Nobian Spin-off ----------------------------------------------------------------- Moody's Investors Service has assigned a B2 corporate family rating and B2-PD probability of default rating to Nouryon Holding B.V. (Nouryon). Moody's has also downgraded the rating of the guaranteed senior secured EUR and $ term loans and revolving credit facility, borrowed by Nouryon Finance B.V. to B2 from previously B1. The outlook on the ratings is stable. With this action Moody's is changing the rated entity for the CFR and PDR to Nouryon Holding B.V., Nouryon Holding B.V. is a guarantor to the senior secured term loans and RCF, but did not explicitly guarantee the unsecured notes which now will be redeemed. With CFR and PDR now assigned at the level of Nouryon Holding B.V., Moody's will withdraw the B2 CFR and B2-PD PDR currently assigned to Nouryon Finance B.V. Moody's also will withdraw the rating of the Caa1 guaranteed senior unsecured indebtedness issued by Nouryon Finance B.V. upon its redemption. The rating action follows the spin-off of Nouryon's former industrial chemical's division, now operating under the name Nobian Finance B.V. (B2 stable). As a result of the spin-off, Nouryon will receive proceeds of approximately EUR1.5 billion, which in combination with proceeds from a new trade receivables securitization facility of around EUR250 million, will be used to repay the company's unsecured notes (around EUR1 billion equivalent) and around EUR700 million equivalent under Nouryon Finance B.V.'s existing $ term loan. The company will also reduce the size of its revolving credit facility to $637 million from currently $877 million which remains undrawn. RATINGS RATIONALE The B2 rating assigned to Nouryon balances the company's material scale and diversification across geographies and end markets with a resilient performance, against the company's high leverage of close to 7x in 2020 on a pro-forma basis for the Nobian spin-off. However, Moody's expects that the company will deleverage to around 6.5x in 2021, benefitting from a favorable demand environment in 2021, further improvements in its EBITDA margin and a lower interest expense following the repayment of the unsecured debt leading to a higher free cash flow. The downgrade of the rating of the senior secured term loans to B2 from previously B1 reflects the change in the capital structure, which, following the repayment of the company's unsecured notes, will only contain one single class of debt. The lower rating on the term loan reflects the fact that the loss absorption cushion of the unsecured notes in the capital structure will disappear following the repayment of the unsecured notes. Despite a challenging demand environment in 2020, Nouryon's sales volume excluding Nobian only decreased by less than 2%, which evidences the company's exposure to resilient end markets. According to the company, around 75% of its sales are generated with "non-cyclical" end-markets such as agriculture, packaging and home & personal care. Post the Nobian spin-off, Nouryon will continue to focus on resilient end markets with solid underlying growth drivers such as personal care, paints & coatings and polymer specialties. In the currently strong demand environment, Moody's expects the company to be well positioned to capture underlying market growth, which will support revenues and EBITDA growth in 2021. Moody's expects the company to generate EBITDA, as defined and adjusted by Moody's, of close to EUR800 million in 2021 and forecasts further EBITDA growth to around EUR850 million in 2022, this translates into Moody's adjusted gross debt/EBITDA of around 6.5x in 2021 and around 6x by the end of 2022. The rating is also supported by Moody's expectation of FCF generation of around 5% of the company's adjusted debt in 2021 and 2022. Nouryon's FCF generation will benefit from lower interest costs following the repayment of the more expensive unsecured debt, but also a less capital intensive setup of its remaining businesses. Moody's understands that inorganic growth through selective bolt-on acquisitions will remain a feature of Nouryon's growth strategy but has, however not factored in any increases in gross debt or leverage into the B2 rating. STRUCTURAL CONSIDERATIONS The B2 rating of the company's senior secured term loans and senior secured revolving credit facility is line with the corporate family rating. The instrument rating reflects the fact that the senior secured instruments will be the only class of debt in the capital structure going forward, besides the EUR250 million securitization line. LIQUIDITY PROFILE Nouryon's liquidity profile is solid. Post the transaction, the company will have around EUR344 million of cash on balance sheet and access to $637 million of revolving credit facility. In combination with expected FFO generation of around EUR520 million in 2021 and continued solid FFO in 2022 these sources comfortably cover capital expenditure in the range of EUR270 to EUR280 million (including lease repayments) as well as swings in working capital. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Moody's could consider upgrading Nouryon's rating, if the company would reduce leverage to below 6x on a sustainable basis. An upgrade furthermore would require RCF/debt to be in excess of 10% on a sustainable basis. Moody's would consider downgrading Nouryon's rating if leverage remained above 7x for a prolonged period of time or in case of negative FCF. A more aggressive financial policy including dividend payouts or debt financed acquisitions would also be negative for the rating. ESG CONSIDERATIONS Nouryon is private equity owned. Private equity sponsors tend to have aggressive financial policies favouring very high leverage, shareholder-friendly policies such as dividend recapitalisation and the pursuit of acquisitive growth. Financial disclosures are often not as timely or comprehensive for sponsor-owned firms as for publicly owned companies. Private equity-owned firms also tend to have smaller boards consisting of associates and partners from the private equity entity and little to no independent representation. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Chemical Industry published in March 2019. COMPANY PROFILE Headquarter in the Netherlands, Nouryon is a specialty chemicals company, which has been carved out from Akzo Nobel in 2018. Pro-forma for the divestment of the industrial chemicals business, the company generated EUR3.7 billion revenues and company-defined adjusted EBITDA of EUR855 million, equivalent to a company defined adjusted EBITDA margin of 23%. =============== P O R T U G A L =============== EDP - ENERGIAS: Egan-Jones Retains BB+ Senior Unsecured Ratings --------------------------------------------------------------- Egan-Jones Ratings Company, on June 23, 2021, maintained its 'BB+' foreign currency and local currency senior unsecured ratings on debt issued by EDP - Energias de Portugal, S.A. Headquartered in Lisbon, Portugal, EDP - Energias de Portugal, S.A. generates, supplies and distributes electricity and the supply of gas in Portugal and Spain. ========= S P A I N ========= JOYE MEDIA: Moody's Cuts CFR to Caa2 & PDR to Ca-PD/LD ------------------------------------------------------ Moody's Investors Service has downgraded to Caa2 from Caa1 the corporate family rating and to Ca-PD/LD from Caa1-PD the probability of default rating of Joye Media S.L., the parent entity above the restricted group that owns Imagina Media Audiovisual, S.L., a leading global integrated international sports, media and entertainment group. Moody's has appended the PDR with the limited default or "/LD" designation following the company's decision to miss the EUR20 million interest payment and EUR24 million principal payment due on June 30, 2021. Moody's understands that there is no grace period for the payment of interest or principal in the documentation of the senior facilities agreement. Concurrently, Moody's has downgraded to Caa1 from B3 the ratings of the EUR300 million guaranteed amortizing senior secured first lien term loan (TLA -- due in 2024), the EUR380 million guaranteed senior secured first lien term loan (TLB -- due in 2025) and the EUR60 million guaranteed senior secured revolving credit facility (RCF -- due in 2024) issued by Invictus Media S.L.U. ("Invictus") and Imagina. Moody's has also downgraded to C from Caa3 the rating of the EUR180 million guaranteed senior secured second lien facility due in 2025 issued by Invictus and Imagina. The outlook on all ratings remains negative. "The downgrades follow the missed interest and principal payment, and reflect our expectation that a debt restructuring is almost unavoidable, while recovery rates will be somewhat lower than initially anticipated," says Víctor Garcia Capdevila, a Moody's Assistant Vice President -Analyst and lead analyst for Joye. RATINGS RATIONALE On Friday June 25, 2021, Joye secured lender approval to waive (1) a EUR20 million interest payment and a EUR24 million debt repayment due on June 30, 2021; (2) the covenant requirement to maintain a minimum liquidity of EUR60 million at the end of each financial quarter; and (3) the obligation to provide annual audited consolidated financial statements within 150 days of the closing of the financial year. The missed interest and principal repayment along with the insufficient liquidity profile of the company and its high leverage make a debt restructuring almost unavoidable. In Moody's view, the missed payment, delayed publication of the audited financial statements and expectation of upcoming debt restructuring stem from financial strategy and risk management considerations associated to corporate governance. Moody's has downgraded the PDR to Ca-PD/LD from Caa1-PD to reflect the missed payment default, as well as the expectation that a debt restructuring, which would likely involve a distressed exchange, could follow in the near term. Moody's expects that in a default scenario, recovery rates for creditors are likely to be lower than initially anticipated. Therefore, Moody's has downgraded the company's CFR to Caa2 from Caa1, the first lien instruments to Caa1 from B3 and the second lien instrument to C from Caa3. RATIONALE FOR NEGATIVE OUTLOOK The negative outlook on the ratings reflects the company's uncertain financial prospects in light of its highly likely debt restructuring and the uncertainties surrounding final recoveries for financial creditors in the event of default. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Downward pressure on the ratings could materialise in the event that recovery prospects for creditors are lower than those assumed in the Caa2 CFR and the Caa1 first lien instrument ratings. Upward pressure on the ratings is unlikely in the short term but could arise if a more sustainable financial structure is put in place and the company restores an adequate liquidity profile. LIST OF AFFECTED RATINGS Issuer: Imagina Media Audiovisual, S.L. Downgrades: BACKED Senior Secured Bank Credit Facilities, Downgraded to Caa1 from B3 Outlook Action: Outlook, Remains Negative Issuer: Invictus Media S.L.U. Downgrades: BACKED Senior Secured Bank Credit Facility, Downgraded to C from Caa3 BACKED Senior Secured Bank Credit Facility, Downgraded to Caa1 from B3 Outlook Action: Outlook, Remains Negative Issuer: Joye Media S.L. Downgrades: Probability of Default Rating, Downgraded to Ca-PD/LD from Caa1-PD LT Corporate Family Rating, Downgraded to Caa2 from Caa1 Outlook Action: Outlook, Remains Negative PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. COMPANY PROFILE Joye Media S.L. (Joye) is the ultimate holding company of Imagina Media Audiovisual, S.L. (Imagina), a leading integrated international media group with operations in sports rights management, audiovisual services and content production. It is present in more than 150 countries and employs more than 6,600 people. In 2019, Joye reported revenue and normalized EBITDA of EUR1.8 billion and EUR224 million, respectively. Joye is majority owned (53.5%) by Kunshan Techonology Investment (HK) Limited, an entity controlled by Chinese private equity group Orient Hontai Capital. =========================== U N I T E D K I N G D O M =========================== BUSINESS LOAN: Creditors Support Administrator's Proposals ---------------------------------------------------------- Marc Shoffman at Peer2Peer Finance News reports that creditors of Business Loan Network, the winding-down peer-to-peer lending business formerly known as ThinCats, have supported the administrator's proposals regarding interest payments and the ability to extend the process if needed. Companies House documents published this week show a meeting of creditors last month confirmed how the administration would work, Peer2Peer Finance News relates. Creditors backed 10 proposals, which include allowing Kroll to extend the administration or put the company into liquidation if needed, Peer2Peer Finance News discloses. Interim payments can also be made to preferential creditors and unsecured creditors, Peer2Peer Finance News notes. According to Peer2Peer Finance News, a statement of affairs for BLN published by Kroll last month showed there were several lenders' complaints lodged with the Financial Ombudsman Service (FOS) relating to loans. At the time of the administration, it had upheld eight complaints against BLN, four of which were final decisions, Peer2Peer Finance News recounts. BLN had insufficient cash resources to pay the GBP400,000 loan compensation, so its board asked ESF for financial support, Peer2Peer Finance News discloses. BLN has confirmed to Peer2Peer Finance News it has not paid this GBP400,000 compensation. ESF told BLN's board that it was unwilling to provide any further financial support to BLN, which resulted in the company falling into administration, according to Peer2Peer Finance News. FRISKA: Sold to Third Party Following Administration ---------------------------------------------------- Business Sale reports that south west-based cafe chain Friska has fallen into administration due to the impact of COVID-19, with the business subsequently being sold to a third party. Friska had been implementing a growth strategy prior to the onset of COVID-19, however this was subsequently derailed by the pandemic's massive impact on the hospitality sector, Business Sale discloses. The company subsequently entered a CVA in October 2020, through which it planned to exit its operations in Manchester and refocus on Bristol, while renegotiating rental terms with landlords, Business Sale recounts. According to administrators Mazars, the CVA had enabled the business to restructure, but COVID-19 continued to impact operations, Business Sale notes. The business continued to struggle as a result of enforced closures during lockdowns, as well as reduced footfall due to factors such as fewer people going out shopping and more employees working from home, Business Sale relates. Mark Boughey and Tim Ball of Mazars were appointed as joint administrators on July 5 and subsequently agreed a sale of the chain, Business Sale relays. The deal will see a third party acquire Friska's brand and goodwill, as well as the assets of five of its eight sites, Business Sale states. A total of 35 staff will transfer as part of the acquisition, Business Sale notes. According to Business Sale, two of the Friska's remaining Bristol locations have been acquired by founders Griff Holland and Ed Brown, who will operate them under a new brand name to be announced in due course. GREENSILL CAPITAL: Gov't. Applied Unusual Pressure Over Covid Loan ------------------------------------------------------------------ Jim Pickard and Robert Smith at The Financial Times report that the UK government applied an "unusual" level of pressure to ensure Greensill Capital became an accredited lender under a state Covid loan scheme, according to Whitehall's spending watchdog. According to the FT, the National Audit Office concluded in a report into the now collapsed supply chain finance company that the business department (BEIS) "repeatedly requested updates on the accreditation process" before the state-owned British Business Bank (BBB) approved Greensill's status. The watchdog also found that the BBB, in its rush to get loans out during the Covid-19 crisis, did not perform detailed checks on lenders seeking accreditation, the FT discloses. The lender used the Coronavirus Large Business Interruption Loan Scheme to provide eight loans totalling GBP400 million to eight corporate entities all linked to GFG Alliance, the metals group run by Sanjeev Gupta which is now being investigated by the Serious Fraud Office, the FT relates. The CLBILS rules forbade lending of more than GBP50 million through any supply chain finance company to any single company, the FT notes. In March this year, the business bank suspended a government guarantee on the Greensill loans amid suspicions that it had breached the terms of the programme, the FT recounts. Greensill, which collapsed later that month, employed former prime minister David Cameron as a senior adviser, the FT relays. He lobbied senior figures -- including chancellor Rishi Sunak -- to try to change the rules governing CLBILS and a separate Bank of England Covid loan scheme in early 2020, the FT states. Although Mr. Cameron's efforts were unsuccessful, Greensill ultimately accessed CLBILS to the benefit of the Gupta empire, the FT notes. The NAO report found that BEIS made eight email inquiries about Greensill to the BBB over 19 weeks, the FT discloses. It also pushed the state-owned bank to see whether Greensill might be accredited to lend up to GBP200 million per borrower rather than the GBP50 million cap, according to the FT. PRECISE MORTGAGE 2017-1B: Fitch Affirms BB+ Rating on Cl. E Notes ----------------------------------------------------------------- Fitch Ratings has upgraded the class C and D notes of Precise Mortgage Funding 2017-1B Plc (17-1B), Precise Mortgage Funding 2018-1B PLC (18-1B) and Precise Mortgage Funding 2018-2B Plc (18-2B) and affirmed the remaining tranches. The Outlooks on the class E notes in all transactions have been revised to Stable from Negative. DEBT RATING PRIOR ---- ------ ----- Precise Mortgage Funding 2017-1B Plc A XS1588567781 LT AAAsf Affirmed AAAsf B XS1588576345 LT AAAsf Affirmed AAAsf C XS1588580297 LT AA+sf Upgrade A+sf D XS1588584018 LT A+sf Upgrade BBB+sf E XS1588587110 LT BB+sf Affirmed BB+sf Precise Mortgage Funding 2018-1B PLC Class A Notes XS1739590955 LT AAAsf Affirmed AAAsf Class B Notes XS1739591094 LT AAAsf Affirmed AAAsf Class C Notes XS1739591177 LT AA+sf Upgrade AA-sf Class D Notes XS1739591250 LT A+sf Upgrade BBB+sf Class E Notes XS1739591334 LT BBBsf Affirmed BBBsf Precise Mortgage Funding 2018-2B Plc Class A XS1783215871 LT AAAsf Affirmed AAAsf Class B XS1783216093 LT AAAsf Affirmed AAAsf Class C XS1783216176 LT AA+sf Upgrade AA-sf Class D XS1783216333 LT Asf Upgrade BBB+sf Class E XS1783216507 LT BBB-sf Affirmed BBB-sf TRANSACTION SUMMARY The transactions are securitisations of buy-to-let mortgages originated by Chartered Court Financial Services (CCFS), trading as Precise Mortgage in the UK. The portfolios consist of mortgage loans from CCFS's Tier 1 product set, which is based on its strictest lending criteria. KEY RATING DRIVERS Asset Performance: As at June 2021, the transactions' performance has been stable with one month plus arrears at 0.96% (17-1B), 0.57% (18-1B) and 0.30% (18-2B). This is up from the last review for 17-1B (0.50%), 18-1B (0.21%) and 18-2B (0.28%). 17-1B has increased by 0.46% since the start of 2021, driven by a low number of borrowers entering into arrears. Borrowers exiting payment holidays since the peak in May 2020 has not led to a material increase in arrears to date, in line with trends observed across the UK mortgage market. The reduction in payment holidays, increase in credit enhancement and stable asset performance has led to the upgrades and revision of the Negative Outlooks to Stable. Coronavirus-related Alternative Assumptions: Fitch applied alternative coronavirus assumptions to the mortgage portfolio. The combined application of the revised 'Bsf' representative pool weighted average foreclosure frequency (WAFF) and revised rating multiples resulted in a multiple to the current FF assumptions in a range of 1.1x to 1.2x at 'Bsf' in each transaction. The alternative coronavirus assumptions are more modest for higher rating levels as the corresponding rating assumptions are already meant to withstand more severe shocks. For this review Fitch has not applied any arrears adjustment or payment holiday stress given the low proportion of borrowers in the pool currently on payment holidays across the three transactions (17-1B: 0.14%, 18-1B: 0.29% and 18-2B: 0.0%). Stable Outlooks on Class E: The revision of the Outlooks on the class E notes reflects that payment holiday proportions have reduced significantly (from over 20% plus) without any material collateral underperformance to date. These notes were considered more vulnerable to prolonged payment holidays or subsequent collateral underperformance given their relatively junior ranking in the revenue and principal priority of payments. Turbo Feature: On any interest payment date on or after the optional redemption date, any excess spread available will be diverted to principal available funds and used to pay down the notes. However, this item sits below potential subordinated hedging amounts in the revenue priority of payments. In the event of a default of the swap counterparty and the swap mark-to-market being in favour of the swap counterparty excess spread would be limited if at all available to pay principal. For this reason, Fitch gave no credit to the turbo feature in investment grade scenarios (ie above 'BB+sf'). Transition to SONIA Note Margins: The underlying note index for 18-1B and 18-2B have transitioned to SONIA leading to an adjustment spread of 0.1193% for all the notes pre and post step up and the swap pay leg, which takes effect from the March 2022 interest payment date. This was used in the cash flow analysis and led to no material change in the model-implied-ratings for the notes from those using the existing note margins. RATING SENSITIVITIES Factor that could, individually or collectively, lead to positive rating action/upgrade: -- Stable to improved asset performance driven by stable delinquencies and defaults would lead to increasing credit enhancement and potential upgrades. Fitch tested an additional rating sensitivity scenario by applying a decrease in the FF of 15% and an increase in the recovery rate (RR) of 15%. The ratings for the subordinated notes could be upgraded by up to three notches for 17-1B and up to two notches for 18-1B and 18-2B. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- The transactions' performance may be affected by changes in market conditions and economic environment. Weakening asset performance would be strongly correlated to increasing levels of delinquencies and defaults that could reduce credit enhancement available to the notes. -- Additionally, unanticipated declines in recoveries could also result in lower net proceeds, which may make certain notes' ratings susceptible to potential negative rating action depending on the extent of the decline in recoveries. Fitch conducts sensitivity analyses by stressing both a transaction's base-case FF and RR assumptions, and examining the rating implications for all classes of issued notes. -- Fitch tested a 15% increase in the WAFF and a 15% decrease in the WARR. The results indicate an adverse rating impact of up to one notch for 17-1B and up to two notches for 18-1B and 18 2B. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Structured Finance transactions have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of seven notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of seven notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings are based on historical performance. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pools and the transactions. There were no findings that affected the rating analysis. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. Prior to the transactions 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 transactions 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, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. ESG CONSIDERATIONS 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. PRECISE MORTGAGE 2020-1B: Fitch Rates 2 Note Classes 'BB+sf' ------------------------------------------------------------ Fitch Ratings has upgraded Precise Mortgage Funding 2019-1B PLC's (19-1B) class B and C notes and affirmed the other tranches. Fitch has also affirmed Precise Mortgage Funding 2020-1B PLC (20-1B). The Outlooks on 19-1B's class D and E notes and 20-1B's class C, D and X notes have been revised to Stable from Negative. DEBT RATING PRIOR ---- ------ ----- Precise Mortgage Funding 2019-1B PLC A1 XS1923736620 LT AAAsf Affirmed AAAsf A2 XS1923737354 LT AAAsf Affirmed AAAsf B XS1923737438 LT AAAsf Upgrade AA+sf C XS1923737511 LT AA-sf Upgrade Asf D XS1923737602 LT BBB+sf Affirmed BBB+sf E XS1923737867 LT BBB-sf Affirmed BBB-sf Precise Mortgage Funding 2020-1B PLC A1 XS2097423060 LT AAAsf Affirmed AAAsf A2 XS2097425354 LT AAAsf Affirmed AAAsf B XS2097426246 LT AA+sf Affirmed AA+sf C XS2097426329 LT Asf Affirmed Asf D XS2097426832 LT BBBsf Affirmed BBBsf E XS2097426915 LT BB+sf Affirmed BB+sf X XS2097427301 LT BB+sf Affirmed BB+sf TRANSACTION SUMMARY The transactions are securitisations of buy-to-let mortgages originated by Chartered Court Financial Services (CCFS), trading as Precise Mortgage in the UK. The portfolios are static and consist of mortgage loans from CCFS's Tier 1 product set, which is based on its strictest lending criteria. KEY RATING DRIVERS Asset Performance: As at June 2021, both transactions' performance has been stable, with one month plus arrears at 0.26% (19-1B) and 0.3% (20-1B). This is marginally down from the last review for 19-1B (0.28%) and up for 20-2B (0.03%). Borrowers exiting payment holidays since the peak in May 2020 has not led to a material increase in arrears to date, in line with trends observed across the UK mortgage market. The reduction in payment holidays, the increase in credit enhancement and stable asset performance has led to the upgrades and revision of Outlooks. Coronavirus-related Alternative Assumptions: Fitch applied alternative coronavirus assumptions to the mortgage portfolio. The combined application of the revised 'Bsf' representative pool weighted average foreclosure frequency (WAFF) and revised rating multiples resulted in a multiple to the current FF assumptions of 1.3x at 'Bsf' in each transaction. The alternative coronavirus assumptions are more modest for higher rating levels as the corresponding rating assumptions are already meant to withstand more severe shocks. For this review, Fitch has not applied any arrears adjustment or payment holiday stress given the low proportion of borrowers in the pool currently on payment holidays across the two transactions (19-1B: 0.18% and 20-1B: 0.20%). Outlooks Revised to Stable: The revision of the Negative Outlooks to Stable reflects that payment holiday proportions have significantly reduced (from over 20% plus) without any material collateral underperformance to date. These notes were considered more vulnerable to prolonged payment holidays or subsequent collateral underperformance given their relatively junior ranking in the revenue and principal priority of payments. Turbo Feature: On any interest payment date on or after the optional redemption date, any excess spread available will be diverted to principal available funds and used to pay down the notes. However, this item sits below potential subordinated hedging amounts in the revenue priority of payments. In the event of a default of the swap counterparty and the swap mark-to-market being in favour of the swap counterparty excess spread would be limited if at all available to pay principal. For this reason, Fitch gave no credit to the turbo feature in investment grade scenarios (ie above 'BB+sf'). RATING SENSITIVITIES Factor that could, individually or collectively, lead to positive rating action/upgrade: -- Stable to improved asset performance driven by stable delinquencies and defaults would lead to increasing credit enhancement and potential upgrades. Fitch tested an additional rating sensitivity scenario by applying a decrease in the foreclosure frequency (FF) of 15% and an increase in the recovery rate (RR) of 15%. The ratings on the subordinated notes could be upgraded by up to two notches in both transactions. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- The transactions' performance may be affected by changes in market conditions and economic environment. Weakening asset performance would be strongly correlated to increasing levels of delinquencies and defaults that could reduce credit enhancement available to the notes. -- Additionally, unanticipated declines in recoveries could also result in lower net proceeds, which may make certain note ratings susceptible to potential negative rating actions depending on the extent of the decline in recoveries. Fitch conducts sensitivity analyses by stressing both a transaction's base-case FF and RR assumptions, and examining the rating implications on all classes of issued notes. -- Fitch tested a 15% increase in weighted average (WA) FF and a 15% decrease in WARR. The results indicate an adverse rating impact of up to one notch in 19-1B and up to two notches in 20-1B. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Structured Finance transactions have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of seven notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of seven notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings are based on historical performance. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. There were no findings that affected the rating analysis. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. Prior to the transactions 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 transactions 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. 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. TOPSHOP: Philip Green's Wife Received GBP50MM From Administration ----------------------------------------------------------------- Hannah Godfrey at City A.M. reports that Tina Green, the wife of former retail tycoon Philip Green, received GBP50 million in May from Topshop's administration. According to City A.M., the GBP50 million was lent to Topshop as part of an emergency restructuring in 2019 and secured against a warehouse in Northamptonshire. In the wake of the collapse of parent company Arcadia, the space was sold for GBP83 million, the Telegraph first reported, and is now being leased by online retailer Boohoo, City A.M. discloses. Ms. Green's payday comes as pensioners and smaller suppliers wait for their share from the administration, City A.M. notes. VICTORY ENERGY: Put Into Voluntary Liquidation ---------------------------------------------- Ben Fishwick at The News reports that Victory Energy filed for liquidation in April with public documents now listing 13 creditors, ranging from a software supplier to a recruitment head hunter, owed cash. According to The News, some 12 companies are owed GBP131,483.08 while owner Portsmouth City Council lost GBP3.32 million of taxpayers' money on the project. It was shelved without the company selling a single kilowatt of energy to a consumer, The News notes. Directors decided to wind up Victory on April 20, with the matter in the hands of liquidators at RSM Restructuring Advisory LLP, The News relates. A meeting chaired by city council finance director Chris Ward, a director of Victory Energy, agreed to put the company into liquidation, The News discloses. They resolved: "That it has been proved to the satisfaction of this meeting that the company cannot, by reason of its liabilities, continue its business, and that it is advisable to wind up the same, and accordingly that the company be wound up voluntarily." ********* 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 2021. 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. 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