/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/221117.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Thursday, November 17, 2022, Vol. 23, No. 224 Headlines B U L G A R I A EUROINS INSURANCE: Fitch Affirms 'B+' IFS, Alters Outlook to Stable F R A N C E HOMEVI SASU: S&P Affirms 'B' Issuer Credit Rating, Outlook Stable G E R M A N Y K+S AG: Egan-Jones Hikes Sr. Unsec. Debt Ratings to BB WIRECARD AG: Audit Watchdog Postpones Ruling on EY Misconduct I R E L A N D DRYDEN 103 2021: S&P Assigns Prelim B- (sf) Rating to Cl. F Notes ENDO INT'L: Egan-Jones Withdraws CCC Sr. Unsec. Debt Ratings HENLEY CLO IX: Moody's Assigns (P)B3 Rating to EUR2.4MM F Notes HENLY CLO IX: Fitch Assigns 'B(EXP)sf' Rating to Class F Notes I T A L Y ASSICURAZIONI GENERALI: Egan-Jones Retains BB Unsec. Debt Ratings K A Z A K H S T A N TRUSTBANK PJSB: S&P Assigns 'B+/B' ICRs, Outlook Stable UNIVERSAL BANK: Fitch Affirms LongTerm IDR at 'B-', Outlook Stable N E T H E R L A N D S INTERTRUST NV: Moody's Withdraws 'B1' CFR on Debt Repayment U N I T E D K I N G D O M ATLANTICA SUSTAINABLE: Egan-Jones Retains 'B-' Sr. Unsec. Ratings DELTA TOPCO: Fitch Gives 'BB(EXP)' LongTerm IDR, Outlook Stable GERAUD UK: Forge Shopping Centre Owner Enters Administration JOULES: Enters Administration, Sale Among Options LAKEMERE GLOBAL: Director Gets 4-Year Disqualification Order POLITRIP: Alliance MLA Worked as Consultant for GBP800 a Month TEMPLE QUAY NO.1: S&P Assigns B- (sf) Rating to Class F Notes TESCO PLC: Egan-Jones Retains 'BB' Sr. Unsecured Debt Ratings TOOPLE PLC: Put Into Creditors Voluntary Liquidation - - - - - =============== B U L G A R I A =============== EUROINS INSURANCE: Fitch Affirms 'B+' IFS, Alters Outlook to Stable ------------------------------------------------------------------- Fitch Ratings has revised the Outlook on the Insurer Financial Strength Ratings (IFS) of Euroins Insurance Group AD (EIG) subsidiaries Euroins Romania Asigurare-Reasigurare S.A., Insurance Company Euroins AD and Insurance Company EIG Re AD to Stable from Negative and affirmed the IFS Ratings at 'B+' (Weak). The revision of the Outlook reflects the stabilisation in reserve development and the expectation of improvement in the Prism Factor-based Model (Prism FBM) Score. The ratings reflect weak reserve adequacy and capitalisation. KEY RATING DRIVERS Improving Reserving Trend: Bulgarian non-life insurance group EIG's reserve adequacy improved during 1H22. Fitch expects reserve adequacy to improve further by end-2022. However, a longer record of lower reserve deficiencies is needed to demonstrate the robustness of insurance reserves. Deficiencies in 2020 and 2021 were driven by competitive rates in Romanian motor business and the weaknesses of the Romanian market in calculating adequate reserves. Rates have more than doubled since January 2021, accelerating after the former market leader exited the market. Weak Reserve Adequacy: EIG reported adverse claims reserve development, primarily for Euroins Romania Asigurare-Reasigurare S.A. in 2020 and 2021. With its 2021 consolidated accounts, EIG reported restatements for its insurance reserves at end-2020. Restated net reserves were BGN493 million (gross BGN1,206 million), up from originally accounted reserves of BGN314 million (gross BGN837 million). Weak Albeit Improving Capitalisation: Fitch expects the Prism FBM Score to be at least 'Somewhat Weak' at end-2022. Its assessment of capitalisation is constrained by the uncertainties around reserve adequacy, albeit Fitch views positively EIG's group Solvency II ratio of 137 % at end-2021. The Prism FBM score was 'Somewhat Weak' at end-2021 (end-2020: 'Weak', after restatements). Its view takes into account the auditor's qualified opinion about insurance reserves. Stable reserve development would be key for an improved view of capital while further restatements of insurance reserves would likely result in the Prism FBM score falling below the 'Somewhat Weak' category. Further to the restatements, shareholder funds were revised to BGN216 million, down by BGN188 million from BGN404 million at end-2020, primarily reflecting the restated insurance reserves. In 2021, the European Bank for Reconstruction and Development (EBRD, EUR30 million) and EIG's owner Eurohold Bulgaria AD (Eurohold, Issuer Default Rating B/Stable, EUR12 million) injected EUR42 million capital into EIG, which supports EIG's capitalisation. Volatile Financial Performance: Fitch expects EIG to report net income for 2022. EIG reported a strong recovery for its net income in 2021, improving to BGN78 million from a loss of BGN55 million in 2020. Due to the elevated volatility, we regard EIG's financial performance as somewhat weak. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Continued stabilisation of reserve experience while the Prism FBM score is at least at the upper end of the 'Somewhat Weak' category Factors that could, individually or collectively, lead to negative rating action/downgrade: - Prism FBM Score falling below the 'Somewhat Weak' category - High losses from reserve development or similar restatements of insurance reserves - A downgrade of Eurohold's IDR ESG CONSIDERATIONS Insurance Company Euroins AD has an ESG Relevance Score of '4' for Financial Transparency due to the qualified audit opinion in its consolidated accounts 2021, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Entity/Debt Rating Prior ----------- ------ ----- Insurance Company EIG Re AD Ins Fin Str B+ Affirmed B+ Euroins Romania Asigurare-Reasigurare S.A. Ins Fin Str B+ Affirmed B+ Insurance Company Euroins AD Ins Fin Str B+ Affirmed B+ =========== F R A N C E =========== HOMEVI SASU: S&P Affirms 'B' Issuer Credit Rating, Outlook Stable ----------------------------------------------------------------- S&P Global Ratings affirmed its long-term issuer credit rating on France-based nursing home operator HomeVi SASU and issue ratings on the senior secured term loan B (TLB) at 'B', with the '4' recovery rating unchanged. The stable outlook reflects S&P's view that expected margin erosion will be limited in 2023, supported by occupancy rates recovering to pre-pandemic levels and increased tariffs for existing and new residents, with cash flow forecast to turn positive by about EUR20 million-EUR25 million after two years of negative results as relocation program investment eases. Still recovering activity and higher personnel and transaction costs than anticipated have weighed on HomeVi's credit quality. The company's year-end 2021 performance materially deviated from our base case due to additional transaction costs related to its latest acquisitions and a slower integration and ramp-up than anticipated. This was further exacerbated by higher personnel expenses on the back of the integration of home care contracts in Spain and overall recovering markets due to COVID-19, with occupancy rates still lagging pre-pandemic levels in the company's main markets--92% in France and 90% in Spain. S&P said, "As a result, S&P Global Ratings-adjusted EBITDA margin decreased to 21.2%, or about EUR400 million in 2021--240 basis points (bps) below our base case--leading to a material deviation in S&P Global Ratings-adjusted debt leverage to 9.7x from the 8.7x we anticipated. In turn, fixed-charge coverage deteriorated to below 1.6x and free operating cash flow (FOCF; after leases) was negative by about EUR16 million. Our adjusted debt figure is gross debt and includes lease liabilities, utilization of the factoring line, and put options granted to minority shareholders. We do not net cash from gross debt, in line with our criteria for financial-sponsor-owned companies. Moreover, our EBITDA figure is preleases but after one-off items." S&P said, "We expect inflationary pressures will continue to affect HomeVi's operating performance and credit metrics in 2022 and 2023, resulting in a slower but still material deleveraging. We see different costs and pricing dynamics depending on the country of operations (France, Spain, Germany, Ireland, and Portugal) with stronger or weaker effects on the group's operations. That said, HomeVi continues to face medical staff shortages in France (where the group generates 57% of sales), which are driving higher staff expenses, further exacerbated by the recently implemented revaluation of the minimum salary. It also has recruitment difficulties in Spain and Ireland due to competition between the public and the private sectors. Although we understand the company has hedged its energy exposure in France, we still expect an increase in energy costs, especially in Spain where it is exposed to energy price fluctuations on the open market. We also believe food inflation will hit margins to a limited extent, despite some flexibility on menu choices. In addition, margin pressure is coming from the time lag in factoring inflation in pricing for existing residents in France due to the 2022 revaluation index being fixed based on Jan. 1 levels. We note that the company can increase prices for new residents and these have, from our understanding, been well received. This is underpinned by a survey from the Direction de la Recherche, des Études, de l'Évaluation et des Statistiques showing that price is not the first priority for families looking to place their parents in a nursing home. The rest of the portfolio is somewhat protected thanks to increased tariffs in line with inflation for existing residents and the company's ability to freely set prices for new residents, based on market capacity to absorb them. Therefore, we expect a minor improvement in S&P Global Ratings-adjusted EBITDA margin to about 21.5%-22.5% in 2022, solely spurred by significantly lower exceptional costs compared to 2021. For 2023, we now anticipate an approximately 100-bps decrease in S&P Global Ratings-adjusted EBITDA margin versus 2022 to about 20.5%-21.5%. Although we see slower deleveraging prospects in 2023 with adjusted debt to EBITDA expected at 7.0x-7.5x by year end, we continue to see a clear deleveraging path toward 7.0x. We believe this anticipated deleveraging will be supported by continuously rebounding occupancy in France and Spain (accounting for 90% of sales) which is currently at almost pre-pandemic levels of about 95% for the former and 97% for public beds in the latter. Although we see difficulties in labor recruitment continuing, we note that structural pressure on staff availability and wages should very slowly improve thanks to the introduction of an intermediary qualification. This will allow the company to find staff more easily and hire non-EU qualified personnel in France (like in Germany), which will broaden the labor pool. "The group will continue to consolidate the market, which will support earnings stability, in our view. HomeVi closed two bolt-on acquisitions in Ireland in the first half and will fully integrate Netherlands-based dementia care provider Martha Flora following the put option exercise by minority shareholders. The transactions were fully cash financed--EUR15 million for the two in Ireland and EUR11 million for the put option. For the rest of 2022, we understand HomeVi will focus on cash management and its integration plan, therefore we do not factor any additional merger and acquisition (M&A) activity. However, we believe the group will continue its strategy of market consolidation to become a global player through growth in core markets, continued international expansion, and diversifying revenue activity. Financing will be supported by cash flow generation, sale and leaseback operations, and the sponsor's support. Although we are mindful of M&A activity entailing integration costs, we see benefits in the improved revenue and payor profile diversification, which will reduce the effects of potential policy changes on profitability. We believe the company will continue to focus on expanding and profitable activities, such as mental care, and increasing demand for senior service residences. "We anticipate HomeVi will restore positive FOCF in 2023. Capital expenditure (capex) is expected to peak at EUR210 million-EUR220 million in 2022 before normalizing at about EUR140 million-EUR150 million in 2023. The increase reflects the group's relocation program in France and investments toward greenfield openings in Spain, Ireland, and Germany. HomeVi plans to gradually open about 50 new houses in Germany and occupancy rates have steadily climbed to normalized levels in the first three years of operations, supported by the expanding market and currently under-capacity status. Although maintenance capex is contained at about 2.7% of revenue, the group pursued a large relocation and refurbishment project in France to capture additional organic growth through better-located facilities and the transforming of double rooms into single rooms. The relocation project is mostly financed through sale and leaseback deals. However, our capex figure is not presented on a net basis and excludes sale and leaseback proceeds. Our forecast also factors in annual working capital requirements of about EUR5 million, reflecting relatively stable working capital in France but some intra-year volatility in Spain, especially in the homecare segment. Therefore, we assume negative FOCF after lease payments of about EUR40 million-EUR50 million in 2022 due to large capex, followed by a rebound to positive EUR20 million-EUR30 million in 2023 as relocation capex starts to ease. "In our view, the group will maintain adequate liquidity to fund its day-to-day operations and good coverage of its fixed charges. HomeVi had EUR56 million of cash balances and EUR210 million undrawn from its revolving credit facility (RCF) on June 30, 2022. We believe it can manage its intra-year working capital needs, capex, and interest payments for the next 12 months. In addition, we positively note the absence of significant debt maturities until the TLB matures in 2026. We do not expect the RCF covenant to be tested because the group usually uses factoring lines for its operational needs rather than RCF drawings. We also view the group as protected from interest rate fluctuations given 100% of its EUR1,963 million TLB is hedged. "The stable outlook reflects our view that adjusted debt leverage will improve to about 7.8x in 2022 before reducing to about 7.0x-7.5x in 2023. We still see the company's FOCF remaining negative in 2022 on the back of relocation capex but anticipate it will move back to positive territory next year. We also see profitability being hit by current inflationary pressures, leading to an expected margin contraction of about 100 bps in 2023. "Ratings downside could materialize if HomeVi's profitability deviates from our current expectations in 2022, preventing leverage improvement to below 8.0x in 2022 and close to 7.0x by 2023, or if it cannot restore positive FOCF in the next 12 months. This could occur if the expected margin erosion for 2023 significantly exceeds 100 bps, which would put the rating under pressure. It would also correspond to the fixed-charge coverage ratio deteriorating sustainably below 1.5x. "Ratings upside could arise from profitability and FOCF being materially above our base case, alongside the use of internally generated cash to reduce adjusted debt to EBITDA sustainably below 5.0x, with a commitment to maintain this level, and fixed-charge coverage stabilized at or above 2.2x. We believe this is unlikely, given that the industry is consolidating. We could also raise the rating if the group reaches a significantly larger scale in the elderly care industry across several European countries. This would materialize with rising market shares in existing businesses and successful expansion into new services and geographies." Environmental, Social, And Governance ESG credit indicators: E-2, S-2, G-2 S&P said, "ESG factors are an overall neutral consideration in our credit rating analysis of HomeVi. As a European provider of elderly care services, HomeVi is exposed to a variety of social risks including quality of care, availability and retention of qualified medical staff, reputation risks, and other regulatory changes. To achieve future balance, HomeVi is leveraging its Domus 2025 strategic plan that aims to promote residents' wellbeing by fostering active social lives in a safe environment. Although the nursing home sector was affected by negative press during the pandemic, mainly around a lack of transparency with families, we have not seen any cases to date that would affect earnings stability. Governance risks from majority financial-sponsor ownership are mitigated by the very significant stake held by the founder, along with French institutional co-investors such as MACIF, Bpifrance, Arkea Capital, and Merieux Equity Partners, and the group's balanced board structure." ============= G E R M A N Y ============= K+S AG: Egan-Jones Hikes Sr. Unsec. Debt Ratings to BB ------------------------------------------------------ Egan-Jones Ratings Company, on October 21, 2022, upgraded the foreign currency and local currency senior unsecured ratings on debt issued by K+S AG to BB from BB-. Headquartered in Kassel, Germany, K+S Aktiengesellschaft manufactures and markets within the fertilizer division standard and specialty fertilizers to the agricultural and industrial industries worldwide. WIRECARD AG: Audit Watchdog Postpones Ruling on EY Misconduct ------------------------------------------------------------- Olaf Storbeck at The Financial Times reports that Germany's audit watchdog has postponed a long-awaited ruling on potential misconduct by EY during its work for collapsed payments group Wirecard, pushing the landmark case into next year. The ruling by Apas, the auditing regulator, was originally scheduled for October, but after discussing 3,000 pages of a draft document, the five officials in charge of the investigation concluded they need more time, people familiar with the matter told the FT. The final decision has now been scheduled for mid-January and will be crucial for the Big Four firm's future in Germany, the people added, the FT notes. Apas declined to comment about the investigation, which is not public under German law. Once high-flying Wirecard crashed into insolvency in June 2020 after disclosing that half of its revenue and EUR1.9 billion in corporate cash did not exist, the FT recounts. EY had given Wirecard's accounts a clean bill of health for close to a decade, the FT notes. Apas has been investigating EY Germany over its Wirecard audits since before the payment firm's insolvency, the FT relates. Twelve current and former EY employees and the firm itself are in its crosshairs over the audits of both Wirecard AG and its banking subsidiary Wirecard Bank from 2015 onwards, the FT states. Fines of up to EUR500,000 per person and per annual audit can add up to millions of euros should the watchdog conclude that the firm's misconduct stretched over years. EY Germany can also be barred from audits of listed companies in Germany for up to three years, or from taking on new audit clients. Moreover, the Big Four firm's position in civil lawsuits with Wirecard shareholders suing for damages could worsen dramatically should the watchdog conclude that EY acted with intent rather than perhaps just negligence, the FT relays, citing lawyers familiar with the case. Apas first filed a criminal complaint two years ago against EY partners who were in charge of the Wirecard audits, flagging to public prosecutors that they might have repeatedly violated their professional duties, the FT discloses. According to the FT, a separate probe by auditor Roedl & Partner on behalf of a parliamentary inquiry committee last year flagged a number of serious shortcomings in EY's Wirecard audits. ============= I R E L A N D ============= DRYDEN 103 2021: S&P Assigns Prelim B- (sf) Rating to Cl. F Notes ----------------------------------------------------------------- S&P Global Ratings assigned preliminary credit ratings to Dryden 103 Euro CLO 2021 DAC's class B-1 to F European cash flow CLO notes. At closing, the issuer will also issue the unrated class A and subordinated notes. Under the transaction documents, the rated notes will pay quarterly interest unless a frequency switch event occurs. Following this, the notes will permanently switch to semiannual payments. The portfolio's reinvestment period will end approximately five years after closing, and the non-call period will end two years after closing. The preliminary ratings reflect S&P's assessment of: -- The diversified collateral pool, which primarily comprises broadly syndicated speculative-grade senior-secured term loans and bonds that are governed by collateral quality tests. -- The credit enhancement provided through the subordination of cash flows, excess spread, and overcollateralization. -- The collateral manager's experienced team, which can affect the performance of the rated notes through collateral selection, ongoing portfolio management, and trading. -- The transaction's legal structure, which S&P expects to be bankruptcy remote. -- The transaction's counterparty risks, which S&P expects to be in line with our counterparty rating framework. Portfolio Benchmarks CURRENT S&P weighted-average rating factor 2,850.54 Default rate dispersion 462.01 Weighted-average life, including reinvestment (years) 5.11 Weighted-average life, excluding reinvestment (years) 4.79 Obligor diversity measure 114.94 Industry diversity measure 26.49 Regional diversity measure 1.16 Transaction Key Metrics CURRENT Portfolio weighted-average rating derived from S&P's CDO evaluator B 'CCC' category rated assets (%) 3.13 Covenanted 'AAA' weighted-average recovery (%) 35.00 Floating-rate assets (%) 81.37 Weighted-average spread (net of floors; %) 4.16 S&P said, "We understand that at closing the portfolio will be well-diversified, primarily comprising broadly syndicated speculative-grade senior-secured term loans and senior-secured bonds. Therefore, we have conducted our credit and cash flow analysis by applying our criteria for corporate cash flow CDOs." Under the transaction documents, the issuer can purchase loss mitigation obligations, which are assets of an existing collateral obligation held by the issuer offered in connection with bankruptcy, workout, or restructuring of an obligation, to improve the recovery value of the related collateral obligation. The issuer may purchase loss mitigation obligations using either interest proceeds, principal proceeds, or amounts standing to the credit of the supplemental reserve account. The use of interest proceeds to purchase loss mitigation obligations are subject to all the interest coverage tests passing following the purchase and the manager determining there are sufficient interest proceeds to pay interest on all the rated notes on the upcoming payment date including senior expenses. The usage of principal proceeds is subject to the following conditions: The aggregate collateral balance remaining above reinvestment target par. However, given that defaulted obligations are carried at par (rather than at recoveries), we have looked to the other mitigants assuming that the maintenance of the reinvestment target par condition is not met. The par coverage tests passing following the purchase, other than the class F par coverage tests. As a result, we have assumed no credit given to the class F par coverage and interest diversion tests under our cash flow modelling analysis. The obligation meeting the restructured obligation criteria. The obligation being pari passu or senior to the obligation already held by the issuer. Its maturity falling before the rated notes' maturity date. It was not purchased at a premium. S&P said, "In our cash flow analysis, we used the EUR400 million target par amount, the covenanted weighted-average spread (4.05%), and the covenanted weighted-average coupon (4.85%) as indicated by the collateral manager. We have assumed covenant weighted-average recovery rates for all rating levels. We applied various cash flow stress scenarios, using four different default patterns, in conjunction with different interest rate stress scenarios for each liability rating category. "Our credit and cash flow analysis show that the class B-1, B-2, C, D, and E notes benefit from break-even default rate (BDR) and scenario default rate cushions that we would typically consider to be in line with higher ratings than those 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 preliminary ratings on the notes. "The class F notes' current BDR cushion is a negative cushion at the current rating level. Nevertheless, based on the portfolio's actual characteristics and additional overlaying factors, including our long-term corporate default rates and recent economic outlook 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 class F notes' available credit enhancement, which is in the same range as that of other CLOs S&P has rated and that has recently been issued in Europe. -- S&P's model-generated portfolio default risk, which is at the 'B-' rating level at 26.86% (for a portfolio with a weighted-average life of 5.11 years) versus 15.84% if S&P was to consider a long-term sustainable default rate of 3.1% for 5.11 years. -- Whether the tranche is vulnerable to nonpayment in the near future. -- If there is a one-in-two chance for this note to default. -- If we envision 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 assigned preliminary 'B- (sf)' rating. S&P said, "Until the end of the reinvestment period on Jan. 19, 2028, the collateral manager may substitute assets in the portfolio for so long as our CDO Monitor test is maintained or improved in relation to the initial ratings on the notes. This test looks at the total amount of losses that the transaction can sustain as established by the initial cash flows for each rating, and it compares that with the current portfolio's default potential plus par losses to date. As a result, until the end of the reinvestment period, the collateral manager may through trading deteriorate the transaction's current risk profile, as long as the initial ratings are maintained. "Under our structured finance sovereign risk criteria, we consider that the transaction's exposure to country risk is sufficiently mitigated at the assigned preliminary ratings. "At closing, we expect that the transaction's documented counterparty replacement and remedy mechanisms will adequately mitigate its exposure to counterparty risk under our current counterparty criteria. "We expect the transaction's legal structure and framework to be bankruptcy remote, in line with our legal criteria. "Following our analysis of the credit, cash flow, counterparty, operational, and legal risks, we believe our preliminary ratings are commensurate with the available credit enhancement for the class B-1 to F notes. "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 B-1 to E notes, based on four hypothetical scenarios. "As our ratings analysis makes additional considerations before assigning ratings in the 'CCC' category, and we would assign a 'B-' rating if the criteria for assigning a 'CCC' category rating are not met, we have not included the above scenario analysis results for the class F notes "Criteria For Assigning 'CCC+', 'CCC', 'CCC-', And 'CC' Ratings," published on Oct. 1, 2012))." The transaction securitizes a portfolio of primarily senior-secured leveraged loans and bonds, and it will be managed by PGIM Loan Originator Manager Ltd. Environmental, social, and governance (ESG) 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 or restrict assets from being related to the following industries: production of controversial weapons; trade of illegal drugs or narcotics; production of civilian firearms; predatory lending; extraction of thermal coal and fossil fuels from unconventional sources; production of or trade in pornography, adult entertainment, or prostitution; production of tobacco or tobacco products, trade or production in non-sustainable palm oil; speculative transactions of soft commodities; opioid marketing and distribution; and the sale or promotion of marijuana. Accordingly, since the exclusion of assets from these industries does not result in material differences between the transaction and our ESG benchmark for the sector, no specific adjustments have been made in our rating analysis to account for any ESG-related risks or opportunities." Environmental, social, and governance (ESG) corporate credit indicators S&P said, "The influence of ESG factors in our credit rating analysis of European CLOs primarily depends on the influence of ESG factors in our analysis of the underlying corporate obligors. To provide additional disclosure and transparency of the influence of ESG factors for the CLO asset portfolio in aggregate, we've calculated the weighted-average and distributions of our ESG credit indicators for the underlying obligors (see "The Influence Of Corporate ESG Factors In Our Credit Rating Analysis Of European CLOs," published on April 20, 2022). We regard this transaction's exposure as being broadly in line with our benchmark for the sector, with the environmental and social credit indicators concentrated primarily in category 2 (neutral) and the governance credit indicators concentrated in category 3 (moderately negative). Corporate ESG Credit Indicators ENVIRONMENTAL SOCIAL GOVERNANCE Weighted-average credit indicator* 2.08 2.12 2.98 E-1/S-1/G-1 distribution (%) 1.00 0.50 0.00 E-2/S-2/G-2 distribution (%) 72.62 72.61 8.65 E-3/S-3/G-3 distribution (%) 6.85 5.30 66.93 E-4/S-4/G-4 distribution (%) 0.38 2.44 3.77 E-5/S-5/G-5 distribution (%) 0.00 0.00 1.50 Unmatched obligor (%) 13.73 13.73 13.73 Unidentified asset (%) 5.42 5.42 5.42 *Only includes matched obligor Ratings List CLASS PRELIM. PRELIM. INTEREST RATE (%) CREDIT RATING AMOUNT ENHANCEMENT (MIL. EUR) (%) A NR 236.00 Three/six-month EURIBOR + 2.20 41.00 B-1 AA (sf) 21.00 Three/six-month EURIBOR + 3.89 30.75 B-2 AA (sf) 20.00 7.50 30.75 C A (sf) 21.00 Three/six-month EURIBOR + 4.69 25.50 D BBB- (sf) 28.00 Three/six-month EURIBOR + 6.34 18.50 E BB- (sf) 16.50 Three/six-month EURIBOR + 8.49 14.38 F B- (sf) 13.50 Three/six-month EURIBOR + 11.04 11.00 Subordinated NR 26.90 N/A N/A NR--Not rated. N/A--Not applicable. EURIBOR--Euro Interbank Offered Rate. ENDO INT'L: Egan-Jones Withdraws CCC Sr. Unsec. Debt Ratings ------------------------------------------------------------ Egan-Jones Ratings Company, on October 20, 2022, withdrew the CCC foreign currency and local currency senior unsecured ratings on debt issued by Endo International PLC. EJR also withdrew the C local currency rating on commercial paper issued by the Company. Headquartered in Dublin, Ireland, Endo International Public Limited Company provides specialty healthcare solutions. HENLEY CLO IX: Moody's Assigns (P)B3 Rating to EUR2.4MM F Notes --------------------------------------------------------------- Moody's Investors Service announced that it has assigned the following provisional ratings to notes to be issued by Henley CLO IX DAC (the "Issuer"): EUR190,500,000 Class A Senior Secured Floating Rate Notes due 2032, Assigned (P)Aaa (sf) EUR23,300,000 Class B Senior Secured Floating Rate Notes due 2032, Assigned (P)Aa2 (sf) EUR16,200,000 Class C Senior Secured Deferrable Floating Rate Notes due 2032, Assigned (P)A2 (sf) EUR16,800,000 Class D Senior Secured Deferrable Floating Rate Notes due 2032, Assigned (P)Baa3 (sf) EUR19,500,000 Class E Senior Secured Deferrable Floating Rate Notes due 2032, Assigned (P)Ba3 (sf) EUR2,400,000 Class F Senior Secured Deferrable Floating Rate Notes due 2032, Assigned (P)B3 (sf) RATINGS RATIONALE The rationale for the ratings is based on a consideration of the risks associated with the CLO's portfolio and structure as described in Moody's methodology. The Issuer is a static CLO. The issued notes will be collateralized primarily by broadly syndicated senior secured corporate loans. Moody's expect the portfolio to be 100% ramped as of the closing date. Napier Park Global Capital Ltd (the "Servicer") may sell assets on behalf of the Issuer during the life of the transaction. Reinvestment is not permitted and all sales and unscheduled principal proceeds received will be used to amortize the notes in sequential order. In addition, the Issuer will issue EUR13,300,000 of Subordinated Notes due 2032 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 2021. 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 Servicer's investment decisions and management of the transaction will also affect the debt's 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 2021. Moody's used the following base-case modeling assumptions: Par Amount: EUR300,000,000 Diversity Score: 46 Weighted Average Rating Factor (WARF): 2943 Weighted Average Spread (WAS): 3.92% (actual spread vector of the portfolio) Weighted Average Coupon (WAC): 4.94% (actual spread vector of the portfolio) Weighted Average Recovery Rate (WARR): 43.9% Weighted Average Life (WAL): 4.99 years (actual amortization vector of the portfolio) HENLY CLO IX: Fitch Assigns 'B(EXP)sf' Rating to Class F Notes -------------------------------------------------------------- Fitch Ratings has assigned Henley CLO IX DAC expected ratings, as detailed below. Entity/Debt Rating ----------- ------ Henley CLO IX DAC A LT AAA(EXP)sf Expected Rating B LT AA(EXP)sf Expected Rating C LT A(EXP)sf Expected Rating D LT BBB(EXP)sf Expected Rating E LT BB-(EXP)sf Expected Rating F LT B(EXP)sf Expected Rating Subordinated Notes LT NR(EXP)sf Expected Rating TRANSACTION SUMMARY Henley CLO IX DAC is a securitisation of mainly senior secured obligations with a component of senior unsecured bonds. Note proceeds are being used to purchase a static portfolio totalling about EUR300 million. The portfolio is managed by Napier Park Global Capital Ltd. KEY RATING DRIVERS 'B/B-' Portfolio Credit Quality (Neutral): Fitch places the average credit quality of obligors in the 'B'/'B-' category. The Fitch weighted average rating factor (WARF) of the target portfolio is 25.05. High Recovery Expectations (Positive): Senior secured obligations make up 99.7% of the portfolio. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. The Fitch weighted average recovery rate of the target portfolio is 61.67%. Diversified Portfolio Composition (Positive): The largest three industries comprise 31.9% of the portfolio balance, the top 10 obligors represent 16.6% of the portfolio balance and the largest obligor represents 1.8% of the portfolio. Static Portfolio (Positive): The transaction does not have a reinvestment period and discretionary sales are not permitted. Fitch's analysis is based on the current portfolio and stressed by applying a one-notch reduction to all obligors with a Negative Outlook (floored at 'CCC'), which is 18.5% of the target portfolio. After the Negative Outlook adjustment, the WARF of the portfolio would be 26.5. Deviation from MIR (Neutral): The class B, C, D, E and F notes are rated one notch below their model-implied rating (MIR). The deviation reflects the limited cushion on the Negative Outlook portfolio at the MIR and uncertain macro-economic conditions. RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: A 25% increase of the mean default rate (RDR) across all ratings and a 25% decrease of the recovery rate (RRR) across all ratings of the target portfolio would lead to a downgrade of up to three notches for the rated notes. Based on the actual portfolio, downgrades may occur if the loss expectation is larger than initially assumed, due to unexpectedly high levels of default and portfolio deterioration. Due to the better WARF of the target portfolio compared with the Negative Outlook portfolio and the model deviations, the class E and F notes display a rating cushion of two notches, and the class B, C and D notes one notch. Factors that could, individually or collectively, lead to positive rating action/upgrade: A 25% reduction of the mean RDR across all ratings and a 25% increase in the RRR across all ratings of the Fitch's portfolio based on Negative Outlook stress would lead to upgrades of up to five notches for the rated notes, except for the 'AAAsf' rated notes, which are at the highest level on Fitch's scale and cannot be upgraded. Upgrades may occur in case of a stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread available to cover for losses on the remaining portfolio. DATA ADEQUACY Henley CLO IX DAC The majority of the underlying assets or risk presenting entities have ratings or credit opinions from Fitch and/or other Nationally Recognized Statistical Rating Organizations and/or European Securities and Markets Authority registered rating agencies. Fitch has relied on the practices of the relevant groups within Fitch and/or other rating agencies to assess the asset portfolio information or information on the risk presenting entities. Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. ========= I T A L Y ========= ASSICURAZIONI GENERALI: Egan-Jones Retains BB Unsec. Debt Ratings ----------------------------------------------------------------- Egan-Jones Ratings Company, on October 25, 2022, retained its BB foreign currency and local currency senior unsecured ratings on debt issued by Assicurazioni Generali SpA. Headquartered in Trieste, Italy, Assicurazioni Generali S.p.A. offers life and non-life insurance and reinsurance throughout the world. =================== K A Z A K H S T A N =================== TRUSTBANK PJSB: S&P Assigns 'B+/B' ICRs, Outlook Stable ------------------------------------------------------- S&P Global Ratings assigned its 'B+/B' long-and short-term issuer credit ratings to Uzbekistan-based PJSB Trustbank. The outlook is stable. PJSB Trustbank is a mid-sized privately-owned bank in Uzbekistan with total assets of Uzbek sums (UZS) 7.8 trillion (about $0.7 billion) and a market share of about 1% of loans as of Sept. 30, 2022. Trustbank has a 22% stake in Uzbek Commodity Exchange (UZEX), and S&P thinks the longstanding close relationship between the two supports the bank's business position. Trustbank's market share will likely remain limited over the coming two years, with a narrow customer base. S&P's assessment of Trustbank's business position balances its sound profitability--supported by an established and loyal client base--with a small franchise compared with larger local banks. The bank has a modest market share of approximately 1% of the total system's gross loan book (or about 6% among privately-owned banks in Uzbekistan). The bank has an established niche business model. In S&P's view, the bank benefits from a stable client base and its long-term close relationship with Uzbek Commodity Exchange (UZEX). The owns 22% of UZEX, and the close ties help the bank manage funding costs. The bank has exclusive rights to serve export-import transactions or numerous commodities of UZEX's participants. Trustbank would likely expand penetration of its services these established ties, potentially helping the bank to enhance cross-sale that yields medium-term improvements in commission income. S&P said, "We believe Trustbank will continue its close business relationship with UZEX and its participants for at least our forecast horizon. This is an important consideration in our base-case scenario since the relationship with UZEX enables Trustbank to keep its funding costs lower than peers'. The cost of funding maintains solid net interest margin (which has stayed above 14% over the past five years), giving the bank a competitive advantage reflected in pricing power on its products. "We expect the bank will gradually expand its retail portfolio. The bank is diversifying its currently narrow customer base, expanding its retail and SME business. Trustbank's share of the retail segment in gross loans increased to 24% as of June 30, 2022, from 16% at the start of the year. This increase could further secures the bank's already solid margins. We understand that the bank aims to increase the share of retail business up to a half of its gross loan book. In our opinion, the bank has a limited track record in retail, making the tracking of the evolution of the risk-return profile important for further growth. "We expect the bank will maintain a strong capital cushion. Our view of Trustbank's capital and earnings largely reflects the bank's track record of strong earnings capacity despite an ambitious growth appetite. That said, over the past few years, the bank has expanded its capital base substantially, thanks to very strong profits and earnings retention. Additionally, in the first half of 2022 the shareholders increased Tier 1 equity with UZS200 billion to support anticipated loan portfolio growth. Our risk-adjusted capital ratio (RAC) will likely remain above 12% over the next 12-18 months. "We expect Trustbank will continue generate higher-than-peers' average returns. The bank has a track record of strong and above-average core financial results, supporting business stability and expansion prospects. Trustbank's return on average equity (ROAE) is sustainably about 45% during the past five consecutive years. It posted annualized ROE of 43% for the first nine months of 2022." Trustbank's asset quality has been broadly in line with systemwide average. With cost of risk of about 2.0%-2.2% over 2018-2021 Trustbank's performance has been comparable with the estimated average 2% cost of risk for the banking sector as whole for the same period. Still, it is in line with many regional and global peers with share of problematic assets (Stage 3 loans under IFRS) of 4.1% as of Sept. 30, 2022. S&P said, "We expect that the share of NPLs will likely increase, mostly on the retail side, up to 5.5%-6.0% of total loans over the next 18 months, in line with overall loan book growth. Ambitious loan book growth of annualized 30% over 2022 could become a challenge, thus we anticipate overall credit costs to remain elevated at least on outlook horizon at about 2.5%-3.0%, which is higher than demonstrated in the past largely due to an untested retail book." S&P said, "We expect Trustbank's funding to remain stable and dominated by accounts of UZEX participants. The bank benefits from an ample liquidity position, largely generated by financial flows from UZEX's customers, accounting for about 70% of all customer funds. The relationship with UZEX provides Trustbank with predictable, and renewable current accounts of participants. Funding and liquidity are also matched by currencies, predominantly denominated in UZS which in our view partially mitigates currency risk. We understand that providing cash management and transaction services to UZEX's customers will remain an important function for Trustbank at least throughout our outlook horizon. This, in our base case, partially offsets risk of confidence sensitivity of highly concentrated deposit base. "The stable outlook reflects our view that Trustbank's solid capital buffer and earnings capacity will support its credit standing over the next 12-18 months. The outlook also captures our expectation that the bank's liquidity position will remain stable and continue to adequately cover short-term funding needs. Our base-case assumption is that the bank will maintain exclusive relationships with UZEX and its participants, resulting in lower cost of funding than peers'. "A negative rating action could stem from any sign of deterioration in the bank's relationships with UZEX and its participants that hinders the bank's business stability. A potential significant decline in capitalization, either via higher-than-expected growth in exposure or large dividend distributions, could also lead us to revise the outlook to negative or lower the rating. "We believe that a positive rating action in the next 12-18 months is unlikely." ESG credit indicators: E-2, S-2, G-4 S&P said, "We view ESG factors as broadly in line with its domestic peers in Uzbekistan. The bank's direct exposure to the oil and gas and metals and mining sectors is very modest. We consider governance and transparency in the Uzbek banking system to be weak in a global context. We believe Trustbank is not immune from countrywide issues regarding governance risks." UNIVERSAL BANK: Fitch Affirms LongTerm IDR at 'B-', Outlook Stable ------------------------------------------------------------------ Fitch Ratings has affirmed Uzbekistan-based Joint Stock Commercial Bank Universal Bank's Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'B-' with a Stable Outlook. The bank's Viability Rating (VR) has been affirmed at 'b-'. KEY RATING DRIVERS Standalone Profile Drives Ratings: Universal's IDRs are driven by the bank's standalone credit strength, as captured by its 'b-' VR. The VR factors in the bank's limited franchise, corporate governance risks (including potentially higher amounts of related-party lending than reported), and a record of rapid growth that has only recently moderated. It also captures weaker financial metrics through the cycle compared with other Fitch-rated private banks in Uzbekistan. Positive GDP Trend; Sector Risks: The impact of the Russia-Ukraine military conflict on Uzbekistan's economy has been limited to date and Fitch forecasts Uzbekistan's GDP will grow by 5.1% in 2022 and 4.7% in 2023. However, Fitch considers Uzbekistan's operating environment as volatile and vulnerable to shocks related to the conflict and the global economy. Potential risks also stem from structural weaknesses of the banking sector, including high dollarisation, continued asset quality deterioration and reliance on external foreign-currency debt. Small Regional Bank: Universal is a small privately-owned bank, making up less than 1% of total assets in the highly concentrated banking sector of Uzbekistan. It operates primarily in Fergana region, focusing on SME financing complemented by unsecured retail lending. Material Related Party Exposure: Universal mostly provides short-term working capital loans, with loan dollarisation (20% at end-3Q22) well below the sector average. The loan book has stagnated in the last two years. Reported related-party loans made up a material 11% of gross loans at end-2021 and their actual amount could potentially be higher, in Fitch's view. Problem Loans Increase: Impaired loans (Stage 3 loans IFRS9) have grown substantially over the last two years, exceeding 3% of gross loans at end-2021 (the last available data). Based on continued build-up of problem loans under local GAAP, Fitch forecasts the impaired loans ratio to reach 7% by end-2023. Potential risks are mitigated by lower-risk asset structure, with non-loan assets (mainly cash balances with the CBU) equal to about 60% of total assets at end-3Q22. Fee Income Boosts Performance: A surge in remittances to Uzbekistan this year has driven up Universal's fees and commissions income, with annualised return on average equity (ROAE) under local GAAP exceeding 60%. However, Fitch expects this profit boost to be temporary, and the bank's performance to normalise next year. Fitch anticipates the core operating profit/risk-weighted assets ratio to spike at over 10% in 2022 before returning to 2% in the medium term. Moderate Capitalisation: Universal's Tier 1 capital ratio under local GAAP equalled 11.3% of regulatory risk-weighted assets at end-3Q22. This provided a limited 130bp capital buffer over the statutory requirement, particularly in view of a potential uptick in the cost of risk. Positively, robust internal profit generation and limited loan growth this year should improve the bank's capital ratios, and Fitch forecasts the Fitch Core Capital ratio will stabilise around 20% for 2023. Customer Funding, Improved Liquidity: Universal is primarily funded by customer accounts (81% of total liabilities at end-3Q22), while funding from state-related entities and wholesale borrowings are small. The bank's liquidity cushion has increased over the last two years to about 40% of total assets at end-3Q22 and net of upcoming external debt repayments, it covered almost 60% of non-state customer deposits. RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: Universal's ratings could be downgraded in case of loss-making performance on a pre-impairment basis or if a material increase in problem loans and credit losses results in the bank's capital ratios falling below the statutory minimum requirements. Factors that could, individually or collectively, lead to positive rating action/upgrade: Upside potential for Universal's VR and IDRs is currently limited and would require a significant strengthening of the bank's commercial franchise and material improvements in the bank's governance structure and risk management framework translating into stronger recurring performance and higher capitalisation. VR ADJUSTMENTS No adjustments are needed to the implied VR scores. ESG CONSIDERATIONS Universal has an ESG Relevance Score of '4' for Governance Structure, due to weaknesses in governance and controls leading to risks of high related-party lending. This factor has a negative impact on the credit profile and is relevant to the ratings in conjunction with other factors. Except for the matters discussed above, the highest level of ESG credit relevance, if present, is a score of '3' - ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Entity/Debt Rating Prior ----------- ------ ----- Joint Stock Commercial Bank Universal Bank LT IDR B- Affirmed B- ST IDR B Affirmed B LC LT IDR B- Affirmed B- LC ST IDR B Affirmed B Viability b- Affirmed b- Government Support ns Affirmed ns ===================== N E T H E R L A N D S ===================== INTERTRUST NV: Moody's Withdraws 'B1' CFR on Debt Repayment ----------------------------------------------------------- Moody's Investors Service has withdrawn all ratings of Intertrust N.V. (Intertrust), including the B1 corporate family rating, B1-PD probability of default rating, and the B1 backed senior unsecured rating of its fully-owned subsidiary Intertrust Group B.V. At the time of withdrawal the outlook on both entities was stable. RATINGS RATIONALE Moody's has withdrawn the ratings because Intertrust's debt previously rated by Moody's has been fully repaid. This follows the acquisition of Intertrust by Corporation Service Company (CSC, B1 stable), a privately owned US-based provider of business services. In connection with the transaction closing, Intertrust redeemed EUR500 million of outstanding backed senior unsecured notes on November 15, 2022 and has fully repaid the existing bank credit facilities. LIST OF AFFECTED RATINGS Issuer: Intertrust Group B.V. Withdrawals: BACKED Senior Unsecured Regular Bond/Debenture, previously rated B1 Outlook Actions: Outlook, Changed To Rating Withdrawn From Stable Issuer: Intertrust N.V. Withdrawals: LT Corporate Family Rating, previously rated B1 Probability of Default Rating, previously rated B1-PD Outlook Actions: Outlook, Changed To Rating Withdrawn From Stable CORPORATE PROFILE Intertrust is the Netherlands based global provider of corporate, fund, capital market and private wealth services. The company has around 4,000 employees in more than 30 jurisdictions in Europe, the Americas, Asia and the Middle East. In 2021, Intertrust generated revenue and company-adjusted EBITA of EUR571 million and EUR170 million, respectively. =========================== U N I T E D K I N G D O M =========================== ATLANTICA SUSTAINABLE: Egan-Jones Retains 'B-' Sr. Unsec. Ratings ----------------------------------------------------------------- Egan-Jones Ratings Company, on October 19, 2022, retained its 'B-' foreign currency and local currency senior unsecured ratings on debt issued by Atlantica Sustainable Infrastructure PLC. EJR also retained its 'B' foreign currency and local currency ratings on commercial paper issued by the Company. Headquartered in United Kingdom, Atlantica Sustainable Infrastructure PLC provides renewable energy solutions. DELTA TOPCO: Fitch Gives 'BB(EXP)' LongTerm IDR, Outlook Stable --------------------------------------------------------------- Fitch Ratings has assigned Delta Topco limited (Formula 1) a first-time expected Long-Term issuer Default Rating of 'BB(EXP)' with a Stable Outlook. Fitch has also assigned Delta 2 (Lux) S.a r.l.'s loans an expected senior secured instrument rating of 'BB+(EXP)' with a Recovery Rating of 'RR2'. The expected ratings are based on Formula 1's planned refinancing of its USD2.9 billion existing term loans and USD500 million debt reduction. Fitch will assign final ratings on completion of the refinancing and on receipt of final documentation conforming to the information reviewed. Formula 1's ratings reflect its highly cash-generative business model with strong revenue visibility supported by multi-year and mostly fixed-fee contracts. Capacity for further growth in the US and other regions is underpinned by the record popularity of the FIA Formula One World Championship (F1) with attendance and viewership levels growing strongly year on year. The ratings also reflect limited diversification, moderately high leverage and uncertainty over its China race. The Stable Outlook reflects its expectation that funds from operation (FFO) leverage will fall within its 'BB' threshold in 2023 of below 4x. EBITDA growth in 2023 will be driven by two additional races in 2023 (including Las Vegas) along with favourable contract renewals. KEY RATING DRIVERS Lower Leverage Expected: Fitch expects company-defined adjusted EBITDA to be a little under USD600 million this year, allowing FFO gross leverage to fall to around 4.4x at end-2022 from 6.3x in 2021. Next year will see an additional two races in the calendar, more key contracts like the US media rights and three more F1 Sprint races bringing further promotional capacity. Fitch believes this organic growth should lift company-defined adjusted EBITDA well above USD700 million in 2023 and in the absence of a future increase in debt, FFO gross leverage should fall to within its 'BB' leverage threshold by end-2023. Headroom Against Financial Policy: Given expected strong deleveraging net leverage is likely to be well below parent Liberty Media's financial policy of net debt at below 5x company-defined adjusted EBITDA. Fitch believes shareholder returns to Liberty Media seem likely given Formula 1's large cash balance and expected strong free cash flow (FCF) generation. Its leverage sensitivities are based on gross leverage so shareholder returns of excess cash flows should not reduce headroom in the current rating. Gross leverage could increase if the company issues new debt to fund additional shareholder returns though this is unlikely in the near future. Unique Global Sport: F1 is one of the world's most watched sports globally. It is unique in its combination of high viewership, frequency of events and global event calendar format compared with the other major sports' competitions such as the Olympics, NFL or the English Premier football league. This provides a strong fan base for pay-TV broadcasters, significant brand marketing opportunities for its sponsors, and makes hosting events attractive to cities and countries across the world. Under its long-term agreement with the Federation Internationale de l'Automobile (FIA), the company holds the exclusive commercial rights to the sport through to 2110. Macroeconomic Challenges: Fitch expects inflation-related increases in operating expenses including personnel, shipping and Paddock club costs in 2022. Fitch expects a slight decline in company-defined pre-team share (PTS) EBITDA as a percentage of revenue but overall company-defined adjusted EBITDA as a percentage of revenue to remain broadly stable, reflecting favourable changes to the Concorde agreement in 2021. Team payments are calculated on reported profits, which hedge against increases in operating expenses. The current popularity of the sport limits the risk of the weakened global macroeconomic environment materially dampening demand for sponsorship or other contract renewals. Significant US Opportunity: Now in its fourth season, the Netflix documentary 'Drive to Survive' has boosted F1's popularity globally and particularly in the US. Both Austin and Miami race tickets sold out in 2022 and the media rights contract extension with ESPN has been agreed at multiples of the previous fee. Increasing the size of the US market brings significant potential for promotion, sponsorship and media rights. In Las Vegas, the company will promote the race themselves. This will be a major event for the sport next year, which Fitch expects will help drive revenue in excess of USD3 billion for the first time in 2023. Revenue Pipeline Growing Quickly: A significant majority of the race promotion, broadcasting and sponsorship contracts specify payments in advance and have built-in annual increases in the fees payable over the course of the contracts. Contracts vary in length with broadcasters typically contracting for three to five years, while race promoter contracts are often longer as demonstrated by Australia's contract extension to 2037. Progress with long-term renewals of core revenue contracts has resulted in significant growth in future revenues under contract, which in total are multiples of 2022 equivalent fees. Limited Diversification: Revenues are directly exposed to the popularity of the sport, which is at record high levels. The company's long-term contracts protect it against future declines in viewership or sponsor appeal though this would likely make renewals and future revenue growth more challenging. Fitch expects the Las Vegas race to be in high demand from fans, casinos and sponsors next year but as race promoter the company is more exposed to downside risks for this race than others. The company also has some exposure to customer concentration risk from its largest sponsors and broadcasters. Pandemic Disruption Still Possible: Fitch-defined EBITDA fell nearly 80% in 2020, reflecting the disruption to the race calendar caused by the pandemic. The company returned to strong growth in 2021 as restrictions were eased and the race calendar returned to 22 races over the year. The race calendar in 2023 has 24 races, which include a return to racing in China in April 2023 as part of a two-year deal. With cases of the virus still widespread globally, China's zero tolerance approach to Covid-19 could put this race in doubt. Fitch assumes that the race in China goes ahead but believe the company should still have good capacity to reduce leverage below 4x in 2023 under a 23-race calendar. DERIVATION SUMMARY Formula 1's rating benefits from its position as the exclusive commercial rights' holder to one of the most popular sports globally. Good revenue visibility, a flexible cost structure, strong brand recognition and F1's unique position in the global sport events' market support the company's credit profile. The rating is constrained by the lack of meaningful product diversification, some concentration of customers in broadcasting and sponsorship and moderately high leverage, which Fitch expects to decline with the projected growth in EBITDA. Formula 1's operating profile as well as its main product are unique and given the lack of direct peers we benchmark it against a wide range of Fitch-rated media companies. Higher-rated larger peers such as Informa PLC (BBB-/Stable) or Pearson Plc (BBB-/Stable) have notably lower leverage and stronger product diversification. Similar to these companies Formula 1 is exposed to secular shifts in media consumption and economic cycles via advertising revenues though its long-term contracts mitigate this. Formula 1 compares well with the broader media peer group in 'B+' and below range, as the company demonstrated resilience during the pandemic with its flexible cost structure, ample liquidity and strong relationships with key partners and customers. Football rights management company Subcalidora 1 S.a.r.l (Mediapro; B/Stable) has a low rating, reflecting its customer concentration risk from a single contract for agency services with La Liga international. KEY ASSUMPTIONS - Race calendars for 2022 and 2023 comprise 22 and 24 races, respectively. From 2024 the race calendar to remain at 24 races - Revenue to grow 18.3% in 2022, 24.9% in 2023 and by low-single digits to 2025 - Fitch-defined EBITDA margin of around 22.7% in 2022 and gradually improving to 23.5% by 2025 - Capex at around 1.2% of revenue in 2022-2025, excluding any one-off capex related to the Las Vegas race in 2023 - Dividend payments are made to keep readily available cash on average at around USD500 million between 2022 and 2025 RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Growth in EBITDA or a positive change in financial policy leading to FFO gross leverage sustainably below 3.0x (or gross debt at 2.8x Fitch-defined EBITDA) - FFO interest coverage sustainably above 5x (equivalent to Fitch-defined EBITDA interest cover of 5.5x) - Increase in average contract length with broadcasters, sponsors and promoters Factors that could, individually or collectively, lead to negative rating action/downgrade: - Unsuccessful refinancing of upcoming debt maturities or gross debt remaining at USD2.9 billion without a USD500 million paydown - FFO gross leverage sustainably above 4.0x (or gross debt above 3.8x Fitch-defined EBITDA) - Material decline in popularity of the sport driving a loss of (or significant reduction in terms at renewal) contracts with key broadcasters or sponsors leading to material pressure on revenues - Change in a future Concorde agreement leading to a reduction in the proportion of PTS EBIT for Formula 1 - FFO interest coverage expected to remain sustainably below 4.0x (equivalent to Fitch-defined EBITDA interest cover of 4.5x) LIQUIDITY AND DEBT STRUCTURE Comfortable Liquidity: Fitch views Formula 1's liquidity position as strong, as Fitch expects its pre-dividend FCF margin to average 15% in the four years to 2025. Post refinancing its next significant debt maturities are in 2027 and 2029. Fitch expects the company to have strong headroom for its upcoming interest payments and amortisation payments on its term loan A. Formula 1 supports its liquidity with an USD500 million revolving credit facility and strong cash flow generation. At end-September 2022 it had USD1 billion of cash held in the FWON tracker at parent company level, which could provide support to Formula 1, if required. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Entity/Debt Rating Recovery ----------- ------ -------- Delta Topco Limited LT IDR BB(EXP) Expected Rating Delta 2 (Lux) S.a r.l. senior secured LT BB+(EXP)Expected Rating RR2 GERAUD UK: Forge Shopping Centre Owner Enters Administration ------------------------------------------------------------ Holly Lennon at GlasgowLive reports that dozens of independent traders based at an indoor market at The Forge shopping centre have been closed until further notice after their landlord reportedly went into administration. Market Village at the Parkhead centre is home to over 35 independent retailers including beauty salons, food vendors, and other small businesses. Business owners were told around 5:00 p.m. on Nov. 14 that their landlord had gone into administration and that the indoor market would cease operating. Market Village is owned by Geraud UK Ltd -- a private operator of local authority markets. According to its website, the firm operates markets across the United Kingdom including Washington Market Village in Sunderland which also closed suddenly over the weekend. JOULES: Enters Administration, Sale Among Options ------------------------------------------------- Sahar Nazir at Retail Gazette reports that Joules has collapsed into administration as it calls in Will Wright, Ryan Grant and Chris Pole from Interpath Advisory. The lifestyle retailer said the board of Joules resolved to file a notice of intention to appoint administrators to the company, Retail Gazette relates. The company's shares were suspended from trading on the AIM on November 7, 2022, Retail Gazette recounts. The board currently expects that, in due course, the listing of the company's ordinary shares will be cancelled, Retail Gazette states. Any residual value will be distributed to the company's shareholders and the company will be wound up, Retail Gazette notes. The joint administrators will continue to trade the group as a going concern while they assess options for the business, including exploring the possibility of a sale as a going concern, Retail Gazette discloses. All stores, including the group's online store, will remain open, according to Retail Gazette. "Over the coming weeks, we will endeavour to continue to operate all stores as a going concern during this vitally important Christmas trading period while we assess options for the group, including a possible sale," Retail Gazette quotes Interpath Advisory joint administrator, Will Wright as saying. "Since the group's announcement on Monday, we have had an overwhelming amount of interest from interested parties. "We will be working hard over the days ahead to assess this interest, but at this stage we are optimistic that we will be able to secure a future for this great British brand." LAKEMERE GLOBAL: Director Gets 4-Year Disqualification Order ------------------------------------------------------------ Liam Mccreadie, 26, from Aberdeen, has been disqualified as a director for 4 years after failing to pay more than GBP1.1 million in taxes and not submitting tax returns for his two companies. Mccreadie was the sole director of two companies that both traded as a call centre business. Lakemere Global Holdings Ltd. was incorporated in October 2017 and traded as AGO Outsourcing in both East Kilbride and Newcastle until it went into liquidation in October 2019, owing more than GBP794,000. His other company, EK Sales Ltd, was incorporated in September 2017 -- just a month before Lakemere went into liquidation -- and took over trading as AGO Outsourcing until it also went into liquidation in October 2020, with debts of more than GBP515,000. The call centre sites had been billed by AGO Outsourcing managers as "state of the art" sales centres, but had reportedly become subject to disputes with staff over payment of wages by October 2019. The liquidation of the two companies led to an investigation by the Insolvency Service which found that Lakemere Global Holdings Ltd had not submitted tax returns between May and October 2019 and owed business and employee-related tax of around GBP629,000. Investigators also discovered that EK Sales Ltd had failed to submit tax returns between December 2019 and August 2020 and owed business and employee-related tax of around GBP513,000. Across both companies, the repeat abuse of tax led to a debt to HM Revenue and Customs (HMRC) of more than GBP1,143,000. The Secretary of State for Business, Energy and Industrial Strategy accepted a disqualification undertaking from Liam Mccreadie, after he didn't dispute that he had failed to ensure that both Lakemere Global Holdings Ltd and EK Sales Ltd submitted returns and payment to HMRC, and caused the companies to trade to the detriment of HMRC in respect of business and employee-related tax. His disqualification starts on November 7, 2022, and lasts for 4 years. The ban prevents Mccreadie from directly or indirectly becoming involved in the promotion, formation or management of a company, without the permission of the court. Steven McGinty, Investigation Manager at the Insolvency Service, said, "The Insolvency Service will rigorously pursue traders who seek an unfair advantage over their competitors by not paying tax to the Government. "If you run a limited company, you have statutory protections as well as obligations. If you fail to comply with your obligations, The Insolvency Service will investigate you and you could lose the protection of limited liability. "Mr McCreadie has paid the price for failing to do that, as he cannot now carry on in business other than at his own risk." POLITRIP: Alliance MLA Worked as Consultant for GBP800 a Month -------------------------------------------------------------- Brendan Hughes at BelfastLive reports that an Alliance MLA was a paid consultant for a political campaigning company that has left students hundreds of pounds out of pocket after going bust. According to BelfastLive, Patrick Brown earned GBP800 a month to advise Volunteer USA, a business trading under the name Politrip which organised trips for young people to take part in American election campaigns. The company has gone into liquidation with trips cancelled and students left unsure whether they will ever get their money back, BelfastLive recounts. Almost 90 people have been listed as creditors of the business which racked up debts of more than GBP64,000, BelfastLive relays, citing insolvency documents. Mr. Brown set up Politrip in 2017 and operated the business for a number of years as its sole director. It was liquidated last year and the brand was sold to Volunteer USA, a company newly incorporated by Rupert Browne who had been working since 2019 as Politrip's general manager, BelfastLive discloses. On his Stormont Assembly register of interests, Mr. Brown, as cited by BelfastLive, said he worked as a consultant for Volunteer USA for "GBP800 per month" with hours varying "depending on services provided". Mr. Brown distanced himself from the business in the summer when some Twitter users complained their trips had been cancelled just weeks before they were due to depart and with no details of a refund, BelfastLive notes. TEMPLE QUAY NO.1: S&P Assigns B- (sf) Rating to Class F Notes ------------------------------------------------------------- S&P Global Ratings assigned credit ratings to Temple Quay No.1 PLC's class A, B-Dfrd, C-Dfrd, D-Dfrd, E-Dfrd, and F-Dfrd notes. At closing, the issuer issued unrated Z, X, R notes, a Y certificate, and VRR loan note. This is a static RMBS transaction that securitizes a portfolio of GBP506.65 million owner-occupied and buy-to-let (BTL) mortgage loans secured on properties in the U.K. The loans in the pool were originated by Bank of Ireland (UK) PLC, The Governor and Company of the Bank of Ireland (U.K. Branch), Bank of Ireland Home Mortgages Ltd., and Bristol & West PLC between 1982 and 2022. Bristol & West PLC was acquired by Bank of Ireland in 1997. Lending under the Bristol & West brand ceased in 2009. The assets were originated based on a lending policy that would be categorized as prime. As such, while the assets are highly exposed to borrowers with self-certified income, exposure to borrowers with prior adverse credit such as county court judgements is relatively low. However, asset performance has deteriorated significantly since origination and arrears remain above our U.K. nonconforming index for pre-2014 originations. Of the pool, 46.3% of the loans are in arrears, with 30.6% of the pool in severe arrears (90+ day arrears). Of the pool, 10.3% is considered reperforming. At closing, the issuer purchased the beneficial interest in the portfolio of U.K. residential mortgages from the seller (The Governor and Company of the Bank of Ireland, U.K. branch), using the proceeds from the issuance of the notes and certificates. The issuer granted security over all its assets in favor of the security trustee. A general reserve fund provides credit support to the rated notes, and principal can be used to pay senior fees and interest on the notes subject to various conditions. A further liquidity reserve fund was funded to provide liquidity support to the class A notes. Bank of Ireland (UK) PLC and The Governor and Company of the Bank of Ireland, U.K. Branch are the legal title holders, and Bank of Ireland (UK) PLC is the servicer. In our view, it is an experienced servicer in the U.K. market with well-established and fully integrated servicing systems and policies. S&P said, "There are no rating constraints in the transaction under our counterparty, operational risk, or structured finance sovereign risk criteria. We consider the issuer to be bankruptcy remote. "We expect U.K. inflation to reach 9.5% in 2022. Although high inflation is overall credit negative for all borrowers, inevitably some borrowers will be more negatively affected than others, and to the extent inflationary pressures materialize more quickly or more severely than currently expected, risks may emerge. Our credit and cash flow analysis and related assumptions consider the transaction's ability to withstand the potential repercussions of the current economic environment--including higher inflation and an increase in the cost of living--such as higher defaults and longer recovery timing due to a potential backlog in court cases. Considering these factors, we believe that the available credit enhancement is commensurate with the ratings assigned. As the situation evolves, we will update our assumptions and estimates accordingly." Ratings CLASS RATING AMOUNT (GBP) A AAA (sf) 332,774,000 B-Dfrd AA (sf) 31,809,000 C-Dfrd A (sf) 29,362,000 D-Dfrd BBB (sf) 14,681,000 E-Dfrd BB (sf) 7,341,000 F-Dfrd B- (sf) 14,681,000 Z NR 58,724,000 X NR 4,894,000 R NR 7,781,000 Y certs NR N/A VRR loan note NR 26,424,000 N/A--Not applicable. NR--Not rated. TESCO PLC: Egan-Jones Retains 'BB' Sr. Unsecured Debt Ratings ------------------------------------------------------------- Egan-Jones Ratings Company, on October 19, 2022, retained its 'BB' foreign currency and local currency senior unsecured ratings on debt issued by Tesco PLC Headquartered in Welwyn Garden City, United Kingdom, Tesco PLC, through its subsidiaries, operates as a food retailer. TOOPLE PLC: Put Into Creditors Voluntary Liquidation ---------------------------------------------------- Ian Walker at Dow Jones Newswires reports that Toople PLC said on Nov. 16 that it has now been put into creditors voluntary liquidation and expects trading in its shares to be cancelled in due course, with any remaining value being distributed to shareholders. The provider of telecom services to U.K. businesses said last month that it planned to appoint administrators as it hadn't been able to raise the capital needed to fund an acquisition and for working capital, and also no longer planned to move to the AQSE Growth Market, Dow Jones relates. According to Dow Jones, it said on Nov. 16 that its two trading subsidiaries--toople.com and Direct Market Services--were sold on Nov. 11 via a pre-pack administration to an existing operator. "Following the sale of the main trading subsidiaries and following consultations with the group's advisers, the board of Toople PLC have resolved to put the group into creditors voluntary liquidation with immediate effect and have appointed FRP Advisory to conduct this process," the company said Nov. 16. Shares were suspended from trading on Oct. 19, Dow Jones discloses. ********* 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 2022. 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. 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