/raid1/www/Hosts/bankrupt/TCREUR_Public/250331.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
Monday, March 31, 2025, Vol. 26, No. 64
Headlines
I R E L A N D
CANYON EURO 2022-1: Fitch Assigns B-(EXP)sf Rating to Cl. F-R Notes
CANYON EURO 2025-1: Fitch Assigns B-sf Final Rating to Cl. F Notes
CANYON EURO 2025-1: S&P Assigns B- (sf) Rating to Class F Notes
SHAMROCK RESIDENTIAL 2023-1: S&P Affirms 'CCC' Rating on G Notes
L U X E M B O U R G
ALTISOURCE PORTFOLIO: Posts $35.6M Net Loss in 2024, Revenue Up 10%
ALTISOURCE PORTFOLIO: Regains Nasdaq MVPHS Rule Compliance
N E T H E R L A N D S
ASR NEDERLAND: S&P Rates New Restricted Tier 1 Notes 'BB+'
N O R W A Y
HURTIGRUTEN NEWCO: S&P Withdraws 'D' Long-Term Issuer Credit Rating
R U S S I A
NATIONAL BANK: Fitch Affirms 'BB-' Long-Term IDR, Outlook Stable
UZBEK INDUSTRIAL: Fitch Affirms 'BB-' Long-Term IDR, Outlook Stable
U N I T E D K I N G D O M
AERGO LTD: Begbies Traynor Named as Administrators
BASILDON CREDIT: Quantuma Advisory Named as Joint Administrators
EPEL LIMITED: FRP Advisory Named as Joint Administrators
HAZEL RESIDENTIAL: Fitch Assigns 'B-sf' Final Rating to Cl. F Debt
HAZEL RESIDENTIAL: S&P Rates Class RFN-Dfrd Notes 'B- (sf)'
JELLYFISH PICTURES: Interpath Ltd Named as Joint Administrators
LHH MANAGEMENT: RSM UK Named as Administrators
LYTHE HILL: RSM UK Named as Administrators
PHYCOWORKS LTD: Evelyn Partners Named as Administrators
THG PLC: Fitch Alters Outlook on 'B+' Long-Term IDR to Stable
TOGETHER ASSET 2025-CRE-1: S&P Puts 'B+(sf)' Rating to X-Dfrd Notes
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I R E L A N D
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CANYON EURO 2022-1: Fitch Assigns B-(EXP)sf Rating to Cl. F-R Notes
-------------------------------------------------------------------
Fitch Ratings has assigned Canyon Euro CLO 2022-1 DAC Reset
expected ratings.
The assignment of final ratings is contingent on the receipt of
final documents conforming to information already reviewed.
Entity/Debt Rating
----------- ------
Canyon Euro
CLO 2022-1 DAC
A-R LT AAA(EXP)sf Expected Rating
A-R Loan LT AAA(EXP)sf Expected Rating
B-R LT AA(EXP)sf Expected Rating
C-R LT A(EXP)sf Expected Rating
D-1-R LT BBB-(EXP)sf Expected Rating
D-2-R LT BBB-(EXP)sf Expected Rating
E-R LT BB-(EXP)sf Expected Rating
F-R LT B-(EXP)sf Expected Rating
Transaction Summary
Canyon Euro CLO 2022-1 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 purchase a portfolio with a target par of
EUR400 million. The portfolio is actively managed by Canyon CLO
Advisors L.P. The CLO has a five-year reinvestment period and a
nine-year weighted average life (WAL) test.
KEY RATING DRIVERS
Average Portfolio Credit Quality (Neutral): Fitch assesses the
average credit quality of obligors at 'B'/'B-'. The Fitch weighted
average rating factor of the identified portfolio is 24.7.
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 weighted
average recovery rate of the identified portfolio is 63.9%.
Diversified Portfolio (Positive): The transaction will include
various concentration limits, including a maximum exposure to the
three largest Fitch-defined industries in the portfolio at 42.5%
and a top 10 obligor concentration limit at 20%. These covenants
ensure that the asset portfolio will not be exposed to excessive
concentration.
Portfolio Management (Neutral): The transaction will have a
five-year reinvestment period and include reinvestment criteria
similar to those of other European transactions. Fitch's analysis
is based on a stressed 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
Fitch-stressed portfolio and matrices analysis is 12 months less
than the WAL covenant to account for structural and reinvestment
conditions after the reinvestment period. These include the
over-collateralisation tests and Fitch's 'CCC' limit. In Fitch's
opinion, these conditions would 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
A 25% increase of the mean default rate (RDR) across all ratings
and a 25% decrease of the recovery rate (RRR) across all ratings of
the identified portfolio would lead to downgrades of one notch for
the class D-2 and E notes, to below 'B-sf' for the class F notes
and have no impact on the other notes.
Based on the identified 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 identified portfolio than
the stressed-case portfolio, the class B, D-1, D-2 and E notes have
a two-notch cushion, the class C and F notes three notches and the
class A notes have no cushion.
Should the cushion between the identified portfolio and the
stressed-case portfolio be eroded due to manager trading or
negative portfolio credit migration, a 25% increase of the mean RDR
across all ratings and a 25% decrease of the RRR across all ratings
of the stressed-case portfolio would lead to downgrades of up to
four notches for the notes.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
A 25% reduction of the mean RDR across all ratings and a 25%
increase in the RRR across all ratings of the stressed-case
portfolio would lead to upgrades of up to five notches, 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 stressed-case
portfolio, upgrades may occur on better-than-expected portfolio
credit quality and a shorter remaining WAL test, meaning the notes
are able 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 on 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
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.
ESG Considerations
Fitch does not provide ESG relevance scores for Canyon Euro CLO
2022-1 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.
CANYON EURO 2025-1: Fitch Assigns B-sf Final Rating to Cl. F Notes
------------------------------------------------------------------
Fitch Ratings has assigned Canyon Euro CLO 2025-1 DAC notes final
ratings, as detailed below.
Entity/Debt Rating Prior
----------- ------ -----
Canyon Euro
CLO 2025-1 DAC
Class A Loan LT AAAsf New Rating AAA(EXP)sf
Class A Notes
XS2991887527 LT AAAsf New Rating AAA(EXP)sf
Class B Notes
XS2991887873 LT AAsf New Rating AA(EXP)sf
Class C Notes
XS2991888095 LT Asf New Rating A(EXP)sf
Class D Notes
XS2991888251 LT BBB-sf New Rating BBB-(EXP)sf
Class E Notes
XS2991888418 LT BB-sf New Rating BB-(EXP)sf
Class F Notes
XS2991888681 LT B-sf New Rating B-(EXP)sf
Class Z Notes
XS2991888848 LT NRsf New Rating NR(EXP)sf
Subordinated
Notes XS2991889143 LT NRsf New Rating NR(EXP)sf
Transaction Summary
Canyon Euro CLO 2025-1 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. Debt
proceeds have been used to purchase a portfolio with a target par
of EUR425 million.
The portfolio is actively managed by Canyon CLO Advisors LP. The
CLO has a reinvestment period of about 4.5 years and an 8.5-year
weighted average life (WAL) test at closing.
KEY RATING DRIVERS
Average Portfolio Credit Quality (Neutral): Fitch places the
average credit quality of obligors at 'B'/'B-'. The Fitch weighted
average rating factor (WARF) of the identified portfolio is 24.8.
High Recovery Expectations (Positive): At least 90% of the
portfolio comprises senior secured obligations. Fitch views the
recovery prospects for these assets as more favourable than for
second-lien, unsecured and mezzanine assets. The Fitch weighted
average recovery rate of the identified portfolio is 64.2%.
Diversified Asset Portfolio (Positive): The transaction includes
six matrices, all corresponding to a top-10 obligor concentration
limit of 20%. Two matrices, which are effective at closing,
correspond to an 8.5-year WAL test and to two fixed-rate asset
limits of 5% and 12.5%. The other four matrices can be selected by
the manager any time from 1.5 years after closing and correspond to
the same two fixed-rate asset limits of 5% and 12.5%, and to a
seven-year WAL test.
The first set of forward matrices can be selected if the collateral
principal amount (defaults at Fitch-calculated collateral value) is
at least at the reinvestment target par balance. The second set of
forward matrices can be selected if the aggregate collateral
balance (including defaulted obligations at Fitch collateral value)
is above the reinvestment target par balance minus EUR2 million.
The transaction includes various concentration limits, including a
maximum exposure to the three largest (Fitch-defined) industries in
the portfolio of 40%. These covenants ensure the asset portfolio
will not be exposed to excessive concentration.
Portfolio Management (Neutral): The transaction has an
approximately 4.5-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
Fitch-stressed portfolio analysis is 12 months less than the WAL
covenant at the issue date to account for the strict reinvestment
conditions envisaged by the transaction after its reinvestment
period. These conditions include passing the coverage tests, the
Fitch WARF, and the Fitch 'CCC' bucket limitation test after
reinvestment, as well as a WAL covenant that gradually steps down
over time, both before and after the end of the reinvestment
period. Fitch believes 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
A 25% increase in the mean rating default rate (RDR) and a 25%
decrease in the rating recovery rate (RRR) across all ratings of
the identified portfolio would have no impact on the ratings of the
notes.
Based on the identified portfolio, downgrades may occur if the loss
expectation is larger than initially assumed due to unexpectedly
high levels of default and portfolio deterioration. As the
identified portfolio has better metrics and a shorter life than the
Fitch-stressed portfolio, the class B, D and E notes each display a
rating cushion of two notches, the class C notes have a cushion of
three notches, and the class F notes have a cushion of five
notches. The class A notes and the class A loan do not have a
rating cushion.
Should the cushion between the identified portfolio and the
Fitch-stressed portfolio be eroded either due to manager trading or
to negative portfolio credit migration, a 25% increase in the mean
RDR and a 25% decrease in the RRR across all the ratings of the
Fitch-stressed portfolio, would lead to downgrades of up to four
notches each for the class A loan and the class A to D 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 25% reduction in 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 four notches each for the notes, except for the
'AAAsf' rated classes.
During the reinvestment period, upgrades, which are based on the
Fitch-stressed portfolio, 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
remaining life of the transaction. After the end of the
reinvestment period, upgrades may result from stable portfolio
credit quality and deleveraging, leading to higher credit
enhancement and excess spread being 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
The majority of the underlying assets or risk-presenting entities
have ratings or credit opinions from Fitch and/or other nationally
recognised statistical rating organisations and/or European
securities and markets authority-registered rating agencies. Fitch
has relied on the practices of the relevant groups within Fitch
and/or other rating agencies to assess the asset portfolio
information or information on the risk-presenting entities.
Overall, and together with any assumptions referred to above,
Fitch's assessment of the information relied upon for the agency's
rating analysis according to its applicable rating methodologies
indicates that it is adequately reliable.
ESG Considerations
Fitch does not provide ESG relevance scores for Canyon Euro CLO
2025-1 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.
CANYON EURO 2025-1: S&P Assigns B- (sf) Rating to Class F Notes
---------------------------------------------------------------
S&P Global Ratings assigned its credit ratings to Canyon Euro CLO
2025-1 DAC's class A to F European cash flow CLO notes and class A
Loan. At closing, the issuer issued unrated class Z notes and
subordinated notes.
Under the transaction documents, the rated loan and notes will pay
quarterly interest unless a frequency switch event occurs.
Following this, the loan and notes will permanently switch to
semiannual payments.
The portfolio's reinvestment period will end 4.5 years after
closing, while the noncall period will end 1.5 years after
closing.
The ratings reflect S&P's assessment of:
-- The diversified collateral pool, which primarily comprises
broadly syndicated speculative-grade senior secured term loans and
bonds that are governed by collateral quality tests.
-- The credit enhancement provided through the subordination of
cash flows, excess spread, and overcollateralization.
-- The collateral manager's experienced team, which can affect the
performance of the rated loan and notes through collateral
selection, ongoing portfolio management, and trading.
-- The transaction's legal structure, which is bankruptcy remote.
-- The transaction's counterparty risks, which are are in line
with S&P's counterparty rating framework.
Portfolio benchmarks
S&P Global Ratings' weighted-average rating factor 2,837.73
Default rate dispersion 508.26
Weighted-average life (years) 4.52
Weighted-average life (years) extended
to cover the length of the reinvestment period 4.52
Obligor diversity measure 137.06
Industry diversity measure 23.43
Regional diversity measure 1.24
Transaction key metrics
Portfolio weighted-average rating
derived from S&P's CDO evaluator B
'CCC' category rated assets (%) 2.76
Actual 'AAA' weighted-average recovery (%) 37.18
Actual weighted-average spread (net of floors; %) 3.95
S&P said, "Our ratings reflect our assessment of the collateral
portfolio's credit quality, which has a weighted-average rating of
'B'. At closing, the portfolio was well-diversified, primarily
comprising broadly syndicated speculative-grade senior secured term
loans and senior secured bonds. Therefore, we have conducted our
credit and cash flow analysis by applying our criteria for
corporate cash flow CDOs.
"In our cash flow analysis, we used the EUR425 million target par
amount, the covenanted weighted-average spread (3.85%), the
covenanted weighted-average coupon (4.00%), and the covenanted
portfolio weighted-average recovery rates for the class A Loan and
all rated notes. We applied various cash flow stress scenarios,
using four different default patterns, in conjunction with
different interest rate stress scenarios for each liability rating
category."
Until the end of the reinvestment period on Sept. 26, 2029, the
collateral manager may substitute assets in the portfolio for so
long as S&P's CDO Monitor test is maintained or improved in
relation to the initial ratings on the loan and notes. This test
looks at the total amount of losses that the transaction can
sustain as established by the initial cash flows for each rating,
and compares that with the current portfolio's default potential
plus par losses to date. As a result, until the end of the
reinvestment period, the collateral manager may through trading
deteriorate the transaction's current risk profile, if the initial
ratings are maintained.
S&P said, "Under our structured finance sovereign risk criteria, we
consider the transaction's exposure to country risk to be
sufficiently mitigated at the assigned ratings.
"The transaction's documented counterparty replacement and remedy
mechanisms adequately mitigate its exposure to counterparty risk
under our current counterparty criteria.
"The transaction's legal structure and framework is bankruptcy
remote. The issuer is a special-purpose entity that meets our
criteria for bankruptcy remoteness.
"Our credit and cash flow analysis show that the class B, C, D, E,
and F notes benefit from break-even default rate and scenario
default rate cushions that we would typically consider to be in
line with higher ratings than those assigned. However, as the CLO
is still in its reinvestment phase, during which the transaction's
credit risk profile could deteriorate, we have capped our ratings
on the notes. The class A notes and class A Loan can withstand
stresses commensurate with the assigned ratings.
"Following our analysis of the credit, cash flow, counterparty,
operational, and legal risks, we believe our ratings are
commensurate with the available credit enhancement for the class A
to F notes and class A Loan.
"In addition to our standard analysis, to indicate how rising
pressures among speculative-grade corporates could affect our
ratings on European CLO transactions, we have also included the
sensitivity of the ratings on the class A to E notes and class A
Loan based on four hypothetical scenarios.
"As our ratings analysis makes additional considerations before
assigning ratings in the 'CCC' category--and we would assign a 'B-'
rating if the criteria for assigning a 'CCC' category rating are
not met--we have not included the above scenario analysis results
for the class F notes."
Environmental, social, and governance
S&P said, "We regard the exposure to environmental, social, and
governance (ESG) credit factors in the transaction as being broadly
in line with our benchmark for the sector. Primarily due to the
diversity of the assets within CLOs, the exposure to environmental
credit factors is viewed as below average, social credit factors
are below average, and governance credit factors are average. For
this transaction, the documents prohibit or limit assets from being
related to certain industries. Since the exclusion of assets from
these industries does not result in material differences between
the transaction and our ESG benchmark for the sector, no specific
adjustments have been made in our rating analysis to account for
any ESG-related risks or opportunities."
Ratings
Amount Credit
Class Rating* (mil. EUR) enhancement (%) Interest rate§
A AAA (sf) 231.00 38.00 Three/six-month EURIBOR
plus 1.28%
A Loan AAA (sf) 32.50 38.00 Three/six-month EURIBOR
plus 1.28%
B AA (sf) 46.75 27.00 Three/six-month EURIBOR
plus 1.80%
C A (sf) 25.50 21.00 Three/six-month EURIBOR
plus 2.10%
D BBB- (sf) 29.75 14.00 Three/six-month EURIBOR
plus 2.95%
E BB- (sf) 19.13 9.50 Three/six-month EURIBOR
plus 4.95%
F B- (sf) 12.75 6.50 Three/six-month EURIBOR
plus 7.61%
Z NR 10.00 N/A N/A
Sub. Notes NR 34.30 N/A N/A
*The ratings assigned to the class A Loan and class A and B notes
address timely interest and ultimate principal payments. The
ratings assigned to the class C, D, E, and F notes address ultimate
interest and principal payments.
§The payment frequency switches to semiannual and the index
switches to six-month EURIBOR when a frequency switch event occurs.
EURIBOR--Euro Interbank Offered Rate.
NR--Not rated.
N/A--Not applicable.
SHAMROCK RESIDENTIAL 2023-1: S&P Affirms 'CCC' Rating on G Notes
----------------------------------------------------------------
S&P Global Ratings affirmed its 'AAA (sf)', 'AA (sf)', 'A (sf)',
'BBB- (sf)', 'BB (sf)', 'B- (sf)', and 'CCC (sf)' ratings on
Shamrock Residential 2023-1 DAC's class A, B-Dfrd, C-Dfrd, D-Dfrd,
E-Dfrd, F-Dfrd, and G-Dfrd notes, respectively.
The rating actions reflect S&P's full analysis of the most recent
transaction information and the transaction's structural features.
Over 72% of the loans in the transaction at closing had been
previously restructured, and 24.8% were at least one month in
arrears. Since closing, reported arrears have increased to 39.7%,
of which 28.4% (13.9% at closing, 21.6% at previous review) were
90+ days past due as of December 2024. This reflects the high
proportion of variable rate loans in the portfolio, which have been
directly affected by interest rate rises.
Additionally, as of the December 2024 interest payment date, the
general reserve fund has been fully drawn from the target of
EUR4.60 million. The liquidity reserve fund remains at its target.
Fees have continued to increase from our assumption at closing, and
are similar to those reported in our previous review. Servicing
fees are high because of the increased engagement involved in the
progression through the arrears stages.
S&P said, "At closing, we gave credit to loans that had
historically strong pay rates, but were 90+ days in arrears, and
applied a 5.0x adjustment to the weighted-average foreclosure
frequency (WAFF) instead of assuming 100% foreclosure frequency. We
have now looked at these loans and removed the benefit given the
small proportion of loans receiving it in our previous review (1.8%
of the pool), and the continuing declining performance of the
assets over the past year. Approximately 31% of the loans 120+ days
past due are making no monthly instalments. We considered this in
our analysis.
"Despite the negative arrears, tranche paydown has accumulated
since closing and our previous review, increasing available credit
enhancement.
"The transaction documents contain a contractual floor of one-month
Euro interbank Offered Rate plus 2.5% for standard variable rate
loans. In the most recent period, we calculated a margin of 3.0% on
these loans, complying with this floor. In our previous review this
margin was 1.7% but has increased due to the servicer not reducing
interest rates at the same pace of the reduction in the index.
"After applying our global RMBS criteria, our credit coverage has
decreased across all rating categories since our previous review,
primarily due to a lower weighted-average loss severity (WALS). For
the lower rating categories, the higher arrears--specifically the
gain in 90+ days arrears--has raised the weighted- WAFF.
"The loan portfolio benefits from a lower reperforming loan
adjustment given the portfolio's increased seasoning since our
previous review and since closing. Currently 43.5% of loans are
classified as reperforming, a reduction from 58.5% and 72.9% at our
previous review and closing, respectively.
"On Jan. 20, 2025, we updated our under- and overvaluation
assessments for European residential real estate markets, reducing
the WALS at all rating categories in the transaction."
Credit analysis results
Rating level WAFF (%) WALS (%) CC (%)
AAA 63.11 19.58 12.36
AA 54.14 16.71 9.05
A 48.75 11.78 5.75
BBB 42.51 9.45 4.02
BB 35.14 7.96 2.80
B 33.50 6.69 2.24
WAFF--Weighted-average foreclosure frequency.
WALS--Weighted-average loss severity. CC--Credit coverage.
S&P said, "We consider that the transaction remains vulnerable to
additional stresses to some key variables, in particular defaults
and loss severity, to determine our forward-looking view. In our
view, borrowers' ability to repay their mortgage loans will be
highly correlated to macroeconomic conditions, particularly the
unemployment rate, consumer price inflation, and interest rates."
Policy interest rates in the eurozone may have peaked--the European
Central Bank began cutting rates in the summer of 2024.
S&P said, "Our unemployment rate estimates for Ireland in 2023 and
forecasts for 2024 and 2025 are 4.3%, 4.1%, and 4.0%, respectively.
Most borrowers in this transaction pay variable interest rates,
which have seen higher rates and inflation effects over the last 24
months and may have exhausted savings to keep up with everyday
payments. We have considered this in both our credit and cash flow
analyses."
S&P said, "In our view, eurozone inflation peaked in 2022 at 8.4%.
Continued high inflation estimates in 2024 and forecasts for 2025
are subsiding at 2.3% and 2.1%, respectively. If inflationary
pressures materialize more quickly or more severely than currently
expected, risks may emerge. We consider the borrowers in this
transaction to have been originated as prime but have seen
performance deterioration and as such they will generally have
lower resilience to economic pressures than prime borrowers."
Furthermore, a decline in house prices typically decreases the
level of realized recoveries. For Ireland in 2024, house prices
increased by 9.5%, exceeding European-wide levels and observed
inflation.
A general housing market downturn may delay recoveries. S&P has
also run extended recovery timings to understand the transaction's
sensitivity to liquidity risk.
The increased credit enhancement and decreased WALS levels for the
junior class F-Dfrd and G-Dfrd notes are offsetting the effect of
the increased WAFF at the lower rating levels. S&P considered the
notes' potential sensitivity to rising arrears, particularly given
the steep trajectory of arrears increases and pay rate performance
in recent months.
S&P said, "Given these classes of notes' sensitivity to the
stresses we apply at our 'B' rating level, we applied our 'CCC'
criteria. We performed a qualitative assessment of the key
variables, along with simulating a steady state scenario (actual
conditional prepayment rates, actual fees, and no commingling
stress) in our cash flow analysis.
"The class F-Dfrd notes can pass such a scenario. We therefore do
not consider their repayment to be dependent upon favorable
business, financial, and economic conditions, and we affirmed the
'B- (sf)' rating.
"The class G-Dfrd notes cannot pass such a scenario. We therefore
consider their repayment to be dependent upon favorable business,
financial, and economic conditions, and affirmed our 'CCC (sf)'
rating.
"In our cash flow analysis, the class B-Dfrd, C-Dfrd, D-Dfrd, and
E-Dfrd notes pass at levels exceeding the assigned ratings in our
standard run, with the increased credit enhancement offsetting the
rise in arrears. However, under some of our sensitivity runs,
notably around the recovery rates of the assets given the lack of
empirical data due to the low level of repossessions, these notes'
creditworthiness deteriorates, in line with their current rating
levels. Given the notes' position in the waterfall, we will
continue to monitor their performance under a potential increase in
arrears.
"Our 'AAA (sf)' rating on the class A notes reflects that they pass
at their current rating level in all sensitivities."
Shamrock Residential 2023-1 is a static RMBS transaction that
securitizes a portfolio of reperforming owner-occupied and
buy-to-let mortgage loans, secured over residential properties in
Ireland. The transaction closed in March 2023 and the first
optional redemption date is in July 2025.
===================
L U X E M B O U R G
===================
ALTISOURCE PORTFOLIO: Posts $35.6M Net Loss in 2024, Revenue Up 10%
-------------------------------------------------------------------
Altisource Portfolio Solutions S.A. reported financial results for
the fourth quarter and full year 2024.
"I am pleased with our full year and fourth quarter 2024
performance as we continue to improve our financial results and win
new business. In the face of serious market headwinds for both
Business Segments, we had strong performance improvements across
the board. For the year, we grew total Company Service revenue by
10% and Adjusted EBITDA(1) by $18.3 million, compared to 2023. In
February 2025, we executed an exchange and maturity extension
transaction with our lenders, significantly strengthening our
balance sheet and reducing interest expense," said Chairman and
Chief Executive Officer William B. Shepro.
Mr. Shepro further commented, "As we look to 2025, we believe we
are positioned to diversify our revenue base and ramp business we
have won while maintaining cost discipline. Based upon our current
business and market expectations, which assumes roughly flat
delinquency rates and 13% growth in origination volume, we are
guiding to 2025 Service revenue of $165 million to $185 million and
Adjusted EBITDA(1) of $18 million to $23 million. At the midpoint,
this represents 16% annual Service revenue growth and 18% Adjusted
EBITDA(1) growth over 2024. We are also forecasting to generate
positive operating cash flow from Service revenue and Adjusted
EBITDA(1) growth and lower corporate interest expense."
2024 Highlights
Company, Corporate and Financial:
* Grew Service revenue by $13.8 million, or 10%, to $150.4
million in 2024 compared to 2023
* Full year 2024 total Company Adjusted earnings before
interest, tax, depreciation and amortization of $17.4 million was
$18.3 million higher than 2023 due to:
(1) improving Adjusted EBITDA(1) margins in the Servicer and
Real Estate and Origination segments (together "Business Segments")
to 29.7% in 2024 from 25.1% in 2023, and
(2) reducing Corporate and Others Adjusted EBITDA loss as a
percentage of total Company Service revenue to (18.1)% in 2024 from
(25.7)% in 2023, primarily through efficiency initiatives and cost
savings measures and Service revenue growth
* Improved Adjusted EBITDA(1) by almost $50 million over the
last three years
* Fourth quarter 2024 Service revenue of $38.4 million was
$6.2 million, or 19%, higher than the fourth quarter of 2023,
marking the highest quarterly Service revenue since the third
quarter of 2021
* Fourth quarter 2024 Adjusted EBITDA(1) of $4.7 million was
$4.5 million higher than the fourth quarter of 2023, marking the
highest quarterly Adjusted EBITDA(1) since the third quarter of
2020
* Ended the year with $29.8 million of cash and cash
equivalents
* On February 19, 2025, the Company executed and closed an
exchange transaction with 100% of lenders under the Company's
senior secured term loans whereby the lenders exchanged the
Company's senior secured term loans with an outstanding balance of
$232.8 million for a $160.0 million new first lien loan and the
issuance of approximately 58.2 million common shares of Altisource;
the new first lien loan is comprised of a $110 million term loan
and a $50 million non-interest bearing exit fee which is reduced on
a pro-rata basis with the repayment of the term loan
* In connection with the Term Loan Exchange Transaction,
Altisource will be issuing transferable warrants to holders as of
February 14, 2025 of the Company's:
(i) common stock,
(ii) restricted share units and
(iii) outstanding penny warrants, to purchase approximately
114.5 million shares of Altisource common stock for $1.20 per
share; once issued, the Stakeholder Warrants will provide
Stakeholders with the ability to purchase approximately 3.25 shares
of Altisource common stock for each share of or right to common
stock held
* On February 19, 2025, Altisource also executed and closed on
a $12.5 million super senior credit facility to fund transaction
costs related to the Term Loan Exchange Transaction and for general
corporate purposes
* The Term Loan Exchange Transaction and the Super Senior
Facility Transaction reduce annual cash and payment-in-kind
interest by approximately $18 million to $13.4 million and extend
the maturity dates of the Company's senior secured debt
Business and Industry:
* In the face of serious market headwinds for both Business
Segments, Service revenue in the Servicer and Real Estate segment
increased by 11% to $120 million and Service revenue in the
Origination segment increased by 6% to $30 million
* Improved Adjusted EBITDA(1) in the Business Segments by
$10.4 million to $44.6 million in 2024 compared to $34.2 million in
2023; improved Adjusted EBITDA as a percentage of Service revenue
in the Business Segments to 29.7% in 2024 from 25.1% in 2023;
improvements were primarily through scale benefits and efficiency
and cost cutting initiatives
* Ended 2024 with a weighted average sales pipeline between
$38 million and $47 million of potential estimated revenue on a
stabilized basis based upon forecasted probability of closing
(comprised of between $26 million and $33 million in the Servicer
and Real Estate segment and between $12 million and $15 million in
the Origination segment)
* Generated 2024 sales wins which we estimate represent
potential annualized Service revenue on a stabilized basis of $25.8
million for the Servicer and Real Estate segment and $13.6 million
for the Origination segment
* Industrywide foreclosure initiations were 6% lower in 2024
compared to 2023 (and 35% lower than the same pre-COVID-19 period
in 2019)
* Industrywide foreclosure sales were 14% lower in 2024
compared to 2023 (and 53% lower than the same pre-COVID-19 period
in 2019)
* Industrywide mortgage origination volume increased by 20% in
2024 compared to 2023, comprised of a 2% decline in purchase
origination and a 112% increase in refinance origination
* Industrywide seriously delinquent mortgage rate (90+ day
past due and loans in foreclosure) increased to 1.4% in December
2024 compared to 1.3% in December 2023
2024 Financial Results
Full Year 2024:
* Service revenue of $150.4 million
* Income from operations of $3.2 million
* Loss before income taxes and non-controlling interests of
$(32.9) million
* Net loss attributable to Altisource of $(35.6) million
* Adjusted EBITDA(1) of $17.4 million
Fourth Quarter 2024:
* Service revenue of $38.4 million
* Income from operations of $0.6 million
* Loss before income taxes and non-controlling interests of
$(8.4) million
* Net loss attributable to Altisource of $(8.8) million
* Adjusted EBITDA(1) of $4.7 million
About Altisource
Headquartered in Luxembourg, Altisource Portfolio Solutions S.A.
— https://www.Altisource.com/ — is an integrated service
provider and marketplace for the real estate and mortgage
industries. Combining operational excellence with a suite of
innovative services and technologies, Altisource helps solve the
demands of the ever-changing markets it serves.
As of September 30, 2024, Altisource had $144.5 million in total
assets, $293.2 million total liabilities, and $148.7 million in
total deficit.
* * *
In March 2025. S&P Global Ratings raised its issuer credit rating
on Altisource Portfolio Solutions S.A. to 'CCC+' from 'SD'.
S&P said, "We also assigned our 'B' issue-level rating and '1'
recovery rating to the new $12.5 million senior secured debt (super
senior facility), 'CCC-' issue-level rating and '6' recovery rating
to the new $160 million senior subordinated debt (new first lien
loan), and withdrew our ratings on the company's exchanged senior
secured term loan, which was rated 'D'.
"The stable outlook reflects our expectation that over the next 12
months, while we expect Altisource to generate positive cash flow
from operations, we believe its liquidity will remain constrained
and the company will remain dependent on favorable financial and
economic conditions to meet its financial commitments.
ALTISOURCE PORTFOLIO: Regains Nasdaq MVPHS Rule Compliance
----------------------------------------------------------
As previously disclosed in a Current Report on Form 8-K filed on
December 23, 2024, Altisource Portfolio Solutions S.A. received a
notice from The Nasdaq Stock Market indicating that, for the 30
consecutive business days ending December 19, the market value of
publicly held shares of the Company's common stock was below the
$15 million minimum required for continued listing on The Nasdaq
Global Select Market under Nasdaq Listing Rule 5450(b)(3)(C). The
Company was provided a compliance period until June 18, 2025, to
regain compliance.
On March 12, 2025, the Company received a notice from Nasdaq
stating that since the Company's MVPHS has been $15 million or
greater for the ten-day period of February 19, 2025, to March 11,
2025, the Company has regained compliance with the MVPHS Rule and
Nasdaq considers the matter closed.
About Altisource
Headquartered in Luxembourg, Altisource Portfolio Solutions S.A.
— https://www.Altisource.com/ — is an integrated service
provider and marketplace for the real estate and mortgage
industries. Combining operational excellence with a suite of
innovative services and technologies, Altisource helps solve the
demands of the ever-changing markets it serves.
As of September 30, 2024, Altisource had $144.5 million in total
assets, $293.2 million total liabilities, and $148.7 million in
total deficit.
* * *
In March 2025. S&P Global Ratings raised its issuer credit rating
on Altisource Portfolio Solutions S.A. to 'CCC+' from 'SD'.
S&P said, "We also assigned our 'B' issue-level rating and '1'
recovery rating to the new $12.5 million senior secured debt (super
senior facility), 'CCC-' issue-level rating and '6' recovery rating
to the new $160 million senior subordinated debt (new first lien
loan), and withdrew our ratings on the company's exchanged senior
secured term loan, which was rated 'D'.
"The stable outlook reflects our expectation that over the next 12
months, while we expect Altisource to generate positive cash flow
from operations, we believe its liquidity will remain constrained
and the company will remain dependent on favorable financial and
economic conditions to meet its financial commitments.
=====================
N E T H E R L A N D S
=====================
ASR NEDERLAND: S&P Rates New Restricted Tier 1 Notes 'BB+'
----------------------------------------------------------
S&P Global Ratings assigned its 'BB+' issue rating to the
restricted Tier 1 (RT 1) perpetual subordinated notes with a
write-down feature that Netherlands-based ASR Nederland N.V.
(BBB+/Positive/--) proposes to issue. The issue rating is subject
to its review of the notes' final terms and conditions.
S&P said, "We expect to classify the proposed notes as having
intermediate equity content under our hybrid capital criteria. This
classification is subject to the notes being eligible for
regulatory solvency treatment and the group's hybrid capital not
exceeding the total amount that is eligible for regulatory solvency
treatment."
The rating on the RT1 notes is three notches below S&P's long-term
issuer credit rating (ICR) on ASR Nederland N.V. In this case, S&P
deducts:
-- One notch to reflect the notes' subordination to ASR's senior
creditors;
-- One notch to reflect the payment risk arising from the
mandatory and optional coupon cancellation. Interest cancellation
is mandatory in the event of a breach of either the solvency
capital requirement (SCR) or the minimum capital requirement under
Solvency II; and
-- One notch to reflect the risk of a potential write-down of
principal.
S&P's understanding is that the notes will be eligible as RT1 notes
under Solvency II. The notes will be written down if:
-- The amount of own funds eligible to cover the SCR is equal to
or less than 75% of the SCR,
-- The amount of own funds eligible to cover the minimum capital
requirement (MCR) is equal to or less than the MCR, or
-- The amount of own funds eligible for the SCR is equal to or
less than 100% of the SCR for three months.
ASR's SCR coverage was a robust 198% at year-end 2024. S&P will
monitor the group's SCR coverage and capital plans to assess
whether the ICR on ASR Nederland adequately captures the payment
risk associated with its hybrid instruments.
An unexpected deterioration of the group's regulatory solvency
position that is not accompanied by a change in the ICR, or
increased sensitivity to stress, could lead us to lower the issue
rating on the notes by widening the notching between the issue
rating and the ICR to reflect the heightened payment risk.
S&P said, "Furthermore, we understand that the RT 1 notes are
callable on April 2, 2035, and at any time from the first call date
to and including the first reset date on Oct. 2, 2035, and on each
coupon date thereafter, subject to the conditions for redemption,
including approval from the insurance regulator. Following certain
external events, such as tax, rating, or regulatory events linked
to Solvency II, we understand that ASR Nederland has the option to
redeem or replace the notes at any time, subject to certain
conditions (including regulatory approval)."
The coupon is fixed until Oct. 2, 2035, which marks the first reset
date. It resets on the first reset date and every reset date
thereafter (five-year intervals) to the five-year mid-swap rate,
plus a margin, with no step up, and is paid semi-annually in
arrears.
S&P said, "We understand the proceeds from the RT1 notes will be
used for the group's general corporate purposes, which may include,
without limitations, the refinancing of existing debt, including
callable capital securities. With the issuance of the new debt, we
will no longer regard the debt to be refinanced as having equity
content.
"We forecast that ASR Nederland's financial leverage (debt plus
hybrid capital, divided by the sum of shareholder equity, debt, and
hybrid capital), and fixed-charge coverage (EBITDA divided by
senior and subordinated debt interest) will remain well within our
thresholds for the ratings."
===========
N O R W A Y
===========
HURTIGRUTEN NEWCO: S&P Withdraws 'D' Long-Term Issuer Credit Rating
-------------------------------------------------------------------
S&P Global Ratings has withdrawn all its ratings on cruise operator
Hurtigruten Newco AS at the issuer's request. At the time of the
withdrawal its long-term issuer credit rating on Hurtigruten was
'D' (default).
===========
R U S S I A
===========
NATIONAL BANK: Fitch Affirms 'BB-' Long-Term IDR, Outlook Stable
----------------------------------------------------------------
Fitch Ratings has affirmed JSC National Bank for Foreign Economic
Activity of the Republic of Uzbekistan's (NBU) Long-Term Foreign-
and Local-Currency Issuer Default Ratings (IDRs) at 'BB-' with
Stable Outlooks. The bank's Viability Rating (VR) has been affirmed
at 'b+'.
Fitch has also assigned ex-government support (xgs) Long-Term
Foreign- and Local-Currency IDRs of 'B+'(xgs) and Long-Term Rating
(xgs) to the bank's senior unsecured debt.
Key Rating Drivers
NBU's IDRs are driven by potential state support, as captured by
its 'bb-' Government Support Rating (GSR). The bank's 'b+' VR is a
notch above the operating environment score, reflecting its leading
market positions in Uzbekistan, an extended record of stable asset
quality, high capital ratios through the economic cycle, as well as
recent tangible improvements in profitability.
IDRs Equalised with Sovereign Rating: NBU's GSR and Long-Term IDRs
are on a par with Uzbekistan's sovereign IDR, given its full state
ownership, high systemic importance, important policy role, and the
low cost of support relative to the sovereign's international
reserves.
Gradual Market Improvements, Structural Risks: Uzbekistan's banks
have benefitted from ongoing, but gradual, market reforms that have
fostered economic growth, lifted restrictions on lending, as well
as improved governance and risk-management practices. However, the
local banking sector remains highly concentrated and
state-dominated, despite privatisation plans. It is also exposed to
heightened credit and currency risks and is reliant on state and
external borrowings.
Leading Corporate Franchise, Diversification Strategy: NBU is the
largest bank in Uzbekistan (18% of sector assets at end-2024), with
a particularly strong market position in corporate lending due to
its focus on financing strategic industries. The bank has
prioritised commercial financing, particularly in retail, under its
new strategy, although directed lending to state-owned entities
(SOEs) is likely to remain the key part of its business in the
medium term.
High Concentrations, Retail Loan Growth: Credit risk mainly stems
from high industry and borrower concentrations, and high loan
dollarisation (64% of gross loans at end-2024). Risks are mitigated
by government guarantees on most directed loans and access to
good-quality SOEs with export revenues or state budget support.
Despite rapid retail loan growth (50% in 2022-2023 and an
annualised 35% in 1H24) from a low base, Fitch expects credit risk
to mostly originate in the corporate loans segment over the next
two to three years.
Stable Asset Quality: Impaired loans have been stable in recent
years and equalled 4.4% of gross loans at end-1H24, while Stage 2
loans made up a high 20%. Problem loans were almost entirely
corporate and SME exposures but were fully reserved. Fitch expects
loan quality to remain stable over 2025-2026, with an impaired
loans ratio forecast at around 4%-5%.
Improved Performance: NBU's underlying profitability has improved
markedly over the past three years due to a shift to higher-margin
commercial lending, while maintaining its high cost efficiency and
a low cost of risk. Fitch expects the bank's operating profit to
remain at 3%-4% of risk-weighted assets (RWAs) in 2025-2026 in its
base case.
High Capital Ratios: The bank's Fitch core capital (FCC) ratio
equalled a high 21% of regulatory RWAs at end-1H24. While Fitch
expects the FCC ratio to reduce on lending growth in 2025-2026, its
base case assumes it will remain around 20% over 2025-2026 on
sustainable, healthy internal capital generation.
Mostly External and State Funding: NBU remains highly reliant on
the mix of state and wholesale funding that totalled about 70% of
liabilities at end-1H24. Fitch assesses the bank's near-term
refinancing risks as limited, while its liquidity buffer covers a
quarter of its liabilities.
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
NBU's support-driven IDRs and GSR would be downgraded following a
downgrade of Uzbekistan's sovereign rating, or if Fitch takes the
view that the Uzbek authorities' ability or propensity to support
the bank has weakened.
The VR could be downgraded if the bank's capitalisation materially
weakens due to asset-quality problems or rapid loan growth, with
the FCC ratio falling below 15% on a sustained basis. Depletion of
the bank's liquidity buffers, particularly in foreign currency,
could also be credit-negative, if not promptly offset by liquidity
injections from the state.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
NBU's support-driven IDRs and GSR would be upgraded if Uzbekistan's
sovereign rating is upgraded.
An upgrade of the VR would require an upward revision of the
operating environment score. It would also require NBU to maintain
its stable asset quality and strong capitalisation. Sustained
improvements in the bank's risk profile, in particular reduced loan
concentrations and lower dollarisation, and a more diversified
funding profile, would also be credit-positive.
OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS
The bank's IDRs (xgs) are driven by the bank's VR.
Fitch rates the bank's senior unsecured notes in line with NBU's
Long-Term IDR and Long-Term IDR (xgs), as a default on these
obligations would be deemed a default of the bank, according to
Fitch's rating definitions.
OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES
Any action on the bank's IDRs (xgs) will mirror changes to its VR.
The senior unsecured debt ratings are sensitive to changes in NBU's
Long-Term IDR and Long-Term IDR(xgs).
Public Ratings with Credit Linkage to other ratings
NBU's IDRs, GSR and debt ratings are directly linked to
Uzbekistan's sovereign IDR.
ESG Considerations
NBU has an ESG Relevance Score of '4' for Governance Structure as
Uzbekistan's authorities are highly involved in the bank at board
level and in its business and strategy development, 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.
Entity/Debt Rating Prior
----------- ------ -----
JSC National Bank
for Foreign
Economic Activity
of the Republic
of Uzbekistan LT IDR BB- Affirmed BB-
ST IDR B Affirmed B
LC LT IDR BB- Affirmed BB-
LC ST IDR B Affirmed B
Viability b+ Affirmed b+
Government Support bb- Affirmed bb-
LT IDR (xgs) B+(xgs) New Rating
ST IDR (xgs) B(xgs) New Rating
LC LT IDR (xgs) B+(xgs)New Rating
LC ST IDR (xgs) B(xgs) New Rating
senior
unsecured LT BB- Affirmed BB-
senior
unsecured LT (xgs) B+(xgs) New Rating
UZBEK INDUSTRIAL: Fitch Affirms 'BB-' Long-Term IDR, Outlook Stable
-------------------------------------------------------------------
Fitch Ratings has affirmed Uzbek Industrial and Construction Bank
Joint-Stock Commercial Bank's (UICB) Long-Term (LT) Foreign- and
Local-Currency Issuer Default Ratings (IDRs) at 'BB-' with Stable
Outlooks and Viability Rating at 'b'.
Key Rating Drivers
UICB's Long-Term IDRs reflect Fitch's view of a moderate
probability of support from the government of Uzbekistan
(BB-/Stable), as reflected in the bank's Government Support Rating
(GSR) of 'bb-'. The government plans to privatise UICB in the near
term, but Fitch believes that state support should be available to
the bank as long as it remains majority state-owned.
UICB's 'b' VR reflects its exposure to the volatile local operating
environment, high concentration on both sides of the balance sheet,
material asset-quality risks, moderate profitability and
capitalisation through the cycle, and high share of wholesale
funding.
Gradual Market Improvements, Structural Risks: Uzbekistan's banks
have benefited from ongoing, but gradual, market reforms that have
fostered economic growth, lifted restrictions on lending, and
improved governance and risk-management practices. However, the
local banking sector remains highly concentrated and
state-dominated, despite privatisation plans. It is also exposed to
heightened credit and currency risks and is reliant on state and
external borrowings.
Mostly Corporate Business Focus: UICB is the second-largest bank in
Uzbekistan, accounting for about 12% of sector assets. It retains a
strong corporate franchise in key strategic industries but has
recently focused on developing SME and retail lending to diversify
its operations.
Dollarised, Lumpy Loan Book: UICB's loan book is mostly
corporate-focused, heavily dollarised (end-2024: 63%) and highly
concentrated. Generally long tenors in corporate lending, grace
periods on principal in some cases, and the project finance nature
of some exposures result in heightened loan quality risks, although
the headline impaired loan ratio has been reasonable.
Downside Risks to Asset Quality: At end-2Q24, UICB's impaired
(Stage 3) loan ratio was moderate at 5.5%, although the high Stage
2 ratio of 25% indicated downside loan-quality risks. Fitch expects
loan impairment charges to stay elevated at 2%-3% of gross loans in
2025, while loan quality remains vulnerable due to the significant
single name concentrations in the corporate loan book.
Moderate Profitability: UICB's pre-impairment profit (annualised 4%
of average gross loans in 6M24) was only moderate, in its view.
Fitch expects stable profitability in 2025, although financial
performance should remain highly sensitive to trends in asset
quality.
Moderate Capital Ratios: The bank's Fitch Core Capital (FCC) ratio
equalled 10.4% at end-2Q24. The regulatory Tier 1 ratio was 10.6%
at end-2024, with low headroom over the statutory minimum of 10%.
Capital ratios are likely to stay at their current levels, given
only moderate profitability and its expectation of single-digit
loan growth in 2025.
Significant Non-Deposit Funding: UICB's is heavily reliant on
wholesale funding, with a high gross loans/deposits ratio
(end-2Q24: 3.2x). Near-term refinancing risks are manageable, in
Fitch's view. In July 2024, the bank placed a new USD400 million
five-year Eurobond issue. At end-2024, liquid assets covered a
moderate 11% of total liabilities.
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
The Long-Term IDRs could be downgraded if Uzbekistan's sovereign
IDR was downgraded.
The IDRs could also be downgraded if UICB's controlling stake is
sold to a strategic investor with a lower rating than the
sovereign, or an unrated entity. However, Fitch is likely to factor
in potential government support for UICB, even after privatisation,
at one notch below the sovereign IDR due to the bank's systemic
importance.
A downgrade of the VR could stem from material asset quality
deterioration, translating into loss-making performance, or rapid
lending growth leading to the FCC ratio being sustainably below 10%
or regulatory capital metrics hovering around the regulatory
minimums. A material increase in net Stage 3 loans relative to
capital could also be credit negative.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
UICB's Long-Term IDRs would be upgraded if Uzbekistan was
upgraded.
An upgrade of the bank's VR would require material improvements in
Uzbekistan's operating environment. In addition, an upgrade would
require a tangible expansion of UICB's commercial franchise and a
record of improved asset quality and profitability, with the FCC
ratio strengthening towards 15%.
OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS
UICB's ex-government support (xgs) ratings exclude assumptions of
extraordinary government support from the underlying rating on the
international scale (Long-Term IDR), and are at the level of the
bank's VR.
UICB's senior unsecured debt ratings are aligned with the bank's
Long-Term IDRs and Long-Term IDRs (xgs).
OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES
Any action on the xgs ratings will mirror changes to UICB's VR.
The debt ratings would be downgraded following a downgrade of the
bank's IDRs. Conversely, if the IDRs were upgraded, this would
trigger an upgrade of the debt ratings.
Public Ratings with Credit Linkage to other ratings
UICB's Long-Term IDRs are driven by potential support from the
government of Uzbekistan.
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
----------- ------ -------- -----
Uzbek Industrial
and Construction
Bank Joint-Stock
Commercial Bank LT IDR BB- Affirmed BB-
ST IDR B Affirmed B
LC LT IDR BB- Affirmed BB-
LC ST IDR B Affirmed B
Viability b Affirmed b
Government Support bb- Affirmed bb-
LT IDR (xgs) B(xgs) Affirmed B(xgs)
ST IDR (xgs) B(xgs) Affirmed B(xgs)
LC LT IDR (xgs) B(xgs) Affirmed B(xgs)
LC ST IDR (xgs) B(xgs) Affirmed B(xgs)
senior
unsecured LT BB- Affirmed BB-
senior
unsecured LT (xgs) B(xgs) Affirmed B(xgs)
===========================
U N I T E D K I N G D O M
===========================
AERGO LTD: Begbies Traynor Named as Administrators
--------------------------------------------------
Aergo Ltd was placed into administration proceedings in the High
Court of Justice Court Number: CR-2025-001569, and Lee De'ath and
Tom Gardiner of Begbies Traynor (Central) LLP, were appointed as
administrators on March 18, 2025.
Aergo Ltd is a manufacturer of special-purpose machinery.
Its registered office is at 46-54 High Street, Ingatestone, CM4
9DW.
The administrators can be reached at:
Lee De'ath
Tom Gardiner
Begbies Traynor (Central) LLP
Town Wall House, Balkerne Hill
Colchester, Essex, CO3 3AD
For further information, contact:
Phoebe Bradshaw
Begbies Traynor (Central) LLP
E-mail: Phoebe.Bradshaw@btguk.com
Tel No: 01206 984 921
BASILDON CREDIT: Quantuma Advisory Named as Joint Administrators
----------------------------------------------------------------
Basildon Credit Union Limited was placed into administration
proceedings in the High Court of Justice Business and Property
Courts in England and Wales, Court Number: CR-2025-001803, and Dina
Devalia and Michael Kiely of Quantuma Advisory Limited, were
appointed as joint administrators on March 17, 2025.
Basildon Credit specialized provided rate loans and saving schemes
to those living and working in the borough of Basildon.
Its registered office is at c/o Quantuma Advisory Limited, 7th
Floor, 20 St. Andrew Street, London, EC4A 3AG.
The joint administrators can be reached at:
Dina Devalia
Michael Kiely
Quantuma Advisory Limited
7th Floor 20 St Andrew Street
London, EC4A 3AG
Further details, please contact:
The Joint Administrators
Tel No: 020 3856 6720
EPEL LIMITED: FRP Advisory Named as Joint Administrators
--------------------------------------------------------
Epel Limited was placed into administration proceedings in the High
Court of Justice Business and Property Courts in Leeds, Insolvency
& Companies List (ChD) Court Number: CR-2025-000266, and Gary
Hargreaves and Anthony Collier of FRP Advisory Trading Limited,
were appointed as joint administrators on March 14, 2025.
Epel Limited is a property developer.
Its registered office is at 91 Wellington Street, Luton, LU1 5AF
(to be changed to FRP Advisory Trading Limited, Derby House, 12
Winckley Square, Preston, PR1 3JJ).
Its principal trading address is at Towergate House, 352 Avebury
Boulevard, Milton Keynes, MK9 2JH.
The joint administrators can be reached at:
Gary Hargreaves
Anthony Collier
FRP Advisory Trading Limited
Derby House, 12 Winckley Square
Preston, PR1 3JJ
Further details, contact:
The Joint Administrators
Tel No: 01772 440700
Alternative contact:
Nicola McAvoy
E-mail: cp.preston@frpadvisory.com
HAZEL RESIDENTIAL: Fitch Assigns 'B-sf' Final Rating to Cl. F Debt
------------------------------------------------------------------
Fitch Ratings has assigned Hazel Residential PLC's notes final
ratings, as detailed below.
Entity/Debt Rating Prior
----------- ------ -----
Hazel Residential PLC
A Loan LT AAAsf New Rating AAA(EXP)sf
A XS3021376846 LT AAAsf New Rating AAA(EXP)sf
B XS3021376929 LT AAsf New Rating AA(EXP)sf
C XS3021377141 LT Asf New Rating A(EXP)sf
D XS3021377224 LT BBBsf New Rating BBB(EXP)sf
E XS3021377497 LT BBsf New Rating BB(EXP)sf
F XS3021377570 LT B-sf New Rating B-(EXP)sf
RFN XS3021377653 LT CCsf New Rating CC(EXP)sf
Z XS3021377737 LT NRsf New Rating NR(EXP)sf
Transaction Summary
This transaction is a static securitisation containing a mixed pool
of seasoned owner-occupied (OO) loans (95.8%) and buy-to-let (BTL)
loans (4.2%) originated by Santander UK (STUK) and its predecessor
building societies. STUK remains the legal title holder and the
servicer of the assets.
KEY RATING DRIVERS
High Arrears, Seasoned Portfolio: The pool consists predominantly
of OO mortgages originated by STUK and its predecessors, with
weighted average (WA) seasoning of 12.6 years. Of the loans, 58.4%
are pre-2014 originations, but the characteristics of the pool are
typical of prime RMBS transactions: 88.3% of the borrowers had
verified income and limited adverse credit markers at origination.
However, the pool was selected to include weaker loans, including
16.2% of restructured loans. Arrears are also high, with loans with
more than three payments in arrears representing 8.6%. Fitch
modelled the pool on the prime matrix and has also considered the
historical performance of the pool in its analysis. Performance has
been worse than Fitch's prime index and consequently the agency has
applied an originator adjustment of 1.5x.
Product Switches, Limited Interest Rate Risk: Any product switches
to a fixed rate granted by STUK for non-forbearance-related reasons
will be repurchased from the pool. Product switches to a fixed-rate
loan for borrowers in arrears (forbearance-related) will be
retained in the pool. In these situations, STUK offers a fixed
product for 12 months, based on a discount from its standard
variable rate (SVR), mitigating interest-rate mismatch. Fitch
applied a 5% decrease on the asset margin to capture the potential
use of discounted rate for arrears management and deteriorating
cash flows from borrowers.
Hedging Schedule on Notional Bounds: At closing, 75.3% of the loans
pay a fixed interest rate (reverting to a floating rate), while the
notes pay a SONIA-linked floating rate. The issuer entered into a
swap at closing to mitigate the interest rate risk arising from the
fixed-rate mortgages in the pool.
The swap has a notional balance based on the outstanding balance of
the fixed-rate loans, subject to upper and lower notional bounds,
which could lead to over-hedging due to defaults or prepayments.
This could reduce available revenues in decreasing interest rate
scenarios.
Non-Payers and Pay Rates: Around 1.6% of the pool represents
advances to borrowers that did not make any scheduled payments over
three consecutive months before November 2024. The WA pay rate
remained close to 100% before dipping to around 40% between 2020
and 2021 and has since improved to around 100%. To address the risk
of fluctuating cash flows and yield compression, Fitch assumed a 2%
margin in rising interest rate scenarios for SVR loans, which is at
the lower end of its criteria range.
Deviation from Model-Implied Ratings: The long seasoning of some
loans results in low sustainable loan-to-value ratios, given the
benefit of property price indexation, which in turn results in
Fitch's ResiGlobal asset model predicting high recovery rates. To
account for potentially higher than expected losses from
non-performing loans in the pool, as recovery rates on repossessed
properties have been lower than suggested by the seasoning on the
assets, Fitch has assigned ratings assuming a 5% decrease in the WA
recovery rate (RR).
The assigned ratings are one notch below the base model-implied
ratings for the class B, C and E notes.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
The transaction's performance may be affected by changes in market
conditions and the economic environment. Weakening economic
performance is strongly correlated to increasing levels of
delinquencies and defaults that could reduce the credit enhancement
available to the notes. In addition, unexpected declines in
recoveries could result in lower net proceeds, which may make some
notes susceptible to potential negative rating action depending on
the extent of the decline in recoveries.
Fitch conducts sensitivity analyses by stressing a transaction's
base-case foreclosure frequency (FF) and RR assumptions. Fitch
found that a 15% increase in the WA FF and a 15% decrease in the
WARR indicates model-implied downgrades of three notches for the
class A, B and C notes and five notches for the class D notes. The
class E, F and RFN notes would be assigned distressed ratings in
this scenario.
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 credit enhancement and
potential upgrades. Fitch tested an additional rating sensitivity
scenario by applying a decrease in the WAFF of 15% and an increase
in the WARR of 15%. This led to upgrades of one notch for the class
B notes, four notches for the class C, D and E notes and five
notches for the class F notes. The class A notes are at the highest
achievable rating on Fitch's scale and cannot be upgraded, and the
class RFN notes would remain at their distressed rating.
USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10
Fitch was provided with Form ABS Due Diligence-15E (Form 15E) as
prepared by Deloitte LLP. The third-party due diligence described
in Form 15E focused on validating loan level data against the
relevant sources. Fitch considered this information in its analysis
and it did not have an effect on Fitch's analysis or conclusions.
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.
Fitch conducted a review of a small targeted sample of the
originator's origination files and found the information contained
in the reviewed files to be adequately consistent with the
originator's policies and practices and the other information
provided to the agency about the asset portfolio.
Overall, and together with any assumptions referred to above,
Fitch's assessment of the information relied upon for the agency's
rating analysis according to its applicable rating methodologies
indicates that it is adequately reliable.
Date of Relevant Committee
03 March 2025
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.
HAZEL RESIDENTIAL: S&P Rates Class RFN-Dfrd Notes 'B- (sf)'
-----------------------------------------------------------
S&P Global Ratings assigned its credit ratings to Hazel Residential
PLC's class A Loan and class A to RFN-Dfrd notes. At closing, the
issuer also issued unrated class Z notes.
Hazel Residential is an RMBS transaction securitizing a portfolio
of owner-occupied (95.8%) and buy-to-let (BTL) (4.2%) mortgage
loans secured against properties in the U.K.
The loans in the pool are mainly legacy loans (61%) originated
before 2014 by Santander UK PLC. Although the loans were originated
as prime, there are some nonconforming characteristics to the pool.
The pool has a low current indexed loan-to-value (LTV) ratio of
49%, which is less likely to incur loss severities if the borrower
defaults.
The collateral has a significant exposure to owner-occupied
mortgages advanced to self-employed borrowers (27.4%) and
first-time buyers (25.5%), as well as borrowers with a high
loan-to-income ratio (42.7%) and exposure to interest-only loans
(42.7%). Moreover, of the loans in the pool in arrears by more than
three month, 80.43% have a payrate above 70%.
Most (75.45%) of the assets within the closing pool pay an initial
fixed interest rate and then revert to paying a standard variable
rate or the Bank of England Base Rate plus a contractual margin.
The transaction embeds some strengths that may offset deteriorating
collateral performance. Given its sequential amortization, credit
enhancement is expected to build up over time. The existence of
both a liquidity general reserve and liquidity funds may, to a
certain extent, insulate the notes against credit losses and
liquidity stresses. In addition, the interest rate swap mitigates
the effect on note coupon payments from rising daily compounded
SONIA (Sterling Overnight Index Average) rates that they are linked
to.
There are no rating constraints under our counterparty, operational
risk, legal, or structured finance sovereign risk criteria.
Ratings
Class Rating Amount (mil. GBP)
A Loan* AAA (sf) 247.235
A* AAA (sf) 273.265
B-Dfrd§ AA (sf) 19.010
C-Dfrd§ A (sf) 17.540
D-Dfrd§ BBB (sf) 13.160
E-Dfrd§ BB+ (sf) 5.850
F-Dfrd§ B (sf) 5.850
RFN-Dfrd B- (sf) 8.770
Z NR 2.920
Residual Certs NR N/A
*The class A loan and class A notes always rank pro rata and pari
passu without preference or priority among themselves for the
payment of interest and principal.
§S&P's rating on this class considers the potential deferral of
interest payments.
NR--Not rated.
N/A--Not applicable.
JELLYFISH PICTURES: Interpath Ltd Named as Joint Administrators
---------------------------------------------------------------
Jellyfish Pictures Limited was placed into administration
proceedings in the High Court of Justice Business and Property
Courts in Manchester, Insolvency and Companies List (ChD), No
CR-2025-MAN-000345, and Howard Smith and Michael Robert Pink of
Interpath Ltd, were appointed as joint administrators on March 18,
2025.
Jellyfish Pictures operates in the motion picture, video and
television programme production industry.
Its registered office is at Interpath Ltd, Tailors Corner, 1 Thirsk
Row, Leeds, LS1 4DP.
Its principal trading address is at 86-88 Valentia Place, London,
England, SW9 8EP.
The joint administrators can be reached at:
Howard Smith
Interpath Ltd
4th Floor, Tailors Corner
Thirsk Row, Leeds
LS1 4DP
-- and --
Michael Robert Pink
Interpath Ltd
10 Fleet Place, London
EC4M 7RB
For further details, contact:
Amy Rose
Tel No: 0115 666 0261
Email: jellyfish@interpath.com
LHH MANAGEMENT: RSM UK Named as Administrators
----------------------------------------------
LHH Management Limited was placed into administration proceedings
in the High Court of Justice, Business & Property Courts of England
& Wales, Insolvency & Companies List (ChD), Court Number:
CR-2025-001728, and Glen Carter and Damian Webb of RSM UK
Restructuring Advisory LLP, were appointed as administrators on
March 13, 2025.
LHH Management, trading as Voco Lythe Hill Hotel & Spa, specialized
in Hotel Management.
Its registered office is at Windover House, St. Ann Street,
Salisbury, SP1 2DR
Its principal trading address is at Petworth Road, Haslemere,
Salisbury, GY27 3BQ
The administrators can be reached at:
Glen Carter
RSM UK Restructuring Advisory LLP
Highfield Court, Tollgate
Chandlers Ford, Eastleigh
SO53 3TY
-- and --
Damian Webb
RSM UK Restructuring Advisory LLP
9th Floor, 25 Farringdon Street
London, EC4A
Correspondence address & contact details of case manager:
Nick Talbot
RSM Restructuring Advisory LLP
Highfield Court, Tollgate
Chandlers Ford, Eastleigh
Hampshire, SO53 3TY
Tel No: 023 8064 6464
Alternative contact:
Glen Carter
Tel No: 023 8064 6464
or
Damian Webb
Tel No: 020 3201 8000
LYTHE HILL: RSM UK Named as Administrators
------------------------------------------
Lythe Hill (Holdings) Limited was placed into administration
proceedings in the High Court of Justice, The Business & Property
Courts of England & Wales, Court Number: CR-2025-1729, and Glen
Carter and Damian Webb of RSM UK Restructuring Advisory LLP, were
appointed as administrators on March 13, 2025.
Lythe Hill (Holdings) offered hotel and similar accommodation.
Its registered office is at Windover House, St. Ann Street,
Salisbury, SP1 2DR.
Its principal trading address is at Petworth Road, Haslemere,
Salisbury, GY27 3BQ.
The administrators can be reached at:
Glen Carter
RSM UK Restructuring Advisory LLP
Highfield Court, Tollgate
Chandlers Ford, Eastleigh
SO53 3TY
-- and --
Damian Webb
RSM UK Restructuring Advisory LLP
9th Floor, 25 Farringdon Street
London, EC4A
Correspondence address & contact details of case manager:
Nick Talbot
RSM Restructuring Advisory LLP
Highfield Court, Tollgate
Chandlers Ford, Eastleigh
Hampshire, SO53 3TY
Tel No: 023 8064 6464
Alternative contact:
Glen Carter
Administrators
Tel No: 023 8064 6464
or
Damian Webb
Tel No: 020 3201 8000
PHYCOWORKS LTD: Evelyn Partners Named as Administrators
-------------------------------------------------------
Phycoworks Ltd was placed into administration proceedings in the
High Court of Justice, Court Number: CR-2025-001895, and Mark
Supperstone and Ben Woodthorpe of Evelyn Partners LLP, were
appointed as administrators on March 19, 2025.
Phycoworks Ltd specialized in research and experimental development
on biotechnology.
Its registered office and principal office address is at Scale
Space, 58 Wood Lane, London, W12 7RZ.
The administrators can be reached at:
Mark Supperstone
Ben Woodthorpe
Evelyn Partners LLP
22 York Buildings
London, WC2N 6JU
Further details contact:
Liam Evans
Email: liam.evans@resolvegroupuk.com
THG PLC: Fitch Alters Outlook on 'B+' Long-Term IDR to Stable
-------------------------------------------------------------
Fitch Ratings has revised the Outlook on THG PLC's Long-Term Issuer
Default Rating (IDR) to Stable from Negative and affirmed the IDR
at 'B+'. Fitch has also placed THG Operations Holdings Limited's
EUR600 million term loan B's 'BB-' rating - which has a 'RR3'
Recovery Rating - on Rating Watch Positive (RWP), following the
announcement of the planned debt reduction in the amend and extend
(A&E) transaction. The RWP signals near-term improved recovery
prospects for the TLB with a likely upgrade to 'BB' and a higher
'RR2' on A&E completion.
The Outlook revision reflects its expectations of continued EBITDA
recovery in 2025, which together with the completed demerger of
Ingenuity will ensure deleveraging towards levels commensurate with
the rating.
THG's rating reflects its moderate business scale in the nutrition
sector, and the established market positions of its beauty products
in online retail, offering both own and third-party brands. The
rating also captures lower operating profitability than pure
consumer product manufacturers.
Key Rating Drivers
Nutrition Business Recovery: Fitch projects mid-to-high
single-digit growth for the nutrition business in 2025 before it
normalises towards low to mid-single digits annually in 2026-2027.
Revenue started to stabilise from the last quarter of 2024 after a
significant negative impact from discounted sales of the old
product stocks following a global rebranding of its key Myprotein
product. Fitch expects the recovery in 2025 to be mainly driven by
average selling price normalisation after the destocking and
further expansion of sales in the growing offline sales channel.
Steady Growth in Beauty Business: Fitch projects positive trading
momentum in the Beauty business to continue in 2025, supported by
its expectations of moderate recovery in consumer sentiment in
THG's key markets, and the company's increasing focus on more
resilient and faster-growing prestige skincare and specialist
beauty products. Fitch also expects revenue growth to be supported
by further investments in own brands. Fitch assumes THG beauty
revenue growth rates would remain constrained by intense
competition in the segment.
Management Focus on Profitability: Fitch expects margin improvement
toward historical levels of 5%-6% from 2025 from an estimated 3.6%
in 2024, to be driven by recovery in profitability of the larger in
terms of EBITDA contribution and more profitable nutrition business
following average selling price normalisation and easing costs for
whey. Fitch also expects EBITDA margin in beauty retail to be
supported by THG's strategic focus on more profitable products and
markets, and further development of owned prestige brands. Fitch
assumes profitability gains will be balanced by modest pressure
from personnel and marketing expenses.
Accelerated Deleveraging: Fitch calculates EBITDA leverage will
drop to 4.0x in 2025, mainly driven by the expected recovery in
EBITDA but also due to the reduction in debt to GBP396 million
(EUR475 million equivalent) following the planned capital structure
refinancing. This will ensure ample rating headroom to absorb
additional external shocks or potential acquisitions throughout its
rating horizon. Fitch forecasts further deleveraging from 2026 to
below 4x, but it remains subject to the company's execution risks
around profit stabilisation in the core nutrition segment.
Moderating Execution Risks: Fitch expects execution risks for the
company to moderate based on the improvement in operating
performance in 2024 from low profitability in 2023 and streamlined
operations toward the two core businesses. Fitch still assumes
there are risks to its 2025-2027 forecasts, but now expect THG to
be better positioned to manage its balance sheet without material
additional debt as the liquidity profile remains strong.
Established Market Positions: THG's established position in the
beauty (Lookfantastic.com) and wellbeing (Myprotein) consumer
markets demonstrates a robust business model, underpinned by
moderate geographic diversification and increasing penetration of
markets outside the UK and Europe.
Peer Analysis
Fitch rates THG according to the framework laid out in its Consumer
Products: Ratings Navigator Companion. THG has a retail offering,
but the group's business model is underpinned by an end-to-end
supply chain that aligns its business model most closely with
Fitch's consumer framework.
THG's IDR is above that of beauty seller, Oriflame Investment
Holding Plc (C), whose ratings reflect the company's announcement
of the planned debt restructuring, which meets the conditions for a
distressed debt exchange under Fitch's Corporate Rating Criteria.
Natura &Co Holding S.A. and Avon Products, Inc.'s (part of the same
group; BB+/Stable) rating differential with THG reflects the
significantly larger scale of Natura's operations, synergies from
Avon's acquisition and the revitalisation of its product portfolio
along with a digitalisation plan. Natura also has low leverage due
to recent equity issuance, and higher operating profitability.
Non-food retailer The Very Group Limited (CCC+/Rating Watch
Negative), a pure online retailer in the UK, is rated three notches
below THG due to its weaker business profile, including
geographical concentration in one country, heavily leveraged
balance sheet with high refinancing risk and tight liquidity.
THG's IDR is two notches higher than Ocado Group PLC's (B-/Stable),
reflecting THG's stronger financial metrics and the higher
execution risk faced by Ocado due to the slow ramp-up of existing
customer fulfilment centres and rollout of new centres needed to
drive earnings growth and profitability. This is partially offset
by Ocado's strong position as an international technology and
business services provider with a significant proportion of
long-term contracted earnings. In its view, there is a greater
exposure to pure online retail, including greater inventory risk.
Key Assumptions
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Revenue decline by 9.6% in 2025 driven by Ingenuity demerger,
followed by annual growth of around 3% over 2026-2027
- Fitch-adjusted EBITDA margin of 3.6% for 2024 improving towards
5.6% by FY25 and 6.1% in FY26
- Flat working-capital requirement as percentage of revenue over
the rating horizon
- Capex declining from GBP100 million in 2024 to GBP25 million
annually from 2025 driven by the demerger of Ingenuity
- No M&A after 2024
- No dividend payments over the rating horizon
Recovery Analysis
KEY RECOVERY RATING ASSUMPTIONS
The recovery analysis assumes that THG would be restructured as a
going concern (GC) rather than liquidated in a default.
THG's post-restructuring GC EBITDA reflects Fitch's view of a
sustainable EBITDA of around GBP80 million, which Fitch considers
would be in line with the underlying earnings based on the
company's portfolio of products and brands. The stress on EBITDA
would most likely result from operational issues, leading to slower
topline growth and weaker margins.
Fitch applies a distressed enterprise value/EBITDA multiple of 5.5x
to calculate a GC enterprise value, reflecting THG's growing
position in both beauty and wellbeing D2C channels, underpinned by
internally developed intellectual property.
Based on the payment waterfall, the multi-currency revolving credit
facility of GBP150 million equivalent ranks pari passu with the
senior secured EUR600 million term loan.
After deducting 10% for administrative claims, Fitch's waterfall
analysis generates a ranked recovery for the senior secured loans
in the 'RR3' band, indicating a 'BB-' instrument rating, one notch
above the IDR.
Upon completion of the planned amend and extend transaction with
the expected reduction of the term loan B to EUR475 million and
full repayment of the remaining term loan A, Fitch estimates the
senior secured debt recovery will improve to the 'RR2' band
indicating a 'BB' issuance rating, two notches above the IDR.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- More aggressive financial policy or operating underperformance
leading to a lack of deleveraging, with EBITDA leverage staying
above 5.5x
- Operating EBITDA interest coverage below 3x for two consecutive
years
- Increased competition, weak pricing power and/or delay to or
failure in delivering expected savings leading to weak
profitability
- FCF margin consistently negative, eroding liquidity position
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Dynamic sales progression reflecting increased scale and solid
pricing power, along with stable cost base driving sequential
EBITDA margin improvements, excluding add-backs
- EBITDA leverage trending permanently below 4x (or net debt to
EBITDA below 3.5x)
- EBITDA interest coverage above 4x
- Maintenance of solid liquidity and visibility of sustainably
positive FCF margin
Liquidity and Debt Structure
Fitch expects THG to maintain a cash balance of above GBP190
million from 2024 to 2027, with its liquidity position to be
further supported by positive FCF generation. Combined with a fully
undrawn and extended GBP150 million revolving credit facility, this
ensures comfortable liquidity, especially given the lack of
significant debt repayments in the short term after the planned
refinancing.
THG plans to amend and extend the term loan B due in 2026 down to
EUR475 million to be due in 2029, from EUR600 million. It also
plans to repay the GBP109 million term loan A and a portion of the
term loan B with cash and a GBP90 million equity injection. This
will strengthen its debt maturity profile and enhance its cash flow
generation. THG also has foreign exchange and interest rate swaps
to mitigate exposure to Euribor.
In its liquidity calculations, Fitch treats GBP40 million of cash
as restricted, reflecting limited intra-year working-capital swings
and the rapidly increasing business scale.
Issuer Profile
THG is a D2C online seller of wellness and beauty products, selling
a mix of third-party and own brands through its various websites.
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
----------- ------ -------- -----
THG Operations
Holdings Limited
senior secured LT BB- Rating Watch On RR3 BB-
THG PLC LT IDR B+ Affirmed B+
TOGETHER ASSET 2025-CRE-1: S&P Puts 'B+(sf)' Rating to X-Dfrd Notes
-------------------------------------------------------------------
S&P Global Ratings assigned its credit ratings to Together Asset
Backed Securitisation 2025-CRE-1 PLC's class A notes, Loan notes,
and B-Dfrd to X-Dfrd notes. At closing, the issuer also issued
unrated class Z notes and residual certificates.
This is a static transaction that securitizes a portfolio of
GBP522.2 million mortgage loans, secured on commercial (82.4%),
mixed-use (11.0%), and residential (6.6%) properties in the U.K.
The pool contains 607 loans (16.51%) of the previous Together Asset
Backed Securitisation 2021-CRE1 transaction.
S&P said, "This is the fifth transaction we have rated in the U.K.
that securitizes small-ticket commercial mortgage loans after
Together Asset Backed Securitisation 2023-CRE-1 PLC. Together
Commercial Finance Ltd. originated the loans in the pool between
2012 and 2025.
"We consider the nonresidential nature of most of the pool as
higher risk than a fully residential portfolio, particularly the
loss severity. We have nevertheless assessed these loans'
probability of default using our global residential loans criteria
as the method by which the loans were underwritten and are serviced
is similar to that of Together Commercial Finance's residential
mortgage portfolio. On the loss severity side, we have used our
covered bond commercial real estate criteria to fully capture the
market value declines associated with commercial properties."
Credit enhancement for the rated notes consists of subordination.
Following the step-up date, additional overcollateralization will
also provide credit enhancement. The overcollateralization will
result from the release of the excess amount from the revenue
priority of payments to the principal priority of payments.
Liquidity support for the class A, Loan notes, and B-Dfrd notes
(when most senior) is in the form of an amortizing liquidity
facility and an amortizing liquidity reserve fund. The liquidity
facility will be available at closing and after the step-up date
the liquidity reserve fund will be funded from the revenue and
principal waterfalls. Principal can also be used to cure interest
shortfalls on all the tranches when they become the most senior.
S&P said, "In line with previous commercial real estate
transactions, we have used our "Principles Of Credit Ratings,"
published on Feb. 16, 2011, and "Methodology And Assumptions:
Analyzing European Commercial Real Estate Collateral In European
Covered Bonds," published on March 31, 2015, criteria for the
weighted-average loss severity (WALS) analysis and loss severity
calculations in this transaction. The assets backing the notes in
this transaction are largely small-ticket commercial real estate
and mixed-use properties. We are using these criteria to fully
capture the higher market value declines associated with commercial
properties and better reflect the commercial nature of these assets
upon liquidation."
At closing, the issuer used the issuance proceeds to purchase the
beneficial interest in the mortgage loans from the seller. The
issuer granted security over its assets in the security trustee's
favor.
S&P said, "There are no rating constraints in the transaction under
our counterparty, operational risk, or structured finance sovereign
risk criteria. The issuer is an English special-purpose entity
(SPE), which we consider to be bankruptcy remote. The legal
structure and transaction documents are in line with our legal
criteria."
Ratings
Class Rating Amount (mil. GBP)
A AAA (sf) 109.06
Loan notes AAA (sf) 18.12
B-Dfrd AA (sf) 45.43
C-Dfrd A+ (sf) 15.67
D-Dfrd BBB+ (sf) 7.83
X-Dfrd B+ (sf) 39.17
Z NR 26.12
Residual certs N/A N/A
NR--Not rated.
N/A--Not applicable.
*********
S U B S C R I P T I O N I N F O R M A T I O N
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be reliable, but is not guaranteed.
The TCR Europe subscription rate is US$775 per half-year,
delivered via e-mail. Additional e-mail subscriptions for
members of the same firm for the term of the initial subscription
or balance thereof are US$25 each. For subscription information,
contact Peter Chapman at 215-945-7000.
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