/raid1/www/Hosts/bankrupt/TCREUR_Public/231024.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
Tuesday, October 24, 2023, Vol. 24, No. 213
Headlines
F R A N C E
BOOST HOLDINGS 2: Moody's Raises CFR to B1, Outlook Stable
FINANCIERE TOP: S&P Rates Proposed EUR1.8BB Secured Loans 'B'
SOLOCAL GROUP: Fitch Raises IDR to 'CC' Amid New Coupon Agreement
G E R M A N Y
KALLE GMBH: $88.8MM Bank Debt Trades at 22% Discount
REVOCAR 2023-2: Moody's Assigns Ba1 Rating to EUR11MM Cl. D Notes
SIGNA SPORTS: Shuts Down U.S. Offices, Begins Delisting Process
TENNIS-POINT GMBH: Files for Insolvency Due to Lack of Funds
I R E L A N D
CIFC EUROPEAN II: Fitch Hikes Rating on Class F Notes to 'B+sf'
CVC CORDATUS XII: Fitch Affirms 'Bsf' Rating on Class F Notes
INVESCO EURO XI: Fitch Assigns 'B-(EXP)sf' Rating on F Notes
SOUND POINT I: Fitch Affirms 'B-sf' Rating on Class F-R Notes
I T A L Y
ALMAVIVA SPA: Fitch Hikes LongTerm IDR to 'BB', Outlook Stable
BCC NPL 2018-2: DBRS Cuts Rating on Class B Notes to CCsf
L U X E M B O U R G
ENDO LUXEMBOURG: $2BB Bank Debt Trades at 32% Discount
TRAVELPORT FINANCE: $1.96BB Bank Debt Trades at 50% Discount
S P A I N
GENOVA HIPOTECARIO X: Fitch Hikes Rating on Class D Notes to 'B+sf'
TENDAM BRANDS: Moody's Affirms B1 CFR & Alters Outlook to Positive
U N I T E D K I N G D O M
COALVILLE GLASS: Enters Administration, Taps Opus Restructuring
G FORCE: Goes Into Administration, Calls in Springfields Advisory
LAWRENCE DALLAGLIO: Judge Tosses Winding Up Petition
MISKIN MANOR: Administrators Seek Potential Buyers After Collapse
- - - - -
===========
F R A N C E
===========
BOOST HOLDINGS 2: Moody's Raises CFR to B1, Outlook Stable
-----------------------------------------------------------
Moody's Investors Service has upgraded Boost Holdings 2's (Bruneau
or the company) corporate family rating to B1 from B2 and its
probability of default rating to B1-PD from B2-PD. At the same
time, Moody's upgraded the issuer's ratings on the EUR305 million
backed senior secured term loan B (TLB) and EUR60 million backed
senior secured revolving credit facility (RCF) to B1 from B2. The
outlook remains stable.
"Moody's decision to upgrade Bruneau reflects the strengthening of
the company's key credit metrics, the track record of successful
execution of the business plan by the management team, above
Moody's expectations, and despite high inflation and a weaker
macroeconomic backdrop" says Guillaume Leglise, a Moody's Vice
President-Senior Analyst and lead analyst for Bruneau. "The upgrade
also reflects Bruneau's healthy free cash generation, which has
been used equally to reduce debt and for shareholder distributions,
which demonstrates a balanced financial policy" adds Mr. Leglise.
RATINGS RATIONALE
The rating action reflects Bruneau's resilient performance in the
last two years, resulting into good credit metrics, which are well
within Moody's guidance for an upgrade to B1. Moody's estimates the
company's leverage (Moody's-adjusted gross debt/EBITDA) reduced to
around 3.0x as at end-August 2023, compared to 4.1x at the time of
the 2021 rating assignment. This deleveraging is supported by the
company's good operating performance, despite high inflation. While
sales were flat in the first eight months this year, EBITDA grew by
6.4%, from the already-good comparable figures in the same period
in 2022 (+13%).
The upgrade also reflects the company's more consistent financial
policy, as illustrated by debt reduction in 2023. The company made
a partial repayment of its TLB in April 2023, for EUR21 million,
which contributed to leverage reduction. Simultaneously, the
company also made shareholder distribution of an equivalent amount
(EUR21 million), which was used to repay a convertible bond outside
of the restricted group. Moody's expects the company to maintain a
balanced financial policy in the future, i.e. to continue to use
internally generated cash flows to reduce debt and pay dividends in
the next 12-18 months. Bruneau has a good track record of positive
free cash flows (FCF) because of its asset-light profile, with
higher margins than store-based distributors and limited capital
spending. Moody's expects the company's FCF to remain healthy in
the next two years, with at least EUR45 million generated per year,
before dividends (or 15% of Moody's-adjusted gross debt).
Governance considerations were an important driver of the rating
action. Moody's believes that the company's maintenance of a modest
leverage since 2021 evidences a balanced financial policy, with
shareholder distributions being largely mitigated by debt
reduction, as seen during 2023.
Corporate demand for office supplies tends to be highly cyclical
because corporate fundamentals are closely linked to general
economic conditions. In this regard, Bruneau faces limited growth
prospects and its activities are highly reliant on the economic
conditions in France, its main market, and especially the health of
SMEs, its core customer base. Moody's forecasts GDP growth in the
euro area and in France in 2024 to decelerate, which will likely
weigh on the company's sales, as seen in recent months. Moody's
nevertheless expects Bruneau's earnings and margins to remain
broadly stable despite lower volumes, translating into a leverage
hovering around 3.0x in the next 12-18 months.
The B1 CFR primarily reflects (1) Bruneau's established position in
the Business-to-Business (B2B) office equipment supply markets in
France and Benelux, supported by a distinct customer approach and
large product offering, (2) its strong digital platform and
logistic infrastructure, (3) its good track record of customer
acquisition and retention, leading to sustained sales and earnings
growth historically, including during the covid-19 crisis, (4) its
good credit metrics for the rating category, supported by high
margins of around 14% (Moody's-adjusted EBIT margin) and low
leverage, and (5) its good liquidity and good FCF expected to be
sustained in the next 12-24 months.
At the same time, the rating is constrained by (1) Bruneau's
intrinsic exposure to macroeconomic cycles and to French SMEs, (2)
its small size compared with global office supply distributors or
specialized retailers, (3) its limited geographical reach, although
improving recently thanks to acquisitions in Italy and Spain, and
(4) the highly fragmented and competitive nature of the industry,
which also faces declining demand for traditional office products
owing to the work-from-home, digitalisation and the go "green"
movement.
LIQUIDITY
Bruneau's liquidity is good, supported by a cash balance of EUR57
million and full access to its EUR60 million revolving credit
facility (RCF) as of August 31, 2023. Moody's expects Bruneau to
continue to generate positive FCF over the next 18 months, as seen
historically, which reflects the company's high margins, low
working capital requirements and low capital spending needs. The
TLB and the RCF are subject to a maintenance senior net leverage
covenant, with ample capacity, despite some testing step-downs
every quarter. Bruneau's TLB is due in October 2028, while its RCF
is due in April 2028.
RATIONALE FOR STABLE OUTLOOK
The stable rating outlook reflects Moody's expectations that
Bruneau will sustain its current operating performance, with
single-digit earnings growth and broadly stable strong operating
margins despite the current inflationary backdrop and weak
macroeconomic prospects, leading to Moody's-adjusted gross leverage
hovering around 3.0x in the next 12-18 months. Moody's also expects
the company to continue to generate positive FCF and maintain at
least adequate liquidity. Finally, the stable outlook incorporates
Moody's assumption that the company will maintain a balanced
financial policy and will not make any significant acquisitions.
STRUCTURAL CONSIDERATIONS
Boost Holdings 2's capital structure consists of a senior secured
TLB for a total outstanding amount of EUR284 million and a EUR60
million senior secured RCF. The TLB and RCF benefit from the same
maintenance guarantor package, including upstream guarantees from
guarantor subsidiaries, representing around 85% of the company's
consolidated EBITDA. Both instruments are secured, on a
first-priority basis, by share pledges in each of the guarantors;
security assignments over intercompany receivables; and security
over material bank accounts. However, there are significant
limitations on the enforcement of the guarantees and collateral
under Belgian and French laws.
The senior secured bank debt instruments are rated B1, in line with
the CFR, reflecting the fact that these represent the only
financial debt in the company's capital structure. Bruneau's PDR is
B1-PD, reflecting the use of a 50% Family Recovery Rate, consistent
with a debt structure which is composed of senior bank debt only
with a relatively weak financial maintenance covenant.
The capital structure also includes a shareholder loan (unrated) of
EUR97 million, which matures in April 2029, six months after the
TLB. This shareholder loan is treated as equity for the purpose of
Moody's metrics calculations.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Further positive rating pressure is currently limited mainly by
Bruneau's low growth prospects, limited scale and geographic
concentration. As the company has already good credit metrics, any
positive rating migration in a longer term would be a function of
Bruneau's ability to gain scale through customer acquisition,
increase business diversification outside France, while maintaining
current margins and building a further track record of a business
model resilient to market troughs. In addition to the qualitative
improvements mentioned aboveany further upward pressure should be
supported by sustained growth in sales and earnings,
Moody's-adjusted debt/EBITDA ratio of below 3.0x and
Moody's-adjusted FCF/Debt ratio of at least mid-teens (in
percentage terms). An upgrade would also require Bruneau to display
a good liquidity profile while demonstrating conservative and
transparent financial policies.
Conversely, negative pressure on the rating could materialise if
Moody's adjusted debt/EBITDA ratio exceeds 4.0x on a sustained
basis, and/or the company's operating or financial performance –
including margins and customer base - contracts meaningfully.
Downward ratings pressure could also arise if FCF weakens
significantly or if the company does not maintain at least adequate
liquidity at all times or displays aggressive financial policies.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Distribution
and Supply Chain Services published in February 2023.
COMPANY PROFILE
Headquartered in Villebon-sur-Yvette, France, Boost Holdings 2
(Bruneau) is an online distributor of office supplies. The company
primarily focuses on the B2B market in France and Benelux,
targeting mostly SMEs. In 2022, Bruneau reported EUR514 million in
net sales and EUR85.3 million in EBITDA (company-adjusted, pre-IFRS
16). In 2022, France accounted for around 66% of group net sales,
with the rest generated in Benelux (18%), Italy (12%) and Spain
(4%).
In September 2021, Towerbrook, a private equity firm, acquired
Bruneau from Equistone in a leveraged buyout transaction.
Towerbrook owns a majority stake in Bruneau (57%), while Equistone
retains an 17% stake, and management and employees own the
remainder (26%).
FINANCIERE TOP: S&P Rates Proposed EUR1.8BB Secured Loans 'B'
-------------------------------------------------------------
S&P Global Ratings assigned its 'B' issue rating to the proposed
EUR1.8 billion senior secured term loan B and proposed EUR500
million U.S. dollar-equivalent term loan B, that Financiere Top
Mendel SAS (Ceva; B/Stable/--) intends to issue through its
financing vehicle Financiere Mendel.
S&P anticipates that the company will use the proceeds to repay its
outstanding EUR2 billion senior secured term loan B, repay other
secured debt, and partly repay its payment-in-kind facility. The
transaction will improve the company's debt maturity profile
because the proposed instruments will mature in 2030, while the
outstanding term loan B matures in April 2026. S&P also sees this
transaction as consistent with the company's ambition to expand in
the large and profitable U.S. market, as illustrated by the
acquisition of U.S.-based producer of calming products for pets
ThunderWorks in 2020.
Financiere Top Mendel is the holding company of Ceva, a veterinary
health company focused on research and development, manufacturing,
and marketing of pharmaceutical products and vaccines for pets (30%
of the group's sales), livestock (20%), swine (19%), and poultry
(30%). Sales are split between pharmaceuticals (53%) and biologics
(47%). The group is the No. 5 player, behind Zoetis; Boehringer
Ingelheim's animal business unit; Elanco, which recently bought
Bayer's animal business; and Merck. It benefits from an established
market share in poultry -- 9% globally and 19% in biopharma -- with
a large range of vaccines, including in-ovo capacity. Excluding
poultry, Ceva is a niche player, with an estimated market share of
4% in swine, and 3% each in the ruminants and companion-animal
segments. In 2022, the company reported EUR1.5 billion of revenue
and S&P Global Ratings-adjusted EBITDA of EUR392 million (the
company calculates a last-12-month EBITDA of EUR440 million as of
August 2023).
As part of the transaction, the company is also securing a new
EUR100 million revolving credit facility (RCF) with a 6.5 year
term. This will strengthen the company's liquidity position, which
we assess as adequate. S&P expects the RCF to be fully available at
closing of the transaction.
S&P said, "We forecast Ceva to generate 6.0%-6.5% revenue growth in
2023 and about 7% in 2024, supported by all segments and partly
offset by adverse foreign exchange movements in China and Turkey
this year. Growth will be especially strong in poultry in our view,
due to high demand for vaccines that the company can meet with
recent product launches, which include a new vaccine addressing the
Newcastle disease as well as H9 (the eastern avian flu). Ongoing
investments in capacity expansion will also support growth.
"We forecast an S&P Global Ratings-adjusted EBITDA margin of about
25.5% in 2023, in line with the 2022 level, with improvement to
26.5%-27.0% in 2024. In our view, the group's positive product mix
and successful cost control initiatives will be offset by
nonrecurring costs this year, caused by underactivity in factories
due to external factors, and by reorganization costs to improve
internal processes. We consider that Ceva will successfully offset
cost inflation with price increases, and we assume lower
nonrecurring costs in 2024.
"We forecast neutral to slightly negative free operating cash flow
(FOCF) in 2023 and 2024, constrained by the large capital
expenditure (capex) to increase production capacity of poultry
vaccine to meet the increasing demand, and to insource the
production of swine vaccines. We also forecast large working
capital requirements stemming from expanding inventories to support
product launches and ensure raw material availability. Excluding
growth capex, we estimate that FOCF would be materially positive in
2023 and 2024. We calculate an S&P Global Ratings-adjusted
debt-to-EBITDA excluding the noncommon equity (convertible bonds
ORA/ORANBSA) ratio of 7.0x-7.3x in 2023 and 6.5x-7.0x in 2024.
Including the noncommon equity instruments, we forecast a
debt-to-EBITDA ratio of 9.7x-10.0x in 2023 and 9.0x-9.5x in 2024.
We expect the funds from operations to cash interest ratio to
remain in the 2.0x-2.5x range in 2023 and 2024.
"The recovery rating on the two proposed term loan B facilities
(EUR1.8 billion and EUR500 million U.S.-dollar equivalent) is '3',
reflecting our expectation of meaningful recovery prospects
(50%-70%; rounded estimate: 55%). This is supported by our
valuation of the business as a going concern and constrained by the
large amount of debt assumed to be outstanding after a hypothetical
default."
SOLOCAL GROUP: Fitch Raises IDR to 'CC' Amid New Coupon Agreement
-----------------------------------------------------------------
Fitch Ratings has downgraded SOLOCAL Group's (Solocal) Long-Term
Issuer Default Rating (IDR) to 'RD' (Restricted Default) from 'CC'
on a failure to pay deferred interest by 30 September as per the
agreement with lenders in July. Fitch has subsequently upgraded the
Long-Term IDR to 'CC' following the new agreement. Fitch has also
downgraded Solocal's senior secured debt to 'C' from 'CCC-' and
upgraded it to 'CC' with a Recovery Rating of 'RR4'.
The company has obtained the required majority bondholder consent
to defer to December 15, 2023 its coupons originally due June 15
and September 15, 2023 on its EUR176.7million and EUR18.7 million
floating-rate notes, which mature in 2025. Fitch views the missed
interest payment following the agreed deferral period as a RD and
the newly-agreed payments deferral as a distressed debt exchange
(DDE) as it is a worsening of terms for noteholders.
The 'CC' IDR reflects ongoing discussions with creditors about
Solocal's capital structure in the context of a mandat ad-hoc
procedure under French insolvency proceedings. Fitch expects the
negotiations to result in a debt restructuring or in further
concessions that would be a worsening of terms for noteholders and
thus likely to be recognised as a DDE.
KEY RATING DRIVERS
Debt Restructuring Approaching: Solocal has engaged creditors to
negotiate a capital structure overhaul under the mandat ad-hoc
procedure. Fitch understands that discussions will take place with
the company's new strategic plan at hand. Two interest payments are
now deferred to 15 December, when a third will also be due. By
then, Fitch expects an announcement about its envisioned new
capital structure or on any new deferral agreements made with
creditors. Meanwhile, management remains in place and operations
are continuing.
Refinancing Imminent: Refinancing risk on the revolving credit
facility (RCF) and bonds due in 2025 is elevated and unlikely to be
available at an arm's length basis. Solocal's access to capital
markets is likely disrupted given the failure to stabilise its
business profile and to consistently generate free cash flow (FCF)
following its 2020 restructuring. If refinancing is an option,
creditors are likely to require excessive interest rates to
compensate for the company's high-risk profile, which would only
further disrupt the company's financial and operational profiles.
Worsening FCF: Following 2Q23 results, Fitch has revised expected
EBITDA for 2023 down to around EUR50 million from EUR75 million.
This was mainly driven by the significant decrease in EBITDA
margins, which has affected the company's expected FCF generation.
Under its forecasts for Solocal under its current capital
structure, the company would continue to generate negative FCF and
eventually encounter a liquidity crisis.
Debt Repayments Pressure Liquidity: Fitch estimates minimum cash
for running Solocal's operations at around EUR25 million. Debt
repayments for its BPI France loan and RCF of EUR4 million and
EUR38 million in 2023 and 2024, respectively, would result in
insufficient liquidity headroom for 2024. Fitch therefore sees high
execution risks over the next 12 months, which confirms the
likelihood of a debt restructuring.
RCF Maturity Extension Likely: Solocal's RCF, fully drawn for EUR34
million, was due in September 2023. Due to poorer trading and
following recent coupon payment deferral, Solocal has requested
lenders accept a share-based payment, an option under the
agreement. However, Fitch understands that creditors have rejected
this request, opting for an automatic extension of the RCF into
2024. Fitch believes that the payment of the RCF and its terms are
likely to be negotiated as part of the mandat ad hoc.
DERIVATION SUMMARY
Solocal's rating reflects a transitioning business model, in
particular in its shift to a subscription-based digital platform
from directories. Competition in digital advertising is fierce.
Changes to management and leading shareholders, and high salesforce
turnover add to execution risk.
Leverage is lower than other 'CCC' to 'C' category peers' since
Solocal's recent restructuring of its financial liabilities in
2020. However, it is at the maximum sustainable level given its
record of debt-to-equity conversions. Solocal's debt-to-equity
swaps also keep financial risk high, particularly in light of
limited refinancing alternatives.
Solocal's most direct comparable peer is Yell, part of the Hibu
group, which has a similar market position in the UK and is facing
similar operational and financial challenges. Comparisons can be
made between Solocal and specialised directories businesses such as
Speedster Bidco GMBH (Autoscout24, B/Stable) or online classifieds
media groups such as Adevinta ASA (BB+/Stable) and Traviata B.V.
(B/UCO).
Autoscout24 is more geographically diversified, and is better
positioned in its business niche, while Adevinta has materially
larger scale, with stronger profitability and cash generation,
underpinned by its greater diversification and strong eBay
classifieds brand.
Traviata, the owner of a minority stake in Axel Springer SE, also
has a stronger business model than Solocal, due to its larger
scale, greater diversification and stronger brands. These peers
have higher leverage metrics, but they are protected by stronger
barriers to entry and by a higher product criticality for its
customers, resulting in a higher debt capacity and lower
refinancing risk.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Revenues to decrease 8% in 2023 and 4.6% in 2024 before
stabilising to -1%-0% in 2025
- EBITDA decreasing to around EUR50 million in 2023 and 2024 before
slightly recovering in 2025
- Average capex of around EUR23million-EUR25 million annually for
2023-2026
- Average annual working-capital outflows of EUR20 million-EUR25
million for 2023-2026
- Repayment of EUR4 million BPI loan due in 2023
- Super senior facility prepayment of EUR34 million and EUR4
million of BPI loan repayment due in 2024, resulting in a liquidity
shortfall of EUR55 million in 2024 and the 2025 notes refinancing
requirement
RECOVERY ANALYSIS
Key Recovery Assumptions
Fitch adopts a going-concern (GC) approach to assessing recoveries
for Solocal. This reflects the higher probability of a surviving
cash generative business with GC enterprise value as the basis for
financial stakeholder recovery than liquidation in a default. Fitch
has assumed a 10% administrative claim.
Fitch expects Solocal to be potentially attractive to trade buyers,
particularly after the completion of its restructuring plan. Fitch
assumes a Fitch-defined GC EBITDA of EUR60 million, down from the
previous estimate of EUR90 million. Fitch expects the poor current
trading to rebase the restructuring negotiations around a lower
EBITDA figure.
Its recovery multiple is constant at 2.0x, considering
business-model pressures and below 50% recoveries for senior
secured loans after its restructuring in 2020.
Fitch factors in the outstanding super senior facility that ranks
ahead of the bonds and view the BPI France state-guaranteed loan as
unsecured.
Based on current metrics and assumptions, the waterfall analysis
generates a ranked recovery at 38%, representing ultimate recovery
prospects in the 'RR4' band for existing senior secured debt. This
indicates a 'CC' senior secured debt rating.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Fitch does not envisage an upgrade before an overhaul of the
capital structure
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Failure to pay interest on the bonds due 15 December 2023
- Entering into a formal debt restructuring or insolvency procedure
recognised as a DDE under Fitch's criteria
LIQUIDITY AND DEBT STRUCTURE
Unfunded Liquidity: Fitch forecasts Solocal's liquidity to be
unfunded by mid-2024 following the repayment of its EUR34 million
RCF due in September 2023, which has now been extended to 2024.
Liquidity may come under additional pressure sooner from
deteriorating business conditions or restructuring payments.
ISSUER PROFILE
Solocal (formerly PagesJaunes, rebranded in 2013) is a French
advertising company that provides digital content, websites and
media campaign services to customers and businesses on a local
basis.
ESG CONSIDERATIONS
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
SOLOCAL Group LT IDR RD Downgrade CC
LT IDR CC Upgrade RD
senior secured LT C Downgrade RR4 CCC-
senior secured LT CC Upgrade RR4 C
=============
G E R M A N Y
=============
KALLE GMBH: $88.8MM Bank Debt Trades at 22% Discount
----------------------------------------------------
Participations in a syndicated loan under which Kalle GmbH is a
borrower were trading in the secondary market around 77.8
cents-on-the-dollar during the week ended Friday, October 20, 2023,
according to Bloomberg's Evaluated Pricing service data.
The $88.8 million facility is a Term loan that is scheduled to
mature on December 29, 2023. The amount is fully drawn and
outstanding.
Kalle GmbH provides food machinery equipment. The Company's country
of domicile is Germany.
REVOCAR 2023-2: Moody's Assigns Ba1 Rating to EUR11MM Cl. D Notes
-----------------------------------------------------------------
Moody's Investors Service has assigned the following definitive
ratings to Notes issued by RevoCar 2023-2 UG
(haftungsbeschraenkt):
EUR441M Class A Floating Rate Asset Backed Notes due September
2036, Definitive Rating Assigned Aaa (sf)
EUR33M Class B Floating Rate Asset Backed Notes due September
2036, Definitive Rating Assigned Aa2 (sf)
EUR9M Class C Floating Rate Asset Backed Notes due September 2036,
Definitive Rating Assigned A3 (sf)
EUR11M Class D Floating Rate Asset Backed Notes due September
2036, Definitive Rating Assigned Ba1 (sf)
Moody's has not assigned a rating to the EUR6M Class E Floating
Rate Asset Backed Notes due September 2036.
RATINGS RATIONALE
The Notes are backed by a static pool of German auto loans
originated by Bank11 fuer Privatkunden und Handel GmbH (Bank11).
This represents the thirteenth issuance out of the RevoCar
program.
The definitive portfolio of assets amount to approximately EUR
500.0 million as of September 30, 2023 pool cut-off date. The
Liquidity Reserve for senior fees, swap rate and Class A Notes
coupon payments will be funded to 1.2% of the total pool balance at
closing and the total credit enhancement for the Class A Notes will
be 11.8%.
The ratings are primarily based on the credit quality of the
portfolio, the structural features of the transaction and its legal
integrity.
According to Moody's, the transaction benefits from various credit
strengths such as a granular portfolio and an experienced
originator and servicer. However, Moody's notes that the
transaction features some credit weaknesses such as an unrated
servicer. Various mitigants have been included in the transaction
structure such as a back-up servicer facilitator, which is obliged
to appoint a back-up servicer if certain triggers are breached.
The portfolio of underlying assets was distributed through dealers
to private individuals (94.3%) and commercial borrowers (5.7%) to
finance the purchase of new (30.6%) and used (69.4%) cars. As of
September 30, 2023, the preliminary portfolio consists of 24,346
auto finance contracts with a weighted average seasoning of 4.8
months. The contracts have equal instalments during the life of the
contract and a larger balloon payment at maturity. On average, the
balloon contracts account for 73.9% of the entire portfolio cash
flows.
Moody's determined the portfolio lifetime expected defaults of
1.5%, expected recoveries of 35.0% and Aaa portfolio credit
enhancement (PCE) of 8.0% related to borrower receivables. The
expected defaults and recoveries capture Moody's expectations of
performance considering the current economic outlook, while the PCE
captures the loss Moody's expect the portfolio to suffer in the
event of a severe recession scenario. Expected defaults and PCE are
parameters used by Moody's to calibrate its lognormal portfolio
loss distribution curve and to associate a probability with each
potential future loss scenario in the cash flow model to rate Auto
ABS.
Portfolio expected defaults of 1.5% are in line with the EMEA Auto
ABS average and are based on Moody's assessment of the lifetime
expectation for the pool taking into account: (i) historical
performance of the book of the originator, (ii) benchmark
transactions, and (iii) other qualitative considerations.
Portfolio expected recoveries of 35.0% are in line with the EMEA
Auto ABS average and are based on Moody's assessment of the
lifetime expectation for the pool taking into account: (i)
historical performance of the originator's book, (ii) benchmark
transactions, and (iii) other qualitative considerations.
PCE of 8.0% is in line with the EMEA Auto ABS average and is based
on Moody's assessment of the pool which is mainly driven by: (i)
the relative ranking to originator peers in the EMEA market, and
(ii) the weighted average current loan-to-value of 86.9% which is
in line with the sector average. The PCE level of 8.0% results in
an implied coefficient of variation (CoV) of 66.4%.
The principal methodology used in these ratings was "Moody's Global
Approach to Rating Auto Loan- and Lease-Backed ABS" published in
November 2022.
Factors that would lead to an upgrade or downgrade of the ratings:
Factors that may cause an upgrade of the ratings of the Notes
include significantly better than expected performance of the pool
together with an increase in credit enhancement of the Notes.
Factors that would lead to a downgrade of the ratings include: (i)
increased counterparty risk leading to potential operational risk
of servicing or cash management interruptions; and (ii) economic
conditions being worse than forecast resulting in higher arrears
and losses.
SIGNA SPORTS: Shuts Down U.S. Offices, Begins Delisting Process
---------------------------------------------------------------
Bicycle Retailer reports that Signa Sports United has closed its
U.S. offices, which included operations for the Vitus and Nukeproof
bike brands and the Hotlines wholesale distribution business, all
based in Park City.
Signa, headquartered in Berlin, announced last week that it had
lost access to a EUR150 million (US$159 million) equity commitment
from its parent company, Bicycle Retailer recounts. The company
has reported serious liquidity challenges and had begun the process
of delisting from the New York Stock Exchange, Bicycle Retailer
discloses. It announced Friday, Oct. 20, that is preparing to make
insolvency filings for its various subsidiaries in the coming days,
Bicycle Retailer relates.
Signa owns the Vitus and Nukeproof brands and the CRC/Wiggle
cycling e-commerce sites, along with an array of other e-commerce
sites in the tennis, camping and team sports markets. Signa's
parent company is controlled by Rene Benko, an Austrian
billionaire.
Last year, U.S. industry veteran Hap Seliga opened Signa's U.S.
base for cycling in Park City. The company was selling its Vitus
bikes direct to consumers and selling Nukeproof products to U.S.
IBDs through its Hotlines wholesale distribution business.
On Oct. 19, Mr. Seliga announced on LinkedIn that the Utah offices
had closed, Bicycle Retailer notes.
"Despite exceeding our top and bottom line FY23 goals handily,
SIGNA Sports United North America’s bike division has been forced
to cease all operations with less than a few days’ notice. This
was triggered Monday, Oct. 16, by a sudden reneging of a binding
150 million Euro equity commitment to SIGNA Sports United N.V.,"
Mr. Seliga wrote.
Termination of Equity Commitment Letter
SIGNA Sports United N.V. ("SSU" or the "Company"), a specialist
sports e-commerce company with businesses in bike, tennis and
outdoor on Oct. 16 disclosed that has received a termination notice
with respect to the unconditional Equity Commitment Letter from
SIGNA Holding GmbH ("SIGNA Holding"), an affiliate of the
Company’s largest shareholder SIGNA International Sports Holding
GmbH ("SISH").
The Company has entered into a binding equity commitment letter
dated June 26, 2023 with unconditional commitments by SIGNA Holding
to provide the Company with additional liquidity of EUR150 million
in the period from September 1, 2023 to
September 30, 2025 ("Equity Commitment Letter"), supplemented by a
side letter dated September 27, 2023, to cover the operational
financing needs of SSU and to secure the going concern of SSU. Of
the original EUR150 million commitment, EUR143 million remains
undrawn to date. SIGNA Holding has terminated the Equity
Commitment Letter on Oct. 16.
After many years of mutually trusted collaboration and reliable
financing between the Company and SIGNA Holding, SSU has relied on
the binding and unconditional nature of the Equity Commitment
Letter to continue to draw funds to meet its near-term obligations
and for its going concern assessment of the Company and its
subsidiaries. The Company considers the termination of the Equity
Commitment Letter by SIGNA Holding unjustified.
While the Company regrets the termination of the Equity Commitment
Letter, it will take the appropriate legal steps in the interests
of all its shareholders, creditors and employees.
About SIGNA Sports United
SIGNA Sports United (SSU) -- http://www.signa-sportsunited.com--
is a specialist sports e-commerce company with headquarters in
Berlin. It has businesses operating within bike, tennis, outdoor,
and team sports. SSU has more than 80 online sites and partners
with 500 shops serving over 6 million customers worldwide. It
includes Tennis-Point, WiggleCRC, Fahrrad.de, Bikester,
Probikeshop, Campz, Addnature and TennisPro.
TENNIS-POINT GMBH: Files for Insolvency Due to Lack of Funds
------------------------------------------------------------
Following the termination of the binding, unconditional equity
commitment letter by SIGNA Holding GmbH on October 16, 2023 and the
lack of funds to cover the operational financing needs of the SIGNA
Sports United entities resulting therefrom, Tennis-Point GmbH, one
of the major subsidiaries of SIGNA Sports United N.V., a specialist
e-commerce company with business in bike, outdoor and tennis, have
filed for insolvency with the competent local court.
=============
I R E L A N D
=============
CIFC EUROPEAN II: Fitch Hikes Rating on Class F Notes to 'B+sf'
---------------------------------------------------------------
Fitch Ratings has upgraded CIFC European Funding CLO II DAC's class
B to F notes and affirmed the class A notes. The Outlooks are
Stable.
Entity/Debt Rating Prior
----------- ------ -----
CIFC European
Funding CLO II DAC
A XS2125922422 LT AAAsf Affirmed AAAsf
B-1 XS2125923156 LT AA+sf Upgrade AAsf
B-2 XS2125923743 LT AA+sf Upgrade AAsf
C XS2125924550 LT A+sf Upgrade Asf
D XS2125925102 LT BBB+sf Upgrade BBBsf
E XS2125925953 LT BB+sf Upgrade BBsf
F XS2125926175 LT B+sf Upgrade Bsf
TRANSACTION SUMMARY
CIFC European Funding CLO II DAC is a securitisation of mainly
senior secured obligations (at least 90%) with a component of
senior unsecured, mezzanine, second-lien loans, first-lien last-out
loans and high-yield bonds. The portfolio is actively managed by
CIFC CLO Management II LLC. The transaction will exit its
reinvestment period in October 2024.
KEY RATING DRIVERS
Transaction Reinvesting: The manager can continue to reinvest
unscheduled principal proceeds and sale proceeds from
credit-impaired and credit-improved obligations after the end of
its reinvestment period in October 2024, subject to compliance with
the reinvestment criteria. Consequently, Fitch's analysis is based
on a stressed portfolio using the agency's collateral quality
matrix specified in the transaction documentation.
Fitch used the matrices with the 15% limit on the 10 largest
obligors and 10% limit on fixed-rate obligations, both higher than
the current portfolio's respective shares. Fitch has applied a
haircut of 1.5% to the weighted average recovery rate (WARR) as the
calculation in the transaction documentation is not in line with
the agency's current CLO Criteria.
Deacreasing WAL, Good Asset Performance: The rating actions reflect
a shorter weighted average life (WAL) and therefore shorter risk
horizon, as well as good asset performance, resulting in larger
break-even default-rate cushions than at the last review in
November 2022. This should allow the notes to withstand unexpected
losses, given the small amount of near-term loan maturities in the
transaction. The transaction is currently 0.9% above par and is
passing all collateral-quality, portfolio-profile and coverage
tests.
Exposure to assets with a Fitch-derived rating in the 'CCC'
category is 0.7%, according to the latest trustee report, and the
portfolio includes no defaulted assets. Exposure to near-term
refinancing risk is limited to 6.6% of assets maturing in 2025.
'B'/'B-' Portfolio: Fitch assesses the average credit quality of
the obligors at 'B'/'B-'. The Fitch-calculated weighted average
rating factor (WARF) of the current portfolio was 24.9. The WARF
metric of the Fitch-stressed portfolio, for which the agency has
notched down entities on Negative Outlook by one notch was 26.0.
High Recovery Expectations: Senior secured obligations comprise
98.3% of the portfolio as calculated by the trustee. Fitch views
the recovery prospects for these assets as more favourable than for
second-lien, unsecured and mezzanine assets. The Fitch-calculated
WARR of the current portfolio is 61.18%.
Diversified Portfolio: The portfolio is well-diversified across
obligors, countries and industries. The top 10 obligor
concentration is 11.2%, and no obligor represents more than 1.4% of
the portfolio balance, as reported by the trustee. The exposure to
the three-largest Fitch-defined industries is 31.3% as calculated
by Fitch. Fixed-rate assets reported by the trustee are at 6.6% of
the portfolio balance.
Model Deviation: The class B-1 and B-2 notes' ratings are a notch
lower than their model-implied ratings (MIR). The deviation
reflects the limited cushion in the Fitch-stressed portfolio at
their MIRs.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
A 25% increase of the mean default rate (RDR) and a 25% decrease of
the recovery rate (RRR) across all ratings of the current portfolio
would have no impact on the class A to C and E notes and would lead
to a one-notch downgrade for the class D and F notes.
Based on the current portfolio, downgrades may occur if the loss
expectation is larger than initially assumed, due to unexpectedly
high levels of default and portfolio deterioration. Due to the
better metrics and shorter life of the current portfolio than the
Fitch-stressed portfolio, the class B, D and E notes display a
rating cushion of one notch, the class F notes three notches. The
class A and C notes display no rating cushion.
Should the cushion between the current portfolio and the
Fitch-stressed portfolio be eroded, due to manager trading or
negative portfolio credit migration, a 25% increase of the mean RDR
and a 25% decrease of the RRR across all ratings of the
Fitch-stressed portfolio would lead to downgrades of up to three
notches for the class B to E notes and to below 'B-sf' for the
class F notes.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
A 25% reduction of the mean RDR and a 25% increase in the RRR
across all ratings of the Fitch-stressed portfolio would lead to
upgrades of up to three notches for the notes, except for the
'AAAsf' rated notes, which are at the highest level on Fitch's
scale and cannot be upgraded.
During the reinvestment period, based on the Fitch-stressed
portfolio, upgrades may occur on better-than-expected portfolio
credit quality and a shorter remaining WAL test, allowing the notes
to withstand larger-than-expected losses for the transaction's
remaining life. After the end of the reinvestment period, upgrades
may occur on stable portfolio credit quality and deleveraging,
leading to higher credit enhancement and excess spread available to
cover losses in the remaining portfolio.
DATA ADEQUACY
Fitch has checked the consistency and plausibility of the
information it has received about the performance of the asset pool
and the transaction. Fitch has not reviewed the results of any
third party assessment of the asset portfolio information or
conducted a review of origination files as part of its ongoing
monitoring.
The majority of the underlying assets or risk presenting entities
have ratings or credit opinions from Fitch and/or other Nationally
Recognized Statistical Rating Organizations and/or European
Securities and Markets Authority registered rating agencies. Fitch
has relied on the practices of the relevant groups within Fitch
and/or other rating agencies to assess the asset portfolio
information or information on the risk presenting entities.
Overall, and together with any assumptions referred to above,
Fitch's assessment of the information relied upon for the agency's
rating analysis according to its applicable rating methodologies
indicates that it is adequately reliable.
CVC CORDATUS XII: Fitch Affirms 'Bsf' Rating on Class F Notes
-------------------------------------------------------------
Fitch Ratings has upgraded CVC Cordatus Loan Fund XII DAC class D
notes to 'BBB+sf' from 'BBBsf' and revised the Outlook on three
tranches to Positive from Stable.
Entity/Debt Rating Prior
----------- ------ -----
CVC Cordatus Loan
Fund XII DAC
A-1-R XS2325581481 LT AAAsf Affirmed AAAsf
A-2-R XS2325582299 LT AAAsf Affirmed AAAsf
B-1-R XS2325582885 LT AAsf Affirmed AAsf
B-2-R XS2325583420 LT AAsf Affirmed AAsf
C-R XS2325584071 LT Asf Affirmed Asf
D XS1899142886 LT BBB+sf Upgrade BBBsf
E XS1899143934 LT BBsf Affirmed BBsf
F XS1899143421 LT Bsf Affirmed Bsf
TRANSACTION SUMMARY
CVC Cordatus Loan Fund XII DAC is a cash flow CLO comprising mostly
senior secured obligations. The transaction is actively managed by
CVC Credit Partners European CLO Management LLP and exited its
reinvestment period in July 2023. At closing of the 2021 refinance,
the class A-1-R to C-R notes were issued and the proceeds used to
refinance the existing notes. The class D, E and F and the
subordinated notes were not refinanced.
KEY RATING DRIVERS
Stable Performance, Shorter Life: The transaction's stable
performance combined with a shortened weighted average life (WAL)
covenant result in better break-even default rate cushions than at
the last review in November 2022. This is reflected in the rating
actions. The Positive Outlooks on the class B-1-R, B-2-R and C-R
notes reflects the possibility of upgrade should portfolio
performance remain stable and the decreasing WAL of the portfolio
contribute to a higher default-rate cushion. The Stable Outlooks on
the remaining notes reflect a considerable default-rate cushion
that could absorb additional defaults and negative rating
migration.
Deviation from MIR: Except for the class A-1-R, A-2-R and D notes,
the notes' ratings are one notch below their model-implied ratings
(MIR). The deviations reflect Fitch's view that the default-rate
cushions of these notes are not commensurate with the MIRs given
current uncertain macroeconomic conditions and heightened
refinancing risk.
Asset Performance Within Expectations: The transaction has
performed in line with Fitch's expectations. The transaction is
currently 0.85% below par and is passing all coverage and
portfolio-profile tests. The last trustee report shows one
defaulted name in the current portfolio, contributing 1% of the
reinvestment target par.
'B'/'B-' Portfolio: Fitch assesses the average credit quality of
the underlying obligors at 'B'/'B-'. The Fitch-calculated weighted
average rating factor (WARF) of the current portfolio was 25.0. The
WARF of the current portfolio, for which Fitch has notched down
entities on Negative Outlook by one notch, was 26.1.
High Recovery Expectations: Senior secured obligations comprise
98.7% of the portfolio as calculated by the trustee. Fitch views
the recovery prospects for these assets as more favourable than for
second-lien, unsecured and mezzanine assets. The Fitch-calculated
weighted average recovery rate (WARR) of the current portfolio is
61.9% under its current criteria.
Diversified Portfolio: The portfolio is well-diversified across
obligors, countries and industries. The top 10 obligor
concentration is 14%, and no obligor represents more than 1.8% of
the portfolio balance, as reported by the trustee.
Transaction Outside Reinvestment Period: The transaction exited its
reinvestment period in July 2023, but the manager can reinvest
unscheduled principal proceeds and sale proceeds from credit-risk
obligations after the reinvestment period, subject to compliance
with the reinvestment criteria.
Given the manager's ability to reinvest, Fitch's analysis is based
on a stressed portfolio using the agency's collateral quality
matrix specified in the transaction documentation. Fitch used the
matrix with a top 10 obligor limit at 23%, which the manager
currently uses. The WARR is haircut by 1.5%, which reflects the
average inflation in the WARR for transactions that are based on
outdated criteria.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
An increase of the default rate (RDR) at all rating levels by 25%
of the mean RDR and a decrease of the recovery rate (RRR) by 25% at
all rating levels of the current portfolio would result in
downgrades of no more than one notch depending on the notes. While
not Fitch's base case, downgrades may occur if build-up of the
notes' credit enhancement following amortisation does not
compensate for a larger loss expectation than assumed due to
unexpectedly high levels of defaults and portfolio deterioration.
Due to the better metrics and shorter life of the current portfolio
than the Fitch-stressed portfolio as well as the MIR deviation, the
class F notes display a rating cushion of four notches, the class
B-1-R, B-2-R, D and E notes two notches, the class C-R notes one
notch and the class A-1-R and A-2-R notes have no rating cushion.
Should the cushion between the current portfolio and the
Fitch-stressed portfolio be eroded either due to manager trading or
negative portfolio credit migration, a 25% increase of the mean RDR
and a 25% decrease of the RRR across all ratings of the stressed
portfolio would lead to downgrades of up to four notches for the
rated notes.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
A reduction of the RDR at all rating levels by 25% of the mean RDR
and an increase in the RRR by 25% at all rating levels in the
Fitch-stressed portfolio would result in upgrades of up to four
notches, except for the 'AAAsf' notes, which are already at the
highest rating on Fitch's scale and cannot be upgraded. Upgrades
may also occur if the portfolio's quality remains stable and the
notes continue to amortise, leading to higher credit enhancement
across the structure.
DATA ADEQUACY
CVC Cordatus Loan Fund XII DAC
Fitch has checked the consistency and plausibility of the
information it has received about the performance of the asset pool
and the transaction. Fitch has not reviewed the results of any
third party assessment of the asset portfolio information or
conducted a review of origination files as part of its ongoing
monitoring.
The majority of the underlying assets or risk presenting entities
have ratings or credit opinions from Fitch and/or other Nationally
Recognized Statistical Rating Organizations and/or European
Securities and Markets Authority registered rating agencies. Fitch
has relied on the practices of the relevant groups within Fitch
and/or other rating agencies to assess the asset portfolio
information or information on the risk presenting entities.
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.
INVESCO EURO XI: Fitch Assigns 'B-(EXP)sf' Rating on F Notes
------------------------------------------------------------
Fitch Ratings has assigned Invesco Euro CLO XI DAC expected
ratings.
The assignment of final ratings is contingent on the receipt of
final documents conforming to information already reviewed.
Entity/Debt Rating
----------- ------
Invesco Euro
CLO XI DAC
Class A-1 LT AAA(EXP)sf Expected Rating
Class A-2 LT AAA(EXP)sf Expected Rating
Class B-1 LT AA(EXP)sf Expected Rating
Class B-2 LT AA(EXP)sf Expected Rating
Class C LT A(EXP)sf Expected Rating
Class D LT BBB-(EXP)sf Expected Rating
Class E LT BB-(EXP)sf Expected Rating
Class F LT B-(EXP)sf Expected Rating
Subordinated
Notes LT NR(EXP)sf Expected Rating
TRANSACTION SUMMARY
Invesco Euro CLO XI DAC is a securitisation of mainly senior
secured obligations (at least 90%) with a component of senior
unsecured, mezzanine, second-lien loans and high-yield bonds. Note
proceeds will be used to fund a portfolio with a target par of
EUR400 million that is actively managed by Invesco CLO Equity Fund
IV LP. The collateralised loan obligation (CLO) has a five-year
reinvestment period and a 7.5 year weighted average life (WAL).
KEY RATING DRIVERS
Average Portfolio Credit Quality (Neutral): Fitch assesses the
average credit quality of obligors at 'B'/'B-'. The
Fitch-calculated weighted average rating factor of the identified
portfolio is 26.06.
High Recovery Expectations (Positive): At least 90% of the
portfolio will comprise senior secured obligations. Fitch views the
recovery prospects for these assets as more favourable than for
second-lien, unsecured and mezzanine assets. The Fitch-calculated
weighted average recovery rate of the identified portfolio is
61.73%.
Diversified Portfolio (Positive): The expected rating analysis is
based on a stress portfolio that corresponds to the 10 largest
obligors at 25% of the portfolio balance and a maximum fixed-rate
asset limit at 13.75% of the portfolio. The transaction also
includes various concentration limits, including a maximum exposure
to the three largest Fitch-defined industries in the portfolio at
40%. These covenants ensure that the asset portfolio will not be
exposed to excessive concentration.
Portfolio Management (Neutral): The transaction has a five-year
reinvestment period and includes reinvestment criteria similar to
those of other European transactions. Fitch's analysis is based on
a stressed-case portfolio with the aim of testing the robustness of
the transaction structure against its covenants and portfolio
guidelines.
Cash-flow Modelling (Positive): The WAL used for the transaction's
stressed-case portfolio analysis is 12 months shorter than the WAL
covenant. This reflects the strict reinvestment criteria post
reinvestment period, which includes satisfaction of Fitch 'CCC'
limitation and the coverage tests, as well as a WAL covenant that
linearly steps down over time. In Fitch's opinion, these conditions
reduce the effective risk horizon of the portfolio during stress
periods.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
An increase of the default rate (RDR) at all rating levels in the
current portfolio by 25% of the mean RDR and a decrease of the
recovery rate (RRR) by 25% at all rating levels would have no
impact on the class A-1, A-2 or B notes, lead to a downgrade of one
notch for the class C, D and E notes, and to below 'B-sf' for the
class F notes Downgrades may occur if build-up of the notes' credit
enhancement following amortisation does not compensate for a larger
loss expectation than initially assumed due to unexpectedly high
levels of defaults and portfolio deterioration.
Due to the better metrics and shorter life of the current portfolio
than the Fitch-stressed portfolio as well as the model-implied
ratings deviation, the class C notes display a rating cushion of
one notch, the class B, D and E notes two notches, and the class F
notes three notches. There is no rating cushion for the class A-1
and A-2 notes.
Should the cushion between the current portfolio and the
Fitch-stressed portfolio be eroded, either due to manager trading
or negative portfolio credit migration, a 25% increase of the mean
RDR and a 25% decrease of the RRR across all ratings of the
stressed portfolio would lead to downgrades of three notches for
the class A-1, B, C and D notes, four notches for the class A-2
notes, and to below 'B-sf' for the class E and F notes.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
A reduction of the RDR at all rating levels in the stressed
portfolio by 25% of the mean RDR and an increase in the RRR by 25%
at all rating levels would result in upgrades of up to two notches
for all notes, except for the class A-1 and A-2 notes. Upgrades may
also occur if the portfolio's quality remains stable and the notes
start to amortise, leading to higher credit enhancement across the
structure.
During the reinvestment period, upgrades based on the
Fitch-stressed portfolio, may occur on better-than-expected
portfolio credit quality and a shorter remaining WAL test, leading
to the ability of the notes to withstand larger-than-expected
losses for the remaining life of the transaction. After the end of
the reinvestment period, upgrades, except for the 'AAAsf' rated
notes, which are at the highest level on Fitch's scale and cannot
be upgraded, may result from stable portfolio credit quality and
deleveraging, leading to higher credit enhancement and excess
spread available to cover losses in the remaining portfolio.
DATA ADEQUACY
Invesco Euro CLO XI DAC
The majority of the underlying assets or risk presenting entities
have ratings or credit opinions from Fitch and/or other Nationally
Recognized Statistical Rating Organizations and/or European
Securities and Markets Authority registered rating agencies. Fitch
has relied on the practices of the relevant groups within Fitch
and/or other rating agencies to assess the asset portfolio
information or information on the risk presenting entities.
Overall, and together with any assumptions referred to above,
Fitch's assessment of the information relied upon for the agency's
rating analysis according to its applicable rating methodologies
indicates that it is adequately reliable.
SOUND POINT I: Fitch Affirms 'B-sf' Rating on Class F-R Notes
-------------------------------------------------------------
Fitch Ratings has upgraded Sound Point Euro CLO I Funding DAC Class
D-R Notes and revised the Outlook on the class B-1-R to E-R notes
to Positive from Stable. The rest of the notes have been affirmed.
Entity/Debt Rating Prior
----------- ------ -----
Sound Point Euro
CLO I Funding DAC
A-R Loan LT AAAsf Affirmed AAAsf
A-R Note XS2339924701 LT AAAsf Affirmed AAAsf
B-1-R XS2339925005 LT AAsf Affirmed AAsf
B-2-R XS2339925344 LT AAsf Affirmed AAsf
C-R XS2339925773 LT Asf Affirmed Asf
D-R XS2339926078 LT BBBsf Upgrade BBB-sf
E-R XS2339926318 LT BBsf Affirmed BBsf
F-R XS2339926235 LT B-sf Affirmed B-sf
TRANSACTION SUMMARY
Sound Point Euro CLO I Funding DAC is a cash flow CLO comprising
mostly senior secured obligations. The transaction is actively
managed by Sound Point CLO C-MOA, LLC and will exit its
reinvestment period in November 2025.
KEY RATING DRIVERS
Stable Performance; Low Refinancing Risk: Since Fitch's last rating
action in February 2022, the portfolio's performance has remained
stable. As per the last trustee report dated 1 September 2023, the
transaction is passing all of its tests with no reported defaults.
The par value tests have slightly improved since last year's
review.
In addition, the notes are not vulnerable to near- and medium-term
refinancing risk, with none of the assets in the portfolio maturing
before 2024, and only 2.32% in 2025. The stable performance of the
transaction, combined with a shortened weighted average life (WAL)
covenant, has resulted in larger break-even default-rate cushions
versus the last review in October 2022. This has resulted in the
upgrade of the class D-R notes and affirmation of the class A-R,
B-1-R, B-2-R, C-R, E-R and F-R notes.
Large Cushion for All Notes: All notes have large default-rate
buffers to support their current ratings and should be capable of
absorbing further defaults in the portfolio. This supports the
Stable Outlooks on the class A-R and F-R notes and the Positive
Outlooks on the class B-1-R to E-R notes.
The Stable Outlooks on the class A-R and F-R notes also reflect
that the ratings are either 'AAAsf' or its expectation that the
classes have sufficient levels of credit protection to withstand
potential deterioration in the credit quality of the portfolio in
stress scenarios commensurate with the rating. The Positive
Outlooks reflect the possibility of upgrade should portfolio
performance remain stable and the decreasing WAL of the portfolio
contribute to a higher default-rate cushion.
'B'/'B-' Portfolio: Fitch assesses the average credit quality of
the underlying obligors at 'B'/'B-'. The Fitch-calculated weighted
average rating factor of the current portfolio is 32.42 as reported
by the trustee based on the old criteria and 24.63 as calculated by
Fitch under its latest criteria.
High Recovery Expectations: Senior secured obligations comprise
99.97% of the portfolio. Fitch views the recovery prospects for
these assets as more favourable than for second-lien, unsecured and
mezzanine assets. The Fitch-calculated weighted average recovery
rate of the current portfolio as reported by the trustee was
64.1%.
Diversified Portfolio: The top 10 obligor concentration as
calculated by the trustee is 10.02%, which is below the limit of
15%, and no obligor represents more than 1.2% of the portfolio
balance.
Deviation from MIR: The class B-1-R to E-R notes' model-implied
ratings (MIRs) are one notch above their current ratings. The
deviations reflect the remaining reinvestment period until November
2025, during which the portfolio can change due to reinvestment or
negative portfolio migration.
Transaction in Reinvestment Period: Given the manager's ability to
reinvest, Fitch's analysis is based on a stressed portfolio and
tested the notes' achievable ratings across all Fitch test
matrices, since the portfolio can still migrate to different
collateral quality tests and the level of fixed-rate assets could
change. Fitch has modelled the target par balance as the
transaction allows up to 1% of the target par amount to be
transferred from the principal account as trading gains.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
An increase of the default rate (RDR) at all rating levels in the
current portfolio by 25% of the mean RDR and a decrease of the
recovery rate (RRR) by 25% at all rating levels will have no impact
on any of the rated notes. Downgrades may occur if build-up of the
notes' credit enhancement following amortisation does not
compensate for a larger loss expectation than initially assumed due
to unexpectedly high levels of defaults and portfolio
deterioration.
Due to the better metrics and shorter life of the current portfolio
than the Fitch-stressed portfolio as well as the MIR deviation, the
class B-1-R, B-2-R notes display a rating cushion of two notches,
the class C-R notes one notch, the class D-R and E-R notes four
notches, and the class F-R notes five notches There is no rating
cushion for the class A-R notes.
Should the cushion between the current portfolio and the
Fitch-stressed portfolio be eroded either due to manager trading or
negative portfolio credit migration, a 25% increase of the mean RDR
and a 25% decrease of the RRR across all ratings of the stressed
portfolio would lead to downgrades of no more than one notch for
the class A-R notes, two notches for the class B-1-R, B-2-R, C-R
and D-R notes, four notches for the class E-R notes and to below
'B-sf' for the class F-R notes.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
A reduction of the RDR at all rating levels in the stressed
portfolio by 25% of the mean RDR and an increase in the RRR by 25%
at all rating levels would result in no impact on the class A-R
notes, upgrades of no more than two notches for the class B-1-R,
B-2-R notes, one notch for the class C-R notes, four notches for
the class D-R and E-R notes and up to five notches for the class
F-R notes. Further upgrades, except for the 'AAAsf' notes, which
are at the highest level on Fitch's scale and cannot be upgraded,
may occur if the portfolio's quality remains stable and the notes
start to amortise, leading to higher credit enhancement across the
structure.
DATA ADEQUACY
Sound Point Euro CLO I Funding DAC
Fitch has checked the consistency and plausibility of the
information it has received about the performance of the asset pool
and the transaction. Fitch has not reviewed the results of any
third party assessment of the asset portfolio information or
conducted a review of origination files as part of its ongoing
monitoring.
The majority of the underlying assets or risk presenting entities
have ratings or credit opinions from Fitch and/or other Nationally
Recognized Statistical Rating Organizations and/or European
Securities and Markets Authority registered rating agencies. Fitch
has relied on the practices of the relevant groups within Fitch
and/or other rating agencies to assess the asset portfolio
information or information on the risk presenting entities.
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
=========
ALMAVIVA SPA: Fitch Hikes LongTerm IDR to 'BB', Outlook Stable
--------------------------------------------------------------
Fitch Ratings has upgraded AlmavivA S.p.A.'s Long-Term Issuer
Default Rating (IDR) to 'BB' with a Stable Outlook. Fitch has also
upgraded the instrument rating on Almaviva's secured debt
facilities to 'BB+'/'RR3'.
The upgrade reflects significant deleveraging and improvements in
key operating performance indicators. Almaviva's ratings are driven
by its established positions as a leading Italian IT services
company with a large order backlog, stable relationships with key
customers, positive growth outlook and continuing deleveraging.
KEY RATING DRIVERS
Significant Deleveraging: Fitch projects Almaviva's gross EBITDA
leverage to show a significant decline to 2.5x at end-2023 from
3.3x at end-2021. Fitch expects deleveraging to continue in line
with management's intention to keep leverage at a minimum level.
Deleveraging will be supported by growth in revenue and
profitability and positive cash flow.
On a net basis, Fitch forecasts EBITDA leverage at a comfortable
1.2x at end-2023 with significant cash on the balance sheet. This
provides flexibility to finance bolt-on M&A and new projects
including through working capital outflows that are often required
under new contracts.
Stable Customer Relationships: Almaviva benefits from typically
stable and long-lasting customer relationships in the IT segment,
with the bulk of IT services revenue coming from customers with
contractual relationships of more than 10 years. The management
estimates the share of recurring revenue will approach 50% in 2023,
compared with 40% in 2021, which Fitch views as longer-term credit
positive.
With IT services being typically mission-critical, Fitch views
Almaviva as well positioned to maintain key customer relationships
due to its capability to provide services under high-standard
service level agreement terms.
Strong Backlog: The company's strong IT services backlog improves
earnings visibility and reduces medium-term revenue volatility.
This metric was equal to 3.1 years of last-12-month revenue at
end-1H23. The backlog is supported by long-term contract with
Almaviva's largest customer, Gruppo Ferrovie dello Stato, after
winning three tenders worth EUR1.1 billion (Almaviva's share) at
end-2021. The contract was concluded for five years, with an
extension option for another two.
Significant Customer Concentration: Almaviva remains exposed to
significant customer concentration with approximately 20% of its IT
services and digital relationship management (DRM) revenues coming
from a single customer. Although this share significantly declined
(it was close to 30% in the IT segment in 2021), high reliance on
key customers is a credit weakness.
Positive IT Growth Outlook: Along with the Italian IT services
industry, Almaviva faces a positive IT growth outlook supported by
a rising use of IT services and significant investments under
Italian Recovery and Resilience Plan (PNRR) into further
digitalization in key sectors. The PNRR allocated close to EUR102
billion into segments that the company views as its core business
areas, including transportation, public administration and
healthcare.
Expansion Into New Segments: Almaviva is likely to continue
expanding into new segments but Fitch expects it to be prudent with
M&A spend, with entry through acquisitions supplemented by organic
development. This expansion will contribute to stronger revenue and
EBITDA growth although may be accompanied by additional
investments, including into working capital.
Almaviva, along with its partners, successfully bid for developing
a national telemedicine platform in Italy winning over the
incumbent healthcare IT providers. It entered the smart water
management segment acquiring two specialised companies in July
2023.
Sizeable International DRM: Almaviva successfully diversified the
customer base of its international DRM operations, with the share
of more volatile and low-margin telecoms/media customers declining
to 30% at end-1H23 from 50% in 2021. This led to stronger segment
profitability.
However, Fitch views the DRM segment as intrinsically more volatile
than IT services, with more intense pricing competition, lower
service differentiation and no contractual volume commitments.
Overall, Fitch sees it as dilutive for Almaviva's credit profile,
this segment accounted for substantial 28% of the group's reported
EBITDA in 1H23.
Moderate Foreign-Exchange Risk: International DRM operations expose
Almaviva to moderate foreign-exchange (FX) risk, with this
segment's cash flows predominantly in Brazilian reals while all of
the company's debt is in euros. The management views cash from
Brazilian operations as fully available.
Bullet Refinancing Risk: Almaviva is facing a bullet refinancing
risk that is likely to continue contributing to its credit risk
profile. The company's EUR350 million bond maturing in October 2026
is its single large debt instrument representing 97% of its total
debt at end-2022. Given the company's medium absolute size, with
its 2022 Fitch-calculated EBITDA equal to EUR133 million, any
post-refinancing bond instrument is also likely to be of similar
size, limiting debt diversification options.
Private Ownership: Fitch believes the company's private ownership
allows it to be more flexible with dividend distributions, with a
record of dividend interruptions. However, Fitch primarily relies
on metrics based on gross debt in the absence of any ring-fencing.
Positive Cash Flow: With capex of about 2% of revenue and EBITDA
margins in the low-double-digit range, Fitch expects pre-dividend
FCF margin to remain strongly positive, in the mid-to-high
single-digit territory. Cash flow may be pressured by investments
into working capital to accommodate for revenue growth, with
billing typically delayed by three to nine months after commencing
a new project.
DERIVATION SUMMARY
Almaviva's closest domestic peer is Ingegneria Informatica S.p.A.
(Engineering), a leading Italian software developer and provider of
IT services to large Italian companies (Fitch rates Centurion Bidco
S.p.a., the acquisition vehicle for this company, at
'B+'/Negative). Engineering has a greater absolute size and wider
industrial scope, faces lower FX risks and does not have any
lower-credit-quality non-IT segments (such as DRM for Almaviva).
Almaviva is rated higher than Engineering due to its significantly
lower leverage.
Almaviva's range of offered services has some overlap with large
multi-country, multi-segment IT services companies, such as DXC
Technology Company (BBB/Stable) and Accenture plc (A+/Stable), but
on a significantly smaller scale, with a focus on a single country
and fewer segments. A closer peer is medium-sized India-based IT
service provider Hexaware Technologies Limited (BB-/Stable), which
generates most of its revenue from US and European customers.
Almaviva is rated higher than enterprise resource planning software
providers with higher leverage. These include TeamSystem S.p.A.
(B/Stable), a leading Italian accounting and ERP software company
with over 75% of recurring revenue, and Cedacri S.p.A.
(B/Negative), a leading Italian provider of software,
infrastructure and outsourcing services for the financial sector.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer:
- IT services revenue growing by high-to-mid single-digit
percentages a year in 2023-2026 on average;
- Substantial reduction in the domestic CRM revenue, with this
segment no longer being a significant contributor to Almaviva's
financial profile
- Modestly improving overall EBITDA margin to 13%-15% in
2023-2026;
- Capex at close to 2% of revenue in 2023-2026 (excluding R&D
capitalised capex, which Fitch treats as a cash expense);
- Negative EUR40 million working-capital change in 2023 declining
to EUR20 million per annum working capital investments thereafter;
- Moderately growing dividends from 2022's EUR25 million;
- EUR30 million use of the factoring facility treated as debt.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade:
- Gross EBITDA leverage sustained at below 2.5x.
- A significant increase of recurring revenues in the revenue mix
and lower customer concentration.
- More diversified financing structure, with lower exposure to
bullet refinancing risk.
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade:
- Gross EBITDA leverage above 2.5x.
- Weaker cash flow generation with pre-dividend FCF margin
declining to below 4% through the cycle.
LIQUIDITY AND DEBT STRUCTURE
Comfortable Liquidity: Fitch views Almaviva's liquidity as
comfortable. The company had EUR142 million of cash on the balance
sheet at end-1H23 supported by EUR70 million of untapped
super-senior revolving credit facility and positive cash flow
generation. The company's senior secured debt is rated 'BB+'/'RR3'
under a generic approach but reflecting caps for Italy under
Fitch's country-specific treatment recovery ratings rating
criteria.
ISSUER PROFILE
Almaviva is a leading Italian IT services company with strong
positions in the transport and public administration sectors. It
also has significant international DRM operations and is the
majority owner of Almawave, a publicly listed fast-growing
speech-recognition and artificial-intelligence subsidiary.
ESG CONSIDERATIONS
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
AlmavivA S.p.A. LT IDR BB Upgrade BB-
senior secured LT BB+ Upgrade RR3 BB
BCC NPL 2018-2: DBRS Cuts Rating on Class B Notes to CCsf
---------------------------------------------------------
DBRS Ratings GmbH downgraded its credit ratings on the following
notes issued by BCC NPLs 2018-2 S.r.l. (the Issuer):
-- Class A Notes to B (sf) from B (high) (sf)
-- Class B Notes to CC (sf) from CCC (low) (sf)
DBRS Morningstar maintained the Negative trend on the Class A
Notes' credit rating. The credit rating on the Class B Notes does
not have a trend.
The transaction represents the issuance of Class A, Class B, and
Class J Notes (collectively, the Notes). The credit 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 July 2042. The credit rating on the Class B Notes addresses
the ultimate payment of both interest and principal. DBRS
Morningstar does not rate the Class J Notes.
At issuance, the Notes were backed by a EUR 2 billion portfolio by
gross book value consisting of a mixed pool of Italian
nonperforming residential mortgage loans, commercial mortgage
loans, and unsecured loans originated by 73 Italian banks.
doValue S.p.A. (the Servicer) services the receivables, while Banca
Finanziaria Internazionale S.p.A. operates as the backup servicer.
CREDIT RATING RATIONALE
The credit rating actions follow a review of the transaction and
are based on the following analytical considerations:
-- Transaction performance: An assessment of portfolio recoveries
as of June 30, 2023, focusing on (1) a comparison between actual
collections and the special servicers' initial business plan
forecast, (2) the collection performance observed over recent
months, and (3) a comparison between the current performance and
DBRS Morningstar's expectations.
-- Portfolio characteristics: The loan pool composition as of June
2023 and the evolution of its core features since issuance.
-- Transaction liquidating structure: The order of priority
entails a fully sequential amortization of the Notes (i.e., the
Class B Notes will begin to amortize following the full repayment
of the Class A Notes and the Class J Notes will begin to amortize
following the repayment of the Class B Notes).
-- Performance ratios and underperformance events: As per the most
recent July 2023 payment report, the cumulative collection ratio
was 70.2% and the net present value cumulative profitability ratio
was 107.4%. Since the January 2023 interest payment date, the
cumulative collection ratio has breached the 80% limit, so that
interest payments on the Class B Notes are subordinated to the
repayment of principal on the Class A Notes.
-- Liquidity support: The transaction benefits from an amortizing
cash reserve providing liquidity to the structure and covering
potential interest shortfall on the Class A Notes. The cash reserve
target amount is equal to 3.0% of the Class A Notes' principal
outstanding and is currently fully funded.
-- Interest rate impact: The transaction benefits from overhedging
in a rising interest rate environment because of a low strike rate
in the interest rate cap agreement as well as a higher cap notional
amount compared with the outstanding balance of the Class A Notes.
TRANSACTION AND PERFORMANCE
According to the latest investor report from July 2023, the
outstanding principal amounts of the Class A, Class B, and Class J
Notes were EUR 310.9 million, EUR 60.1 million, and EUR 20.0
million, respectively. As of the July 2023 payment date, the
balance of the Class A Notes had amortized by 35.0% since issuance
and the aggregated transaction balance was EUR 391.0 million.
As of June 2023, the transaction was performing below the
Servicer's initial business plan expectations. The actual
cumulative gross collections equaled EUR 282.6 million whereas the
Servicer's business plan estimated cumulative gross collections of
EUR 394.0 million for the same period. Therefore, as of June 2023,
the transaction was underperforming by EUR 111.4 million (-28.3%).
EUR 64.9 million (23.0%) of gross collections registered as of June
2023 were derived from note sales with a material discount to the
Servicer's executed lifelong expectations for the receivables. DBRS
Morningstar understands that the note sales' material discounts to
the Servicer's executed lifelong expectations are not directly
reflected in the net present value cumulative profitability ratio
that was last reported as of June 2023, because of the discrepancy
between actual collection time and expected collection time in the
initial business plan.
At issuance, DBRS Morningstar estimated cumulative gross
collections for the same period of EUR 303.8 million in the BBB
(low) (sf) stressed scenario. Therefore, as of June 2023, the
transaction was performing below DBRS Morningstar's initial
stressed expectations.
In June 2023, the Servicer delivered an updated portfolio business
plan (the updated business plan) as of December 2022. The updated
business plan, combined with the actual cumulative gross
collections of EUR 265.0 million as of 31 December 2022, results in
a total of EUR 744.3 million in expected gross collections, which
is 10.4% lower than the total gross collections of EUR 830.6
million estimated in the initial business plan. Without including
actual collections, the Servicer's expected future collections from
January 2023 are now accounting for EUR 479.2 million (EUR 491.7
million in the initial business plan). Hence, the Servicer's
expectation for collection on the remaining portfolio was revised
downward and timing of collections is now expected later than
initially envisaged.
The updated DBRS Morningstar B (sf) credit rating stress assumes a
haircut of 6.6% to the Servicer's updated business plan,
considering total future expected collections from July 2023
onward. In DBRS Morningstar's CCC (sf) scenario, the Servicer's
updated forecast was adjusted only in terms of actual collections
to date and timing of future expected collections. Considering
senior costs and interest due on the Notes, the full repayment of
the Class B principal is increasingly unlikely, but, considering
the transaction structure, a payment default on the Class B Notes
would likely occur only a few years from now.
The final maturity date of the transaction is in July 2042.
DBRS Morningstar's credit ratings on the Class A Notes and Class B
Notes address the credit risk associated with the identified
financial obligations in accordance with the relevant transaction
documents. The associated financial obligations are the related
Interest Payment Amounts and the related Class Balance.
DBRS Morningstar's credit rating does not address nonpayment risk
associated with contractual payment obligations contemplated in the
applicable transaction document(s) that are not financial
obligations.
DBRS Morningstar's long-term credit ratings provide opinions on
risk of default. DBRS Morningstar considers risk of default to be
the risk that an issuer will fail to satisfy the financial
obligations in accordance with the terms under which a long-term
obligation has been issued.
Notes: All figures are in euros unless otherwise noted.
===================
L U X E M B O U R G
===================
ENDO LUXEMBOURG: $2BB Bank Debt Trades at 32% Discount
------------------------------------------------------
Participations in a syndicated loan under which Endo Luxembourg
Finance Co I Sarl is a borrower were trading in the secondary
market around 68.1 cents-on-the-dollar during the week ended
Friday, October 20, 2023, according to Bloomberg's Evaluated
Pricing service data.
The $2 billion facility is a Term loan that is scheduled to mature
on March 25, 2028. About $1.98 billion of the loan is withdrawn
and outstanding.
Endo Luxembourg Finance Company I S.a r.l is in the pharmaceutical
industry. The Company's country of domicile is Luxembourg.
TRAVELPORT FINANCE: $1.96BB Bank Debt Trades at 50% Discount
------------------------------------------------------------
Participations in a syndicated loan under which Travelport Finance
Luxembourg Sarl is a borrower were trading in the secondary market
around 49.6 cents-on-the-dollar during the week ended Friday,
October 20, 2023, according to Bloomberg's Evaluated Pricing
service data.
The $1.96 billion facility is a Term loan that is scheduled to
mature on May 29, 2026. The amount is fully drawn and
outstanding.
Travelport Finance Luxembourg Sarl operates as a subsidiary of
Travelport Holdings Ltd. The Company’s country of domicile is
Luxembourg.
=========
S P A I N
=========
GENOVA HIPOTECARIO X: Fitch Hikes Rating on Class D Notes to 'B+sf'
-------------------------------------------------------------------
Fitch Ratings has upgraded AyT Genova Hipotecario VII, FTH's
(Genova VII) class C notes, AyT Genova Hipotecario VIII, FTH's
(Genova VIII) class B, C and D notes, AyT Genova Hipotecario IX,
FTH's (Genova IX) class C and D notes and AyT Genova Hipotecario X,
FTH's (Genova X) class C and D notes. The remaining tranches have
been affirmed.
Entity/Debt Rating Prior
----------- ------ -----
AyT Genova Hipotecario
VII, FTH
Class A2 ES0312343017 LT AAAsf Affirmed AAAsf
Class B ES0312343025 LT AA+sf Affirmed AA+sf
Class C ES0312343033 LT Asf Upgrade A-sf
AyT Genova Hipotecario
X, FTH
Class A2 ES0312301015 LT A+sf Affirmed A+sf
Class B ES0312301023 LT A+sf Affirmed A+sf
Class C ES0312301031 LT A-sf Upgrade BBB+sf
Class D ES0312301049 LT B+sf Upgrade B-sf
AyT Genova Hipotecario
IX, FTH
Class A2 ES0312300017 LT AA+sf Affirmed AA+sf
Class B ES0312300025 LT AAsf Affirmed AAsf
Class C ES0312300033 LT Asf Upgrade A-sf
Class D ES0312300041 LT B+sf Upgrade Bsf
AyT Genova Hipotecario
VIII, FTH
Class A2 ES0312344015 LT AAAsf Affirmed AAAsf
Class B ES0312344023 LT AAAsf Upgrade AA+sf
Class C ES0312344031 LT AA-sf Upgrade A+sf
Class D ES0312344049 LT BBB-sf Upgrade BBsf
TRANSACTION SUMMARY
The transactions are Spanish residential mortgage securitisations
serviced by CaixaBank, S.A. (BBB+/Stable/F2) and originated by
Barclays Bank, S.A.
KEY RATING DRIVERS
Resilient Asset Performance: The rating actions reflect the stable
asset performance of the securitised portfolios. The share of loans
in arrears over 90 days is fairly low, at less than 0.5% of the
current portfolios balance as of the latest reporting periods.
Fitch deems the current levels of credit enhancement (CE) for the
transactions sufficient to absorb potential downsides that may
arise in an environment of moderate asset deterioration.
Ratings Capped by Counterparty Risks: The affirmation of Genova X's
classes A2 and B notes at 'A+sf'/Stable reflects the rating cap due
to the account bank eligibility triggers being set at 'BBB+' and
'F2'. This limits the maximum achievable rating on the notes to
'A+sf' under Fitch's Structured Finance and Covered Bonds
Counterparty Rating Criteria.
Genova VII's class C notes' rating is capped at the transaction
account bank provider's deposit rating (Societe Generale S.A.;
A-/Positive/F1, long-term deposits 'A') as the cash reserves held
at this entity represent a material source of CE for the notes. The
rating cap reflects the excessive counterparty dependence on the
account bank holding the cash reserve as the sudden loss of these
funds would result in a material reduction in CE available to these
notes and a multiple-notch downgrade, in accordance with Fitch's
Structured Finance and Covered Bonds Counterparty Rating Criteria.
CE to Continue Increasing: Fitch expects structural CE to continue
increasing in the short term for all transactions. This reflects
the prevailing sequential amortisation of Genova VIII and IX's
notes, and pro-rata with tranche thickness targets on Genova VII
and Genova X, which have been met, and the non-amortising reserve
funds that are at their absolute floors.
For the sequentially amortising transactions, CE ratios could
decrease if the pro-rata amortisation mechanism is activated with
the application of a reverse sequential amortisation of the notes
until the target class B, C and D balances as a share of total note
balance are met (i.e. tranche thickness targets, defined as double
the initial size). This switch to pro-rata is subject to
performance triggers, such as the reserve funds being at their
target amounts, which have been historically below for Genova VIII
and Genova IX. A mandatory switch-back to sequential will occur
once the portfolio factors reach 10% of initial principal balance
(currently between 11% for Genova VII and 16% for Genova X).
Genova X's class A2 and B notes' ratings are limited due to account
bank eligibility thresholds, which has a negative impact on the
credit profile, and is highly relevant to the rating, resulting in
the ratings being at least one notch lower.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
The transactions' performance may be affected by adverse changes in
market conditions and the economic environment. Weakening economic
performance is strongly correlated to increasing levels of
delinquencies and defaults that could reduce CE available to the
notes.
For Genova VII's class A2 and Genova VIII's class A2 and B notes, a
downgrade of Spain's Long-Term Issuer Default Rating (IDR) that
could decrease the maximum achievable rating for Spanish structured
finance transactions may result in corresponding action on the
notes. This is because these notes are rated at the maximum
achievable rating, six notches above the sovereign IDR.
For Genova VII's class C notes, a downgrade of Societe Generale
S.A.'s long-term deposit rating may result in a downgrade, as the
rating is capped due to excessive counterparty risk exposure.
In addition, unanticipated declines in recoveries could result in
lower net proceeds, which may make certain notes susceptible to
negative rating action depending on the extent of the decline in
recoveries. Fitch conducts sensitivity analyses by stressing both a
transaction's base-case foreclosure frequency (FF) and
recovery-rate (RR) assumptions, and examining the rating
implications on all class notes. A 15% increase in the weighted
average (WA) FF and a 15% decrease in the WARR indicate downgrades
of up to three notches for the notes.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
Stable to improved asset performance driven by stable delinquencies
and defaults would lead to increasing CE levels and, potentially,
upgrades. A decrease in the WAFF of 15% and an increase in the WARR
of 15% indicate upgrades of no more than two notches for the
notes.
DATA ADEQUACY
AyT Genova Hipotecario IX, FTH, AyT Genova Hipotecario VII, FTH,
AyT Genova Hipotecario VIII, FTH, AyT Genova Hipotecario X, FTH
Fitch has checked the consistency and plausibility of the
information it has received about the performance of the asset
pools and the transactions. Fitch has not reviewed the results of
any third-party assessment of the asset portfolio information or
conducted a review of origination files as part of its ongoing
monitoring.
Fitch did not undertake a review of the information provided about
the underlying asset pools ahead of the transactions' initial
closing. The subsequent performance of the transactions over the
years is consistent with the agency's expectations given the
operating environment and Fitch is therefore satisfied that the
asset pool information relied upon for its initial rating analysis
was adequately reliable.
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.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
Genova VII's class C notes' rating is capped at the deposit rating
of Societe Generale S.A.
ESG CONSIDERATIONS
AyT Genova Hipotecario X, FTH has an ESG Relevance Score of '5' for
Transaction Parties & Operational Risk due to account bank
eligibility thresholds, which has a negative impact on the credit
profile, and is highly relevant to the rating, resulting in the
ratings being at least one notch lower.
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
TENDAM BRANDS: Moody's Affirms B1 CFR & Alters Outlook to Positive
------------------------------------------------------------------
Moody's Investors Service has affirmed Spanish apparel retailer
Tendam Brands S.A.U.'s corporate family rating at B1 and its
probability of default rating at B1-PD. Concurrently, Moody's has
affirmed the B2 instrument rating on the company's EUR110 million
backed senior secured notes due 2028. The outstanding amount of
these notes was reduced from EUR300 million on October 16, 2023
following a EUR190 million partial redemption funded via a new
EUR187.5 million senior secured term loan due 2027. The outlook on
the ratings has been changed to positive, from stable.
"The rating action reflects Tendam's solid recovery following the
pandemic and Moody's expectations of continued growth in revenue
and profitability as well as solid free cash flow (FCF) generation
over the next 12-18 months" said Fabrizio Marchesi, Vice President
and Moody's lead analyst for the company. "The positive outlook
also considers management's decision to partially redeem
outstanding senior secured notes with new amortising senior secured
term debt, which signals a commitment to deleverage over time"
added Mr. Marchesi.
The rating action takes into account corporate governance
considerations associated with the amortising nature of the new
senior secured term loan (Financial Strategy and Risk Management),
which are captured under Moody's General Principles for Assessing
Environmental, Social and Governance Risks methodology for
assessing ESG risks.
RATINGS RATIONALE
Tendam's financial performance has improved strongly since the
pandemic, with last 12 months (LTM) revenue and company-adjusted
EBITDA (pre-IFRS 16) rising to EUR1.2 billion and EUR167 million as
of May 31, 2023, respectively, well above pandemic troughs and both
c. 3% above pre-pandemic levels (calculated based on fiscal year
ended (FYE) February 29, 2020 results).
Moody's forecasts that FYE24 (ending February 29, 2024) will be a
record year for Tendam, with revenue growth of c. 5-6% compared to
prior year and company-adjusted EBITDA (pre-IFRS 16) approaching
EUR185 million. Top-line growth is expected to continue at c. 3-4%
in FYE25 so that company-adjusted EBITDA (pre-IFRS 16) approaches
EUR195 million. Moody's-adjusted FCF generation is also projected
to remain solid, ranging from 7-9% of Moody's-adjusted (gross) debt
over the next 12-18 months.
Moody's views management's decision to use the proceeds of a new
EUR187.5 million senior secured term loan due October 2027 to
partially redeem outstanding senior secured notes as a credit
positive. This is because the new term loan, which amortises in 4
equal instalments, commits the company to gradually reducing gross
debt outstanding using FCF. The rating agency forecasts that
Tendam's Moody's-adjusted leverage will improve from 2.8x as of May
31, 2023 to 2.5x and 2.3x in FYE24 and FYE25, respectively.
Moody's-adjusted EBIT / interest coverage is also expected to
improve towards 2.9x in FYE25.
Tendam's B1 rating is also supported by the company's strong brand
and established market position in the Spanish apparel market as
well as its good EBITDA margin, underpinned by an efficient supply
chain and a successful omnichannel distribution model.
Concurrently, the rating is constrained by the company's inherent
fashion risk, exposure to discretionary spending and the cyclical
nature of the apparel retail industry, which can all lead to
variability in financial performance; limited geographic
diversification and high dependency on the competitive and highly
fragmented Spanish apparel retail market; as well as the risk of
disruption of the company's supply-chain and exposure to a
persistent cost-inflation environment.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) CONSIDERATIONS
Moody's believes that governance was a key rating driver in the
rating action. Management's decision to partially redeem
high-coupon senior secured notes with cheaper senior secured term
loans lowers the company's interest expense by c. EUR10 million per
year, improving its financial metrics. The amortising nature of the
new senior secured term loan, which provides for around EUR47
million of debt repayment per year over the next four years also
suggests that the company will look to maintain a more conservative
financial policy over time.
LIQUIDITY
Moody's considers Tendam's liquidity to be adequate and supported
by EUR16 million of cash on balance sheet as of May 31, 2023,
access to a EUR174 million revolving credit facility (RCF), EUR32
million of which was drawn as of May 31, 2023; and Moody's
expectations of solid Moody's-adjusted FCF generation of EUR50-55
million in FYE24 and c. EUR65 million in FYE25. This annual FCF
generation will be enough to cover scheduled term loan amortization
of c. EUR47 million per year. Apart from the new EUR187.5 million
senior secured term loan, which amortises over 2024-27, the company
does not have significant debt maturities until October 2027, when
the existing EUR130.9 million senior secured term loan is due,
followed by March 2028, when the outstanding EUR110 million senior
secured notes mature.
STRUCTURAL CONSIDERATIONS
Tendam's capital structure consists of EUR110 million of backed
senior secured floating rate notes due in 2028, the new EUR187.5
million amortizing senior secured term loan maturing in 2027 and a
EUR130.9 million senior secured term loan due in 2027, all of which
rank pari-passu, as well as a EUR174.2 million super-senior RCF,
also due in 2027.
The B2 rating on Tendam's EUR110 million backed senior secured
notes due 2028 is one notch below the CFR. This notching is
explained by the large size of priority liabilities, specifically
the EUR174 million super-senior RCF, that rank ahead of the backed
senior secured notes. The backed senior secured notes are also
structurally subordinated to Tendam's non-debt liabilities,
including sizeable trade payables of around EUR325 million. The
backed senior secured notes are only secured by pledges over
shares, intercompany receivables and bank accounts and are only
guaranteed by TendamFashion, S.L.U., an intermediate holding
company, which does not generate material revenues and earnings.
The company's B1-PD probability of default rating is at the same
level as the CFR, reflecting Moody's assumption of a 50% family
recovery rate.
RATING OUTLOOK
The positive outlook reflects Moody's expectations of continued
growth in revenue and Moody's-adjusted EBITDA over the next 12-18
months, as well as annual Moody's-adjusted FCF in the mid-to-high
single digits as a percentage of Moody's-adjusted debt. The outlook
also assumes a gradual deleveraging to below 2.5x and no material
releveraging from shareholder distributions, as well as the company
maintaining an adequate liquidity profile.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Positive pressure could develop if Tendam generates sustained LFL
revenue growth, EBITDA and margin improvement, and continues
reducing its debt such that Moody's-adjusted gross debt/EBITDA is
maintained below 3.0x for a prolonged period and Moody's-adjusted
EBIT/interest expense approaches 3.0x. An upgrade would also
require the maintenance of high-single digit Moody's-adjusted
FCF/debt and good liquidity. A balanced and clearly articulated
financial policy would also be a pre-requisite for positive rating
pressure.
Conversely, the outlook on the rating could be stabilized if the
company 's performance and credit metrics deteriorate and are no
longer consistent with Moody's expectations that underpin the
positive outlook.
Moody's could downgrade Tendam's ratings if the company's operating
performance deteriorates as a result of, for instance, a decline in
like-for-like sales or a material decrease in profit margins.
Moody's could also downgrade the ratings if Tendam were unable to
maintain adequate liquidity or its financial policy became more
aggressive, such that Moody's-adjusted debt/EBITDA remained above
4.0x on a sustainable basis, adjusted EBIT/interest expense fell
sustainably below 2.0x, or Moody's-adjusted FCF/debt fell below 5%
on a sustained basis.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Retail
published in November 2021.
COMPANY PROFILE
Tendam Brands S.A.U. (Tendam), headquartered in Madrid, Spain, is
an international apparel retailer with presence in more than 80
countries worldwide, although with a predominant presence in Spain,
Portugal, France, Belgium, Mexico and the Balkans. The company
designs, sources, markets, sells and distributes fashionable
premium apparel for men and women at affordable prices. The company
currently operates several complementary brands, including
Women'secret, Springfield, Cortefiel, Pedro del Hierro (PdH), the
outlet brand Fifty, and recently launched brands such as Hoss
Intropia, SlowLove, HighSpirits and Springfield Kids, Dash and
Stars, Ooto and Hi & Bye. In the 12 months to May 31, 2023, the
company reported revenue of EUR1.2 billion and EBITDA (company
adjusted, pre-IFRS16) of EUR167 million.
===========================
U N I T E D K I N G D O M
===========================
COALVILLE GLASS: Enters Administration, Taps Opus Restructuring
---------------------------------------------------------------
Sam Metcalf at TheBusinessDesk.com reports that a private
equity-backed Leicestershire manufacturer and installer of windows,
doors and conservatories has collapsed into administration.
Coalville Glass and Glazing called in administrators from Opus
Restructuring on Oct. 12 after posting posted a notice of
appointment to appoint administrators on the same day,
TheBusinessDesk.com relates. The notice has been posted by Optimum
SME Finance, which holds a charge over the company,
TheBusinessDesk.com states.
There has been a spate of director resignations at Coalville Glass
and Glazing over recent weeks, with five people stepping down in
the space of two weeks at the end of September and the beginning of
October, TheBusinessDesk.com notes.
According to TheBusinessDesk.com, the family firm was set up 45
years ago by Ray and Beryl Whitehorn over 45 years ago. A
statement its website reads: "Please note our trade counter is
temporarily closed for the foreseeable future. There is no
re-opening date currently scheduled. We apologise for any
inconvenience this may cause."
In its latest accounts, made up to the end of June 2022, Coalville
Glass and Glazing employed 75 people, TheBusinessDesk.com
discloses.
G FORCE: Goes Into Administration, Calls in Springfields Advisory
-----------------------------------------------------------------
Sam Metcalf at TheBusinessDesk.com reports that a Leicester
logistics firm has called in administrators.
G Force Group, which trades as Gee Force Logistics, is based in
Whetstone in the city, and offers services including distribution,
storage, packing, point of sale assembly and label production.
The company had posted an application to be placed into
administration through law firm Schofield Sweeney at the beginning
of September, TheBusinessDesk.com relates.
According to TheBusinessDesk.com, on Oct. 13, Situl Raithatha from
Springfields Advisory, was appointed as administrator to G Force
Group.
LAWRENCE DALLAGLIO: Judge Tosses Winding Up Petition
----------------------------------------------------
Brian Farmer at PA Media reports that a judge has dismissed a
winding up petition lodged by tax officials against a company
linked to rugby union star Lawrence Dallaglio.
Judge Sally Barber considered the case at a hearing in the
specialist Insolvency and Companies Court in London on Wednesday,
Oct. 18, PA Media relates.
According to PA Media, barrister Tom Cockburn, who represented HM
Revenue & Customs, told the judge that Lawrence Dallaglio Limited
had entered a voluntary liquidation.
The former England forward, who was not at the hearing, is listed
as a company director on a Companies House website, PA Media
discloses.
No detail of any amount owed was given at the hearing, PA Media
notes.
MISKIN MANOR: Administrators Seek Potential Buyers After Collapse
-----------------------------------------------------------------
Business Sale reports that Miskin Manor Hotel, a Grade II-listed
hotel in Wales, is set to be put up for sale after falling into
administration.
Miskin Manor Hotel is a four-star hotel on the outskirts of Cardiff
that has established itself as a popular wedding venue but fell
into administration as a result of significant cashflow pressures,
Business Sale recounts.
Gareth Harris and Diana Frangou of RSM UK Restructuring Advisory
LLP were appointed as joint administrators to RCA Hotels, which
trades as Miskin Manor Hotel, on Oct. 19 and will now the trade the
venue while seeking a sale of the business as a going concern,
Business Sale discloses.
While the administrators are aiming for the hotel to be "fully
operational" by the close of business on Oct. 23, a number of
events set be hosted at the venue in the short term (including
weddings) have been cancelled as a result of "operational
difficulties", Business Sale notes.
According to Business Sale, Diana Frangou, RSM UK restructuring
partner and joint administrator, commented: "Due to cashflow
pressures, the directors took the hard decision to place the
company into administration."
"Regretfully, and since taking on the administration, certain
operational difficulties at the hotel have resulted in an
unavoidable cancellation of some key events at the venue in the
very short term. We are extremely sorry for the distress this has
caused for all involved."
Ms. Frangou added: "The joint administrators' immediate strategy is
to stabilise the operating position to enable the hotel to trade,
whilst it is marketed for sale as a going concern. We are aware of
interest already in the hotel from potential buyers."
*********
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 2023. All rights reserved. ISSN 1529-2754.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.
Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.
The TCR Europe subscription rate is US$775 per half-year,
delivered via e-mail. Additional e-mail subscriptions for
members of the same firm for the term of the initial subscription
or balance thereof are US$25 each. For subscription information,
contact Peter Chapman at 215-945-7000.
* * * End of Transmission * * *