/raid1/www/Hosts/bankrupt/TCREUR_Public/210827.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
E U R O P E
Friday, August 27, 2021, Vol. 22, No. 166
Headlines
C R O A T I A
DALEKOVOD: Minority Shareholders Launch Two Lawsuits
F R A N C E
CASINO GUICHARD-PERRACHON: Egan-Jones Keeps CCC Sr. Unsec. Ratings
G E R M A N Y
PLATIN 1425.GMBH: Moody's Affirms B3 CFR, Alters Outlook to Pos.
G R E E C E
DANAOS CORP: S&P Raises Long-Term ICR to 'BB-', Outlook Positive
I R E L A N D
HAYFIN EMERALD VII: Moody's Assigns B3 Rating to EUR12.6MM F Notes
HAYFIN EMERALD VII: S&P Assigns B- (sf) Rating on Class F Notes
RRE 8 LOAN: Moody's Assigns (P)Ba3 Rating to EUR20MM Class D Notes
K A Z A K H S T A N
NURBANK JSC: S&P Affirms 'B-/B' ICRs, Outlook Stable
L U X E M B O U R G
ENDO LUXEMBOURG: Moody's Cuts CFR to Caa1 & Alters Outlook to Neg.
SAMSONITE INTERNATIONAL: S&P Affirms 'B' ICR, Outlook Negative
N E T H E R L A N D S
AURORUS 2020 B.V.: DBRS Confirms B Rating on Class F Notes
N O R W A Y
AXACTOR SE: Moody's Rates New EUR300MM Senior Unsecured Notes 'B3'
AXACTOR SE: S&P Rates EUR300MM Senior Unsecured Bond 'B'
U N I T E D K I N G D O M
CHARTER MORTGAGE 2018-1: Moody's Hikes Cl. E Notes Rating from Ba1
DOLFIN FINANCIAL: Creditors' Meeting Scheduled for September 2
DURHAM MORTGAGES: DBRS Assigns Prov. B Rating on 2 Note Classes
DURHAM MORTGAGES: DBRS Finalizes B Rating on 2 Classes Notes
GLOBAL SHIP: S&P Upgrades ICR to 'BB-', Outlook Stable
HUB ENERGY: Enters Administration, Ceases Trading
PROVINCIAL HOTELS: Details Surrounding Administration Revealed
REYKER SECURITIES: Clients Urged to Submit Money Claim
WARWICK FINANCE: DBRS Confirms BB(high) Rating on Class E Notes
X X X X X X X X
[*] BOOK REVIEW: Hospitals, Health and People
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C R O A T I A
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DALEKOVOD: Minority Shareholders Launch Two Lawsuits
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Annie Tsoneva at SeeNews reports that Croatian power transmission
equipment manufacturer Dalekovod said its minority shareholders
initiated two separate lawsuits, both challenging all of the
decisions taken at the company's annual shareholders' meeting on
June 30.
Dalekovod received on Aug. 17 two decisions by the Commercial court
in Zagreb, in which it was informed that a group of its minority
shareholders filed one of the lawsuits, the company said in a
filing to the Zagreb bourse on Aug. 17, SeeNews relates.
Another minority investor, individual Sasa Spasic, filed the second
lawsuit, SeeNews discloses. Dalekovod said the court has not set a
date for hearing, SeeNews notes.
On June 30, the shareholders of the company approved a proposal for
its financial restructuring made in May by local electrical
equipment manufacturer Koncar Elektroindustrija and Maltese company
Construction Line Ltd., SeeNews relays.
The proposal envisaged to cut Dalekovod's share capital to HRK2.5
million (US$391,000/EUR333,600) from HRK247.2 million to cover
earlier losses, only to further increase it to up to HRK412.5
million in order to raise funding to cover the company's debts to
creditors under a pre-bankruptcy settlement agreement concluded in
January 2014, according to SeeNews.
The shareholders' meeting approved the proposal, under which the
capital increase was supposed to be carried out by share
subscriptions in three rounds, cash payments and/or contributions
by entering rights.
However, as a result of the initial capital cut approved by the
meeting, the company made a reverse stock split in July by
consolidating every 100 shares into 1, and later on the same month
offered to potential investors in a public offering new ordinary
shares at their face value of HRK10 each, SeeNews states.
In late July Koncar said its unit Napredna Energetska Rjesenja will
contribute HRK310 million in cash to Dalekovod's capital increase,
SeeNews recounts. Founders of Zagreb-based Napredna Energetska
Rjesenja are Construction Line and Koncar's fully-owned subsidiary
Koncar Ulaganja. Back then, Dalekovod said separately that demand
for shares from the new issue topped the maximum amount planned in
the first and second round of subscription, SeeNews notes.
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F R A N C E
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CASINO GUICHARD-PERRACHON: Egan-Jones Keeps CCC Sr. Unsec. Ratings
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Egan-Jones Ratings Company, on August 17, 2021, maintained its
'CCC' foreign currency and local currency senior unsecured ratings
on debt issued by Casino Guichard-Perrachon SA. EJR also maintained
its 'C' rating on commercial paper issued by the Company.
Headquartered in Saint-Etienne, France, Casino Guichard-Perrachon
SA operates a wide range of hypermarkets, supermarkets, and
convenience stores.
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G E R M A N Y
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PLATIN 1425.GMBH: Moody's Affirms B3 CFR, Alters Outlook to Pos.
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Moody's Investors Service has affirmed the B3 corporate family
rating and B3-PD probability of default rating of Platin 1425.GmbH,
an intermediate holding company of German industrial equipment
manufacturer Schenck Process Group (SPG). Moody's also affirmed the
B3 ratings of Schenck Process Holding GmbH's EUR425 million backed
senior secured notes issued in 2017 and EUR125 million backed
senior secured notes issued in 2018. The outlook on all ratings has
been changed to positive from negative.
RATINGS RATIONALE
The change of the outlook to positive and the affirmation of SPG's
B3 CFR and B3-PD PDR recognises the company's rapid deleveraging
after a challenging 2020 and its ability to consistently generate
positive Moody's-adjusted free cash flow (FCF) even in times of
economic downturns that supports its healthy liquidity. The rating
action further takes into consideration Moody's expectation that
over the next 12-18 months SPG will continue to expand its
Moody's-adjusted EBITDA (excluding foreign exchange gains and
losses (FX)) and will generate modest FCF on the back of increased
sales volumes and recovery in profitability to pre-pandemic levels.
This expectation increases the likelihood that the company will
continue its deleveraging trajectory through 2022 towards a level
commensurate with a B2 rating, such as Moody's-adjusted debt/EBITDA
towards 6.0x.
As of end-June 2021, SPG's Moody's-adjusted debt/EBITDA decreased
to 9.2x (7.5x excluding FX) from 19.9x (10.6x excluding FX) in 2020
driven by EBITDA expansion. During H1 2021, the company's revenue
and company-adjusted EBITDA expanded by 13% (17% FX-adjusted) and
29% (35% FX-adjusted), respectively. The top line increase was
driven by aftermarket sales growth and increased sales volumes of
original equipment in strategic mining and food sectors as well as
positively impacted by the acquisition of Baker Perkins in Q4 2020.
The expansion of company-adjusted EBITDA was further supported by a
recovery in profitability with company-adjusted EBITDA margin
reaching 13.8% (H1 2020: 12.1%), higher than 13.1% in the
pre-pandemic H1 2019 as a result of cost saving and restructuring
initiatives.
In H1 2021, SPG's order intake showed a strong 75% year-on-year
growth driven by the surge in demand for original equipment from
food, mining and chemicals and performance materials industries.
The company ended Q2 2021 with a record high order backlog of
EUR523 million, which, even when excluding a large pet food order
of -$200 million (out of which around $170 million are already
reflected in order backlog), is still at a historically high level.
Given relatively short lead times, this large order book offers
good visibility into the company's sales in 2021 and provides
already EUR300 million of orders for 2022. More positive rating
action however hinges to SPG showing a sustainable recovery in
earnings also beyond 2021, that will allow it to materially reduce
financial leverage towards 6.0x Moody's-adjusted debt/EBITDA
(excluding FX).
Assuming some cooling off in the order intake in H2 2021, Moody's
expects SPG's leverage (excluding FX) to improve to slightly below
7.0x by end-2021, and further down to 6.0x-6.5x range in 2022. This
mostly reflects Moody's expectation that demand conditions will
remain solid across the company's core end-markets, as seen in
recent months.
The B3 rating continues to be constrained by SPG's 1) small size
with total revenue of EUR628 million for the last 12 months (LTM)
ended June 2021; (2) significant exposure to highly cyclical
end-markets, such as mining, steel, chemicals and power, though
recently it has somewhat decreased through further diversification
into a more resilient food business; and (3) highly leveraged
capital structure, with Moody's-adjusted gross leverage at 9.2x
(7.5x excluding FX) as of end-June 2021, though expected to decline
to 6.0x-6.5x over the next 12-18 months.
At the same time, SPG's credit profile continues to be supported by
(1) good end-customer industry and geographical diversification;
(2) asset-light business model and flexible cost structure (around
75% of total costs are variable) which enabled SPG to protect solid
margins and remain FCF positive historically, even during times of
economic stress; (3) fairly solid entry barriers because of its
established leadership position, the size of aftermarket revenue
and long-standing customer relationships, although the low capital
intensity of operations does not create a significant hurdle to
replicate the business; and (4) adequate liquidity.
LIQUIDITY
SPG's liquidity is adequate. As of end-June 2021, it was supported
by cash on balance of around EUR86 million (of which EUR34 million
was transferred as collateral to the bank syndicate that finances
SPG, but the company has access to it) and the fully available
EUR70 million committed revolving credit facility (RCF), maturing
in December 2022. Over the next 12 months, these liquidity sources
together with the operating cash flows, which the agency expects
the company to generate over the same period, will be sufficient to
cover its liquidity needs, which mainly comprise seasonal working
capital requirements, modest capital spending of around 2%-3% of
group sales and lease payments. The group has no material debt
maturities before its bonds are due in June 2023.
SPG has to comply with one springing senior leverage covenant, if
the RCF is drawn by more than 40%, under which Moody's expects the
group to maintain adequate capacity.
RATIONALE FOR THE POSITIVE OUTLOOK
The positive outlook indicates Moody's expectation that SPG will be
able to gradually increase its profitability to historical levels,
significantly reduce its leverage and generate modest free cash
flow on the back of EBITDA expansion.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONSIDERATIONS
The company is controlled by the private equity firm Blackstone. As
is often the case with private equity-sponsored deals, governance
practices are less transparent and the shareholder has a higher
tolerance for leverage, as illustrated by SPG's currently high
leverage. In Moody's view, SPG's financial policies are aggressive
and tend to favour shareholders over creditors, which was
illustrated when SPG partially used the proceeds from the
additional EUR75 million senior secured notes to finance a
repayment of the EUR40 million shareholder loan at the end of
2020.
SPG has a track record of debt-funded acquisitions, such as
acquisition of RBS in 2018 and Baker Perkins in 2020, which were
financed by issuance of EUR125 million senior secured notes and
partially financed by EUR75 million of additional senior secured
notes. Additional re-leveraging transactions cannot be excluded
from time to time considering the group's aggressive growth
strategy, including through opportunistic acquisitions.
STRUCTURAL CONSIDERATIONS
Schenck Process Holding GmbH is the borrower of the EUR70 million
super senior RCF (maturing December 2022) and the EUR425 million
senior secured notes issued in 2017 and EUR125 million senior
secured notes issued in 2018, both due in June 2023. The super
senior RCF ranks ahead of the senior secured notes. Given the
absence of material prior-ranking debt as well as junior claims,
the senior secured notes are rated B3, in line with the CFR.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if SPG's (1) leverage declined
sustainably towards 6.0x Moody's-adjusted debt/EBITDA; (2) free
cash flow generation were consistently positive with
Moody's-adjusted FCF/metrics in the mid-single-digit percentage
area.
The ratings could be downgraded if the company's (1) operating
performance were to materially deteriorate; (2) leverage exceeded
7.0x Moody's-adjusted debt/EBITDA for a prolonged time due to
material profit erosion or debt-funded growth; (3) free cash flow
turned negative on a sustained basis; (4) liquidity deteriorated
materially.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Manufacturing
Methodology published in March 2020.
COMPANY PROFILE
Headquartered in Darmstadt, Germany, Schenck Process Group (SPG) is
one of the world's leading technology and solution providers in the
fields of industrial weighing, screening, conveying, automation,
filtration and loading/transportation equipment. The group serves a
broad range of end-markets, including construction,
minerals/metals, food, chemicals and plastics across its main
regions Americas (43% of revenue for the LTM June 2021), Asia
Pacific (33%) and EMEA (24%). SPG is active in both the original
equipment (52% of revenue for LTM June 2021) and the aftermarket
business (48%). In the last 12 months (LTM) ended June 30, 2021,
SPG generated EUR628 million revenues and EBITDA (company-adjusted)
of EUR101 million (16.1% margin). The group has been owned by
Blackstone since December 2017.
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G R E E C E
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DANAOS CORP: S&P Raises Long-Term ICR to 'BB-', Outlook Positive
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S&P Global Ratings raised its long-term issuer credit rating on
Marshall Islands-registered Danaos Corp. to 'BB-' from 'B+' and its
issue rating on the group's senior unsecured debt to 'B+' from 'B',
and kept the recovery rating at '5' while revising the recovery
estimate to 25% from 10%.
The positive outlook reflects that S&P could raise the rating if
industry momentum persists and allows Danaos to re-charter its
ships at rates consistent with or higher than its base case and
extend its charter profile duration, while applying excess cash for
debt amortization, and for fleet expansion or rejuvenation.
Short-to-medium-term charter rate conditions should remain
favorable and benefit Danaos' overall charter profile. The movement
of essential goods, strong pickup in e-commerce, and shift in
consumer spending to tangible goods from services have supported
shipping volume recovery and containership charter rates since June
2020. Trade momentum remained solid in the first half of 2021,
despite the usual seasonal slowdown. As a result, S&P forecasts a
rebound in shipped volumes consistent with global GDP growth of
5%-6% in 2021 following a 1%-2% contraction in 2020 compared with
2019. Despite the most recent spike in new ship orders (lifting the
containership order book to 20% of the total global fleet from
about 9% at the start of 2021), containership supply growth is
unlikely to surpass demand growth in the coming quarters, propping
up charter rates. Moreover, the prolonged congestion in major
maritime ports and disruption of logistical supply chains are tying
up containership capacity and boosting charter rates further.
More stringent regulation on sulfur emissions (limiting sulfur used
in ship fuel to 0.5% from Jan. 1, 2020), and broader considerations
about greenhouse gas emissions in general--particularly in the
context of decarbonization--will result in uncertainties over the
costs and benefits of various technologies and fuel, and should in
the short term constrain orders to some extent. S&P said, "We also
note that lead times between placing orders for ships and the
ability of shipyards to deliver currently stand at 18-24 months. We
believe that demand-and-supply conditions will be largely in
balance in 2021 and 2022. We now forecast that charter rates could
start normalizing only from year-end 2021 at the earliest, as the
pandemic's impact on container shipping eases."
Such industry conditions have supported Danaos' recent
re-chartering efforts as container liners are securing shipping
capacity in the market for longer periods. After a number of
charter extension transactions, 35 so far since the beginning of
2021, Danaos' contracted revenue backlog of over $2 billion has
almost doubled from year-end 2020 while the average remaining
charter duration also increased to 3.3 years (from 3.1 years in
December 2020). This resulted in Danaos' contracted ship operating
days coverage of 85%-90% for 2022 and 65%-70% for 2023, thus partly
insulating the company from the industry's higher-than-average
underlying volatility and providing some earnings visibility.
S&P said, "We expect Danaos' credit metrics to improve gradually as
the company amortizes debt from free operating cash flow (FOCF) and
its financial flexibility for further fleet expansion and
rejuvenation to increase.Underpinned by the current charter
agreements and strong rate momentum, Danaos' EBITDA is set to
increase meaningfully to $450 million-$460 million in 2021,
according to our base case, compared with about $320 million in
2020--and more in 2022 given full-year earnings contribution from
the newly acquired ships. The 2022 growth in EBITDA is further
supported by the recent charter renewals at rates considerably
higher than previously: for example Danaos has been able to
re-charter some of its smaller ships (3,400 TEU-4,250 TEU) for
$37,750/day-$45,000/day compared with the previous rates of
$15,750/day-$25,000/day. This, combined with a gradually decreasing
debt from excess cash flows and interest expense, will boost credit
metrics in 2021 and likely more significantly in 2022, with our
adjusted FFO to debt improving to 23%-25% in 2021 and to about 40%
in 2022 (from 16% in 2020) and debt to EBITDA shrinking to
3.0x-3.5x in 2021 and 2.0x-2.5x in 2022 (from 4.7x in 2020). This
is significantly below Danaos' historical adjusted leverage levels
of 4.7x-7.5x during 2015-2020. Taking into account the current
contracted revenue backlog and solid EBITDA-to-FOCF conversion, our
base-case stipulates that Danaos' will have sufficient cash flow to
service annual mandatory debt amortization (of up to $110 million
per year in 2022-2023) and help build an ample cash position." This
would provide liquidity leeway for further potential ship
acquisitions or prudent shareholder returns and against unexpected
operational adversities.
Danaos' financial flexibility is further supported by marketable
securities on hand. During the first half of 2021 Danaos' received
about $146 million from the redemption of bonds it obtained as
partial compensation for restructuring its charters with container
liners: ZIM Integrated Shipping Services (ZIM) and Hyundai Merchant
Marine (HMM) in 2014 and 2016, and from selling part of its equity
stake in ZIM. Danaos consequently reported a considerable cash
position of $294 million as of June 30, 2021, which it will
partially use to cover the new vessel acquisition price and the
acquisition of the remaining stake in Gemini (in total about $332
million). S&P believes that Danaos' remaining stake in ZIM (about
8.2 million shares currently valued at about $350 million) provides
ample financial flexibility support, given the robust share
performance since ZIM's IPO in early 2021 and the current
underlying positive industry momentum. However, because it is
difficult to precisely quantify the proceeds until the securities
are sold, we do not quantitatively include these into our base case
until monetized.
S&P said, "We lack a track record of Danaos operating at a lower
level of financial leverage as forecast in our base case. We apply
a negative comparable rating analysis modifier to our 'bb' anchor
for Danaos, resulting in 'BB-' rating, because we note that the
credit ratios in 2022, likely significantly improved to the
thresholds consistent with our intermediate financial risk profile
category would be a new achievement for the company. This means
that there is no track record of Danaos' commitment to maintaining
this degree of financial risk, for example, adjusted debt to EBITDA
of less than 3x, which weighs on the possibility of a further
upgrade at this time.
"The positive outlook reflects that we could raise the rating in
the next 12 months if we believe that Danaos is able and willing to
improve and maintain adjusted FFO to debt of more than 30%, which
is our threshold for a 'BB' rating."
An upgrade would be contingent on industry momentum persisting and
allowing the company to re-charter its ships at rates consistent
with or higher than our base case, extend its charter profile
duration, and enhance earnings predictability, while continuing to
reduce debt, according to the mandatory amortization schedule, with
excess cash flows. Given the industry's inherent volatility, an
upgrade would also depend on the company's ability to achieve an
ample cushion under the credit measures for potential EBITDA
fluctuations.
S&P said, "Furthermore, we would need to be convinced that
management's financial policy would not allow for significant
increases in leverage. This means, for example, that the company
applies excess cash for fleet expansion or rejuvenation and that
dividend distributions remain prudent.
"We would revise the outlook to stable if Danaos' earnings appear
to underperform our base case due to a significant deterioration in
charter rate conditions, resulting in adjusted FFO to debt being
unlikely to improve and stay above 30%. We consider adjusted FFO to
debt of more than 20% consistent with the current 'BB-' rating."
Rating pressure would also arise if container liners' credit
quality appears to weaken unexpectedly, increasing the risk of
amendments to existing contracts, delayed payments, or nonpayment
under the charter agreements.
A negative rating action could also follow any unexpected
deviations in terms of financial policy, for example, if S&P
believes that the company is pursuing significant and largely
debt-funded investments in additional tonnage or aggressive
shareholder distributions, which would depress credit metrics.
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I R E L A N D
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HAYFIN EMERALD VII: Moody's Assigns B3 Rating to EUR12.6MM F Notes
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Moody's Investors Service announced that it has assigned the
following definitive ratings to the notes issued by Hayfin Emerald
CLO VII DAC (the "Issuer"):
EUR236,900,000 Class A-1 Senior Secured Floating Rate Notes due
2034, Definitive Rating Assigned Aaa (sf)
EUR32,000,000 Class A-2 Senior Secured Floating Rate Notes due
2034, Definitive Rating Assigned Aaa (sf)
EUR54,000,000 Class B Senior Secured Floating Rate Notes due 2034,
Definitive Rating Assigned Aa2 (sf)
EUR27,200,000 Class C Senior Secured Deferrable Floating Rate
Notes due 2034, Definitive Rating Assigned A2 (sf)
EUR32,400,000 Class D Senior Secured Deferrable Floating Rate
Notes due 2034, Definitive Rating Assigned Baa3 (sf)
EUR23,900,000 Class E Senior Secured Deferrable Floating Rate
Notes due 2034, Definitive Rating Assigned Ba3 (sf)
EUR12,600,000 Class F Senior 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.
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 75% ramped 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 7 month and 10 days ramp-up period in compliance with
the portfolio guidelines.
Hayfin Emerald Management LLP ("Hayfin") 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
4.5 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.
In addition to the seven classes of notes rated by Moody's, the
Issuer issued EUR38,400,000 Subordinated Notes due 2034 which are
not rated.
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: EUR450,000,000
Diversity Score(*): 45
Weighted Average Rating Factor (WARF): 3,020
Weighted Average Spread (WAS): 3.65%
Weighted Average Coupon (WAC):4.00%
Weighted Average Recovery Rate (WARR):43%
Weighted Average Life (WAL): 8.5 years
HAYFIN EMERALD VII: S&P Assigns B- (sf) Rating on Class F Notes
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S&P Global Ratings assigned its credit ratings to Hayfin Emerald
CLO VII DAC's class A-1, A-2, B, C, D, E, and F notes. At closing,
the issuer also issued unrated subordinated notes.
Under the transaction documents, the rated notes pay quarterly
interest unless there is a frequency switch event. Following this,
the notes will switch to semiannual payment.
The portfolio's reinvestment period will end approximately four and
a half years after closing, and the portfolio's weighted-average
life test will be approximately eight and half years after
closing.
The ratings assigned to the notes reflect S&P's assessment of:
-- The diversified collateral pool, which primarily comprises
broadly syndicated speculative-grade senior secured term loans and
bonds that are governed by collateral quality tests.
-- The credit enhancement provided through the subordination of
cash flows, excess spread, and overcollateralization.
-- The collateral manager's experienced team, which can affect the
performance of the rated notes through collateral selection,
ongoing portfolio management, and trading.
Portfolio Benchmarks
CURRENT
S&P Global Ratings weighted-average rating factor 2,777.83
Default rate dispersion 605.93
Weighted-average life (years) 5.65
Obligor diversity measure 102.76
Industry diversity measure 21.31
Regional diversity measure 1.23
Transaction Key Metrics
CURRENT
Total par amount (mil. EUR) 450.0
Defaulted assets (mil. EUR) 0
Number of performing obligors 24
Portfolio weighted-average rating
derived from S&P's CDO evaluator 'B'
'CCC' category rated assets (%) 2.67
'AAA' weighted-average recovery (%) 35.67
Covenanted weighted-average spread (%) 3.65
Reference weighted-average coupon (%) 4.00
Loss mitigation loan mechanics
Under the transaction documents, the issuer can purchase loss
mitigation loans, which are assets of an existing collateral
obligation held by the issuer offered in connection with the
obligation's bankruptcy, workout, or restructuring, to improve its
recovery value.
The purchase of loss mitigation loans is not subject to the
reinvestment criteria or the eligibility criteria. It receives no
credit in the principal balance definition. The cumulative exposure
to loss mitigation loans is limited to 10% of target par.
The issuer may purchase loss mitigation loans using either interest
proceeds, principal proceeds, or amounts in the collateral
enhancement account. The use of interest proceeds to purchase loss
mitigation 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 the transaction passing par
coverage tests and the manager having built sufficient excess par
in the transaction so that the principal collateral amount is equal
to or exceeds the portfolio's target par balance after the
reinvestment.
Rating rationale
S&P said, "Our ratings reflect our assessment of the collateral
portfolio's credit quality, which has a weighted-average rating of
'B'. The portfolio primarily comprises broadly syndicated
speculative-grade senior secured term loans and senior secured
bonds. Therefore, we conducted our credit and cash flow analysis by
applying our criteria for corporate cash flow CDOs.
"In our cash flow analysis, we used the EUR450 million target par
amount, the covenanted weighted-average spread of 3.65%, the
reference weighted-average coupon of 4.00%, and actual
weighted-average recovery rates at each rating level. We applied
various cash flow stress scenarios, using four different default
patterns, in conjunction with different interest rate stress
scenarios for each liability rating category.
"The transaction's documented counterparty replacement and remedy
mechanisms adequately mitigate its exposure to counterparty risk
under our current counterparty criteria.
"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 ratings, as the exposure to individual
sovereigns does not exceed the diversification thresholds outlined
in our criteria.
"We consider the transaction's legal structure to be bankruptcy
remote, in line with our legal criteria.
"Our credit and cash flow analysis indicate that the available
credit enhancement for the class B to E notes could withstand
stresses commensurate with higher rating levels than those we have
assigned. However, as the CLO is still in its reinvestment phase,
during which the transaction's credit risk profile could
deteriorate, we have capped our assigned ratings on the notes.
"The class F notes' current break-even default rate (BDR) cushion
is negative at the 'B-' rating level. Based on the portfolio's
actual characteristics and additional overlaying factors, including
our long-term corporate default rates, we believe 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 available credit enhancement for this class of notes is in
the same range as that of other CLOs that S&P rates and that has
recently been issued in Europe.
-- The portfolio's average credit quality is similar to that of
other recent CLOs.
-- S&P's model generated BDR at the 'B-' rating level of 27.99%
(for a portfolio with a weighted-average life of 5.65 years) versus
if it was to consider a long-term sustainable default rate of 3.1%
for 5.65 years, which would result in a portfolio default rate of
17.50%.
-- 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 notes is commensurate with the
'B- (sf)' rating assigned.
-- Following S&P's analysis of the credit, cash flow,
counterparty, operational, and legal risks, it believes that its
ratings are commensurate with the available credit enhancement for
the class A-1, A-2, B, C, D, E, and F notes.
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-1 to E 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 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 from being related to certain activities,
including, but not limited to, tobacco products, controversial
weapons, civilian firearms, nuclear weapons, thermal coal,
prostitution, payday lending, and weapons of mass destruction.
Since the exclusion of assets related to these activities 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 SUB (%) INTEREST RATE*
(MIL. EUR)
A-1 AAA (sf) 236.90 40.24 Three/six-month EURIBOR
plus 0.95%
A-2 AAA (sf) 32.00 40.24 Three/six-month EURIBOR
plus 1.20%§
B AA (sf) 54.00 28.24 Three/six-month EURIBOR
plus 1.65%
C A (sf) 27.20 22.20 Three/six-month EURIBOR
plus 2.15%
D BBB (sf) 32.40 15.00 Three/six-month EURIBOR
plus 3.30%
E BB- (sf) 23.90 9.69 Three/six-month EURIBOR
plus 6.06%
F B- (sf) 12.60 6.89 Three/six-month EURIBOR
plus 8.65%
Sub NR 38.40 N/A N/A
*The payment frequency switches to semiannual and the index
switches to six-month EURIBOR when a frequency switch event occurs.
§EURIBOR subject to a cap of 2.1%.
EURIBOR--Euro Interbank Offered Rate.
NR--Not rated.
N/A—-Not applicable.
RRE 8 LOAN: Moody's Assigns (P)Ba3 Rating to EUR20MM Class D Notes
------------------------------------------------------------------
Moody's Investors Service announced that it has assigned the
following provisional ratings to notes to be issued by RRE 8 Loan
Management DAC (the "Issuer"):
EUR302,500,000 Class A-1 Senior Secured Floating Rate Notes due
2036, Assigned (P)Aaa (sf)
EUR42,500,000 Class A-2 Senior Secured Floating Rate Notes due
2036, Assigned (P)Aa2 (sf)
EUR20,000,000 Class D Senior Secured Deferrable Floating Rate
Notes due 2036, Assigned (P)Ba3 (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 92.5% of the
portfolio must consist of secured senior loans or senior secured
bonds and up to 7.5% of the portfolio may consist of unsecured
senior loans, second-lien loans, high yield bonds and mezzanine
loans. The portfolio is expected to be 80% ramped 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 4 months ramp-up period in compliance with the
portfolio guidelines.
Redding Ridge Asset Management (UK) LLP ("Redding Ridge") 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 4.6 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 three classes of notes rated by Moody's, the
Issuer will issue two classes of notes and subordinated notes due
2036, which are not rated.
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: EUR500,000,000
Diversity Score(1): 44
Weighted Average Rating Factor (WARF): 3300
Weighted Average Spread (WAS): 3.55%
Weighted Average Coupon (WAC): 5.00%
Weighted Average Recovery Rate (WARR): 46.0%
Weighted Average Life (WAL): 9 years
===================
K A Z A K H S T A N
===================
NURBANK JSC: S&P Affirms 'B-/B' ICRs, Outlook Stable
----------------------------------------------------
S&P Global Ratings affirmed its 'B-/B' long- and short-term issuer
credit ratings and 'kzBB-' long-term Kazakhstan national scale
rating on Kazakhstan-based Nurbank JSC. The outlook is stable.
Nurbank's asset quality has gradually improved following support
from the state and its majority shareholder. Nurbank created
material loan loss provisions over 2020-2021 after a 2019
regulatory asset quality review (AQR). This is thanks to the
capital injection of more than the Kazakhstani tenge (KZT) 20
billion (about $47 million) from the controlling shareholder
provided in 2020, and state support in the form of state guarantees
and subordinated loans, following the AQR outcome. Because of the
gradual clean-up of its balance sheet, Nurbank's coverage metrics
improved to 50% (Stage 3 under International Financial Reporting
Standards) as of July 1, 2021, compared with 39% as of the same
date in 2020. S&P sid, "We expect the bank will maintain the
coverage ratio at about 52%-53% in 2021. This is, however, still
low and below the market average of about 57% for rated Kazakh
peers. As of mid-2021, the bank's Stage 3 and purchased or
originated credit impaired loans reduced to 31% of the total loan
book from 38% and 45% in 2020 and 2019, respectively. We view it as
still high compared to that of local and international players. We
expect Nurbank will gradually create additional provisions in
2021-2022 in line with AQR program, which implies additional
provisioning in the next several years. The prolonged period for
creating provisions also reflects that the bank's earnings
generation capacity might be even more limited if all provisions
were created at once. As such, we expect Stage 3 loans will decline
to about 25%-27% in 2021. We expect Nurbank's credit losses will
remain elevated at about 3% for 2021-2022 and will continue to
weigh on its earning capacity."
Capital adequacy will likely remain under pressure due to weak
earnings capacity from additional provisioning expenses. In 2020,
following receipt of the capital support from the majority
shareholder and subordinated loans from the state, the bank
comfortably meets all regulatory capital adequacy requirements. S&P
said, "Nevertheless, we consider that the pressure on the bank's
capitalization might further intensify in the medium term, due to
potential further weakening of asset quality as operating
conditions for smaller banks in Kazakhstan will likely remain
challenging. We anticipate the bank's risk-adjusted capital ratio
(RAC), which we calculate using globally comparable risk weights,
will be at about 4.7%-4.8% in the next 12-18 months. In our
forecast, we envisage no capital injection in 2021-2022, loan book
growth of about 5%-7%, and new provisioning expenses equivalent to
3% of average loans in the next two years. We expect that the
controlling shareholder will remain committed to supporting the
bank in case of need, in particular in case there is a need for
additional provisions above our forecasts."
S&P said, "We view the bank's funding and liquidity profile as in
line with the system average and that of small peers in
Kazakhstan.Customer confidence appeared rather stable in 2020 and
in the first seven months of 2021, and the bank built a sufficient
liquidity cushion, which we view as positive in the current
macroeconomic environment. Under our base case, we do not expect
any massive deposit outflows over the outlook horizon.
"The stable outlook on Nurbank reflects our expectation that the
bank will be able to gradually improve its asset quality and
maintain the capital adequacy buffers commensurate with its planned
new business growth. We expect that the bank will be able to
maintain a stable funding profile and maintain sufficient liquidity
buffers."
S&P could take a negative rating action in the next 12 months if it
saw:
-- High risks to the viability of Nurbank's business model;
-- A significant decline in Nurbank's capitalization, with RAC
falling below 3% or regulatory ratios falling below minimum
levels;
-- a material weakening in its asset-quality indicators; or
-- Pronounced pressure on its funding and liquidity metrics.
An upgrade appears unlikely in the next 12 months, since it would
require significant improvement in the group's capitalization (with
RAC sustainably in S&P's strong category), alongside further
pronounced progress in problem assets recovery, leading to
improving profitability. An upgrade would also depend on Nurbank
demonstrating stability of customer deposits.
===================
L U X E M B O U R G
===================
ENDO LUXEMBOURG: Moody's Cuts CFR to Caa1 & Alters Outlook to Neg.
------------------------------------------------------------------
Moody's Investors Service downgraded the ratings of Endo Luxembourg
Finance I Company S.a.r.l., and other subsidiaries of Endo
International plc (together, "Endo"). The Corporate Family Rating
was downgraded to Caa1 from B3 and the Probability of Default
Rating was downgraded to Caa1-PD from B3-PD. Moody's also
downgraded the ratings on the company's senior secured debt to B3
from B2, and the unsecured ratings to Caa3 from Caa2. Moody's
affirmed the secured 2nd Lien Regular Bond/Debenture, at Caa2.
There is no change to the SGL-3 Speculative Grade Liquidity Rating.
At the same time, Moody's revised the rating outlook to negative
from stable.
The rating downgrades reflect Moody's expectation that Endo's
potential cash outflows related to opioid litigation will hinder
its ability to improve operational performance or meaningfully
deleverage. The downgrade also reflects ongoing erosion in Endo's
US generics business, as well as Moody's view that Endo has
experienced a material reduction in its capital market access and
enterprise value. This adds pressure to the company's ongoing
business challenges.
The negative outlook reflects Moody's view of Endo's rising
exposure to opioid-related litigation and settlement involving cash
outflows. The negative outlook also reflects Moody's view that
Endo's earnings will decline in 2022, but that it's large cash
balance will provide adequate liquidity for operations.
Social considerations were a material factor in this rating action.
The company faces significant legal exposures related to its sales
of branded and generic opioid drugs. Moody's believes the risk of a
settlement to resolve all outstanding opioid litigation by the end
of 2021 is high, as other defendants have neared final global
resolution of their exposures. A settlement involving cash outflows
over multiple years would be credit negative for Endo.
Downgrades:
Issuer: Endo Luxembourg Finance I Company S.a.r.l.
Corporate Family Rating, to Caa1 from B3
Probability of Default Rating, to Caa1-PD from B3-PD
Backed Senior Secured Bank Credit Facility, to B3 (LGD3) from B2
(LGD3)
Senior Secured Bank Credit Facility, to B3 (LGD3) from B2 (LGD3)
Backed Senior Secured 1st Lien Regular Bond/Debenture to B3 (LGD3)
from B2 (LGD3)
Issuer: Par Pharmaceutical Inc.
Backed Senior Secured Regular Bond/Debenture, to B3 (LGD3) from B2
(LGD3)
Issuer: Endo Finance LLC
Senior Secured Regular Bond/Debenture, to B3 (LGD3) from B2
(LGD3)
Senior Unsecured Regular Bond/Debenture, to Caa3 (LGD6) from Caa2
(LGD6)
Backed Senior Unsecured Bond/Debenture, to Caa3 (LGD6) from Caa2
(LGD6)
Issuer: Endo Finance Co.
Senior Unsecured Regular Bond/Debenture, to Caa3 (LGD6) from Caa2
(LGD6)
Affirmations:
Issuer: Endo Finance LLC
Backed Secured 2nd Lien Regular Bond/Debenture, at Caa2 (LGD5)
Outlook Actions:
Issuer: Endo Luxembourg Finance I Company S.a.r.l.
Outlook, Changed to Negative from Stable
Issuer: Par Pharmaceutical Inc.
Outlook, Changed to Negative from Stable
Issuer: Endo Finance LLC
Outlook, Changed to Negative from Stable
Issuer: Endo Finance Co.
Outlook, Changed to Negative from Stable
RATINGS RATIONALE
Endo's Caa1 Corporate Family Rating reflects its weak credit
profile as earnings will continue to decline in 2021 and 2022 due
to ongoing challenges in its US generics business. Moody's expects
the branded segment to grow while it is unlikely that the generics
business will return to growth for the foreseeable future due to
continued pricing pressure. The rating is also constrained by
product concentration risk as Vasostrict, Endo's largest product,
contributes more than 20% of Endo's earnings. Uncertainty around
patent litigation on Vasostrict exposes it to risk of earnings
declines that would increase financial leverage if generic
challengers are successful.
Endo's rating is supported by strong scale, decent growth potential
of a newly approved product, Qwo, for cellulite, and its balanced
business mix between branded and generic drugs. However, revenues
from new products, including Qwo, would not be sufficient to offset
Vasostrict declines, if it were to face generic competition. The
ratings are also supported by Endo's high cash balance and good
cash flow before litigation payments.
The SGL-3 Speculative Grade Liquidity Rating is supported by Endo's
unrestricted cash, which was approximately $1.5 billion at June 30,
2021. Moody's expects that Endo will generate good cash flow prior
to litigation payments. Endo has nearly $360 million of litigation
payments remaining in 2021 -- related to vaginal mesh - roughly
half of which is already reserved in restricted cash. Endo has $300
million of revolver borrowings. A portion of the $1 billion
revolver is subject to a 4.5x secured net debt to EBITDA covenant
that springs with any more borrowings than it currently has. Endo's
compliance is diminishing given shrinking EBITDA through 2021 and
beyond. $22 million of Endo's revolver commitments will continue to
expire in April 2022, with $75 million expiring in 2024, and the
remainder extended into 2026. Endo also has $180 million in notes
maturing in January 2022 that Endo has the ability to fund with
cash.
Social considerations are material to Endo's ratings. Endo faces
significant legal exposures related to its sales of branded and
generic opioid drugs. Endo and its subsidiaries are named
defendants in various lawsuits including those from US cities,
states, and counties, alleging deceptive promotion of branded
opioid products and downplaying the risks of opioid use. Endo's
exposure primarily relates to its previously promoted branded
opioid products, Opana ER and Percocet/Endocet. Endo no longer
promotes any opioid products. These investigations could result in
cash outflows, although the timing and amounts are highly
uncertain. Endo's flexibility to absorb this risk is weak, given
its high financial leverage and other headwinds. Moody's believes
the risk of a settlement to resolve all outstanding opioid
litigation by the end of 2021 is high, as other defendants have
neared final global resolution of their exposures. A settlement
involving cash outflows over multiple years would be credit
negative for Endo. This is because litigation payouts consume
financial resources that could otherwise be used for debt reduction
or acquisitions, while also adding a form of financial leverage.
Endo's capacity to absorb a settlement would depend on potential
cash outflows relative to its annual free cash flow as well as
developments in the rest of its business, such as ongoing patent
litigation on Vasostrict.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Materially negative developments related to Endo's opioid-related
litigation could lead to a downgrade. A negative outcome stemming
from ongoing patent litigation on its largest product, Vasostrict,
could also lead to a downgrade. A reduction in cash for
acquisitions or shareholder initiatives ahead of clarity on opioid
litigation could also lead to a downgrade.
The rating could be upgraded if there is reduced credit risk
related to the impact of opioid-related legal matters and
Vasostrict litigation. Sustainable revenue and earnings growth,
reduced concentration in Vasostrict, would also be needed to
support an upgrade. Quantitively debt/EBITDA will need to approach
6.0x.
Headquartered in Luxembourg, Endo Luxembourg Finance I Company
S.a.r.l. is a subsidiary of Endo International plc, which is
headquartered in Dublin, Ireland. Endo is a specialty healthcare
company offering branded and generic pharmaceuticals. Endo's
reported revenue for the twelve months ended June 30, 2021 was
approximately $2.8 billion.
The principal methodology used in these ratings was Pharmaceutical
Industry published in June 2017.
SAMSONITE INTERNATIONAL: S&P Affirms 'B' ICR, Outlook Negative
--------------------------------------------------------------
S&P Global Ratings affirmed its 'B' issuer credit rating on
Luxembourg–based Samsonite International S.A., its 'B+'
issue-level rating on its senior secured debt, and its 'B'
issue-level rating on its senior unsecured debt.
The negative outlook reflects the risk that the company's operating
performance will deteriorate further, leading to continued cash
burn and sustained leverage in the high-single-digit area over the
next 12 months.
S&P said, "The affirmation reflects our expectation for improved
cash flow in the second half of fiscal year 2021. However, the
negative outlook reflects the downside risk to our base case
forecast stemming from the rapid spread of new coronavirus
variants, which could threaten the company's recovery. The recent
increase in COVID-19 cases due the spread of new variants of the
coronavirus in the U.S. and some of Samsonite's other major
markets, such as Japan and Korea, threatens its recovery. We
believe the spread of these variants could lead to a more uneven or
prolonged recovery than we previously expected. That said, we do
not expect future virus-related restrictions to be as restrictive
as those implemented in March and April of 2020, thus we do not
believe the company's incremental revenue declines will be as
severe as those during the onset of the pandemic." Nevertheless,
the spread of these virus variants could cause governments to
continue or reimpose travel restrictions on international routes,
which would decrease the willingness of consumers and businesses to
travel and thereby slow the expected rebound in local and
international travel volumes. If this occurs, Samsonite may
underperform S&P's base-case forecast, which assumes vaccine
rollouts will continue to improve consumer mobility and increase
the demand for the company's products.
Supply chain constraints and higher freight, labor, and input costs
are additional risks to the company's financial recovery. Samsonite
is currently experiencing supply chain constraints and increased
freight costs due to port congestion and shipping delays related to
the virus' spread in the regions that handle its shipping and
manufacturing. The company's profitability is also being
constrained by higher raw material and labor costs, while the
non-renewal of the U.S. generalized system of preferences (GSP)
system continues to pressure its EBITDA in the U.S. The GSP system
reduces the tariffs on several of the products that Samsonite
imports into the U.S. Although the company expects these costs to
increase further, it has been successful in partially offsetting
these headwinds through price increases, product reformulations,
and by leveraging its supplier relationships to limit its cost
pressure.
S&P said, "We continue to assume a slow rebound in Samsonite's
operating performance will cause its leverage to remain elevated
through 2021. The company increased its sales by 121% in its second
quarter ended June 2021 because it lapped its hardest hit quarter
from the beginning of the pandemic, though its constant currency
net sales still remained 52% below its performance during the same
period in 2019. Compared to the second quarter of June 2019,
Samsonite's constant currency revenue declined by 78% in its June
2020 quarter when the most restrictive lockdown measures of the
pandemic were implemented across multiple regions. Since the
initial shock of the pandemic, the company's revenue has continued
to improve sequentially along with improvement in global domestic
travel. However, the pace of the recovery in its sales was sluggish
throughout the second quarter of 2021. Specifically, the company's
net sales fell by 54.1% on a constant currency basis in April,
54.7% in May, and 48.2% in June, when compared to the same periods
respectively in 2019, which reflects the critical importance of
international travel to support its sales. The company also stated
that net sales in July 2021 fell by 40.9% when compared to July
2019. Samsonite's profitability has risen with the improvement in
its sales and its aggressive cost-reduction actions, though its
profitability remains significantly below pre-pandemic levels. We
continue to expect the company's S&P Global Ratings-adjusted
leverage to improve to close to 9x by the end of fiscal year 2021
in-line with our previous expectation. We also forecast that
Samsonite's sales will increase by about 25% in 2022 unless the
spread of new variants significantly disrupts its path to
recovery." This, combined with the benefits from its realization of
annualized cost savings, will likely cause the company's leverage
to decline to the mid-single-digit area by fiscal year 2022.
The aggressive cost-cutting initiatives implemented during the
pandemic have stemmed the company's cash burn and positioned it for
margin expansion when its sales recover. The company has taken
aggressive measures since the onset of the pandemic to address its
fixed-cost structure through permanent cost cuts, including
headcount reductions, store closures, savings from temporary rent
reductions, cutbacks on corporate spending, and lower advertising
spending. Specifically, Samsonite reduced its total headcount to
8,800 employees as of June 30, 2021, which compares with 14,500
employees as of June 30, 2019.
In addition, the company exited 251 stores, net of new store
openings, since June 2019, which reduced its total store count to
1,027 as of June 30, 2021. Furthermore, the company stripped out
approximately $89 million of fixed selling, general, and
administrative (SG&A) costs, lowering its SG&A (excluding
depreciation and amortization expenses) to $422.73 million for the
first half of fiscal year 2021 from $519.4 million during the same
period in the previous fiscal year. About half of the $195.1
million decline in its fixed SG&A in the first half of 2021
compared to the first half of 2019 stems from management's
permanent cost-reduction actions. These measures, combined with
Samsonite's minimal capex and aggressive working capital actions,
enabled it to minimize its cash burn to $27 million in the second
quarter of fiscal year 2021 and return to generating positive S&P
Global Ratings-adjusted EBITDA for the first two quarters of fiscal
year 2021. S&P said, "We expect Samsonite's performance will
continue to recover in the back half of fiscal year 2021 and
anticipate it will improve its S&P Global Ratings-adjusted EBITDA
to about $250 million while generating $100 million of FOCF for
fiscal year 2021. Further, we expect the company's S&P Global
Ratings-adjusted EBITDA margin to return closer to 2019 levels by
the end of fiscal year 2022 on its continued cost discipline and
higher fixed cost absorption as its sales recover."
Samsonite's liquidity remains adequate and it is starting to prepay
debt. The company was able to reduce its cash burn by $197 million
to $91.9 million in the first half of 2021, which compares with
$288.9 million in the first half of 2020, because of its
comprehensive cost-reduction actions and tight cash controls. S&P
expects it to further reduce its cash burn to breakeven levels in
the second half of fiscal year 2021.
Samsonite sold its Speck business in July 2021 for a total
consideration of approximately $36 million, excluding a potential
$4 million in future earnouts. The company plans to use proceeds
from this sale to pay down debt in the third quarter. In addition,
Samsonite prepaid $125 million of its term loan A facility, $100
million of the outstanding borrowings under its amended revolving
credit facility, and $100 million in conjunction with the further
amendment to its credit agreement and the refinancing of its 2020
incremental term loan B facility in the second quarter of 2021. S&P
expects the company to further pay down its revolver borrowings in
early 2022 when its earnings and cash flow recover sufficiently.
The negative outlook on Samsonite reflects the risk that its
operating performance will deteriorate further and lead to
continued cash burn and leverage sustained in the high-single-digit
area beyond fiscal year 2021.
S&P could lower its ratings on Samsonite if:
-- S&P does not expect travel trends or macroeconomic conditions
to materially improve over the next year, which will likely lead to
sustained cash burn and a reduced liquidity cushion; or
-- The company's performance deteriorates beyond its expectations
such that it no longer expects it to generate positive free cash
flow in fiscal year 2021 and anticipate it will sustain leverage in
the high-single-digit area beyond 2021.
S&P could revise its outlook on Samsonite to stable if its sales
recover due to a rebound in travel or an improvement in
macroeconomic conditions such that:
-- It generates positive FOCF of at least $100 million for fiscal
year 2021; and
-- S&P sees a path for it to deleverage to near the
mid-single-digit area in fiscal year 2022.
=====================
N E T H E R L A N D S
=====================
AURORUS 2020 B.V.: DBRS Confirms B Rating on Class F Notes
----------------------------------------------------------
DBRS Ratings GmbH confirmed its ratings on the notes issued by
Aurorus 2020 B.V. as follows:
-- Class A Notes at AAA (sf)
-- Class B Notes at AA (sf)
-- Class C Notes at A (sf)
-- Class D Notes at BBB (sf)
-- Class E Notes at BB (sf)
-- Class F Notes at B (sf)
The ratings on the Class A and B Notes address the timely payment
of interest and ultimate payment of principal on or before the
legal final maturity date. The ratings on the Class C, D, E, and F
Notes address the timely payment of interest when most senior class
of notes outstanding otherwise ultimate payment of interest and
ultimate payment of principal on or before the legal final maturity
date.
The confirmations follow an annual review of the transaction and
are based on the following analytical considerations:
-- Portfolio performance, in terms of delinquencies and cumulative
net losses, as of the July 2021 payment date;
-- Probability of default (PD), loss given default (LGD), and
expected loss assumptions on a potential portfolio migration
according to the replenishment criteria;
-- Current available credit enhancement available to the notes to
cover the expected losses at their respective rating level;
-- No early amortization events have occurred;
-- Current economic environment and an assessment of sustainable
performance, as a result of the Coronavirus Disease (COVID-19)
pandemic.
Aurorus 2020 B.V. is a securitization of instalment loans,
unsecured credit cards receivables where no more drawings are
allowed and which are amortizing, and revolving credit facilities
originated by Qander Consumer Finance B.V. (Qander) in the
Netherlands. The receivables are serviced by Qander, with Vesting
Finance Servicing B.V. acting as the backup servicer. The
transaction is currently in its revolving period scheduled to end
in October 2023. The revolving period end coincides with a First
Optional Redemption Date and a step-up in the coupon on the rated
notes. The transaction closed in August 2020 and the legal final
maturity is in August 2046.
At the end of Q1 2020, Qander withdrew from the credit card market
and has blocked all associated revolving facilities, resulting in
these receivables becoming fully amortizing and carrying a fixed
rate of interest. The terms and conditions of the revolving loan
product have also changed in May 2019, which has resulted in a
significantly shorter tenor and restrictions on drawing
capabilities.
PORTFOLIO PERFORMANCE
Delinquency ratios have been low since closing; as of the July 2021
payment date two-to-three months in arrears and 90+ day delinquency
ratios were at 0.3% and 0.1%, respectively. As of the July 2021
payment dates, cumulative defaults represented 1.2% of the total
receivables purchased since closing. The default definition uses a
120-day in arrears basis.
PORTFOLIO ASSUMPTIONS
DBRS Morningstar maintained its base case PD assumption on each of
the product types: 10.0%, 5.0%, and 12.5% on revolving facilities,
on amortizing credit cards receivables, and instalment loans,
respectively, leading to a weighted-average PD of 8.1%. DBRS
Morningstar also maintained its base case LGD assumption of 25.0%
across the three product types.
CREDIT ENHANCEMENT AND RESERVES
Credit enhancement (CE) to the rated notes consists of the
subordination of their respective junior notes. Given that the
transaction is in its revolving period, the CE to the rated notes
remained stable since closing as follows:
-- CE to the Class A Notes at 36.0%
-- CE to the Class B Notes at 24.0%
-- CE to the Class C Notes at 16.5%
-- CE to the Class D Notes at 11.5%
-- CE to the Class E Notes at 9.0%
-- CE to the Class F Notes at 6.0%
The transaction benefits from a liquidity reserve, currently at its
target level of EUR 2.7 million, equal to 0.9% of the original
Class A, Class B, Class C, and Class D Notes balances. After the
revolving period, the target increases to 1.5% of the Class A,
Class B, Class C, and Class D Notes and is funded from the proceeds
available according to the interest priority of payments. It is
nonamortising and following the redemption of the Class D Notes it
becomes available to pay interest on the most senior class of notes
outstanding subject to no amount being recorded in the applicable
note-principal specific ledger (PDL). The reserve can be used to
cover balances recorded on the class-specific PDLs subject to
conditions. As of the July 2021 payment date, all PDLs were clear.
ABN AMRO Bank N.V. (ABN AMRO) acts as the account bank for the
transaction. Based on the account bank reference rating of ABN AMRO
at AA (low), which is one notch below the DBRS Morningstar
Long-Term Critical Obligations Rating (COR) of AA, the downgrade
provisions outlined in the transaction documents and other
mitigating factors inherent in the transaction structure, DBRS
Morningstar considers the risk arising from the exposure to the
account bank to be consistent with the rating assigned to the Class
A Notes, as described in DBRS Morningstar's "Legal Criteria for
European Structured Finance Transactions" methodology.
BNP Paribas SA (BNP) acts as the swap counterparty for the
transaction. DBRS Morningstar's Long-Term COR of BNP at AA (high)
is above the First Rating Threshold as described in DBRS
Morningstar's "Derivative Criteria for European Structured Finance
Transactions" methodology.
Notes: All figures are in euros unless otherwise noted.
===========
N O R W A Y
===========
AXACTOR SE: Moody's Rates New EUR300MM Senior Unsecured Notes 'B3'
------------------------------------------------------------------
Moody's Investors Service assigned a B3 senior unsecured debt
rating to Axactor SE's proposed EUR300 million senior unsecured
notes. Axactor is a publicly-listed debt purchasing company,
headquartered in Oslo, Norway.
RATINGS RATIONALE
The B3 senior unsecured debt rating reflects Axactor's B1 corporate
family rating (CFR) and the application of Moody's Loss Given
Default for Speculative-Grade Companies methodology (published in
December 2015), Axactor's capital structure and particularly the
priorities of claims and asset coverage in the company's current
and future liability structure. The size of Axactor's secured
revolving credit facility (RCF) indicates higher loss-given default
for senior unsecured creditors, leading to senior unsecured rating
two notches below Axactor's B1 CFR.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
FACTORS THAT COULD LEAD TO AN UPGRADE
Axactor's senior unsecured debt rating would likely be upgraded, if
Axactor's CFR will be upgraded. Axactor's senior unsecured debt
rating could also be upgraded following a positive change in its
debt capital structure that would increase the recovery rate for
the senior unsecured debt class.
FACTORS THAT COULD LEAD TO A DOWNGRADE
Axactor's senior unsecured debt rating could be downgraded, if
Axactor's CFR will be downgraded. Axactor's senior unsecured debt
rating could also be downgraded if the company were to materially
increase its secured RCF, which ranks structurally above to the
senior unsecured bonds.
PRINCIPAL METHODOLOGY
The principal methodology used in this rating was Finance Companies
Methodology published in November 2019.
AXACTOR SE: S&P Rates EUR300MM Senior Unsecured Bond 'B'
--------------------------------------------------------
S&P Global Ratings assigned its 'B' issue rating to the EUR300
million senior unsecured bond due in 2026 that Norway-based Axactor
SE (B/Stable/--) plans to issue. The rating is subject to our
review of the notes' final documentation.
The company plans to use the proceeds from the proposed bond to
repay the amounts outstanding on its existing bond held by
Axactor's largest shareholder Geveran Trading Co Ltd (EUR140
million) and different loan facilities at Axactor's Italian
facility (about EUR40 million as of second-quarter 2021). Any
remaining amount is set aside for general corporate purposes, and
we expect these funds to be invested in debt portfolios or to
reduce the outstanding volume on RCF.
Issue Ratings - Recovery Analysis
Key analytical factors
-- The issue rating on Axactor's senior unsecured note is 'B', in
line with the issuer credit rating. This is based on a recovery
rating of '3', indicating S&P's expectation of meaningful recovery
(50%-70%; rounded estimate: 60%) in an event of default. The
recovery rating is constrained by Axactor's sizeable multicurrency
senior secured RCF (EUR545 million), which is structurally superior
to Axactor's senior unsecured bonds.
-- S&P does not add Axactor's existing EUR140 million bond and its
Italian loan facilities to debt claims, because it believes those
will be repaid by end-2021.
-- In S&P's simulated default scenario, it envisages a default in
2024, reflecting a significant decline in cash flow because of lost
clients, difficult collection conditions, or greater competitive
pressures, leading to the mispricing of portfolio purchases.
-- S&P calculates a combined enterprise value, taking into
consideration the different business segments and assuming Axactor
finds a potential acquirer for its portfolio of debt receivables.
-- S&P said, "We apply a haircut of 25% to the book value of the
debt portfolios. We apply the same haircut on Axactor's remaining
real estate-owned portfolio because we expect Axactor will reinvest
proceeds from the disposal of real estate assets into debt
portfolios."
-- S&P said, "In addition, we assume earnings from its third-party
servicing business will decline and apply a valuation using a 4.0x
EBITDA multiple. We assess Axactor on a going-concern basis given
its established relationships with customers."
Simulated default assumptions
-- Simulated year of default: 2024
-- EBITDA multiple: 4.0x
-- Jurisdiction: Norway
RCF is 85% drawn at default. S&P does not add Axactor's EUR75
million accordion option to prior ranking claims because it is not
committed, and S&P doesn't anticipate it will be used as a funding
vehicle within the regular course of business.
Key analytical factors
-- Gross enterprise value at default: EUR867 million
-- Net enterprise after 5% administrative costs: EUR824 million
-- Prior ranking claims: EUR488 million under the RCF
-- Collateral value available to unsecured debt: EUR336 million
-- Senior unsecured debt claims: circa EUR530 million
-- Recovery expectation: 50%-70% (rounded estimate: 60%)
Note: Debt amounts include six months of accrued interest that S&P
assumes will be owed at default.
===========================
U N I T E D K I N G D O M
===========================
CHARTER MORTGAGE 2018-1: Moody's Hikes Cl. E Notes Rating from Ba1
------------------------------------------------------------------
Moody's Investors Service has upgraded the ratings of two notes in
Charter Mortgage Funding 2018-1 plc. The rating action reflects
better than expected collateral performance and the increased
levels of credit enhancement for the affected notes.
Moody's affirmed the ratings of the notes that had sufficient
credit enhancement to maintain the current rating and for the Class
C notes taking into account the level of liquidity support.
GBP261.69M Class A Notes, Affirmed Aaa (sf); previously on Dec 10,
2019 Affirmed Aaa (sf)
GBP7.15M Class B Notes, Affirmed Aaa (sf); previously on Dec 10,
2019 Upgraded to Aaa (sf)
GBP7.15M Class C Notes, Affirmed Aa1 (sf); previously on Dec 10,
2019 Upgraded to Aa1 (sf)
GBP7.15M Class D Notes, Upgraded to Aa3 (sf); previously on Dec
10, 2019 Upgraded to A2 (sf)
GBP2.86M Class E Notes, Upgraded to Baa1 (sf); previously on Dec
10, 2019 Affirmed Ba1 (sf)
RATINGS RATIONALE
The rating action is prompted by better than expected collateral
performance and the increased levels of credit enhancement for the
affected notes.
Revision of Key Collateral Assumptions:
As part of the rating action, Moody's reassessed its lifetime loss
expectation for the portfolio reflecting the collateral performance
to date.
Delinquencies with 90 days plus arrears currently stand at 1.29% of
current pool balance with pool factor at 42.4%. Cumulative losses
currently stand at 0% of original pool balance.
Moody's assumed the expected loss of 1.1% as a percentage of
current pool balance, due to the better than expected collateral
performance. This corresponds to expected loss assumption as a
percentage of the original pool balance of 0.5%, down from the
assumption of 0.9% as at November 2020.
Moody's has also assessed loan-by-loan information as a part of its
detailed transaction review to determine the credit support
consistent with target rating levels and the volatility of future
losses. As a result, Moody's has maintained the MILAN CE assumption
at 9%.
Increase in Available Credit Enhancement
Sequential amortization led to the increase in the credit
enhancement available in this transaction.
The credit enhancement for Classes D and E Notes in Charter
Mortgage Funding 2018-1 plc increased to 2.57% and 0.21% from 1.43%
and 0.12% respectively since the last rating action.
The principal methodology used in these ratings was "Moody's
Approach to Rating RMBS Using the MILAN Framework" published in
December 2020.
The analysis undertaken by Moody's at the initial assignment of
ratings for RMBS securities may focus on aspects that become less
relevant or typically remain unchanged during the surveillance
stage.
Factors that would lead to an upgrade or downgrade of the ratings:
Factors or circumstances that could lead to an upgrade of the
ratings include (1) performance of the underlying collateral that
is better than Moody's expected, (2) an increase in available
credit enhancement, (3) improvements in the credit quality of the
transaction counterparties and (4) a decrease in sovereign risk.
Factors or circumstances that could lead to a downgrade of the
ratings include (1) an increase in sovereign risk, (2) performance
of the underlying collateral that is worse than Moody's expected,
(3) deterioration in the notes' available credit enhancement and
(4) deterioration in the credit quality of the transaction
counterparties.
DOLFIN FINANCIAL: Creditors' Meeting Scheduled for September 2
--------------------------------------------------------------
In the High Court of Justice, Business & Property Courts of England
& Wales Insolvency & Company List (ChD) Court Number:
CR-2021-001111
A meeting of clients and creditors of Dolfin Financial is to be
held on September 2, 2021, at 11:00 a.m. at etc. Venues, 1st Floor,
200 Aldersgate Street, Barbican, London EC1A 4HD.
The meeting is an initial creditors' and clients' meeting in
accordance with The Investment Bank Special Administration
Regulations 2011 and under Paragraph 51 of Schedule B1 to the
Insolvency Act 1986.
A proxy form should be completed and returned to me by noon on
September 1, 2021, if you cannot attend and wish to be represented.
In order to be entitled to vote under Rule 85 (creditors) and/or
Rule 90 (clients) at the meeting, you must provide details in
writing of your claim no later than noon on September 1, 2021,
being the business day before the meeting.
The Joint Administrators can be reached at:
Adam Henry Stephens (IP No. 9748)
Kevin Ley (IP No. 25090)
Smith & Williamson LLP
25 Moorgate
London, EC2R 6AY
United Kingdom
E-mail: dolfin@smithandwilliamson.com
The Joint Special Administrators were appointed on June 30, 2021.
The Company's registered office is at:
25 Moorgate
London, EC2R 6AY
United Kingdom
The Company's principal trading address is at:
77 Coleman Street
London, EC2R 5BT
United Kingdom
DURHAM MORTGAGES: DBRS Assigns Prov. B Rating on 2 Note Classes
---------------------------------------------------------------
DBRS Ratings Limited assigned provisional ratings to the following
classes of notes to be issued by Durham Mortgages B plc (Durham or
the Issuer):
-- Class A Notes at AAA (sf)
-- Class B Notes at AA (low) (sf)
-- Class C Notes at A (low) (sf)
-- Class D Notes at BBB (sf)
-- Class E Notes at BB (sf)
-- Class F Notes at B (sf)
-- Class X Notes at B (sf)
The provisional rating on the Class A Notes addresses the timely
payment of interest and the ultimate repayment of principal on or
before the final maturity date in November 2054. The provisional
rating on the Class B Notes addresses the timely payment of
interest once most senior and the ultimate repayment of principal
on or before the final maturity date. The provisional ratings on
the Class C, Class D, Class E, Class F, and Class X Notes address
the ultimate payment of interest and repayment of principal by the
final maturity date.
The Issuer is a bankruptcy-remote special-purpose vehicle (SPV)
incorporated in the United Kingdom. The collateralized notes will
be backed by a buy-to-let (BTL) mortgage portfolio originated by
Mortgage Express, GMAC, Kensington Mortgages Limited, Bradford &
Bingley plc, and Close Brothers Group plc (the Originators), sold
by Cornwall Home Loans Limited (the Seller) and serviced by Topaz
Finance Limited (the Servicer).
The issuance is a refinancing of an existing transaction that
closed in 2018. As of the end of July 2021, the provisional
mortgage portfolio consisted of GBP 1.75 billion of first-lien
mortgage loans collateralized by BTL properties in England and
Wales, with a concentration in Scotland, London, and the North West
of England. The majority of the pool (76.3%) was originated between
2006 and 2008.
For the purpose of the refinanced transaction, the Issuer will
ultimately use the proceeds of the notes to pay noteholders of the
existing notes whereas the portfolio will back the newly issued
notes. However, the closing date of the refinanced transaction will
be one day before the redemption date of the existing notes. In the
short period between those two dates, the existing noteholders will
hold security over the cash proceeds of the new issuance whereas
the noteholders of the refinanced transaction will hold security
over the portfolio. DBRS Morningstar has reviewed legal opinions on
the enforceability of the different transfers involved in the
refinancing.
Durham is a securitization where the Seller is not the Originator
or Servicer of the loan portfolio. In 2018, the Seller, an entity
that is part of the Barclays Group PLC (Barclays), sold loans to
the Issuer that were granted by the Originators, which had ceased
their lending operations. This poses more risks than a traditional
residential mortgage-backed security (RMBS) transaction where the
originator remains a mortgage lender in the jurisdiction of the
securitized portfolio, services the assets, and consequently has a
contractual duty and commercial incentives to support the
securitizations of its assets. Furthermore, traded portfolio
securitizations usually involve more than one sale of the
underlying portfolio, often through SPVs and limitations to
traditional representations and warranties. DBRS Morningstar has
reviewed legal opinions on the validity of the sales.
The pool has so far shown limited adverse performance events. For
example, restructuring arrangements account for only about 1.4% of
the outstanding portfolio, largely implemented before 2018.
The portfolio has shown a limited uptake of Coronavirus Disease
(COVID-19) pandemic payment holidays, which have been more
predominant in peer transactions. Further current evidence of good
performance is also reflected in the transaction's low
three-month-plus arrears ratio, which stood at 1.6% as of July
2021.
Interest-only (IO) loans make up 96.4% of the mortgage portfolio,
where the principal is repaid as a bullet at the loan's maturity,
with a further 1.2% of the loans repaying on a part and part basis.
This poses a risk at loan maturity if the borrower does not have a
repayment strategy in place or is unable to refinance before the
maturity date. IO loans representing 1.4% of the mortgage portfolio
have matured in the past and are technically in default status, but
still pay their regular IO instalments in most cases. DBRS
Morningstar assumed a higher probability of default (PD) for about
17% of the IO loans in the portfolio it considers as riskier IO
loans under its "European RMBS Insight: UK Addendum". DBRS
Morningstar treated past-due IO loans with an original maturity
date over two years ago as defaulted in its analysis.
The transaction includes both a general reserve fund (GRF) and a
liquidity reserve fund (LRF). The GRF provides credit and liquidity
support to the rated notes (with the exception of Class X Notes).
The GRF can be used to cover interest shortfalls on payments for
the Class A Notes and other rated notes if the relevant principal
deficiency ledger (PDL) condition (no more than 10% debited) is
satisfied. The GRF will be funded mainly through the proceeds from
the Class R Notes at closing.
The LRF is available to provide liquidity support to the senior
fees payments, Class X certificate payments, and interest on the
Class A and Class X Notes. The initial amount of 0.5% of the
original Class A Notes balance will mainly be funded at closing
through Class R Notes proceeds. The LRF does not amortize until the
Class A Notes reach half their initial balance. After, the LRF will
amortize at 1% of the Class A Notes outstanding balance; however,
if the GRF is depleted to a level lower than 1% of the initial
portfolio before the Class A Notes have reached half their initial
size, then the LRF will be funded to 1% of the outstanding Class A
Notes balance immediately using interest available funds, junior to
the Class A interest but senior to the Class A PDL.
Citibank, N.A., London Branch (Citibank London) will hold the
Issuer's transaction account and reserves. Based on DBRS
Morningstar's private rating on Citibank London, the downgrade
provisions outlined in the documents, and the transaction
structural mitigants, DBRS Morningstar considers the risk arising
from the exposure to Citibank London to be consistent with the
ratings assigned to the rated notes as described in DBRS
Morningstar's "Legal Criteria for European Structured Finance
Transactions" methodology.
DBRS Morningstar based its ratings on a review of the following
analytical considerations:
-- The transaction's capital structure and form and sufficiency of
available credit enhancement.
-- The credit quality of the mortgage portfolio and the ability of
the Servicer to perform collection and resolution activities. DBRS
Morningstar calculated PD, loss given default (LGD), and expected
loss (EL) outputs on the mortgage portfolio, which DBRS Morningstar
then uses as inputs into the cash flow tool. DBRS Morningstar
analyzed the mortgage portfolio in accordance with DBRS
Morningstar's "European RMBS Insight: UK Addendum".
-- The ability of the transaction to withstand stressed cash flow
assumptions and repay the Class A, Class C, Class D, Class E, Class
F, and Class X Notes according to the terms of the transaction
documents. While a failure to timely pay interest on the Class B
Notes when most senior is not an event of default under the
transaction documents, DBRS Morningstar tested its Class B Notes
rating for timely interest when they become most senior. DBRS
Morningstar analyzed the transaction structure using Intex
DealMaker, considering the default rates at which the rated notes
did not return all specified cash flows.
-- The structural mitigants in place to avoid potential payment
disruptions caused by operational risk, such as a downgrade, and
replacement language in the transaction documents.
-- DBRS Morningstar's sovereign rating on the United Kingdom of
Great Britain and Northern Ireland at AA (high) with a Stable trend
as of the date of this press release.
-- The consistency of the transaction's legal structure with DBRS
Morningstar's "Legal Criteria for European Structured Finance
Transactions" methodology and the presence of legal opinions
addressing the assignment of the assets to the Issuer.
The coronavirus and the resulting isolation measures have caused an
economic contraction, leading in some cases to increases in
unemployment rates and income reductions for borrowers. DBRS
Morningstar anticipates that delinquencies may continue to increase
in the coming months for many structured finance transactions, some
meaningfully. The ratings are based on additional analysis and,
where appropriate, adjustments to expected performance as a result
of the global efforts to contain the spread of the coronavirus.
Notes: All figures are in British pound sterling unless otherwise
noted.
DURHAM MORTGAGES: DBRS Finalizes B Rating on 2 Classes Notes
------------------------------------------------------------
DBRS Ratings Limited finalized the following provisional ratings on
the classes of notes issued by Durham Mortgages B plc (Durham or
the Issuer):
-- Class A Notes at AAA (sf)
-- Class B Notes at AA (low) (sf)
-- Class C Notes at A (low) (sf)
-- Class D Notes at BBB (sf)
-- Class E Notes at BB (sf)
-- Class F Notes at B (sf)
-- Class X Notes at B (sf)
The rating on the Class A Notes addresses the timely payment of
interest and the ultimate repayment of principal on or before the
final maturity date in November 2054. The rating on the Class B
Notes addresses the timely payment of interest once most senior and
the ultimate repayment of principal on or before the final maturity
date. The ratings on the Class C, Class D, Class E, Class F, and
Class X Notes address the ultimate payment of interest and
repayment of principal by the final maturity date.
The Issuer is a bankruptcy-remote special-purpose vehicle (SPV)
incorporated in the United Kingdom. The collateralized notes are
backed by a buy-to-let (BTL) mortgage portfolio originated by
Mortgage Express, GMAC, Kensington Mortgages Limited, Bradford &
Bingley plc, and Close Brothers Group plc (the Originators), sold
by Cornwall Home Loans Limited (the Seller) and serviced by Topaz
Finance Limited (the Servicer).
The issuance is a refinancing of an existing transaction that
closed in 2018. As of the end of July 2021, the mortgage portfolio
consisted of GBP 1.75 billion of first-lien mortgage loans
collateralized by BTL properties in England and Wales, with a
concentration in Scotland, London, and the North West of England.
The majority of the pool (76.3%) was originated between 2006 and
2008.
For the purpose of the refinanced transaction, the proceeds of the
notes were ultimately used to pay noteholders of the existing notes
whereas the portfolio backs the newly issued notes. However, the
closing date of the refinanced transaction is one day before the
redemption date of the existing notes. In the short period between
those two dates, the existing noteholders will hold security over
the cash proceeds of the new issuance whereas the noteholders of
the refinanced transaction will hold security over the portfolio.
DBRS Morningstar has reviewed legal opinions on the enforceability
of the different transfers involved in the refinancing.
Durham is a securitization where the Seller is not the Originator
or Servicer of the loan portfolio. In 2018, the Seller, an entity
that is part of the Barclays Group PLC (Barclays), sold loans to
the Issuer that were granted by the Originators, which had ceased
their lending operations. This poses more risks than a traditional
residential mortgage-backed security (RMBS) transaction where the
originator remains a mortgage lender in the jurisdiction of the
securitized portfolio, services the assets, and consequently has a
contractual duty and commercial incentives to support the
securitizations of its assets. Furthermore, traded portfolio
securitizations usually involve more than one sale of the
underlying portfolio, often through SPVs and limitations to
traditional representations and warranties. DBRS Morningstar has
reviewed legal opinions on the validity of the sales.
The pool has so far shown limited adverse performance events. For
example, restructuring arrangements account for only about 1.4% of
the outstanding portfolio, largely implemented before 2018.
The portfolio has shown a limited uptake of Coronavirus Disease
(COVID-19) pandemic payment holidays, which have been more
predominant in peer transactions. Further current evidence of good
performance is also reflected in the transaction's low
three-month-plus arrears ratio, which stood at 1.6% as of July
2021.
Interest-only (IO) loans make up 96.4% of the mortgage portfolio,
where the principal is repaid as a bullet at the loan's maturity,
with a further 1.2% of the loans repaying on a part and part basis.
This poses a risk at loan maturity if the borrower does not have a
repayment strategy in place or is unable to refinance before the
maturity date. IO loans representing 1.4% of the mortgage portfolio
have matured in the past and are technically in default status, but
still pay their regular IO instalments in most cases. DBRS
Morningstar assumed a higher probability of default (PD) for about
17% of the IO loans in the portfolio it considers as riskier IO
loans under its "European RMBS Insight: UK Addendum". DBRS
Morningstar treated past-due IO loans with an original maturity
date over two years ago as defaulted in its analysis.
The transaction includes both a general reserve fund (GRF) and a
liquidity reserve fund (LRF). The GRF provides credit and liquidity
support to the rated notes (with the exception of Class X Notes).
The GRF can be used to cover interest shortfalls on payments for
the Class A Notes and other rated notes if the relevant principal
deficiency ledger (PDL) condition (no more than 10% debited) is
satisfied. The GRF will be funded mainly through the proceeds from
the Class R Notes at closing.
The LRF is available to provide liquidity support to the senior
fees payments, Class X certificate payments, and interest on the
Class A and Class X Notes. The initial amount of 0.5% of the
original Class A Notes balance was funded at closing through Class
R Notes proceeds. The LRF does not amortize until the Class A Notes
reach half their initial balance. After, the LRF will amortize at
1% of the Class A Notes outstanding balance; however, if the GRF is
depleted to a level lower than 1% of the initial portfolio before
the Class A Notes have reached half their initial size, then the
LRF will be funded to 1% of the outstanding Class A Notes balance
immediately using interest available funds, junior to the Class A
interest but senior to the Class A PDL.
Citibank, N.A., London Branch (Citibank London) holds the Issuer's
transaction account and reserves. Based on DBRS Morningstar's
private rating on Citibank London, the downgrade provisions
outlined in the documents, and the transaction structural
mitigants, DBRS Morningstar considers the risk arising from the
exposure to Citibank London to be consistent with the ratings
assigned to the rated notes as described in DBRS Morningstar's
"Legal Criteria for European Structured Finance Transactions"
methodology.
DBRS Morningstar based its ratings on a review of the following
analytical considerations:
-- The transaction's capital structure and form and sufficiency of
available credit enhancement.
-- The credit quality of the mortgage portfolio and the ability of
the Servicer to perform collection and resolution activities. DBRS
Morningstar calculated PD, loss given default (LGD), and expected
loss (EL) outputs on the mortgage portfolio, which DBRS Morningstar
then uses as inputs into the cash flow tool. DBRS Morningstar
analyzed the mortgage portfolio in accordance with DBRS
Morningstar's "European RMBS Insight: UK Addendum".
-- The ability of the transaction to withstand stressed cash flow
assumptions and repay the Class A, Class C, Class D, Class E, Class
F, and Class X Notes according to the terms of the transaction
documents. While a failure to timely pay interest on the Class B
Notes when most senior is not an event of default under the
transaction documents, DBRS Morningstar tested its Class B Notes
rating for timely interest when they become most senior. DBRS
Morningstar analyzed the transaction structure using Intex
DealMaker, considering the default rates at which the rated notes
did not return all specified cash flows.
-- The structural mitigants in place to avoid potential payment
disruptions caused by operational risk, such as a downgrade, and
replacement language in the transaction documents.
-- DBRS Morningstar's sovereign rating on the United Kingdom of
Great Britain and Northern Ireland at AA (high) with a Stable trend
as of the date of this press release.
-- The consistency of the transaction's legal structure with DBRS
Morningstar's "Legal Criteria for European Structured Finance
Transactions" methodology and the presence of legal opinions
addressing the assignment of the assets to the Issuer.
The coronavirus and the resulting isolation measures have caused an
economic contraction, leading in some cases to increases in
unemployment rates and income reductions for borrowers. DBRS
Morningstar anticipates that delinquencies may continue to increase
in the coming months for many structured finance transactions, some
meaningfully. The ratings are based on additional analysis and,
where appropriate, adjustments to expected performance as a result
of the global efforts to contain the spread of the coronavirus.
Notes: All figures are in British pound sterling unless otherwise
noted.
GLOBAL SHIP: S&P Upgrades ICR to 'BB-', Outlook Stable
------------------------------------------------------
S&P Global Ratings raised its long-term issuer credit rating on
Marshall Islands-registered Global Ship Lease, Inc. (GSL) to 'BB-'
from 'B+'.
The stable outlook reflects S&P's forecast of solid EBITDA
performance and positive free cash flow generation underpinned by
the company's medium-term charter coverage, allowing GSL to gain
financial flexibility under the improved credit metrics for
unforeseen operational setbacks, or potential further ship
acquisitions and prudent shareholder returns.
The upgrade reflects GSL's enhanced credit profile after
acquisitions of vessels that are chartered out on multiyear
contracts. GSL acquired 23 small and midsize containerships in the
first half of 2021 and they are to be delivered by the end of the
forth quarter. The addition of new ships increased the company's
scale (with its fleet expanding to 65 containerships from 43
previously and capacity to 345,000 TEU from 245,000 TEU); expanded
its customer base; boosted its contract order backlog; and enhanced
its charter coverage. The acquisition price of about $500 million
in total will be conservatively financed by a mix of debt and cash
on hand, while the new ships will contribute about $132 million in
annual EBITDA, according to our base case. S&P said, "We believe
that incremental earnings will more than offset the corresponding
debt increase and result in improved credit metrics. We now
estimate GSL's 2021-2022 weighted average funds from operations
(FFO)-to-debt ratio will improve to about 25% compared with our
previous December 2020 base case of about 15%."
S&P said, "Furthermore, we believe GSL's current medium-term time
charter (T/C) profile, underpinned by attractive rates, partly
shields it from the industry's cyclical swings. We understand that
the charter profile consists of fully noncancellable and fixed-rate
contracts. In addition, the company benefits from good operating
efficiency, and predictable operating costs, with no exposure to
volatile bunker fuel prices and other voyage expenses, which
typically under T/C agreements are borne by counterparties.
Although enlarged scale provides more credit protection, the
company remains exposed to volatile container shipping charter
rates (and vessel values), in particular in the event of the
counterparties' nonperformance on charter agreements or defaults.
Furthermore, we view the shipping sector as having
higher-than-average industry risk, constraining our overall
assessment of the company' business risk profile. In our view, this
stems from the industry's capital intensity, high fragmentation,
frequent supply-demand imbalances, history of meaningful
oversupply, and limited ability to differentiate services, leaving
industry players to compete mainly on price."
GSL's solid revenue backlog, predictable running costs, and
generally conservative chartering policy provide some earnings
visibility. Most of GSL's newly acquired vessels have two- or
three-year contracts attached, with extension options, stabilizing
the company's contract coverage duration at 2.5 years on a TEU
weighted pro forma basis at end-June 2021 (including new charters
and acquisitions agreed up to Aug. 4, 2021). The company has
successfully rechartered 14 vessels in 2021, adding $440 million of
contracted revenue to its backlog amounting to $1.37 billion as of
June 30, 2021, on a pro forma basis; while the 11 ships that are
due for employment by the end of 2022 are chartered at rates below
the current levels, suggesting further upside potential for the
backlog. Pro forma as of June 30, 2021, GSL had contracted out 98%
of its ship available days for the remainder of 2021, 80% for 2022,
and 70% for 2023. The medium-term charter profile should largely
mitigate industry volatility in 2022 and 2023, provided the
counterparties deliver on their commitments, which S&P assumes in
its base case.
S&P said, "We expect GSL's credit metrics will improve as the
company amortizes debt using free operating cash flow (FOCF) and
its financial flexibility will rise. Underpinned by the current
charter agreements and strong rate momentum, GSL's EBITDA will
increase to $260 million-$280 million in 2021, and to $370
million-$390 million in 2022 according to our base case, compared
with about $165 million in 2020. The 2022 growth in EBITDA will be
supported by the recent charter renewals at rates considerably
higher than previously: for example, GSL has recharted some of its
smaller 2,207 TEU ships for $20,000/day-$25,000/day compared with
the previous rates of $9,250/day-$9,400/day. This, combined with
gradually decreasing debt from excess cash flows and interest
expenses, will boost credit metrics in 2021 and more significantly
in 2022 when the full year EBITDA contribution from the newly
acquired ships comes into effect, such that our adjusted 2021-2022
weighted average FFO to debt improves to about 25% (from 13% in
2020) and debt to EBITDA shrinks to about 3.5x (from 4.8x in 2020).
This is significantly below GSL's historical average adjusted
leverage level of about 5.5x in 2015-2020. We note that 2021 credit
ratios are understated/distorted because of the timing mismatches
of the full-year earnings from the newly acquired ships and the
corresponding debt increase as a result of these acquisitions.
Taking into account the current pro forma contracted revenue
backlog of $1.37 billion and solid EBITDA-to-FOCF conversion, our
base-case suggests that GSL's cash flow generation could be
sufficient to service annual mandatory debt amortization (of $130
million-$160 million in 2021-2022), help to maintain an ample cash
position, and provide financial flexibility against unexpected
operational adversities." Since its merger with Poseidon in 2018,
GSL has continued to gradually expand its fleet, improve its
leverage metrics by both repaying debt and increasing EBITDA, and
has recently refinanced its next large debt obligation coming due
in 2022 (about $377 million) thus improving its debt maturity
profile. In our view, these factors, in combination with Kelso's
reduction of ownership, support the upgrade (Kelso, a private
equity company, is GSL's largest shareholder, but reduced its
ownership stake to 13% from about 40% in October 2020).
Short-to-medium-term charter rate conditions in container shipping
should support GSL's cash flow. The movement of essential goods, a
strong pickup in e-commerce, and a shift in consumer spending to
tangible goods from services have supported shipping volume
recovery and containership charter rates from June 2020. Trade
momentum remained solid in first- and second-quarter 2021, despite
the usual seasonal slowdown. S&P said, "As a result, we forecast a
rebound in shipped volumes consistent with global GDP growth of
5%-6% in 2021, after a 1%-2% contraction in 2020 compared with
2019. Continued congestion in major maritime ports and disruption
of logistical supply chains is tying up containership capacity and
boosting charter rates. Despite the most recent spike in new ship
orders (lifting the containership order book to 20% of the total
global fleet from about 9% at the start of 2021), containership
supply growth is unlikely to surpass demand growth in the coming
quarters, propping up charter rates. We believe that broader
considerations about greenhouse gas emissions in
general--particularly in the context of decarbonization--result in
uncertainties over the costs and benefits of various technologies
and fuel, and should constrain orders to some extent in the short
term. We also note that lead time between placing orders for ships
and the ability of shipyards to deliver currently stands at 18
months-24 months. We believe that demand-and-supply conditions will
be largely in balance in 2021 and 2022. We forecast that
containership charter rates will gradually moderate from late 2021
at earliest, as the pandemic's impact on container shipping eases.
However, there is a high degree of uncertainty about the levels
that charter rates will settle at when they begin to normalize. We
acknowledge risks stemming from the shift in consumer spending back
to services from tangible goods and potential slowdown in
e-commerce as the pandemic's effects ease, weighing on shipping
volumes, aggravated by the accelerated deliveries of new vessels
and potential overcapacity from 2023. We also understand that the
environmental pressure on the container shipping industry is
increasing, which may accelerate fleet upgrades, requiring higher
capital expenditure (capex) and potentially additional operating
costs with vessels' owners such as GSL having to at least partly
cover these costs."
S&P said, "The stable outlook reflects our forecast of solid EBITDA
performance and positive free cash flow generation underpinned by
the company's medium-term charter coverage, allowing GSL to gain
financial flexibility under the improved credit metrics for
unforeseen operational setbacks, or potential further ship
acquisitions and prudent shareholder returns.
"We could consider a downgrade if adjusted FFO to debt failed to
improve and stay at more than 20%. This could occur if, for
example, the industry supply-and-demand conditions deteriorate
unexpectedly, resulting in a significant drop in utilization and
charter rates for containerships."
Rating pressure would also arise if container liners' credit
quality appears to weaken, increasing the risk of amendments to
existing contracts, delayed payments, or nonpayment under the
charter agreements.
S&P said, "A negative rating action could also follow any
unforeseen deviations in terms of financial policy, for example, if
we believe that the company is pursuing significant and largely
debt-funded investments in additional tonnage or aggressive
shareholder distributions, which would depress credit metrics.
"We could raise the rating if we believe that GSL will achieve and
maintain adjusted FFO to debt of more than 30%.
"This would be contingent on industry momentum persisting and
allowing the company to re-charter its ships at rates consistent
with (or higher than) our base case, extend its charter profile
duration, and further enhance earnings predictability, while
continuing to reduce debt in line with the mandatory amortization
schedule. Given the industry's inherent volatility, an upgrade
would also depend on the company's ability to achieve an ample
cushion under the improved credit measures for potential EBITDA
fluctuations.
"Furthermore, we would need to be convinced that management's
financial policy does not allow for significant increases in
leverage. This would mean, for example, that the company will not
unexpectedly embark on any significant debt-financed fleet
expansion without an offsetting increase in earnings, will apply
excess cash for fleet expansion or rejuvenation, and that dividend
distributions will remain prudent."
HUB ENERGY: Enters Administration, Ceases Trading
-------------------------------------------------
Jon Robinson at BusinessLive reports that a Preston-based gas and
electricity supplier with approximately 15,000 customers across the
UK has stopped trading and entered administration.
Andrew Stone and Rick Harrison of Interpath Advisory have been
appointed joint administrators of Gas and Power Ltd, which trades
as HUB Energy, BusinessLive relates.
The company ceased trading following the start of a
Government-regulated process to appoint a Supplier of Last Resort
(SOLR), BusinessLive notes.
As a result of that process, Ofgem has confirmed that all customers
have been transferred to EON Next, BusinessLive states.
When the business entered administration it employed 29 members of
staff, a number of which have been retained to work alongside the
joint administrators to "enable the smooth transfer of customers to
EON Next and to assist with the final billing process",
BusinessLive discloses.
According to BusinessLive, Andrew Stone, managing director at
Interpath Advisory and joint administrator, said: "The company had
been experiencing financial challenges for some time, exacerbated
recently by significant cash flow pressures primarily due to being
unable to buy wholesale energy on usual market credit terms.
"These factors, coupled with the ongoing high wholesale energy
prices, left the company in an extremely challenging position.
"Against this backdrop, the director asked the regulator to run a
Supplier of Last Resort process and subsequently appointed
administrators to protect the interests of the company's customers
and creditors."
PROVINCIAL HOTELS: Details Surrounding Administration Revealed
--------------------------------------------------------------
Jon Robinson at BusinessLive reports that the details surrounding
the fall into administration of pubs and hotels group Provincial
Hotels & Inns with debts of almost GBP2 million have been revealed
for the first time.
Patrick Lannagan and Julien Irving of Mazars LLP were appointed as
joint administrators to Lancashire-based Provincial Hotels & Inns
in June, BusinessLive relates.
The company, which was founded in 2013 but dormant until 2016, is
based near Carnforth and owned four public houses and a hotel.
They are:
-- The County Lodge & Brasserie, Carnforth
-- The Blue Anchor, Bolton-le-Sands
-- The Manor Inn, Lancaster
-- Yorkshire House Hotel, Lancaster
-- The Windmill Tavern, Clifton, near Preston
According to BusinessLive, a document submitted to Companies House
by the joint administrators said: "It was apparent from the
financial review conducted by Mazars LLP, following engagement by
the company in February 2021, that there was no reasonable prospect
of rescuing the company as a going concern in view of the level of
secured debt and the impediments to restructuring this debt and
rationalizing the property portfolio."
In June 2016 the company acquired a portfolio of nine pubs and two
hotels from Mitchell's of Lancaster (brewers) Ltd, funding by a
first ranking secured loan from HSBC and a second from a private
investor, BusinessLive recounts.
Mazars said: "The directors agreed a business plan to turn the
business around which involved the immediate disposal of two of the
property assets (assessed by the directors as non-essential to the
performance of the portfolio) in order to release funding to
enhance the rest of the estate to a modernized combination of
tenanted and managed hospitality venues, to repay some of the
secured borrowing and to free up some additional working capital
for the business if possible.
"The initial sales were not concluded as soon as anticipated as it
was discovered the fabric of the property portfolio was in a poorer
condition than the pre-acquisition property surveys had suggested,
requiring additional capital expenditure on improvements and the
sale of further properties to fund the capital expenditure.
"As a consequence of the changes to the business turnaround plan,
the company's cash flow position was lower than originally
forecast.
"Accordingly, the directors sought to agree an interest repayment
holiday in relation to the second ranking secured debt."
The company then disposed of non-profitable properties from its
portfolio, raising funds of more than GBP1 million in 2018 and
almost GBP500,000 in 2019, BusinessLive discloses.
Mazars added: "The global outbreak of the Covid-19 pandemic placed
great trading difficulties on the UK hospitality industry,
resulting in the company closing all of its remaining venues in
accordance with the UK Government-imposed restrictions."
The venues remained closed throughout 2020 and 28 company staff
were placed on furlough, BusinessLive notes.
REYKER SECURITIES: Clients Urged to Submit Money Claim
------------------------------------------------------
This is an urgent message for clients of Reyker Securities plc (in
special administration) who held a Client Money balance as at
October 8, 2019, being the date of the special administration, and
who have not yet submitted a claim.
As previously communicated to Clients using available contact
details, the Joint Special Administrators ("JSAs") are providing
notice that they intend to close the Client Money Pool ("CMP")
later this calendar year and to no longer treat unclaimed Client
Money balances as Client Money.
The effect of the CMP being closed by the JSAs is that at any
Client Money held for a Client who has not submitted a claim by the
time of closure, will cease to be held as Client Money for that
Client and will instead to be set off against the costs of
distributing the CMP. This will mean you will lose your ownership
rights to claim your share of Client Money from the CMP.
Any Client who has not submitted a claim by the closure will, as a
result, only have an unsecured claim against Reyker. At present,
it is anticipated there will be no return for any unsecured
creditors.
The JSAs therefore invite and strongly encourage Clients who have
not yet submitted a Client Money claim to do so as soon as possible
and prior to the closure of the CMP. The easiest way for Clients to
do this is by contacting Client Services on 0800 048 9512 or
clientservices@reyker.com. Clients who require further
information, if, for example, unaware of previous communications,
should also use these contact details.
WARWICK FINANCE: DBRS Confirms BB(high) Rating on Class E Notes
---------------------------------------------------------------
DBRS Ratings Limited confirmed its ratings of the notes issued by
Warwick Finance Residential Mortgages Number Four Plc (the Issuer)
as follows:
-- Class A notes at AAA (sf)
-- Class B notes at AA (sf)
-- Class C notes at A (low) (sf)
-- Class D notes at BBB (high) (sf)
-- Class E notes at BB (high) (sf)
The rating on the Class A notes addresses the timely payment of
interest and the ultimate payment of principal on or before the
legal final maturity date in March 2042. The rating on the Class B
notes addresses the ultimate payment of interest and principal
while junior, and the timely payment of interest while the
senior-most class outstanding. The ratings on the Class C, Class D,
and Class E notes address the ultimate payment of interest and
principal.
The rating actions follow an annual review of the transaction and
are based on the following analytical considerations:
-- Portfolio performance, in terms of delinquencies, defaults, and
losses.
-- Portfolio default rate (PD), loss given default (LGD), and
expected loss assumptions on the remaining receivables.
-- Current available credit enhancement to the notes to cover the
expected losses at their respective rating levels.
-- Current economic environment and an assessment of sustainable
performance, as a result of the Coronavirus Disease (COVID-19)
pandemic.
The Issuer is a bankruptcy-remote special-purpose vehicle
incorporated in the United Kingdom. The issued notes were used to
fund the purchase of seasoned owner-occupied and buy-to-let
nonconforming portfolios of mortgages originated in the UK by
Platform Funding Limited, Verso Limited, Kensington Mortgage
Company Limited, Southern Pacific Mortgages Limited, and GMAC-RFC
Limited (now Paratus AMC Limited). The loans were sold to the
issuer at transaction close by The Co-operative Bank plc and are
serviced by Western Mortgages Services Limited.
PORTFOLIO PERFORMANCE
As of June 2021, loans two to three months in arrears represented
0.5% of the outstanding portfolio balance and the 90+ delinquency
ratio was 3.3%. As of the same date, the cumulative loss ratio was
0.1%.
PORTFOLIO ASSUMPTIONS AND KEY DRIVERS
DBRS Morningstar conducted a loan-by-loan analysis of the remaining
pool of receivables and has updated its base case PD and LGD
assumptions to 10.6% and 14.2%, respectively.
CREDIT ENHANCEMENT
As of the June 2021 payment date, the credit enhancements available
to the Class A, Class B, Class C, Class D, and Class E notes were
18.2%, 12.7%, 9.0%, 7.2%, and 5.4%, respectively, up from 16.2%,
11.3%, 8.0%, 6.4%, and 4.7%, 12 months prior, respectively. Credit
enhancement is provided by subordination of junior classes and the
residual certificates.
The transaction benefits from a liquidity reserve fund of GBP 2.8
million, available to cover senior fees and interest on the Class A
and Class B notes.
Citibank N.A., London Branch acts as the account bank for the
transaction. Based on the DBRS Morningstar private rating of
Citibank N.A., London Branch; the downgrade provisions outlined in
the transaction documents; and other mitigating factors inherent in
the transaction structure, DBRS Morningstar considers the risk
arising from the exposure to the account bank to be consistent with
the rating assigned to the Class A notes, as described in DBRS
Morningstar's "Legal Criteria for European Structured Finance
Transactions" methodology.
DBRS Morningstar analyzed the transaction structure in Intex
DealMaker.
The Coronavirus Disease (COVID-19) and the resulting isolation
measures have caused an economic contraction, leading in some cases
to increases in unemployment rates and income reductions for
borrowers. DBRS Morningstar anticipates that delinquencies may
continue to increase in the coming months for many structured
finance transactions, some meaningfully. The ratings are based on
additional analysis and, where appropriate, adjustments to expected
performance as a result of the global efforts to contain the spread
of the coronavirus.
Notes: All figures are in British pound sterling unless otherwise
noted.
===============
X X X X X X X X
===============
[*] BOOK REVIEW: Hospitals, Health and People
---------------------------------------------
Author: Albert W. Snoke, M.D.
Publisher: Beard Books
Softcover: 232 pages
List Price: $34.95
Order your personal copy today at
http://www.beardbooks.com/beardbooks/hospitals_health_and_people.html
Hospitals, Health and People is an interesting and very readable
account of the career of a hospital administrator and physician
from the 1930's through the 1980's, the formative years of today's
health care system. Although much has changed in hospital
administration and health care since the book was first published
in 1987, Dr. Snoke's discussion of the evolution of the modern
hospital provides a unique and very valuable perspective for
readers who wish to better understand the forces at work in our
current health care system.
The first half of Hospitals, Health and People is devoted to the
functional parts of the hospital system, as observed by Dr. Snoke
between the late 1930's through 1969, when he served first as
assistant director of the Strong Memorial Hospital in Rochester,
New York, and then as the director of the Grace-New Haven Hospital
in Connecticut. In these first chapters, Dr. Snoke examines the
evolution and institutionalization of a number of aspects of the
hospital system, including the financial and community
responsibilities of the hospital administrator, education and
training in hospital administration, the role of the governing
board of a hospital, the dynamics between the hospital
administrator and the medical staff, and the unique role of the
teaching hospital.
The importance of Hospitals, Health and People for today's readers
is due in large part to the author's pivotal role in creating the
modern-day hospital. Dr. Snoke and others in similar positions
played a large part in advocating or forcing change in our hospital
system, particularly in recognizing the importance of the nursing
profession and the contributions of non-physician professionals,
such as psychologists, hearing and speech specialists, and social
workers, to the overall care of the patient. Throughout the first
chapters, there are also many observations on the factors that are
contributing to today's cost of care. Malpractice is just one
example. According to Dr. Snoke, "malpractice premiums were
negligible in the 1950's and 1960's. In 1970, Yale-New Haven's
annual malpractice premiums had mounted to about $150,000." By the
time of the first publication of the book, the hospital's premiums
were costing about $10 million a year.
In the second half of Hospitals, Health and People, Dr. Snoke
addresses the national health care system as we've come to know it,
including insurance and cost containment; the role of the
government in health care; health care for the elderly; home health
care; and the changing role of ethics in health care. It is
particularly interesting to note the role that Senator Wilbur Mills
from Arkansas played in the allocation of costs of hospital-based
specialty components under Part B rather than Part A of the
Medicare bill. Dr. Snoke comments: "This was considered a great
victory by the hospital-based specialists. I was disappointed
because I knew it would cause confusion in working relationships
between hospitals and specialists and among patients covered by
Medicare. I was also concerned about potential cost increases. My
fears were realized. Not only have health costs increased in
certain areas more than anticipated, but confusion is rampant among
the elderly patients and their families, as well as in hospital
business offices and among physicians' secretaries." This aspect of
Medicare caused such confusion that Congress amended Medicare in
1967 to provide that the professional components of radiological
and pathological in-hospital services be reimbursed as if they were
hospital services under Part A rather than part of the co-payment
provisions of Part B.
At the start of his book, Dr. Snoke refers to a small statue,
Discharged Cured, which was given to him in the late 1940's by a
fellow physician, Dr. Jack Masur. Dr. Snoke explains the
significance the statue held for him throughout his professional
career by quoting from an article by Dr. Masur: "The whole question
of the responsibility of the physician, of the hospital, of the
health agency, brings vividly to mind a small statue which I saw a
great many years ago.it is a pathetic little figure of a man, coat
collar turned up and shoulders hunched against the chill winds,
clutching his belongings in a paper bag-shaking, tremulous,
discouraged. He's clearly unfit for work-no employer would dare to
take a chance on hiring him. You know that he will need much more
help before he can face the world with shoulders back and
confidence in himself. The statuette epitomizes the task of medical
rehabilitation: to bridge the gap between the sick and a job."
It is clear that Dr. Snoke devoted his life to exactly that
purpose. Although there is much to criticize in our current
healthcare system, the wellness concept that we expect and accept
today as part of our medical care was almost nonexistent when Dr.
Snoke began his career in the 1930's. Throughout his 50 years in
hospital administration, Dr. Snoke frequently had to focus on the
big picture and the bottom line. He never forgot the importance of
Discharged Cured, however, and his book provides us with a great
appreciation of how compassionate administrators such as Dr. Snoke
have contributed to the state of patient care today. Albert Waldo
Snoke was director of the Grace-New Haven Hospital in New Haven,
Connecticut from 1946 until 1969. In New Haven, Dr. Snoke also
taught hospital administration at Yale University and oversaw the
development of the Yale-New Haven Hospital, serving as its
executive director from 1965-1968. From 1969-1973, Dr. Snoke worked
in Illinois as coordinator of health services in the Office of the
Governor and later as acting executive director of the Illinois
Comprehensive State Health Planning Agency. Dr. Snoke died in April
1988.
*********
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.
Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.
The TCR Europe subscription rate is US$775 per half-year,
delivered via e-mail. Additional e-mail subscriptions for
members of the same firm for the term of the initial subscription
or balance thereof are US$25 each. For subscription information,
contact Peter Chapman at 215-945-7000.
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