/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/250212.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 Wednesday, February 12, 2025, Vol. 26, No. 31 Headlines B E L G I U M NORTHVOLT ETT: EV Battery Manufacturing Equipment Put Up for Sale G E R M A N Y STEPSTONE GROUP: Fitch Assigns 'B+' LongTerm IDR, Outlook Stable [] Fitch Puts 21 Tranches of 5 E-MAC RMBS Deals on Watch Negative I R E L A N D MAN GLG V: Fitch Cuts Rating on Cl. F Notes to Bsf, Outlook Stable L U X E M B O U R G FWU LUX: Fitch Affirms & Then Withdraws 'D' LongTerm IDR S P A I N JERONIMO FUNDING: Fitch Assigns 'Bsf' Final Rating on Class F Notes MADRID RMBS III: Fitch Hikes Rating on Class D Notes to 'Bsf' S W I T Z E R L A N D MULTITUDE AG: Fitch Affirms 'B+' LongTerm IDR, Outlook Positive T U R K E Y TURK HAVA: Fitch Hikes LongTerm IDR to 'BB', Outlook Stable U N I T E D K I N G D O M LYTHE HILL: Leonard Curtis Named as Administrators MAGIC ROCK: FRP Advisory Named as Administrators - - - - - ============= B E L G I U M ============= NORTHVOLT ETT: EV Battery Manufacturing Equipment Put Up for Sale ----------------------------------------------------------------- On behalf of a secured creditor, Tiger Group and Liquidity Services are accepting offers on a large amount of advanced EV battery manufacturing equipment -- brand-new and still in its original crates. Originally acquired at a cost of approximately $82 million, the equipment is stored in Belgium and South Korea. It comes from Northvolt Group subsidiary Northvolt Ett Expansion AB. The division had been managing construction of an EV battery plant that was suspended as part of its parent company's rescoping of Swedish operations. "This advanced, high-quality equipment -- much of it manufactured in South Korea by SLA, WuXi, Creative and Innovative Systems [CIS] and Sejong Technology -- is in perfect condition," said Chad Farrell, Managing Director, Tiger Commercial & Industrial. "We are already receiving strong interest from EV battery manufacturers that are looking to build new plants as well as owners and operators of existing facilities." "This sale represents an extraordinary opportunity for companies in Europe, Asia and beyond," added Nick Taylor, SVP & Managing Director of the Capital Assets Group at Liquidity Services. "It is rare to see this much brand-new EV manufacturing equipment become available at liquidation values." The available equipment includes: -- Cathode and anode notching and slitting machines -- Powder blower -- Waste collectors -- WuXi stacking machine -- Formation and aging temperature-controlled warehouse equipment, including pre-charge and monitoring chambers, stacker crane and racking -- End-of-line cell-cleaning, visual inspection and packaging equipment -- Aging tray cleaner, formation tray cleaner -- Water tanks -- Floor lifters -- Roller conveyors -- Boxed-cell warehouse equipment, including stacker crane and racking -- Walkways, stairs and framework The liquidation is one of many to occur in the green/sustainable sector in recent months, Farrell noted. "It is not only electric vehicle and battery companies, but also 'green' packaging makers, experimental food producers, solar specialists and others," he explained. To arrange an inspection or obtain other information, email auctions@tigergroup.com or call +1 (805) 497-4999. For asset photos, descriptions, and other information, visit SoldTiger.com or AllSurplus.com. About Tiger Group Tiger Group provides asset valuation, advisory and disposition services to a broad range of retail, wholesale, and industrial clients. With over 40 years of experience and significant financial backing, Tiger offers a uniquely nimble combination of expertise, innovation and financial resources to drive results. Tiger's seasoned professionals help clients identify the underlying value of assets, monitor asset risk factors and provide capital or convert assets to capital quickly and decisively. Tiger maintains offices in New York, Los Angeles, Boston, Chicago, Houston and Toronto. About Liquidity Services Liquidity Services operates the world's largest B2B e-commerce marketplace platform for surplus assets with over $10 billion in completed transactions to more than five million qualified buyers and 15,000 corporate and government sellers worldwide. The company supports its clients' sustainability efforts by helping them extend the life of assets, prevent unnecessary waste and carbon emissions, and reduce the number of products headed to landfills. ============= G E R M A N Y ============= STEPSTONE GROUP: Fitch Assigns 'B+' LongTerm IDR, Outlook Stable ---------------------------------------------------------------- Fitch Ratings has assigned The Stepstone Group Holding GmbH (Stepstone) a final Long-Term Issuer Default Rating (IDR) of 'B+' with a Stable Rating Outlook. The final ratings are in line with the expected ratings assigned on Nov. 20, 2024. The IDR reflects high initial leverage and inherent business cyclicality. Rating strengths are a solid business profile and high EBITDA margins owing to a flexible cost structure, which supports high cash flow generation. The Stable Outlook reflects its expectation that Stepstone has sufficient operational and financial flexibility to navigate a weak operating environment in 2025, leading to a decline in Fitch-defined EBITDA leverage to 5.5x by end-2026. Despite the Stable Outlook, Fitch foresees some downside risks to the rating if the company is not able to achieve the operating efficiencies assumed in its conservative forecasts, as interest cover and leverage remain outside of the parameters compatible with Fitch's 'B+' rating over the next couple of years. Key Rating Drivers High Leverage: Despite a high Fitch-defined leverage (around 6.3x at end-2024) - which is not compatible with the assigned rating - the group has the ability to rapidly deleverage, due to an asset-light business model and healthy cash flow generation. Fitch expects leverage to fall to 6.0x at end-2025 and 5.5x at end-2026. Fitch expects cash flow from operations (CFO) less capex/total debt to average 4% in 2024-2026, trending higher thereafter, which will be more aligned with the rating. Solid EBITDA Margin: Stepstone has experienced some challenges in 2H24, resulting from reduced demand for staffing and hence job listings. Despite challenging economic conditions, cost-saving measures should largely offset revenue reductions, allowing EBITDA margins to remain robust in 2024 and beyond, trending above 35%. Previously, EBITDA margin showed a strong upward trend, rising to 33% in 2023 from 30% in 2022. This was achieved by major cost-control measures and some price increases. Exposure to Cyclicality: Stepstone is exposed to economic cycles due to its dependence on job and hiring trends that correlate with the overall economy. As per Fitch's Global Economic Outlook, Fitch expects labour markets to remain subdued in advanced economies with slow employment growth, declining job vacancies and firms becoming less concerned about labour shortages. Fitch expects economic disruptions to continue to affect Stepstone through 2025. Fitch expects revenues and EBITDA to decline 10% in 2024 and flatten out in 2025. While its base case projects some normalisation of hiring volumes in 2026, a prolongation of the current cycle cannot be ruled out and represents a downside risk for the rating. Robust Market Position: Stepstone is the leader in its core market, Germany, with an estimated 39% market share and a robust presence across EMEA and North America. Competition in the online recruitment space is intense and dynamic, driven by the rapid adoption of digital technologies and the evolving needs of both job seekers and employers. Key competitors include established job portals, professional networking sites, and emerging platforms leveraging artificial intelligence and machine learning to enhance the recruitment process. Consistently Positive FCF: Fitch expects Stepstone to generate high FCF margins on an average well above 5% over the next four years, due to low capex requirements and favourable working-capital dynamics. FCF generation is a key supporting factor for the rating. This is offset by rather weak EBITDA interest coverage, for the rating, only moving towards 3.0x by end-2027. Fitch believes the group will maintain financial discipline and seek to deleverage over the next three years. Its forecast assumes no major M&As in the near term and Fitch would treat any large M&A as event risk. Limited-to-Moderate Execution Risks: Stepstone's strategy involves increasing penetration in the US market, although it has the potential to leverage its AppCast platform. However, Fitch sees some execution risks in the highly competitive U.S. recruitment market, with online marketplace operators having faced significant challenges in the past. On the other hand, execution risks are lower in the core German market, where Stepstone has a strong market position. Derivation Summary Stepstone will be held, operated and financed as an independent company under the majority ownership of affiliates of KKR & Co. (KKR) and CPP Investments, as part of the strategic decision to separate Axel Springer SE's media business from its classifieds business, which is expected to close in Q2 2025. Among Stepstone's key competitors is Indeed, a global leader in online recruitment with extensive reach and robust search algorithms. Similarly, LinkedIn, with ablend of professional networking and job listings, is larger or more geographically diversified than Stepstone; however, Stepstone benefits from its aggregation offering that Linkedin does not provide. Moreover, Stepstone has maintained a strong market share in Germany as well as in its other main geographies. Stepstone's closest Fitch-rated peer in EMEA is Speedster Bidco GmbH (AutoScout24; B/Stable). AutoScout24 is one of the leading European digital automotive classifieds platforms that offers listing platforms for used and new cards, motorcycles and commercial vehicles to dealers and private sellers. AutoScout24 operates in a potentially less cyclical end-market than Stepstone and generates much higher EBITDA margins. However, it has higher leverage and weaker cash flow generation potential because of significant interest costs. Aviv Group GmbH (B+(EXP)/Stable), a leading real estate classified company, generates similar EBITDA margins and has a similar current gross leverage. However, Aviv's end markets are less cyclical and it has lower deleveraging capacity than Stepstone. This is mitigated by Stepstone's bigger scale and better geographic diversification. ZipRecruiter, Inc (B+/Negative) operates a similar business model to Stepstone but has smaller scale, less diversification, a weaker market position, and lower EBITDA margins though the company maintains leverage at much lower levels than Stepstone in normalised years. Fitch also compares Stepstone with other recruitment firms such as Auxey Midco Limited (AMS; B/Stable). AMS operates in the HR outsourcing sector but is limited by scale and market position, which is reflected in its tighter thresholds and lower rating than Stepstone. Key Assumptions - Low double-digit revenue decline in 2024 followed by flat revenues in 2025 and mid-single-digit growth in 2026 as job markets stabilise; - Fitch-defined EBITDA margins at 33%-37% in 2024-2027; - Working-capital inflows/outflows of EUR10 million-EUR20 million per year; - Capex at 6%-7% of revenue to 2027; - No dividend payments for 2024-2027; - Small bolt-on acquisitions; - No dividends or large M&As; - Fitch treats a planned Holdco PIK to be raised at Traviata B.V. level as non-debt of Stepstone due to its subordination features, interest payment structure and longer-dated maturity. Recovery Analysis Fitch assumes Stepstone would be considered a going-concern (GC) in bankruptcy and that it would be reorganised rather than liquidated. This is underscored by the group's immaterial tangible asset base, online platform, and existing user base of job seekers and employers. These features make Stepstone, in the event of financial distress, a natural target for other recruitment platforms looking to expand market share and recruitment agencies capable of benefitting from synergies out of its integration. Fitch has assumed a 10% administrative claim in the recovery analysis. In its bespoke GC recovery analysis, Fitch estimates post-restructuring GC EBITDA available to creditors of around EUR250 million, reflecting limited growth, a cyclical downturn and higher competitive intensity leading to lower margins. At this GC EBITDA, Fitch expects the group to generate neutral to mildly positive FCF but its capital structure to be unsustainable. Fitch has used a distressed enterprise multiple of 6.0x. These assumptions lead to an instrument rating of 'BB-', one notch above the IDR, resulting in a recovery rate of 61% for the senior secured debt, within the 'RR3' range. The capital structure includes senior secured debt of EUR1,350 million and USD600 million including an equally ranking revolving credit facility (RCF) of EUR300 million, assumed fully drawn in a default. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Pressure on EBITDA margins due to resumption of costs to boost growth or pricing pressure in a competitive environment that keep Fitch-defined EBITDA leverage above 5.5x; - Neutral to mildly positive free cash flow generation; - EBITDA interest cover below 3.0x on a sustained basis. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Fitch-defined EBITDA leverage below 4.5x through the cycle on a sustained basis; - FCF margin consistently above 10%; - Greater commitment to a financial policy that aligns with creditors' interests (such as clearly articulated shareholder remuneration and/or M&A policies that favour lower leverage. Liquidity and Debt Structure Fitch expects the business to be cash-flow generative with positive FCF margins above 4% in 2024-2026, based on its conservative forecasts. Post-separation, Stepstone will have no short-term debt maturities and have its new term loan with a seven-year tenor. It will also have access to a EUR300 million RCF with a 6.5-year tenor. Fitch expects these resources to be enough to fund seasonal working-capital, capex requirements and the group's ongoing cost streamlining efforts. Issuer Profile Stepstone operates online recruitment platforms and provides job-search related services including placement of job advertisements, programmatic recruitment as well as employer branding services. Stepstone will be held, operated and financed as an independent company under the majority ownership of affiliates of KKR & Co. (KKR) and CPP Investments, as part of the strategic decision to separate Axel Springer SE's media business from its classifieds business, which is expected to close in Q2 2025. MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. 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 ----------- ------ -------- ----- The Stepstone Group Holding GmbH LT IDR B+ New Rating B+(EXP) The Stepstone Group US Co-Borrower LLC senior secured LT BB- New Rating RR3 The Stepstone Group MidCo 2 GmbH senior secured LT BB- New Rating RR3 BB-(EXP) [] Fitch Puts 21 Tranches of 5 E-MAC RMBS Deals on Watch Negative ----------------------------------------------------------------- Fitch Ratings has placed 21 tranches of five German and Dutch E-MAC RMBS transactions on Rating Watch Negative (RWN. The RWN reflects Fitch's view that following a recent English High Court judgment against CMIS Netherland BV and CMIS Investments BV (together CMIS), risks that negatively affect the five transactions could arise. Fitch has no information whether CMIS will appeal the decision or not. Fitch will look to resolve the RWN when CMIS's response to the judgment is clearer. Fitch believes it may take longer than the typical six months to resolve the RWN. Entity/Debt Rating Prior ----------- ------ ----- E-MAC Program B.V. Compartment NL 2007-I Class A2 XS0292255758 LT A+sf Rating Watch On A+sf Class B XS0292256301 LT A-sf Rating Watch On A-sf Class C XS0292258695 LT A-sf Rating Watch On A-sf Class D XS0292260162 LT BBBsf Rating Watch On BBBsf Class E XS0292260675 LT CCCsf Rating Watch On CCCsf E-MAC NL 2006-II B.V. Class A XS0255992413 LT B-sf Rating Watch On B-sf Class B XS0255993577 LT B-sf Rating Watch On B-sf Class C XS0255995358 LT B-sf Rating Watch On B-sf Class D XS0255996166 LT CCCsf Rating Watch On CCCsf Class E XS0256040162 LT CCCsf Rating Watch On CCCsf E-MAC Program II B.V. – Compartment NL 2007-IV A XS0325178548 LT A+sf Rating Watch On A+sf B XS0325183464 LT A+sf Rating Watch On A+sf C XS0325183621 LT A+sf Rating Watch On A+sf D XS0325184355 LT BBB+sf Rating Watch On BBB+sf E-MAC DE 2006-II B.V. Class C XS0276934667 LT A+sf Rating Watch On A+sf Class D XS0276935045 LT CCsf Rating Watch On CCsf Class E XS0276936019 LT CCsf Rating Watch On CCsf E-MAC Program III B.V. Compartment NL 2008-I Class A2 XS0344800957 LT AAAsf Rating Watch On AAAsf Class B XS0344801765 LT AAAsf Rating Watch On AAAsf Class C XS0344801922 LT AA+sf Rating Watch On AA+sf Class D XS0344802060 LT AAsf Rating Watch On AAsf Transaction Summary On 15 January 2025, the English Commercial Court ruled that CMIS owed EUR155 million under indemnities payable under certain swap transactions involving NatWest Markets NV and NatWest Markets Plc (together NWM). CMIS disputed this. The case concerned seven E-MAC issuers, five of which Fitch rates. CMIS stated to the Court that it would seek counter-indemnity claims against the relevant E-MAC issuers. Fitch will likely resolve the RWN once CMIS's response is clearer. Resolution could include an analysis of the implications of the judgment on CMIS's role as servicer and issuer administrator. KEY RATING DRIVERS Possible Counter-Indemnities: The RWN addresses the possible counter-indemnities that CMIS stated to the Court it may seek from the issuers of the affected transactions. If successfully sought, these counter-indemnities could jeopardise the notes' payment obligations. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade The notes could be significantly downgraded if CMIS successfully pursues counter-indemnity claims against the E-MAC issuers and this leads to a reduction in available funds to meet payment obligations under the notes. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade The notes could be upgraded if the RWN is resolved and there is no reduction in available funds. CRITERIA VARIATION E-MAC DE 2006-II B.V.: The variation from prior reviews continues to apply USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Fitch has 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 pool[s] 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. ESG Considerations E-MAC DE 2006-II B.V. has a ESG Relevance Score of '4' for Transaction Parties & Operational Risk due to weaker underwriting standards applied by the originator that have manifested in weaker-than-market performance of the asset portfolio and reflected in originator adjustments to the foreclosure frequency, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. 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. ============= I R E L A N D ============= MAN GLG V: Fitch Cuts Rating on Cl. F Notes to Bsf, Outlook Stable ------------------------------------------------------------------ Fitch Ratings has downgraded Man GLG Euro CLO V DAC's class F notes and revised the Outlooks on the class B-1, B-2-R and B-3 notes to Positive from Stable. Entity/Debt Rating Prior ----------- ------ ----- Man GLG Euro CLO V DAC A-1-R XS2313672177 LT AAAsf Affirmed AAAsf A-2-R XS2313672250 LT AAAsf Affirmed AAAsf B-1 XS1881728221 LT AA+sf Affirmed AA+sf B-2-R XS2313672334 LT AA+sf Affirmed AA+sf B-3 XS1885673399 LT AA+sf Affirmed AA+sf C-1 XS1881728908 LT A+sf Affirmed A+sf C-2-R XS2313673142 LT A+sf Affirmed A+sf C-3 XS1885673985 LT A+sf Affirmed A+sf D-1 XS1881729203 LT BBB+sf Affirmed BBB+sf D-2-R XS2313672680 LT BBB+sf Affirmed BBB+sf E XS1881732256 LT BB+sf Affirmed BB+sf F XS1881732330 LT B-sf Downgrade Bsf Transaction Summary Man GLG Euro CLO V DAC is a cash flow CLO comprising mostly senior secured obligations. The transaction is actively managed by GLG Partners LP and exited its reinvestment period in December 2022. KEY RATING DRIVERS Deteriorating Portfolio Affects Junior Notes: Since the May 2024 review, the portfolio has seen further erosion of 1.4% of par value, to 5.1% below target par, due mainly to sell-trade losses, according to the latest trustee report dated 8 January 2025. This has reduced the default-rate cushions of junior notes. The class F par value test has reduced to 103.2% from 104.4%. The notional amount of defaults has increased to EUR8.05 million from EUR2.2 million and the exposure to assets with a Fitch-derived rating of 'CCC+' and below to 5.8% from 3%, but under the limit of 7.5%, since its last rating action. The downgrade of the class F notes reflects the deteriorating par position and portfolio credit quality. The Stable Outlook is driven by available credit enhancement (CE) to support the current rating. The Negative Outlook on the class E notes reflects their reduced default-rate cushion against credit quality deterioration, but Fitch expects the rating to remain within its existing category. Deleveraging Increases Senior Notes' Buffer: Since the last review, the class A-1-R notes have repaid EUR55 million, resulting in increased CE of 2% for the class B-1, B-2-R and B-3 notes. The transaction's deleveraging has resulted in an increased default-rate cushion for the senior notes to support their current ratings and absorb further defaults in the portfolio. This supports the Positive Outlooks on the class B-1, B-2-R and B-3 notes. 'B'/'B-' Portfolio: Fitch assesses the average credit quality of the underlying obligors at 'B'/'B-'. The weighted average rating factor of the current portfolio is 25.7 as calculated by Fitch under its latest criteria. High Recovery Expectations: Senior secured obligations comprise 98.2% 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 (WARR) of the current portfolio is 62.8%. Diversified Portfolio: The portfolio is well-diversified across obligors, countries and industries. The top 10 obligor concentration, as calculated by Fitch, is 15.4%, and no obligor represents more than 3% of the portfolio balance. Exposure to the three largest Fitch-defined industries is 33.8% as calculated by the trustee. Fixed-rate assets as reported by the trustee are at the 7.3% of the portfolio balance, which compares favourably with the 10% limit. Transaction Outside Reinvestment Period: The transaction exited its reinvestment period in December 2022 and was breaching its weighted average life (WAL) test at the last report date. However, the manager can reinvest unscheduled principal proceeds and sale proceeds from credit-risk obligations after the reinvestment period if the WAL is maintained or improved and subject to compliance with the other reinvestment criteria. Given the manager's ability to reinvest, Fitch's analysis is based on a stressed portfolio and tested the notes' achievable ratings across the Fitch matrix, since the portfolio could still migrate to different collateral quality tests. Fitch also applied a haircut of 1.5% to the WARR as the calculation of the WARR in the transaction documentation is not in line with its latest CLO Criteria. Deviation from MIR: The class B-1, B-2-R and B-3 notes' ratings are one notch below their respective model-implied ratings (MIRs), reflecting their limited cushion under the Fitch-stressed portfolio at the MIR. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Based on the current portfolio, downgrades may occur if loss expectations are larger than initially assumed, due to unexpectedly high levels of default and portfolio deterioration. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Upgrades may result from stable portfolio credit quality and deleveraging, leading to higher CE and excess spread available to cover losses in the remaining portfolio. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Man GLG Euro CLO V DAC Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. The majority of the underlying assets or risk presenting entities have ratings or credit opinions from Fitch and/or other Nationally Recognized Statistical Rating Organizations and/or European Securities and Markets Authority registered rating agencies. Fitch has relied on the practices of the relevant groups within Fitch and/or other rating agencies to assess the asset portfolio information or information on the risk presenting entities. Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. ESG Considerations Fitch does not provide ESG relevance scores for Man GLG Euro CLO V DAC. In cases where Fitch does not provide ESG relevance scores in connection with the credit rating of a transaction, programme, instrument or issuer, Fitch will disclose any ESG factor that is a key rating driver in the key rating drivers section of the relevant rating action commentary. =================== L U X E M B O U R G =================== FWU LUX: Fitch Affirms & Then Withdraws 'D' LongTerm IDR -------------------------------------------------------- Fitch Ratings has affirmed Luxembourg-based FWU Life Insurance Lux S.A.'s (FWU Lux) 'CC' Insurer Financial Strength (IFS) Rating and 'D' Long-Term Issuer Default Rating (IDR) and subsequently withdrawn them. Fitch has withdrawn the ratings for commercial reasons. Fitch will no longer provide ratings or analytical coverage for this entity. Key Rating Drivers The affirmation of FWU Lux's IDR reflects the dissolution and liquidation of the company following the District Court of Luxembourg decision on 31 January 2025, announced by the Luxembourg regulator CAA on 3 February 2025. The affirmation of the IFS Rating reflects Fitch's expectation of 'Good' recoveries for policyholder obligations from FWU Lux's liquidation. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Not applicable, as the ratings have been withdrawn. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Not applicable, as the ratings have been withdrawn. ESG Considerations FWU Lux has an ESG Relevance Score of '4' for Governance Structure, due to the dissolution and liquidation of the company as well as the insolvency proceedings at its ultimate owner FWU AG. These have a negative impact on the credit profiles, and are relevant to the ratings in conjunction with other factors. Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. 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 Prior ----------- ------ ----- FWU Life Insurance Lux S.A. LT IDR D Affirmed D LT IDR WD Withdrawn LT IFS CC Affirmed CC LT IFS WD Withdrawn ========= S P A I N ========= JERONIMO FUNDING: Fitch Assigns 'Bsf' Final Rating on Class F Notes ------------------------------------------------------------------- Fitch Ratings has assigned Jeronimo Funding DAC final ratings. Entity/Debt Rating Prior ----------- ------ ------ Jeronimo Funding DAC Class A XS2956114727 LT AAAsf New Rating AAA(EXP)sf Class B XS2956118637 LT AA-sf New Rating AA-(EXP)sf Class C XS2956118801 LT A-sf New Rating A-(EXP)sf Class D XS2956119106 LT BBB-sf New Rating BBB-(EXP)sf Class E XS2956119361 LT BB-sf New Rating BB-(EXP)sf Class F XS2956119528 LT Bsf New Rating B(EXP)sf Class Z XS2956119791 LT NRsf New Rating NR(EXP)sf Transaction Summary Jeronimo Funding DAC is a cash-flow securitisation of a EUR305.8 million static pool of residential mortgages originated in Spain by Unicaja Banco, S.A. (Unicaja, BBB-/Positive/F3) and other financial entities integrated into Unicaja. As of 31 October 2024, around 68% of the portfolio balance related to restructured loans. KEY RATING DRIVERS High Foreclosure Frequency Expectations: Its foreclosure frequency (FF) expectations on the portfolio, at 41.6% for the 'AAAsf' rating case, are comparable with those of other Spanish reperforming RMBS transactions. It reflects that as of 31 October 2024, 7.6% of the portfolio balance had more than three missed monthly instalments, for which Fitch has applied an FF rate of 100% at 'AAAsf', and around a third of the restructured loans have less than 12 months of clean payment history (CPH). Fitch determines the FF rate of restructured loans by assessing the payment record from the most recent of the following dates: the last date in arrears, the grace period end date, and the restructuring end date. The weighted average (WA) CPH of the restructured loans is around 2.2 years. Long Interest Deferrals: Fitch expects the class B to F notes to incur material interest deferrals for more than 10 years at their respective ratings, according to its cash flow modelling. These long deferrals may also take place under the 'CCCsf' rating case (linked to a weighted average FF rate on the portfolio of 13.3%), primarily influenced by the level of defaults, low prepayments and the step-up margins on the notes effective from April 2028. Fitch expects the deferred amounts to be repaid in a short period once each class becomes the senior most outstanding. Consistent with Fitch's Global Structured Finance Rating Criteria, the rating analysis reflects that any interest deferrals are projected to be fully recovered by the legal maturity date, that deferrals are a common structural feature in Spanish RMBS, and that the transaction's documentation includes a defined mechanism for the repayment of deferred amounts. Transaction Adjustment: When calibrating the portfolio's FF rates, Fitch has applied a 1.2x transaction adjustment to reflect its general assessment of the pool. This considers lender-specific historical performance data and Fitch's observations from the originator review, particularly the underwriting and servicing strategies on restructured loans. Operational Risk Diversified: The transaction features two portfolio servicers. Unicaja as primary servicer and Pepper Spanish Servicing, S.L.U. as master and special servicer focusing on loans in arrears over 120 days. The presence of multiple servicers diversifies operational risks and could facilitate forbearance and recovery during stress periods. Interest Rate Risk Partially Mitigated: An interest-rate cap is in place from closing for 10 years to hedge against rising interest rates. It has a scheduled notional up to 30% of the portfolio balance and a strike rate of 5.5%. The cap upfront premium has been paid by the seller at the closing date. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Long-term asset performance deterioration, such as increased delinquencies or reduced portfolio yield, which could be driven by changes in portfolio characteristics, macroeconomic conditions, business practices or the legislative landscape. For instance, a combined increase in the WAFF by 15% and a decrease in the WA recovery rate by 15% could imply category downgrades for most of the notes. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Increasing credit enhancement ratios as the transaction deleverages to fully compensate for the credit losses and cash flow stresses commensurate with higher ratings. Smaller losses on the portfolio than levels that are consistent with ratings. For instance, a decrease in the WAFF by 15% and an increase in the WA recovery rate by 15% could imply category upgrades for most of the notes. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Fitch reviewed the results of a third-party assessment conducted on the asset portfolio information, and concluded that there were no findings that affected the rating analysis. 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. REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING Fitch was not provided with loan-by-loan debt to income (DTI) information. Fitch has assumed all loans to be class 3 DTI (i.e. debt service representing between 30% and 40% of gross household income), supported by the lending criteria applied by the originators at the time of originating the mortgages and other comparable RMBS transactions. Moreover, employment data for 70% of the pool balance was missing and therefore Fitch applied the same employment distribution data from the observed positions. Fitch views the ResiGlobal model output of this transaction as adequately capturing the risky attributes of the portfolio, which is also influenced by the high granularity of the portfolio and its static nature. 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. MADRID RMBS III: Fitch Hikes Rating on Class D Notes to 'Bsf' ------------------------------------------------------------- Fitch Ratings has upgraded 11 tranches of three Madrid Spanish RMBS transactions, and removed them from Under Criteria Observation (UCO), while affirming the others, as detailed below. Entity/Debt Rating Prior ----------- ------ ----- Madrid RMBS II, FTA Class A3 ES0359092022 LT AA+sf Affirmed AA+sf Class B ES0359092030 LT AA+sf Upgrade AAsf Class C ES0359092048 LT A+sf Upgrade BBB-sf Class D ES0359092055 LT BBB-sf Upgrade BBsf Class E ES0359092063 LT B+sf Upgrade CCsf Madrid RMBS III, FTA Class A3 ES0359093020 LT AA+sf Affirmed AA+sf Class B ES0359093038 LT AA+sf Upgrade AAsf Class C ES0359093046 LT A+sf Upgrade BBBsf Class D ES0359093053 LT Bsf Upgrade CCCsf Class E ES0359093061 LT Csf Affirmed Csf Madrid RMBS I, FTA Class A2 ES0359091016 LT AA+sf Affirmed AA+sf Class B ES0359091024 LT AA+sf Upgrade AA-sf Class C ES0359091032 LT A+sf Upgrade BB+sf Class D ES0359091040 LT BBBsf Upgrade BB-sf Class E ES0359091057 LT BBsf Upgrade CCsf Transaction Summary The transactions comprise fully amortising Spanish residential mortgages serviced by Caixabank, S.A. (A-/Stable/F2). KEY RATING DRIVERS European RMBS Rating Criteria Updated: The rating actions reflect the update of Fitch's European RMBS Rating Criteria on 30 October 2024. The update adopted a non-indexed current loan-to-value (LTV) approach to derive the base foreclosure frequency (FF) on portfolios, instead of the original LTV approach applied before, and removes the performance adjustment factor (70% applied before). Another relevant change under the updated criteria is the updated loan level recovery rate (RR) cap of 85%, lower than the 100% before. Volatile Performance: Arrears and defaults have increased in all three transactions over the past two years, likely driven by increasing mortgage rates. Periodic defaults peaked between 3% and 4% on an annualised basis. Performance has already improved in the last few periods for all three transactions. This recent volatility, together with the historical significant underperformance of the three transactions led to the application of a 1.5x transaction adjustment (TA) to Madrid 1 and Madrid 2. For Madrid 3, Fitch applied a 2.4x TA to reflect an even more volatile performance. For Madrid 1 and 2, adopting the non-indexed current LTV offsets the 1.5x TA and lower RR cap so bapplied loss levels are lower than at the previous review. This has driven the upgrades for Madrid 1 and 2. However, the class D and E notes remain below their model-implied ratings (MIR) by up to four notches due to recent performance volatility. Their Positive Outlooks reflect that further performance improvement could lead to upgrades. The class C notes remain one notch below their MIR as they are sensitive to subordination of interest on the junior notes, which may not be triggered even in stress scenarios. Low Recoveries: Cumulative recoveries to date are close to 60% for the three transactions, materially lower than suggested by ResiGlobal Model: Europe. Fitch therefore considered sensitivities to lower recoveries, which contributed to ratings below their MIR for Madrid 1 and 2's class D and E notes and Madrid 3's class C and D notes. PIR Caps Senior Ratings: The maximum achievable rating for the three transactions remains capped at 'AA+sf' because of unmitigated payment interruption risk (PiR). The cash reserve funds have been fully depleted in the past and have only been partially replenished for Madrid 1 and 2 (24% and 20% of their target, respectively) largely due to recoveries, which may be volatile. The reserve is still fully depleted for Madrid 3. Consequently, Fitch does not consider them a reliable source of coverage for PiR. Additionally, as interest deferability is permitted under transaction documentation for all rated notes, Fitch views PiR as immaterial up to 'AA+sf'. CE Continues to Increase: The rating actions reflect Fitch's view that the notes are sufficiently protected by credit enhancement (CE) to absorb the projected losses commensurate with the prevailing rating scenarios. Fitch expects CE ratios to continue building up considering the prevailing and expected sequential amortisation of the notes. For example, the average modelled CE for the most senior notes across all deals increased to 63% as of November 2024 versus 54% a year earlier. The increasing CE supported the upgrades. Portfolio Risky Features: The portfolios are highly exposed to the region of Madrid, with exposure greater than 65%. To address regional concentration risk, Fitch applies higher rating multiples to the base FF assumption to the portion of the portfolios that exceeds 2.5x the population within this region relative to the national total, in line with its European RMBS Rating Criteria. Additionally, more than 40% of the portfolios were originated via third-party brokers, a feature that carries a FF adjustment of 1.2x within the agency's credit analysis. The transactions have an elevated ESG Relevance Score for Transaction & Collateral Structure due to unmitigated payment interruption risk for the 'AAA' rating case. This has a negative impact on the credit profile, and is highly relevant to the rating, resulting in a lower rating. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Long-term asset performance deterioration, such as increased delinquencies or larger defaults, which could be driven by adverse changes to macroeconomic conditions, interest rates or borrower behaviour. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Increasing liquidity protection sufficient to fully mitigate PIR could lead to an upgrade of the senior notes to 'AAAsf'. - Stable to improved asset performance driven by stable delinquencies and defaults would lead to increasing CE and potentially upgrades. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Madrid RMBS I, FTA, Madrid RMBS II, FTA, Madrid RMBS III, FTA 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 transaction's 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. ESG Considerations The transactions have an ESG Relevance Score of '5' for Transaction & Collateral Structure due to unmitigated payment interruption risk for the 'AAA' rating case, which has a negative impact on the credit profile, and is highly relevant to the rating, resulting in a lower rating. 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. ===================== S W I T Z E R L A N D ===================== MULTITUDE AG: Fitch Affirms 'B+' LongTerm IDR, Outlook Positive --------------------------------------------------------------- Fitch Ratings has affirmed Multitude AG's and its fully-owned operating bank Multitude Bank plc's Long-Term Issuer Default Ratings (IDRs) at 'B+' with Positive Outlooks. Multitude's senior unsecured notes have been affirmed at 'B+' with a Recovery Rating of 'RR4' and its subordinated hybrid perpetual capital notes at 'B-'/'RR6'. Key Rating Drivers The ratings and Positive Outlook reflect Multitude's improving business volumes, diversification and profitability, adequate capitalisation, supported by prudential requirements at Multitude Bank, and access to granular, albeit price-sensitive, retail deposits. The ratings also consider Multitude's niche franchise in high-yield consumer and SME lending; pressure on its net interest margin; high, albeit declining, impairment charges; and rapid growth in SME and wholesale lending. Group Ratings: Multitude Bank's ratings reflect Fitch's 'group ratings' approach and are based on the analysis of Multitude, as a group of companies, on a consolidated basis. Multitude Bank is a Malta-based 100%-owned subsidiary of Multitude and the group's core operating entity, accounting for about 80% of the group's assets. Fitch views the bank as operationally integrated into the group with a mostly similar geographic footprint and shared branding. Multitude's ratings are equalised with the consolidated group's 'b+' Standalone Credit Profile (SCP), given adequate liquidity management, supported by revenues from intra-group services at the holding company level and material unencumbered cash held outside Multitude Bank. Niche Franchise, Improving Diversification: Multitude mainly operates in non-prime lending with an increased focus on comparatively lower-risk consumer, SME and wholesale lending. Credit risk in consumer lending is mitigated by high margins and adequate underwriting standards. Expansion into SME and wholesale lending adds diversification to the business model, but also poses risks of increased concentration and credit losses due to rapid growth. High Loan Impairments: Multitude's asset quality is improving from diversification into SME and wholesale lending, as well as lower-risk retail clients. High loan impairments are inherent to its business model, with an impaired/gross loans ratio of around 16%-18% since 2023. Impaired loans are well reserved. Loan impairment charges moderated to 13.5% in 9M24, after peaking at 16% in 1Q24, helped by tightened underwriting in consumer and SME segments. Improving Profitability, Margin Pressures: Multitude's profitability has been improving, with pre-tax income/average assets close to 2% in 2022-9M24, helped by contained operating expenses. Multitude's high loan impairments consumed 84% of pre-impairment profit in 9M24 (2023: 80%). Its net interest margin is pressured by regulatory interest caps, a gradual shift to lower-yielding client segments and increased cost of deposit funding. Growth in SME and wholesale lending should support profitability, providing credit risk remains well-managed. Capitalisation Benefits From Bank Regulation: Multitude's gross debt/tangible equity ratio was high (end-3Q24: 8.4x) and can be volatile, reflecting changing retail deposit needs. Multitude Bank's common equity Tier 1 and total capital ratios (16.8% and 17.3% at end-1H24) were managed with narrow headroom above the prudential requirements (13.08% and 16.95%, respectively), due to lending growth. Tier 2 debt issuance should help increase the headroom, which also benefited in January 2025 from a reduction in operational risk-weighted assets. Deposit-Funded; Moderate Refinancing Risk: The group is predominately funded by retail deposits (88% of liabilities at end-3Q24), which are price sensitive but granular and 99% covered by deposit insurance. An increasing share of deposits from Multitude's own platform (17% at end-3Q24) adds resilience to its deposits base. Non-deposit funding comprises a EUR80 million senior unsecured bond with maturity in 2028 and EUR45 million perpetual debt (with a call option in 2026). The group's liquidity position is adequate, supported by the relatively short tenor of its loan book and a sound liquidity buffer. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Inability to increase business volumes and improve profitability in line with management projections could lead to a revision of the Outlook to Stable. Pressure on profitability, e.g. from a tightening of regulatory requirements in key markets or losses from expansion into new business segments, could result in a downgrade. Significant asset quality deterioration, with loan impairment charges sustained above 15% of average gross loans and pressuring profitability, or a notable increase in unreserved impaired loans relative to tangible equity, could result in a downgrade. A reduction in Multitude Bank's headroom above the regulatory capital requirements to materially below 100bp without clear prospects of restoring capitalisation, as well as a significant increase in leverage at the consolidated group level, could also be credit-negative. Material increase in double leverage or a weaker liquidity buffer at the holding company, including from the planned corporate reorganisation, additional debt issuances, as well as constraints to dividend upstream from the bank, could result in notching the holding company Long-Term IDR down from the group's SCP. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade A more diversified asset and revenue base, with all business segments contributing to overall group profitability in line with management's objectives, could result in an upgrade of the Long-Term IDR to 'BB-'. Improved profitability, with pre-tax income/average assets close to 2.5% on a sustained basis, without a significant increase in risk appetite, asset-quality risks or leverage could also be credit positive. DEBT AND OTHER INSTRUMENT RATINGS: KEY RATING DRIVERS Multitude's senior unsecured bond is rated in line with its Long-Term IDR. The rating alignment reflects Fitch's expectation of average recovery prospects. Its subordinated perpetual hybrid callable notes are notched down twice from Multitude's Long-Term IDR in line with Fitch's Non-Financial Corporates Hybrids Treatment and Notching Criteria. DEBT AND OTHER INSTRUMENT RATINGS: RATING SENSITIVITIES Multitude's senior unsecured notes' rating is sensitive to changes in its Long-Term IDR. Changes to Fitch's assessment of recovery prospects for senior unsecured debt in default would result in the senior unsecured notes' rating being notched down from the IDR. The subordinated notes' rating will mirror changes in Multitude's Long-Term IDR. Changes to Fitch's assessment of going-concern loss absorption or recovery prospects for subordinated debt in a default (e.g. the introduction of features resulting in easily activated going-concern loss absorption or a permanent write-down of the principal in wind-down) could also result in a widening of the notching for the subordinated notes' rating to more than two notches below Multitude's Long-Term IDR. ADJUSTMENTS The 'b+' business profile score is below the 'bbb' category implied score due to the following adjustment reason(s): business model (negative) and market position (negative). The 'b+' asset-quality score is above the 'ccc and below' category implied score due to the following adjustment reason: collateral and reserves (positive). ESG Considerations Multitude has an ESG Relevance Score of '4' for Exposure to Social Impacts as a result of its exposure to the high-cost consumer lending sector. As the regulatory environment evolves (including a tightening of rate caps), this has a moderately negative influence on the credit profile via its assessment of its business model and is relevant to the rating in conjunction with other factors. Multitude has an ESG Relevance Score of '4' for Customer Welfare, in particular in the context of fair lending practices, pricing transparency and the potential involvement of foreclosure procedures, given its focus on the high-cost consumer credit segment. This has a moderately negative influence on the credit profile via its assessment of risk appetite and asset quality and is relevant to the rating in conjunction with other factors. 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 ----------- ------ -------- ----- Multitude AG LT IDR B+ Affirmed B+ Subordinated LT B- Affirmed RR6 B- Multitude Capital Oyj senior unsecured LT B+ Affirmed RR4 B+ Multitude Bank plc LT IDR B+ Affirmed B+ ST IDR B Affirmed B =========== T U R K E Y =========== TURK HAVA: Fitch Hikes LongTerm IDR to 'BB', Outlook Stable ----------------------------------------------------------- Fitch Ratings has upgraded Turk Hava Yollari Anonim Ortakligi's (Turkish Airlines; THY) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDR) to 'BB' from 'BB-'. The Outlook is Stable. Fitch has affirmed its Bosphorus Pass Through Certificates Series 2015-1A class A notes at 'BB+'. THY's Standalone Credit Profile (SCP) has been revised up to 'bb' from 'bb-'. The SCP revision reflects Fitch's expectation that THY's credit metrics will stabilise at more favourable levels than previously anticipated, with EBITDAR leverage of 3.0x-3.5x during 2024-2027. The revision also factors in THY's loosened debt capacity versus its peers'. The SCP reflects THY's foreign-exchange (FX) exposure and reliance on Turkiye as the key market but also its strong market position as one of the top five carriers in Europe and the Middle East, with solid EBITDAR margins close to 20%. The IDR is one notch above Turkiye's Country Ceiling of 'BB-'. Key Rating Drivers Stable Operations: Fitch expects THY's 2024-2027 performance to normalise, after a strong post-pandemic rebound led earnings to surpass pre-pandemic levels. Fitch expects annual revenue growth in the high single digits, mostly driven by capacity growth, while benefits from increased pricing (passenger and cargo) will be very limited. However, Fitch expects pressure on margins, due to continuing supply chain issues and increase in other costs (including personnel, airport and handling). Fitch forecasts Fitch-calculated EBITDAR at around USD5 billion in 2027, up from an estimated USD4.7 billion in 2024. SCP Reflects Moderate Leverage: Fitch estimates THY's EBITDAR leverage to have increased to 3.1x at end-2024, from 2.7x in 2023, on margin compression due to higher unit costs and soft yields. However, Fitch expects leverage to remain broadly stable thereafter, as cash flow from operations more than offsets average net capex of over USD2 billion. Leverage sits comfortably within the SCP thresholds of 3.0x-4.0x. Fitch has relaxed THY's debt capacity by 0.5x to factor in its consistently strong performance since 2022 and to better align with peers'. Ambitious Strategic Plan: THY's strategic plan up to 2033 foresees fleet growth to more than 800 aircraft, transporting more than 170 million of passengers, versus 492 aircraft at end-2024, and an expected 600 at end-2026. While the fleet growth and the development of AJet, THY's low-cost subsidiary, will gradually improve THY's business profile, the investments may also lead to a mild leverage increase in the medium term. Fitch expects most of the new aircraft to be funded with financial and operating leases. Diversified Network: THY has comparable scale of operations and network breadth to other major network carriers in EMEA such as British Airways Plc, Air France KLM and Deutsche Lufthansa AG. This supports its business profile and provides the foundation for sustained performance. THY's base in Istanbul is geographically well-positioned to allow higher usage of lower unit-cost narrow-body aircraft and serves as a solid transit hub connecting Europe, Africa and Asia, with 37% of passengers transferring from international-to-international flights in 9M24. Manageable FX Exposure: The majority of THY's debt, including leases, is in hard currencies, but a high share of revenue is also generated in US dollars and euros (63% in 9M24), mitigating its FX exposure. Despite well-managed FX risk due to a geographically diversified revenue stream, the volatile lira can add to demand volatility. A depreciating lira has been a strong, but unsustainable, draw for foreign tourists, in its view. Government Ownership Limits IDR: THY is 49.12%-owned by Turkey Wealth Fund (TWF), which is fully state-owned, and the government directly or indirectly nominates seven out of its nine board members. However, all of THY's non-equity funding is external and managed autonomously with independent operations and cash management. Fitch consequently views access and control as 'porous' under its Parent and Subsidiary Linkage Rating Criteria, which together with an 'open' assessment of legal ring-fencing, constrains THY's Long-Term Local-Currency IDR at one notch above the sovereign rating. Preferential Treatment Pierces Country Ceiling: THY's Long-Term Foreign-Currency IDR exceeds Turkey's 'BB-' Country Ceiling, reflecting airlines' exemption from Turkish regulation to convert a portion of exporters' FC revenues into lira. In addition, nearly all of THY's hard-currency external obligations are aircraft leases. Fitch views restriction on lease payments as unlikely for THY, given its flagship carrier status and the risk of operational disruptions from possible aircraft repossessions. Bosphorus Certificates Top Down Approach: Fitch continues to rate the notes using a top-down approach, given the continued reduction in outstanding principal. The notes can tolerate stress up to 'A', which is consistent with a maximum loan-to-value (LTV) of 73.2%. This is because their favorable amortisation profile without balloon payments at maturity in March 2027 causes the LTV to fall rapidly closer to maturity. The collateral is three 2015 vintage B777-300ERs, which Fitch views as tier 2 assets. However, this still results in the same 'BB+' rating, capped at two notches above Turkiye's Country Ceiling. Transfer and Convertibility Risk Mitigated: Based on Fitch's Aircraft Enhanced Equipment Trust Certificates (EETC) Rating Criteria and Exceeding Country Ceiling Criteria, the certificates benefit from offshore structural enhancements. These include the EETC structure, its collateral, and an offshore liquidity facility from Paris-based BNP Paribas S.A (A+/Stable), which can cover 18 months of debt service to prevent a default. This mitigates transfer and convertibility risk and enables the Bosphorus rating to exceed the Country Ceiling by two notches. Derivation Summary Fitch views British Airways Plc (BBB-/Stable, SCP: bb+), Air France KLM (BBB-/Stable) and Deutsche Lufthansa AG (BBB-/Stable) as THY's peers, given their comparable business profiles. The three European legacy carriers benefit from a better location than THY to capture profitability from transatlantic connections as well as more stable home market conditions, although THY has benefited from a strong recovery in tourism in Turkiye. THY's 'bb' SCP implies a moderately lower debt capacity than its peers', given its more volatile home market and higher FX exposure. THY's IDR is one notch above Turkiye's 'BB-' Country Ceiling, reflecting both its links with its key shareholder, the government of Turkiye, and its view that THY meets the conditions needed to pierce the Country Ceiling. THY has a more robust business profile than its domestic competitor Pegasus Hava Tasimaciligi A.S. (Pegasus; BB-/Stable), due to a larger fleet, wider geographic footprint, significantly stronger market position, and a more diversified revenue base. These factors also lead to THY's moderately higher debt capacity for a given rating than Pegasus'. Key Assumptions Available seat kilometre to grow 9% each year from 2024 Stable load-factor at 82% for 2025-2027 Stable yield at 8.8 US cents per revenue passenger kilometre from 2025, having decreased 4% in 2024 Oil price of USD85 per barrel during 2025-2027 Cargo revenues to grow 5% each year from 2024 Capex averaging USD2.1 billion per year, in line with company's guidance for 2024-2026 Dividends payment of USD0.2 billion per year commencing in 2025 RATING SENSITIVITIES THY Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - A downgrade of Turkiye's sovereign rating and Country Ceiling - Tighter links with the government - EBITDAR leverage above 4.0x and EBITDAR fixed charge cover below 2.2x, all on a sustained basis Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - An upgrade of Turkiye's Country Ceiling and sovereign rating, if accompanied by an upward revision of THY's SCP, and provided links to Turkiye are unchanged - EBITDAR leverage below 3.0x and EBITDAR fixed charge cover over 2.7x, all on a sustained basis, could lead to an upward revision of the SCP Bosphorus Pass Through Certificates Series 2015-1A Factors That Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - An upgrade of Turkiye's Country Ceiling Factors That Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - A downgrade of Turkiye's Country Ceiling For Rating Sensitivities on Turkiye, see 'Fitch Affirms Turkiye at 'BB-'; Stable Outlook' dated 31 January 2025. Liquidity and Debt Structure THY had USD5.9 billion cash at end-September 2024, comprising USD1.8 billion cash and USD4.1 billion Fitch-adjusted cash equivalents (mostly cash deposits). This was complemented by USD6.6 billion of uncommitted and undrawn facilities at end-2024. This is sufficient to cover USD0.3 billion debt maturities and about USD2 billion of leases expenses expected for 2025. Fitch expects THY to generate positive free cash flow over 2024 to 2027. THY's credit lines are renewed annually. Similar to other Turkish and emerging-market corporates the company does not pay commitment fees. It has been successful in renewing its credit lines, and given its state ownership, Fitch believes those lines will remain available, but these are not included in its liquidity analysis. Almost all its credit lines are with local Turkish banks. Issuer Profile THY is a Turkish flagship carrier and one of the largest European network carriers. It operates from its hub at Istanbul airport. Public Ratings with Credit Linkage to other ratings THY's IDRs are linked to Turkiye's sovereign IDRs. MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. 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 Prior ----------- ------ ----- Bosphorus Pass Through Certificates Series 2015-1A senior secured LT BB+ Affirmed BB+ Turk Hava Yollari Anonim Ortakligi (Turkish Airlines) LT IDR BB Upgrade BB- LC LT IDR BB Upgrade BB- =========================== U N I T E D K I N G D O M =========================== LYTHE HILL: Leonard Curtis Named as Administrators -------------------------------------------------- Lythe Hill Limited was placed into administration proceedings in the High Court of Justice Business and Property Courts of England and Wales, Insolvency & Companies List (ChD), Court Number: CR-2025-000611, and Nicola Elaine Layland and Carl Derek Faulds of Leonard Curtis were appointed as administrators on Jan. 31, 2025. Lythe Hill, trading as Lythe Hill Hotel & Spa, is in the hotel and accomodations industry. Its registered office is at 1580 Parkway Solent Business Park, Whiteley, Fareham, Hampshire, PO15 7AG Its principal trading address is Petworth Road, Haslemere, Surrey, GU27 3BQ The joint administrators can be reached at: Nicola Elaine Layland Carl Derek Faulds Leonard Curtis 1580 Parkway Solent Business Park Whiteley Fareham Hampshire PO15 7AG For further details, contact: The Joint Administrators Email: creditors.south@leonardcurtis.co.uk Alternative contact: David Manning MAGIC ROCK: FRP Advisory Named as Administrators ------------------------------------------------ Magic Rock Brewing Company Ltd was placed into administration proceedings in the High Court of Justice, Court Number: CR-2025-000039, and David Hudson and Philip David Reynolds of FRP Advisory Trading Limited were appointed as administrators on Jan. 30, 2025. Magic Rock is a brewery taproom featuring a variety of house beers & weekend food trucks. Its registered office is c/o FRP Advisory Trading Limited, at 2nd Floor, 110 Cannon Street, London, EC4N 6EU Its principal trading address is at Willow Park Business Centre, Willow Lane, Huddersfield, HD1 5EB The joint administrators can be reached at: David Hudson Philip David Reynolds FRP Advisory Trading Limited 110 Cannon Street London EC4N 6EU For further details, contact: The Joint Administrators Tel No: 020 3005 4000 Alternative contact: Bobby Cotter Email: cp.london@frpadvisory.com ********* 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 2025. 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 * * *