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250501.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Thursday, May 1, 2025, Vol. 26, No. 87 Headlines G E O R G I A TBC LEASING: Fitch Affirms 'BB' Long-Term IDR, Outlook Negative G E R M A N Y ALLGAU FRESH: German Meats Supplier Seeks Insolvency Protection MOTEL ONE: S&P Assigns 'B-' Issuer Credit Rating, Outlook Stable I R E L A N D AB CARVAL III-C: S&P Assigns B- (sf) Rating to Class F Notes EIRCOM FINANCE: S&P Rates New EUR400M Sr. Sec. Fixed-Rate Notes B+ SCULPTOR EUROPEAN IV: Fitch Assigns B-sf Final Rating to F-R Notes TULLY PARK: S&P Assigns Prelim B- (sf) Rating to Class F Notes K A Z A K H S T A N FORTELEASING JSC: Fitch Affirms 'BB' Long-Term IDR, Outlook Stable TAS FINANCE: Fitch Affirms 'B' Long-Term IDR, Outlook Stable TECHNOLEASING LLC: Fitch Hikes Long-Term IDR to 'B', Outlook Stable L U X E M B O U R G KLEOPATRA HOLDINGS: S&P Cuts ICR to 'SD' on Distressed Exchange M O L D O V A MOLDOVA: Moody's Affirms 'B3' LT Issuer Ratings, Outlook Stable N E T H E R L A N D S IPD 3 B.V: Fitch Rates New EUR620MM Notes 'B+(EXP)' S P A I N BANKINTER 11: Moody's Affirms Rating B1 Rating on EUR9.8M D Notes S W I T Z E R L A N D AVOLTA AG: S&P Affirms 'BB+' Long-Term ICR, Outlook Stable U N I T E D K I N G D O M ARDONAGH MIDCO 2: Fitch Ups LT IDR to 'B', Then Withdraws Rating BARROW FUNDING: Fitch Affirms 'B-sf' Rating on Class F Notes BRACCAN MORTGAGE 2025-1: S&P Puts Prelim 'B-' Rating to X Notes HARBOUR ENERGY: Fitch Puts BB(EXP) Rating to New Fixed-Rate Notes - - - - - ============= G E O R G I A ============= TBC LEASING: Fitch Affirms 'BB' Long-Term IDR, Outlook Negative --------------------------------------------------------------- Fitch Ratings has affirmed JSC TBC Leasing's (TBCL) Long-Term Issuer Default Rating (IDR) at 'BB'. The Outlook is Negative. Key Rating Drivers Support Drives Rating: TBCL's IDRs are driven by support from its sole shareholder, TBC Bank JSC (BB/Negative/bb), which is reflected in its Shareholder Support Rating (SSR) of 'bb'. Fitch believes the propensity of TBC Bank to support TBCL is high, reflecting full ownership, common branding, integration, a record of capital and funding support, and high reputational risks from a subsidiary default. Potential support should be manageable for TBC Bank, given the subsidiary's small relative size, with TBCL accounting for less than 2% of TBC Bank's equity and net income. Negative Outlook: The Negative Outlook on TBCL's IDR reflects the same on its parent and the sovereign rating of Georgia (see "Fitch Revises Outlooks on 7 Georgian Banks on Sovereign Outlook Change"). Standalone Credit Profile Constraints: TBCL's standalone credit profile does not drive the IDR as it is constrained by a monoline business model, fairly weak asset quality, high risk appetite, and tolerance for high leverage. Reputational Risk: Fitch believes a failure to support TBCL would seriously damage TBC Bank's reputation with its key lenders, undermining its business model and growth potential. TBCL's foreign lenders are largely the same international financial institutions (IFIs) and investors from which TBC Bank sources a material portion of its own wholesale funding. Leading Position, Niche Market: TBCL operates solely in Georgia, where it is the market leader with an 86% share at end-2024. The company mainly provides financial leasing to SME and corporate clients (including those of TBC Bank), and to a lesser extent to micro-businesses and individuals. The company accounts for a modest 2% of TBC Bank's assets, but its significance to the parent's product offering has been increasing in recent years. Adequate, but Volatile Asset Quality: TBCL's clients are often higher risk than those of TBC Bank. Its Stage 3 ratio (including only impaired leases) was 3.5% at end-2024 but it can be volatile. The impaired loan ratio, including both leases and terminated lease assets, was higher at 12% at end-2024. This is mitigated by the collateralised nature of leasing exposures, reasonable reserve coverage of terminated leases (55%) and the adequate pricing of risk. Positively, single-name concentration improved in recent years with the top 10 accounting for 10% of the portfolio at end-2024 (end-2022: 21%). Sound Profitability: TBCL's profitability is a rating strength, with pre-tax income-to-average assets of 3.8% in 2024 and a return on average equity of 25.1%. This reflects its high-risk, high-reward business model and small capital base in absolute size. Cost of risk has remained contained at below 2% in 2024, which supports profitability alongside strong portfolio growth and high interest income. Improved Leverage: TBCL's gross debt-to-tangible equity gradually improved to 5.7x at end-2024 (end-2020: 10.8x). Dividend distribution of GEL5 million at a pay-out ratio of 30% had a moderate impact on capitalisation. Wholesale Funding: TBCL's funding profile is wholesale and largely secured (about 90% at end-2024) with a pledge on its lease portfolio. It benefits from being part of the larger banking group, with TBC Bank providing letters of comfort to IFIs and local banks, and a funding line of up to USD30 million (with USD 24.5million undrawn at end-2024). RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A downgrade of TBC Bank's IDR would lead to a downgrade of TBCL's IDR. A material weakening of TBC Bank's propensity or ability to support TBCL could result in the subsidiary's rating being notched down from the parent's IDR. This could be driven, for example, by greater regulatory restrictions on support or a reduction in TBCL's strategic importance. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade A revision of the Outlook to Stable and/or an upgrade of TBC Bank's IDR would lead to similar action on TBCL. DEBT AND OTHER INSTRUMENT RATINGS: KEY RATING DRIVERS TBCL's senior secured debt rating is equalised with the company's Long-Term IDR, notwithstanding the bond's secured nature and an outstanding buffer of contractually subordinated debt. This reflects its expectations of average recoveries, because asset recoveries in the event of both TBCL and TBC Bank being in default would probably be weighed down by the considerable macro-economic stress that would likely accompany such an event. DEBT AND OTHER INSTRUMENT RATINGS: RATING SENSITIVITIES Changes to TBCL's Long-Term IDR would be mirrored in the company's senior secured bond rating. Conversion of the bond to unsecured would not lead to a downgrade of the issue, provided this is accompanied by a similar conversion of TBCL's other funding facilities. Public Ratings with Credit Linkage to other ratings TBCL's ratings are linked to TBC Bank's. 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 ----------- ------ ----- JSC TBC Leasing LT IDR BB Affirmed BB ST IDR B Affirmed B LC LT IDR BB Affirmed BB LC ST IDR B Affirmed B Shareholder Support bb Affirmed bb senior secured LT BB Affirmed BB ============= G E R M A N Y ============= ALLGAU FRESH: German Meats Supplier Seeks Insolvency Protection --------------------------------------------------------------- Just Food reports that German meats supplier Allgau Fresh Foods (AAF) has filed for insolvency protection proceedings amid "increasing" cost pressures. In a statement announcing the move, the company said it submitted the application to the competent district court in Kempten on April 22, relates the report. The Feneberg Group subsidiary said cost and price pressures have been "increasing simultaneously" in this business segment for many years, Just Food relays. "To ensure continued success in the future, the company must implement extensive restructuring. This includes, among other things, reducing the company's financial burdens through insolvency protection proceedings in order to gain the necessary freedom to shape a secure future," it added, says the report. The filing initiates a protective shield procedure, a special provision under German insolvency law introduced in 2012, allowing the company to develop an independent restructuring plan within three months, Just Food notes. The meats supplier will remain under court oversight and the guidance of a provisional administrator during this period. According to the report, Leibold Consulting restructuring team managing director Stephan Leibold said: "This step offers us the opportunity to maintain our business activities and restructure ourselves. "We believe in our existing business model of quality, organic, and regionality and will henceforth integrate it into the existing market environment in a sustainable manner and operate safely there," he said, adding the protective shield procedure provides confidence in realigning the company's direction. Just Food notes that attorney Jochen Sedlitz, a partner at law firm Grub Brugger, said: "Initial measures have already been successfully implemented, and salaries and jobs are secured through the insolvency compensation from the Federal Employment Agency and the protective shield. "Business will continue as usual, and customers will be supplied as usual." Allgau Fresh Foods was formed through the merger of Hans Dietz butchery in Schopfloch, the Reiter butchery in Augsburg, Bühler, and the Feneberg butchery in Kempten. It offers meat, sausage, and delicatessen products. The company has roughly 450 employees across its facilities in Kempten, Bavaria, and Schopfloch, Baden-Wurttemberg. MOTEL ONE: S&P Assigns 'B-' Issuer Credit Rating, Outlook Stable ---------------------------------------------------------------- S&P Global Ratings assigned our 'B-' issuer credit rating to Motel One Group GmbH and withdrew its existing 'B-' issuer credit rating on One Hotels & Resorts GmbH given the entity no longer controls Motel One after the acquisition by PAI. S&P said, "We assigned our 'B-' issue and '3' recovery ratings to Motel One's EUR907 million term loan B (TLB) and affirmed our 'B-' issue and '3' recovery ratings on Motel One's existing EUR500 million senior secured notes. "The stable outlook reflects our expectation that Motel One will continue to successfully integrate newly opened hotels over the next 12 months and generate FOCF after lease payments." In March 2025, financial sponsor PAI Partners acquired an 80% stake in Motel One, from One Hotels & Resorts, which will retain 20% ownership. Motel One was founded by Dieter Müller and is a German-based hotel chain, focused on budget design hotels in inner-city locations. Following the transaction, Dieter Müller will remain chairman of Motel One. S&P said, "As a result of the acquisition, One Hotels & Resorts no longer has control over the group and, hence, we no longer include the previous parent and property company in our rating analysis. We base our analysis and assessment approach for deriving our issuer credit rating on the consolidated financials of Motel One GmbH, which we previously referred to as the operating company." Motel One reported a solid operating performance in 2024, despite weak consumer and business sentiments in Germany. S&P said, "Motel One's preliminary operating performance in 2024 was in line with our expectations. Revenue grew to EUR980 million in 2024, from EUR852 million in the previous year, which was primarily driven by 9.2% higher average daily rates, while occupancy was down by 20 basis points (bps) to 71.3%. Company-reported EBITDAR margins were 40 bps lower in 2024, at 54.3%, translating to expected S&P Global Ratings-adjusted EUR488 million in 2024. As the network grows and prices continue to increase on the back of the company-wide rollout of dynamic pricing, we expect revenue to grow to EUR1,085 million and S&P Global Ratings-adjusted EBITDA to grow to EUR538 million in for 2025, which includes a lease adjustment of EUR244 million." Following PAI's acquisition, the group's financial leverage will remain high. S&P said, "Pro forma for the transaction, Motel One's capital structure includes a EUR907 million TLB, EUR500 million of senior secured notes, an undrawn EUR200 million revolving credit facility (RCF), and a EUR350 million PIK instrument, sitting outside of the restricted group but which we include in our adjusted metrics. S&P Global Ratings-adjusted debt also includes other guarantees on miscellaneous debt items for about EUR40 million, and EUR3.029 billion estimated leases liabilities for 2025. Consequently, we project total S&P Global Ratings-adjusted debt of EUR4.842 billion at the end of 2025. This translates into pro-forma S&P Global Ratings-adjusted leverage of 9.0x as of end-2025. We estimate that this metric will remain above 7.0x until at least 2027. Reported debt is projected at EUR1.771 billion at the end of 2025, reflecting in a reported leverage of 6.0x in 2025, remaining above 5.0x until at least 2027." S&P said, "We expect Motel One to continue to generate sound FOCF after leases, supporting a trajectory of self-funded growth. Despite the high S&P Global Ratings-adjusted leverage at closing, we expect FOCF after lease payments to reach EUR91 million in 2025 and EUR109 million in 2026, supported by limited working capital changes and about EUR67 million of capital expenditure (capex) in 2025 and EUR91 million in 2026, of which about 60% will be dedicated to maintenance and re-design capex, while the rest will be allocated to the opening of five to ten new hotels per year. We see as positive Motel One's ability to fund its growth with internally generated FOCF. "Our rating reflects the group's good balance of business and leisure customers, supported by prime inner-city locations and high customer loyalty, which translate into high revenue per available room (RevPar) and above-average EBITDA margins. In our view, the group's value-for-money proposition in inner-city locations, which attracts business (60%) and leisure (40%) guests, is less exposed to intra-year seasonality compared with holiday-focused "sun and beach" hotels. We view the focus on inner-city locations as a barrier to entry, as it is more difficult for competitors to open a hotel next door rather than on the periphery of cities or in the countryside where land is more easily available. The high share of direct bookings, at about 63%, illustrates strong brand recognition and customer loyalty, driving strong RevPar, compared with rated peers in the same segment." The rating remains constrained by the group's capital-intensive business model and its limited diversification across geographies, brands, and value propositions. The group operates under a capital intensive business model, as it leases all its hotels, which is typical in European hotel chains, but which is less cost-flexible in times of weaker demand, especially given the long average lease period of about 20 years and the absence of break clauses in the contracts. Moreover, the group's geographic diversification is low, as 75%-80% of its 28,000 rooms in its 99 hotels are located in Germany, Austria, and Switzerland (DACH region), despite its more recent expansion in other European countries, notably in the U.K. and Ireland since 2012. Finally, the group operates essentially under one brand, Motel One, in the budget segment, which we see as an additional constraint to the rating. While S&P notes that the group is developing a new concept under its Cloud One brand, to date this only accounts for six hotels and has yet to yield stronger brand and value proposition diversification. S&P said, "The stable outlook indicates our expectation that Motel One will continue to report sound operating performance and successfully integrate newly opened hotels over the next 12 months. We expect it will continue to generate positive FOCF after lease payments, and report S&P Global Ratings-adjusted leverage of about 9.0x in 2025." S&P could consider lowering the rating in the next 12 months if: -- FOCF after leases turns negative on a sustained basis, weakening the group's liquidity position and putting strain on its capital structure. This could occur, for example, as a result of weaker operating performance than expected, or if the group decided to pay interest on the subordinated loan in cash rather than in PIK; or -- Financial leverage increases to such levels that would make the group vulnerable to adverse macroeconomic conditions or that would make the capital structure unsustainable in S&P's opinion. S&P could consider a positive rating action if it foresaw for Motel One: -- S&P Global Ratings-adjusted leverage reducing to below 6.5x on a sustained basis, with a financial policy supportive of these metrics; and -- Substantial and incrementing FOCF after lease payments. ============= I R E L A N D ============= AB CARVAL III-C: S&P Assigns B- (sf) Rating to Class F Notes ------------------------------------------------------------ S&P Global Ratings assigned credit ratings to AB Carval Euro CLO III-C DAC's class A-1 and A-2 loans and class X, A, B, C, D, E, and F notes. At closing, the issuer also issued subordinated notes. The ratings assigned 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 loans 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 in line with our counterparty rating framework. Portfolio benchmarks S&P Global Ratings' weighted-average rating factor 2,757.99 Default rate dispersion 546.05 Weighted-average life including reinvestment (years) 4.63 Obligor diversity measure 157.65 Industry diversity measure 21.11 Regional diversity measure 1.17 Transaction key metrics Portfolio weighted-average rating derived from S&P's CDO evaluator B 'CCC' category rated assets (%) 0.50 Covenanted 'AAA' weighted-average recovery (%) 37.21 Covenanted weighted-average spread (%) 3.70 Covenanted weighted-average coupon (%) 3.75 Rating rationale S&P said, "Under the transaction documents, the rated loans and notes will pay quarterly interest unless a frequency switch event occurs. Following this, the loans and notes will switch to semiannual payments. The portfolio's reinvestment period will end approximately 4.5 years after closing. "The portfolio is 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 EUR400 million target par amount, the covenanted weighted-average spread (3.70%), the covenanted weighted-average coupon (3.75%), and the identified portfolio's weighted-average recovery rates at each rating level. We applied various cash flow stress scenarios, using four different default patterns, in conjunction with different interest rate stress scenarios for each liability rating category. "Under our structured finance sovereign risk criteria, we consider that the transaction's exposure to country risk is sufficiently mitigated at the assigned ratings. "Until the end of the reinvestment period on Nov. 15, 2029, the collateral manager may substitute assets in the portfolio for so long as our CDO Monitor test is maintained or improved in relation to the initial ratings on the loans 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 it compares that with the current portfolio's default potential plus par losses to date. As a result, until the end of the reinvestment period, the collateral manager may through trading deteriorate the transaction's current risk profile, as long as the initial ratings are maintained. "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, in line with our legal criteria. "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-1 and A-2 loans and class X to F notes. Our credit and cash flow analysis indicates that the available credit enhancement for the class B, C, D, E, and F notes could withstand stresses commensurate with higher ratings than those we have assigned. However, as the CLO will be in its reinvestment phase starting from closing, during which the transaction's credit risk profile could deteriorate, we have capped our ratings assigned to the notes. "Taking the above factors into account and following our analysis of the credit, cash flow, counterparty, operational, and legal risks, we believe that our ratings are commensurate with the available credit enhancement for all the rated classes of loans and notes. "In addition to our standard analysis, to provide an indication of how rising pressures among speculative-grade corporates could affect our ratings on European CLO transactions, we have also included the sensitivity of the ratings on the class A-1 and A-2 loans and class X to E notes based on four hypothetical scenarios. "As our ratings analysis makes additional considerations before assigning ratings in the 'CCC' category, and we would assign a 'B-' rating if the criteria for assigning a 'CCC' category rating are not met, we have not included the above scenario analysis results for the class F notes." Environmental, social, and governance S&P said, "We regard the transaction's exposure to environmental, social, and governance (ESG) credit factors as broadly in line with our benchmark for the sector. Primarily due to the diversity of the assets within CLOs, the exposure to environmental and social credit factors is viewed as below average, while governance credit factors are average. For this transaction, the documents prohibit or limit certain assets from being related to certain activities. Accordingly, since the exclusion of assets from these activities does not result in material differences between the transaction and our ESG benchmark for the sector, no specific adjustments have been made in our rating analysis to account for any ESG-related risks or opportunities." Ratings list Amount Credit Class Rating* (mil. EUR) Interest rate§ enhancement (%) X AAA (sf) 2.00 3/6-month EURIBOR + 0.85% N/A A AAA (sf) 105.00 3/6-month EURIBOR + 1.20% 39.00 A-1 loan AAA (sf) 89.00 3/6-month EURIBOR + 1.20% 39.00 A-2 loan AAA (sf) 50.00 3/6-month EURIBOR + 1.20% 39.00 B AA (sf) 48.00 3/6-month EURIBOR + 1.85% 27.00 C A (sf) 24.00 3/6-month EURIBOR + 2.35% 21.00 D BBB- (sf) 28.00 3/6-month EURIBOR + 3.20% 14.00 E BB- (sf) 18.00 3/6-month EURIBOR + 5.25% 9.50 F B- (sf) 12.00 3/6-month EURIBOR + 8.09% 6.50 Sub NR 34.50 N/A N/A *The ratings assigned to the class A-1 and A-2 loans and class X, A, and B notes address timely interest and ultimate principal payments. The ratings assigned to the class C to 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. EIRCOM FINANCE: S&P Rates New EUR400M Sr. Sec. Fixed-Rate Notes B+ ------------------------------------------------------------------ S&P Global Ratings had assigned its 'B+' issue rating and '3' recovery rating to the proposed EUR400 million senior secured fixed-rate notes with a six-year maturity, issued by Eircom Finance DAC. The proceeds will be used to prepay in full the EUR300 million term loan B maturing in May 2026 and to prepay a portion of the outstanding balance on its EUR550 million senior secured notes maturing in May 2026, to repay the outstanding balance on its revolving credit facility (RCF) and add to its cash on balance sheet that it will use for general corporate purposes. The rating on the proposed facility is in line with that on the existing senior secured notes and senior secured term loans, which is 'B+'. The recovery rating is '3', indicating our expectation of meaningful recovery (50%-70%; rounded estimate: 55%) in the event of default. The issue and recovery ratings on the proposed notes are based on preliminary information and subject to their successful issuance and our satisfactory review of the final documentation. Issue Ratings--Recovery Analysis Key analytical factors -- The issue rating on the proposed and existing senior secured notes issued by Eircom Finance DAC and on the senior secured term loans from Eircom Finco S.a.r.l. is 'B+', in line with the issuer credit rating on Eircom Holdings (Ireland) Ltd. -- The '3' recovery rating indicates S&P's expectation of a meaningful recovery (50%-70%; rounded estimate: 55%) in the event of a default. -- S&P bases its analysis on the valuation and debt structure of Eircom. S&P excludes Fixed Network Ireland Ltd. (FNI), because it does not provide a guarantee to the rest of the group, nor the group to FNI. -- While the company owns a 50.01% stake in FNI, S&P thinks there will be no residual value remaining available for distribution to Eircom debtholders in the event of a default. This is due to the significant amount of debt at the FNI level, which would take priority over FNI's assets in a hypothetical group default. -- The recovery rating is supported by S&P's valuation of the group as a going concern and limited amount of prior ranking debt in the debt structure. It remains constrained by the large amount of equal-ranking secured debt with no mandatory annual amortizations. -- S&P values Eircom as a going concern due to its established broadband customer base (retail and wholesale), solid mobile market position, and established network asset base in Ireland. -- In S&P's hypothetical default scenario, it assumes a continual deterioration in operating performance. It anticipates, among other factors, pressure on revenue and operating margins due to competition, weaker economic conditions, and no substantial additional revenue from investments in fiber broadband and 5G. Simulated default assumptions -- Year of default: 2029 -- Minimum capital expenditure (capex; share of the last three years' average sales): 6% -- Cyclicality adjustment factor: +0% (standard sector assumption for telecom and cable) -- Operational adjustment: +25% (further adjusted to minimum capex needs) -- Emergence EBITDA after recovery adjustments: about EUR200 million -- Implied enterprise value multiple: 6.0x -- Jurisdiction: Ireland Simplified waterfall -- Gross enterprise value at default: About EUR1.4 billion -- Administrative costs: 5% -- Net value available to debtors: EUR1.2 billion -- Secured debt claims: About EUR2.2 billion* -- Recovery expectation: 50%-70% (rounded estimate: 55%)✝ *All debt amounts include six months of prepetition interest. RCF assumed 85% drawn on the path to default. ✝Rounded down to the nearest 5% SCULPTOR EUROPEAN IV: Fitch Assigns B-sf Final Rating to F-R Notes ------------------------------------------------------------------ Fitch Ratings has assigned Sculptor European CLO IV DAC final ratings, as detailed below. Entity/Debt Rating Prior ----------- ------ ----- Sculptor European CLO IV DAC A-1 XS1829320784 LT PIFsf Paid In Full AAAsf A-2 XS1829321592 LT PIFsf Paid In Full AAAsf A-R XS3047412369 LT AAAsf New Rating B XS1829321089 LT PIFsf Paid In Full AAAsf B-R XS3047412526 LT AAsf New Rating C-1 XS1829324422 LT PIFsf Paid In Full A+sf C-2 XS1834897719 LT PIFsf Paid In Full A+sf C-R XS3047412872 LT Asf New Rating D XS1829322137 LT PIFsf Paid In Full BBB+sf D-R XS3047413094 LT BBB-sf New Rating E XS1829322301 LT PIFsf Paid In Full BB+sf E-R XS3047413417 LT BB-sf New Rating F XS1829323705 LT PIFsf Paid In Full B+sf F-R XS3047413763 LT B-sf New Rating Z XS3047413920 LT NRsf New Rating Transaction Summary Sculptor European CLO IV DAC is a securitisation of mainly senior secured obligations (at least 90%) with a component of corporate rescue loans, senior unsecured, mezzanine, second-lien loans and high-yield bonds. Net proceeds from the debt issuance have been used to redeem the existing notes except the subordinated notes and fund the portfolio with a target par of EUR400 million. The portfolio is actively managed by Sculptor Europe Loan Management Limited. The CLO has a two-year reinvestment period and six-year weighted average life (WAL) test. KEY RATING DRIVERS Average Portfolio Credit Quality (Neutral): Fitch assesses the average credit quality of obligors to be in the 'B/B-' category. The Fitch weighted average rating factor of the identified portfolio is 25.2. 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 62.3%. Diversified Portfolio (Positive): The transaction includes two matrices corresponding to a six-year WAL that are effective at closing. Each matrix corresponds to a different fixed-rate asset limit at 2.5% and 10%. Both matrices are based on a top 10 obligor concentration limit at 25%. The transaction also has various other concentration limits of the portfolio, including a maximum exposure to the three largest Fitch-defined industries in the portfolio at 43%. These covenants ensure the asset portfolio will not be exposed to excessive concentration. Portfolio Management (Neutral): The transaction has a reinvestment period of about two years and includes reinvestment criteria like those of other European transactions. Fitch's analysis is based on a stressed case portfolio with the aim of testing the robustness of the transaction structure against its covenants and portfolio guidelines. Cash Flow Modelling (Positive): The WAL used for the transaction's stressed portfolio and matrices analysis is six years, which is in line with WAL covenant. Fitch has chosen not to shorten the modelled risk horizon below six years according to its CLO Criteria. This is despite the strict reinvestment conditions after the reinvestment period that are envisaged in this transaction, including the satisfaction of over-collateralisation tests and Fitch's 'CCC' limit tests, together with a progressively decreasing WAL covenant. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A 25% increase of the mean default rate (RDR) and a 25% decrease of the recovery rate (RRR) across all ratings of the identified portfolio would lead to downgrades of one notch each to the class C-R and D-R notes and to below 'B-sf' for the class F-R notes. Downgrades, which are based on the identified portfolio, 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 Fitch-stressed portfolio, the class B-R, C-R, D-R, E-R and F-R notes each have a rating cushion of two notches. Should the cushion between the identified portfolio and the Fitch-stressed portfolio be eroded either due to manager trading or negative portfolio credit migration, a 25% increase of the mean RDR and a 25% decrease of the RRR across all ratings of the Fitch-stressed portfolio would lead to a downgrade of up to four notches across the notes. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade A 25% reduction of the mean RDR and a 25% increase in the RRR across all ratings of the Fitch-stressed portfolio would result in an upgrade of no more than three notches across the structure, apart from the 'AAAsf' notes. During the reinvestment period, upgrades, which will be 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 a stable portfolio credit quality and deleveraging, leading to higher credit enhancement 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 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 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 Sculptor European CLO IV 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. TULLY PARK: S&P Assigns Prelim B- (sf) Rating to Class F Notes -------------------------------------------------------------- S&P Global Ratings assigned its preliminary credit ratings to Tully Park CLO DAC's class A, B, C, D, E, and F notes. At closing, the issuer will also issue unrated subordinated notes. The reinvestment period will be approximately 4.60 years, while the non-call period will be 1.50 years after closing. Under the transaction documents, the rated notes will pay quarterly interest unless there is a frequency switch event. Following this, the notes will switch to semiannual payment. The preliminary ratings assigned to the notes reflect our assessment of: -- The diversified collateral pool, which primarily comprises broadly syndicated speculative-grade senior secured term loans and bonds that are governed by collateral quality tests. -- The credit enhancement provided through the subordination of cash flows, excess spread, and overcollateralization. -- The collateral manager's experienced team, which can affect the performance of the rated notes through collateral selection, ongoing portfolio management, and trading. -- The transaction's legal structure, which S&P expects to be bankruptcy remote. -- The transaction's counterparty risks, which we expect to be in line with S&P's counterparty rating framework. Portfolio benchmarks S&P Global Ratings weighted-average rating factor 2,930.43 Default rate dispersion 473.32 Weighted-average life (years) 4.09 Weighted-average life (years) extended to cover the length of the reinvestment period 4.56 Obligor diversity measure 141.39 Industry diversity measure 22.82 Regional diversity measure 1.27 Transaction key metrics Total par amount (mil. EUR) 400.00 Defaulted assets (mil. EUR) 0.00 Number of performing obligors 160 Portfolio weighted-average rating derived from S&P's CDO evaluator B 'CCC' category rated assets (%) 1.50 Target 'AAA' weighted-average recovery (%) 36.65 Actual weighted-average spread (net of floors; %) 3.80 Actual weighted-average coupon (%) N/A N/A--Not applicable. S&P said, "Our preliminary ratings reflect our assessment of the collateral portfolio's credit quality, which has a weighted-average rating of 'B'. "We expect the portfolio to be well-diversified on the closing date, primarily comprising broadly syndicated speculative-grade senior secured term loans and senior secured bonds. Therefore, we conducted our credit and cash flow analysis by applying our criteria for corporate cash flow CDOs. "The transaction will include an amortizing reinvestment target par amount, which is a predetermined reduction in the value of the transaction's target par amount unrelated to the principal payments on the notes. This may allow for the principal proceeds to be characterized as interest proceeds when the collateral par exceeds this amount, subject to a limit, and affect the reinvestment criteria, among others. This feature allows some excess par to be released to equity during benign times, which may lead to a reduction in the amount of losses that the transaction can sustain during an economic downturn. Hence, in our cash flow analysis, we assumed a starting collateral size of less than target par (i.e., the EUR400 million target par minus the EUR2.5 million maximum reinvestment target par adjustment amount). "In our cash flow analysis, we also modeled the covenanted weighted-average spread of 3.65%, the covenanted weighted-average coupon of 4.50%, and the target weighted-average recovery rates at each rating level. We applied various cash flow stress scenarios, using four different default patterns, in conjunction with different interest rate stress scenarios for each liability rating category. "At closing, we expect the transaction's documented counterparty replacement and remedy mechanisms to adequately mitigate its exposure to counterparty risk under our current counterparty criteria. "Under our structured finance sovereign risk criteria, we expect the transaction's exposure to country risk to be sufficiently mitigated at the assigned preliminary ratings. "We expect the transaction's legal structure and framework to be bankruptcy remote, in line with our legal criteria. "Our credit and cash flow analysis indicates that the available credit enhancement for the class B and C notes could withstand stresses commensurate with higher preliminary ratings than those assigned. However, as the CLO will be in its reinvestment phase starting from the effective date, during which the transaction's credit risk profile could deteriorate, we have capped our preliminary ratings assigned to the notes." The class A, D, and E notes can withstand stresses commensurate with the assigned preliminary ratings. S&P said, "For the class F notes, our credit and cash flow analysis indicate that the available credit enhancement could withstand stresses commensurate with a lower preliminary rating. "However, we have applied our 'CCC' rating criteria, resulting in a preliminary 'B- (sf)' rating on this class of notes." The ratings uplift for the class F notes reflects several key factors, including: -- The class F notes' available credit enhancement, which is in the same range as that of other CLOs we have rated and that have recently been issued in Europe. -- The preliminary portfolio's average credit quality, which is similar to other recent CLOs. -- S&P said, "Our model generated break-even default rate at the 'B-' rating level of 23.93% (for a portfolio with a weighted-average life of 4.6 years), versus if we were to consider a long-term sustainable default rate of 3.1% for 4.6 years, which would result in a target default rate of 14.26%." -- S&P does not believe that there is a one-in-two chance of this tranche defaulting. -- S&P does not envision this tranche defaulting in the next 12-18 months. -- Following this analysis, S&P considers that the available credit enhancement for the class F notes is commensurate with the assigned preliminary 'B- (sf)' rating. S&P said, "Following our analysis of the credit, cash flow, counterparty, operational, and legal risks, we believe that our preliminary ratings are commensurate with the available credit enhancement for the class A, B, C, D, E, and F notes. "In addition to our standard analysis, we have also included the sensitivity of the ratings on the class A to E notes, based on four hypothetical scenarios. "As our ratings analysis makes additional considerations before assigning ratings in the 'CCC' category, and we would assign a 'B-' rating if the criteria for assigning a 'CCC' category rating are not met, we have not included the above scenario analysis results for the class F notes." 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 assets from being related to certain activities. Accordingly, since the exclusion of assets from these industries does not result in material differences between the transaction and our ESG benchmark for the sector, no specific adjustments have been made in our rating analysis to account for any ESG-related risks or opportunities." Tully Park CLO is a European cash flow CLO securitization of a revolving pool, comprising euro-denominated senior secured loans and bonds issued mainly by speculative-grade borrowers. Blackstone Ireland Ltd. will manage the transaction. Ratings list Prelim. Prelim. Amount Credit Indicative Class rating* (mil. EUR) enhancement (%) interest rate§ A AAA (sf) 244.00 39.00 Three/six-month EURIBOR plus 1.35% B AA (sf) 48.00 27.00 Three/six-month EURIBOR plus 2.10% C A (sf) 24.00 21.00 Three/six-month EURIBOR plus 2.60% D BBB- (sf) 28.00 14.00 Three/six-month EURIBOR plus 3.90% E BB- (sf) 18.00 9.50 Three/six-month EURIBOR plus 6.50% F B- (sf) 12.00 6.50 Three/six-month EURIBOR plus 10.00% Sub notes NR 29.755 N/A N/A *The preliminary ratings assigned to the class A and B notes address timely interest and ultimate principal payments. The preliminary ratings assigned to the class C, D, E, and F notes address ultimate interest and principal payments. §Solely for modeling purposes--the actual spreads may vary at pricing. 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. =================== K A Z A K H S T A N =================== FORTELEASING JSC: Fitch Affirms 'BB' Long-Term IDR, Outlook Stable ------------------------------------------------------------------ Fitch Ratings has affirmed JSC ForteLeasing's (FL) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'BB' and its National Long-Term Rating at 'A(kaz)'. The Outlooks are Stable. Fitch has also affirmed FL's Shareholder Support Rating (SSR) at 'bb'. Key Rating Drivers Ratings Driven by Support: FL's ratings are driven by Fitch's assessment of potential support from shareholder ForteBank JSC (FB) and are equalised with the parent's 'BB' ratings, which are on Stable Outlook. This reflects a high level of management and operational integration, and strong synergies with the parent as the only entity providing leasing services to the clients of the banking group. In its view, the reputational risk to FB from a FL default is high, given their shared branding and FL's full ownership by FB. FB is one of the largest privately owned banks in Kazakhstan. Strong Parent Integration: Fitch's support assessment is also underpinned by the close supervision of FL by FB management, FL's large parental funding (70% of FL's borrowings at end-3Q24) and its record of solid performance. Fitch believes FL's small size relative to FB's (less than 1% of total assets) would make extraordinary support manageable for the shareholder. Limited Standalone Viability: In Fitch's view, FL's standalone credit profile would be materially lower than the support-driven IDRs. This is due to FL's narrow independent franchise, the performance of which is highly correlated with FB, its modest absolute size and its high reliance on funding from FB. Modest Franchise; Monoline Business Model: FL has a small but growing franchise in the Kazakh leasing market, which is largely dominated by state-owned companies. The business model is focused on leasing trucks, specialised vehicles and passenger cars, although recently the company has started growing other segments and product types. FL's portfolio, largely unseasoned due to its strong growth, remains concentrated by asset types and single names, although associated risks have moderated in recent years as the portfolio has expanded. Adequate Asset Quality, Fast Growth: FL's asset quality has improved in recent years, with problem receivables decreasing to 2.1% at end-3Q24 from 8.5% at end-2020. However, the problem receivables ratio is flattered by rapid portfolio growth, averaging about 43% a year in 2020-2023, potentially indicating more aggressive underwriting than at peers. Fitch expects FL to maintain high portfolio growth in the next two to three years, but the longer-term seasoning of FL's lease portfolio could weigh on its asset-quality metrics. Strong Profitability: FL's profitability is sound, with a pre-tax return on average assets ratio of 9.1% in 9M24 (8% in 2023), supported by a healthy annualised net interest margin of 12.8% (12.8% in 2023). Higher provisioning costs, driven by asset-quality deterioration from the portfolio's seasoning over the long term, could put pressure on profitability. Parent Supports Capitalisation: FB has provided KZT3 billion of additional capital to FL to support its portfolio growth, with further capital injections up to KZT10 billion possible until end-2027. FL's gross debt/tangible equity increased to 2.2x at end-3Q24 from 0.6x at end-2020, as portfolio growth outpaced internal equity generation. Fitch believes FL's leverage will gradually increase in 2025-2027, driven by its projected portfolio growth. However, FB's capital injections will fund the expansion, allowing FB to adhere to its covenants. Concentration risk weighs on its assessment of capital adequacy, with the 10 largest leasing exposures representing 97% of FL's equity at end-2024. Parent Bank Dominates Funding Profile: FL is mostly funded by the parent bank (70% of total borrowings at end-3Q24), with other sources including the state-owned fund, DAMU (19%), and the Industrial Development Fund (11%). FL's access to parent bank funding supported recent growth and its ambitious growth targets. Fitch also believes FB would provide liquidity support. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A downgrade of FB's ratings would result in a corresponding downgrade of FL's ratings. A weakening of FB's propensity to support FL, triggered, for example, by weaker integration, reduced ownership or deviation of FL from the group's objectives could result in FL's Long-Term IDR being notched down from the parent's. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade An upgrade of FB's IDRs would likely result in an upgrade of FL's ratings. Public Ratings with Credit Linkage to other ratings FL's ratings are linked to FB's IDRs. 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 ----------- ------ ----- JSC ForteLeasing LT IDR BB Affirmed BB ST IDR B Affirmed B LC LT IDR BB Affirmed BB LC ST IDR B Affirmed B Natl LT A(kaz)Affirmed A(kaz) Shareholder Support bb Affirmed bb TAS FINANCE: Fitch Affirms 'B' Long-Term IDR, Outlook Stable ------------------------------------------------------------ Fitch Ratings has upgraded Kazakhstan-based Microfinance Organization TAS FINANCE GROUP LLP's (TAS) National Long-Term Rating to 'BB+(kaz)' from 'BB(kaz)'. The Outlook is Stable. Fitch has also affirmed TAS's Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'B'. The Outlook is Stable. Key Rating Drivers Small Franchise; Sector Risk: TAS's ratings reflect its small franchise in the domestic microfinance sector and its monoline and concentrated business model, with a focus on secured used car-backed loans (88% of the total loan portfolio at end-2024) and higher-risk under-banked customers. They also take into account its basic underwriting standards and risk controls, as well as its concentrated funding profile and limited liquidity flexibility. Solid Capitalisation; Adequate Profitability: TAS has sound buffers relative to regulatory requirements, and a granular, mostly short-term secured loan portfolio, backed by fairly liquid collateral. It has had only moderate credit losses and good profitability, despite a volatile macroeconomic environment. National Rating Upgraded: The upgrade of TAS's National Long-Term Rating largely reflects the company's record of coping with macroeconomic and regulatory challenges, including those stemming from still high interest rates, inflation, asset-quality pressures and an evolving regulatory environment. TAS's profitability decreased in 2024 but remained sound. Asset quality has worsened due to macroeconomic and weather conditions in the region, leading to a spike in delinquencies in 2024, but it has remained acceptable for the rating. Monoline Business, Regulatory Risk: TAS provides secured loans to under-banked clients with limited credit history, backed mostly by used cars and real estate (12% of portfolio at end-2024). Clients are largely individuals and small business owners, who use the loans to finance consumption and working capital. TAS's business is sensitive to evolving regulation for microfinance companies and could be subject to event risk, such as interest rate caps or changes in licencing requirements. Exposure to these borrowers, potential market disapproval, sensitivity to regulatory changes and potential exposure to conduct-related risks have a negative effect on its credit profile. Key Person Risk, Competitive Market: TAS's management has so far been able to handle macroeconomic and regulatory challenges, achieving adequate performance. However, Fitch believes key-person risk is material and could affect governance practices, due to high reliance for decision-making on shareholders and their families. Nevertheless, TAS complies with local regulatory and disclosure requirements. It is one of the largest companies in the domestic secured loan segment, but its franchise is smaller than larger local micro-finance companies' and, in its view, could be replicated by incumbents including banks, and microfinance and fintech companies. High Portfolio Growth: TAS's portfolio growth decelerated to 20% in 2024 from 41% in 2023, but remained significant. In its view, the continued rapid portfolio growth could pressure the company's underwriting practices, and consequently asset quality. Impaired Loans Balance Increased: TAS's impaired loans/gross loans ratio (Stage 3) increased to 7.1% at end-2024 from 3.5% at end-2023, which was due to both an increasing volume of impaired loans and to changes in impaired loans recognition methodology, according to management. In its view, TAS's portfolio could be subject to further seasoning and macroeconomic challenges due to fast portfolio growth. TAS's coverage ratio (loan loss reserves/impaired loans) fell to 41% at end-2024 from 99% at end-2023, reflecting the recent impaired loans increase. However, TAS's acceptable loan-to-value ratio and collateral quality requirements support its asset quality. Profitability Down but Still Solid: TAS's pre-tax income/average assets fell to 15% in 2024 from 23% in 2023, due to increased interest, personnel and other operating expenses. Net interest margin fell to 31% in 2024 from 33% in 2023, but in its view was still solid. TAS's business model is labour intensive and its cost/income ratio rose to 52% in 2024 from 36% in 2023, due mostly to an increase in personnel expenses. Fitch believes TAS is subject to potential earnings and business model volatility due to its exposure to regulatory actions across the sector on lending to higher-risk, more socially vulnerable, borrowers. Solid Capital Buffers: TAS's leverage ratio (gross debt/tangible equity) was unchanged at 1.1x at end-2024. It is stronger than most of its peers' and the company maintains a comfortable buffer above regulatory requirements. TAS's equity/assets ratio, its prudential capital requirement (minimum requirement of 10%), was 47% at end-2024 (2023: 48%). Should TAS fully provision its impaired loans, its leverage ratio would only increase to a still solid 1.2x. Cash Generation Supports Liquidity Profile: TAS's assets are mostly equity funded, supplemented by debt funding via unsecured tenge-denominated bonds (58% of total debt at end-2024) and secured loans from JSC Halyk Bank of Kazakhstan (BBB-/Stable; 37% of total debt) and other sources. Its short-term liquidity, measured as liquid assets/short-term funding, was modest at 0.2x at end-2024 (end-2023: 0.4x). However, in its view, TAS's liquidity is supported by the cash flow-generative nature of its business model. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - A regulatory event, for example considerably tighter lending caps, negatively affecting TAS's business model viability or signs of funding and refinancing problems (including covenant breaches), compromising its funding access or ability to grow - A prolonged high interest rate environment in Kazakhstan, coupled with asset quality challenges, which could put pressure on TAS's earnings and portfolio quality - A material reduction in TAS's regulatory capital headroom or its gross debt/tangible equity ratio exceeding 4x on a sustained basis, particularly if combined with material asset quality deterioration and weaker revenue generation ability, weighing on profitability and capital buffers Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Over the long term, sustained growth of TAS's franchise and business scale, maintaining solid financial metrics, could lead to an upgrade Sustained funding diversification, stable and proven access to international financial institution funding could also support positive rating action in the long term DEBT AND OTHER INSTRUMENT RATINGS: KEY RATING DRIVERS TAS's senior unsecured bond rating is equalised with its Long-Term Local-Currency IDR, reflecting Fitch's view that the likelihood of default on the senior unsecured obligation is the same as that of the company, with average recovery prospects reflected in a 'RR4' Recovery Rating. TAS has two KZT10 billion two-year senior unsecured bonds issued in December 2023 and January 2024, both part of its KZT30 billion senior unsecured bond programme. They have fixed coupons of 22% and 20.5%, respectively, are paid quarterly, and have maturities in December 2025 and July 2026. At end-2024, TAS did not have any bonds outstanding under its separate KZT20 billion senior unsecured programme. DEBT AND OTHER INSTRUMENT RATINGS: RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Negative rating action on TAS's Long-Term IDR could lead to negative action on the debt ratings. - Weaker recovery expectations, for example due to materially weaker capitalisation or higher asset encumbrance, could also lead to a downgrade. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Positive rating action on TAS's Long-Term IDR could lead to positive action on the debt ratings. ADJUSTMENTS TAS's 'b' Standalone Credit Profile (SCP) is in line with the implied SCP. The 'bb-' sector risk operating environment score is in line with the 'bb' category implied score. The 'b' business profile score is below the 'bb' category implied score due to the following adjustment reason(s): business model (negative). The 'b' asset quality score is below the 'bb' category implied score due to the following adjustment reason(s): risk profile and business model (negative). The 'bb-' earnings & profitability score is below the 'bbb' category implied score due to the following adjustment reason(s): portfolio risk (negative). The 'b+' capitalisation & leverage score is below the 'bb' category implied score due to the following adjustment reason(s): risk profile and business model (negative). The 'b' funding, liquidity & coverage score is above the 'ccc & below' category implied score due to the following adjustment reason(s): cash flow-generative business model (positive). ESG Considerations TAS has an ESG Relevance Score of '4' for customer welfare given its exposure to higher-risk underbanked borrowers with limited credit history and variable incomes. This underlines social risks arising from increased regulatory scrutiny and policies to protect more vulnerable borrowers (such as lending caps) regarding its lending practices, pricing transparency and consumer data protection. This has a moderately negative impact on TAS's credit profile and is relevant to the ratings in conjunction with other factors. TAS has as ESG Relevance Score of '4' for exposure to social impacts. This reflects risks arising from a business model focused on extending credit at high rates, which could give rise to consumer and market disapproval, and to regulatory changes and conduct-related risks that could affect the company's franchise and performance metrics. This has a moderately negative impact on TAS's credit profile and is relevant to the ratings in conjunction with other factors. TAS has an ESG Relevance Score of '4' for governance structure. This reflects high key-person risk due to significant dependence in decision-making on the company's shareholders and their families, which has a negative impact on the credit profile, 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 ----------- ------ -------- ----- Microfinance Organization TAS FINANCE GROUP LLP LT IDR B Affirmed B ST IDR B Affirmed B LC LT IDR B Affirmed B LC ST IDR B Affirmed B Natl LT BB+(kaz)Upgrade BB(kaz) senior unsecured LT B Affirmed RR4 B TECHNOLEASING LLC: Fitch Hikes Long-Term IDR to 'B', Outlook Stable ------------------------------------------------------------------- Fitch Ratings has upgraded TechnoLeasing LLC's (TL) Long-Term Issuer Default Ratings (IDRs) to 'B' from 'B-' and National Long-Term Rating to 'BB(kaz)' from 'BB-(kaz)'. The Outlooks are Stable. Key Rating Drivers Improving Operating Environment: The upgrade results from an improved operating environment for leasing companies in Kazakhstan, alongside TL's solid leverage position and good performance record, helped by well-controlled impairment costs. Stable Outlook: The Stable Outlook reflects Fitch's view that TL's credit profile can withstand moderate macroeconomic challenges, including high interest rates and inflation. It also reflects TL's record of adequate profitability and capitalization during multiple stressed periods. Improving Leverage: In 2024, TL's gross debt/tangible equity ratio improved to 2.4x from 3.2x at YE 2023, helped by modest growth and full profit retention. The absolute capital size remains small, at KZT8.5 billion at YE 2024 (USD16 million). TL's liabilities/equity ratio of 2.9x was well below the covenanted liabilities-to-equity ratio of 5.0x. Management aims to keep an ample buffer, targeting capitalisation (equity to assets) of 25% in the long term. Modest Leasing Franchise: TL's ratings are constrained at the current level by its modest franchise in Kazakhstan's leasing market, its monoline business model with substantial concentration by lessee and industry, and its reliance on continued access to funding, which can be volatile. Fitch views agricultural leasing as riskier than car and equipment leasing due to seasonal challenges. Limited Funding Flexibility: TL's liquidity is acceptable for the rating, benefitting from a well-matched balance sheet and solid unrestricted cash balances of KZT3.8 billion at YE 2024, covering 46% of short-term debt. However, TL has limited access to unsecured funding and most debt is secured (88% of total debt at YE 2024), constraining its funding flexibility and liquidity. TL's outstanding KZT2 billion bonds were fully repaid in April 2025, with no intention currently to refinance them. High Concentrations: Fitch assesses TL's credit risk as high, given its sizeable exposure to the agricultural sector and single lessees. Its lease book is subject to mostly annual payments, which could lead to sudden increases in impaired lease assets, as seen in 2024 when extreme weather events affected one of its largest clients. TL's asset quality is vulnerable to macroeconomic challenges, agricultural goods prices, harvests, and export controls. Volatile Impairments; Low Coverage: TL's reported impaired leases increased to 6.6% of the total gross portfolio at YE 2024 (2023: 0%) largely due to the delinquency of the single largest lessee in its agricultural leasing portfolio following extreme weather events affecting harvests. Impaired receivables reserve coverage was low (8% at YE 2024). Fitch understands that TL recovered most of the problem exposure in 1Q25, and management expects problem levels to remain low, around historical levels. Profitability Could Be Pressured: TL's profitability has been gradually strengthening, with its pre-tax income to average assets ratio improving to 5.2% in 2024 (2023: 4.7%). This increase was mostly driven by higher revenues despite high inflation and funding costs. Fitch believes TL's profitability could be pressured by increasing competition, particularly from state agents, and broader macroeconomic volatility. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Signs of increased refinancing risk, such as funding becoming increasingly reliant on short-term sources, or an inability to access liquidity when needed; - Changes in strategic direction that contribute to a material increase in risk appetite; - An increase in the gross debt/tangible equity ratio to above 5x, which would significantly narrow headroom to covenanted leverage metrics; - A deterioration in asset quality that affects profitability and reduces loss absorption buffers; - Weakening of profitability, for example, as a result of competitive pressure or state intervention in the agricultural leasing sector, with pre-tax return on average assets dropping below 2% on a sustained basis. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Upgrade potential is limited in the medium term and would require a materially stronger franchise, improved liquidity and greater funding diversification; - In the long term, a more diversified portfolio and larger business scale relative to both domestic and international peers, combined with a conservative leverage profile and the maintenance of above peer financial indicators, could be positive for the rating. ADJUSTMENTS The Asset Quality score has been assigned below the implied score due to the following adjustment reason(s): Risk profile and business model (negative). The Earnings & Profitability score has been assigned below the implied score due to the following adjustment reason(s): Revenue diversification (negative). The Capitalization & Leverage score has been assigned below the implied score due to the following adjustment reason(s): Risk profile and business model (negative). The Funding, Liquidity & Coverage score has been assigned below the implied score due to the following adjustment reason(s): Funding flexibility (negative). ESG Considerations TL has an ESG Relevance Score of '4' for Governance Structure due to a significant dependence in decision-making on the sole shareholder, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. TL has an ESG Relevance Score of '4' for Exposure to Environmental Impacts due to its sizable exposure to the agricultural sector, 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 ----------- ------ ----- TechnoLeasing LLC LT IDR B Upgrade B- ST IDR B Affirmed B LC LT IDR B Upgrade B- Natl LT BB(kaz)Upgrade BB-(kaz) =================== L U X E M B O U R G =================== KLEOPATRA HOLDINGS: S&P Cuts ICR to 'SD' on Distressed Exchange --------------------------------------------------------------- S&P Global Ratings lowered its long-term issuer credit rating on plastic packaging producer Kloeckner Pentaplast's holding company, Kleopatra Holdings 2 S.C.A. (KH2) to 'SD' (selective default) from 'CC' and its issue rating on the senior unsecured notes to 'D' (default). The 'CCC-' long-term issuer credit ratings and negative outlook on Kloeckner Pentaplast of America Inc. and Kleopatra Finco S.a.r.l., and the 'CCC-' issue rating on the senior secured facilities, remain unchanged. KH2 exchanged its 6.5% EUR300 million senior unsecured notes due in September 2026 at par into new EUR300 million second-lien notes due September 2029 paying 6.5% cash + 2.5% in-kind interest. The new notes benefit from an enhanced security package. S&P Global Ratings sees the transaction as distressed. S&P said, "We view the exchange as distressed because investors are, in our view, receiving less than originally promised on their outstanding notes. We think that KH2 could have faced a conventional default on these notes in the short-to-medium term, in the absence of this transaction." S&P said, "We lowered the issue rating on the EUR300 million senior unsecured notes due in 2026 issued by KH2 to 'D' from 'C'. The recovery rating remains '6'. The issue rating on KH2's senior secured instruments (comprising a EUR600 million term loan, a $725 million term loan, and the EUR400 million notes) remains at 'CCC-', in line with the long-term issuer credit rating on Kloeckner Pentaplast of America Inc. and Kleopatra Finco S.a.r.l. The recovery rating ('4') indicates our expectation of average recoveries (30%-50%; rounded estimate 45%) in an event of default. "We view KH2's capital structure as unsustainable. We think that KH2's S&P Global Ratings-adjusted debt quantum (EUR2.4 billion) is too high compared with its track record of mostly negative free operating cash flow. This undermines KH2's refinancing prospects for its $725 million and EUR600 million senior secured term loans due in February 2026, and its EUR400 million senior secured notes (March 2026). "We will re-evaluate our ratings in the coming days or once we have more information on KH2's additional refinancing plans, or if the company announces restructuring plans or a distressed exchange. "Our 'SD' rating on KH2 does not carry an outlook. The negative outlook on Kloeckner Pentaplast of America Inc. and Kleopatra Finco S.a.r.l. reflects that we will lower our ratings on those entities to 'SD' (selective default) and the senior secured debt to 'D' (default) if the group also completes a transaction that we see as distressed on those instruments." ============= M O L D O V A ============= MOLDOVA: Moody's Affirms 'B3' LT Issuer Ratings, Outlook Stable --------------------------------------------------------------- Moody's Ratings has affirmed the foreign and domestic-currency long-term issuer ratings of the Government of Moldova at B3. The outlook remains stable. The affirmation of Moldova's B3 ratings reflects its elevated exposure to geopolitical risk stemming from the war in neighbouring Ukraine (Ca stable), which remains a key constraint on the rating. This offsets improvements to the country's institutions and governance strength driven by institutional reforms in the context of the EU accession process. The affirmation of the B3 ratings also takes into account the reforms and mainly loan-funded investments under the EU-funded Reform and Growth Facility for Moldova, which will boost Moldova's currently weak rate of economic growth and support long-term growth potential, but at the same time add to the government debt burden. The stable outlook reflects balanced risks at the B3 level. On the potential upside, continued progress on reforms tied to the EU accession process could lead to improvements to institutional strength beyond Moody's current expectations, and bolster Moldova's economic strength through effective implementation of the EU-funded Reform and Growth Facility. To the potential downside, the autumn parliamentary elections risk resulting in a government which is more fragmented or less committed to the EU accession process, hampering the prospects for further institutional and economic reform. Furthermore, US disengagement from its role of supporting Ukraine and European security more broadly risks having negative spillover effects for Moldova. Both of these factors would damage the prospects for a sustained recovery of the Moldovan economy, which has struggled to grow since 2022. Moldova's local and foreign-currency ceilings remain unchanged at Ba3 and B2, respectively. The three-notch gap between the local-currency ceiling and the sovereign rating reflects elevated political risks, somewhat elevated external vulnerabilities and moderate predictability of government and institutions. The two-notch gap between the foreign-currency ceiling and the local-currency ceiling reflects very limited capital-account openness, weak policy effectiveness, and somewhat elevated external indebtedness which push the foreign-currency ceiling below the local-currency ceiling. RATINGS RATIONALE RATIONALE FOR AFFIRMING THE B3 RATINGS CONTINUED HIGH EXPOSURE TO GEOPOLITICAL RISK IN LIGHT OF HEIGHTENED UNCERTAINTY AROUND THE EVOLUTION OF THE WAR IN UKRAINE Moldova's elevated exposure to geopolitical risk stemming from the war in neighbouring Ukraine remains a key constraint on the rating. The likelihood of Russia's military invasion of Ukraine spilling over into Moldova has receded since the start of the war in February 2022 as fighting remains concentrated mainly in the eastern part of Ukraine. Since the start of the war in Ukraine, Moldova has also effectively ended its previous energy dependence on Russia, thus limiting what was previously a key source of geopolitical risk. Nevertheless, the disengagement of the United States from its role both as a key backer of Ukraine and as a guarantor of European security more broadly has contributed to heightened uncertainty about the evolution of the war in Ukraine. If the disengagement of the US were to lead to significant advances of Russian troops beyond the current front lines, this would risk having significant spillover effects also for Moldova even though the country is currently far removed from the areas of the most active fighting. While Russia continues to support the separatist Moldovan region of Transnistria, the region does not pose a military threat to Moldova without more extensive military backing from Russia. Russia is also likely to continue engaging in hybrid warfare to destabilise Moldova. The Moldovan authorities allege that Russia interfered to support its favoured outcome in last year's presidential election and referendum on enshrining Moldova's commitment to joining the EU in the country's constitution. It is highly likely that similar methods will be deployed to influence also this year's parliamentary elections, while other forms of hybrid warfare such as sabotage operations against key infrastructure in Moldova also remain a significant risk. IMPROVEMENTS TO MOLDOVA'S INSTITUTIONS AND GOVERNANCE STRENGTH SUPPORTED BY THE EU ACCESSION PROCESS The strength of Moldova's institutions and governance has improved in recent years, albeit from low levels. The pro-European president and government which have been in office since 2020 and 2021 respectively have driven a reform agenda focused on aligning Moldova's institutions with EU standards, which has contributed to a notable strengthening of the institutional environment in the country. This has resulted in significant improvements to many of Moldova's WorldWide Governance Indicators (WGI), including those informing Moody's assessments of the strength of Moldova's civil society and judiciary. The improvements in the field of the rule of law and control of corruption in particular reflect efforts to reform many of the key parts of the judicial system, including the supreme court and judicial administration body. The process of vetting members of the judiciary to tackle concerns around systemic corruption is also currently ongoing, within the framework of recommendations made by international bodies such as the Council of Europe's Venice Commission. The opening of EU accession negotiations at the end of 2023 has improved the prospects for a further strengthening of Moldova's institutions in coming years. The reformed EU accession process places an increasing importance on the fulfillment of the institutional requirements for accession in areas such as the rule of law, public procurement and financial control. Moody's also expects the EU to continue to support capacity-building not least to strengthen fiscal policy effectiveness. The EU's Reform and Growth Facility for Moldova agreed in March 2025 provides additional incentives for Moldova to align with EU institutional standards, as adherence to these will be a prerequisite for the disbursement of loans and grants under the facility. While Moody's expects parliamentary elections this autumn will result in a government that still wants to advance Moldova's progress towards EU membership, Moody's also expects the next government will need to be based on a multi-party coalition. A more fragmented government as well as institutional capacity constraints risk hampering policy effectiveness and the government's ability to continue advancing its European reform agenda at an accelerated pace. EU-FUNDED INVESTMENT AND REFORM PROGRAMME WILL BOOST SLUGGISH ECONOMIC GROWTH BUT ALSO INCREASE GOVERNMENT DEBT BURDEN FROM LOW LEVELS The weak growth performance of the Moldovan economy since the onset of the Russian invasion of Ukraine in 2022 has compounded other constraints on the country's economic strength such as its small size and low income levels. Real GDP grew by only 0.1% in 2024 following weak growth also in 2023 and a contraction in 2022. Given the unexpectedly weak growth performance in 2024, Moody's have made a significant downward revision to Moody's growth projections also for coming years, with real GDP growth set to remain sluggish at 1.1% in 2025 before picking up to 2.6% in 2026. Moody's expectations of a pick-up in growth is to a significant extent based on the anticipated positive impact on investment stemming from the roll-out of the Moldova Reform and Growth Facility starting in 2025. The plan which will run until 2027 totals EUR1.9 billion (11.2% of 2024 GDP) in funding for Moldova, with twice-yearly disbursements conditional on the meeting of reform milestones that will generally be linked to the reform requirements of the EU accession process. The facility will also offer Moldova enhanced access to the EU single market. As such, Moody's expects that successful implementation of the plan will also support Moldova's long-term growth potential and economic strength. Almost 80% of the funding under the plan will be provided as loans rather than grants. While the loans are offered on concessional terms, with favourable interest rates and long maturities, their disbursement will nevertheless add to the government deficit and drive a moderate increase of the government debt burden in coming years. Moody's expects the headline fiscal deficit to increase to 5.5% of GDP in 2025 from 3.9% in 2024, and remain above 5% also in 2026. As a consequence, Moody's forecasts the debt-to-GDP ratio will gradually increase to 46% in 2028 from 38% in 2024. Still, this would leave the government debt burden somewhat below the median of Moldova's B3 rated peers. RATIONALE FOR THE STABLE OUTLOOK The stable outlook reflects balanced risks at the B3 level. On the potential upside, continued progress on reforms tied to the EU accession process could lead to improvements to institutional strength beyond Moody's current expectations, and bolster Moldova's economic strength through effective implementation of the EU-funded Reform and Growth Facility. To the potential downside, the autumn parliamentary elections risk resulting in a government which is more fragmented or less committed to the EU accession process, hampering the prospects for further institutional and economic reform. Furthermore, US disengagement from its role of supporting Ukraine and European security more broadly risks having negative spillover effects for Moldova. Both of these factors would damage the prospects for a sustained recovery of the Moldovan economy, which has struggled to grow since 2022. ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONSIDERATIONS Moldova's ESG Credit Impact Score is CIS-4, reflecting high exposure to social and environmental risks as well as governance challenges which weaken Moldova's resilience to shocks. Moldova's E-3 issuer profile score is driven by physical climate risk due to its large agricultural sector which is increasingly vulnerable to droughts, floods, and other extreme weather phenomena intensified by global climate change. Droughts in 2020 and 2024 resulted in a significant contraction of agricultural output. Given that up to 80% of Moldova's poor population reside in rural areas and depend on agriculture for their livelihoods, climate-induced extreme weather events can increase poverty levels and food insecurity. Exposure to social risks (S-4 issuer profile score) is mainly related to a rapidly shrinking population, which weighs on the country's labour input and constrains its growth potential. A significant part of the country's population has emigrated, mainly because of a lack of job opportunities and relatively high poverty levels. According to UN estimates, the total population is expected to further shrink by over 20% between 2023 and 2050. Social risks are amplified by weak health outcomes and limited access to basic services, highlighted by significantly higher mortality rates during the COVID-19 pandemic compared to the WHO European Region average. Moldova's governance profile score (G-4) reflects broad-based institutional weaknesses. That said, the quality of institutions, particularly in areas such as the control of corruption and rule of law, have improved in recent years due to on-going reform efforts which will continue to be supported by the EU accession process. GDP per capita (PPP basis, US$): 17,320 (2023) (also known as Per Capita Income) Real GDP growth (% change): 0.7% (2023) (also known as GDP Growth) Inflation Rate (CPI, % change Dec/Dec): 4.2% (2023) Gen. Gov. Financial Balance/GDP: -5.1% (2023) (also known as Fiscal Balance) Current Account Balance/GDP: -11.3% (2023) (also known as External Balance) External debt/GDP: 60.5% (2023) Economic resiliency: b1 Default history: At least one default event (on bonds and/or loans) has been recorded since 1983. On April 23, 2025, a rating committee was called to discuss the rating of the Moldova, Government of. The main points raised during the discussion were: The issuer's economic fundamentals, including its economic strength, have not materially changed. The issuer's institutions and governance strength, have materially increased. The issuer's fiscal or financial strength, including its debt profile, has materially decreased. The issuer's susceptibility to event risks has not materially changed. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Positive pressure could build on Moldova's ratings from a combination of a lowering of political risk and further improvements to institutional and economic strength. The on-going EU accession process could drive a strengthening of Moldova's institutions and governance strength beyond Moody's current expectations in coming years. Investments and reforms backed by the EU and other international partners could also improve Moldova's economic strength and add to positive overall rating pressures, for instance by improving the quality of infrastructure and the business climate. Moldova's outlook could change to negative and its ratings could eventually be downgraded if the geopolitical risks stemming from Russia's invasion of Ukraine or Russian interventionism through hybrid attacks were to escalate into domestic instability in Moldova. Evidence of increased domestic political volatility, including a weakening in the government's commitment towards EU accession, which jeopardises international financial support and leads to a reversal in reforms, would be negative for the ratings. A significant weakening of the government's fiscal strength could also add to downward pressures. The principal methodology used in these ratings was Sovereigns published in November 2022. The weighting of all rating factors is described in the methodology used in this credit rating action, if applicable. The net effect of any adjustments applied to rating factor scores or scorecard outputs under the primary methodology(ies), if any, was not material to the ratings addressed in this announcement. ===================== N E T H E R L A N D S ===================== IPD 3 B.V: Fitch Rates New EUR620MM Notes 'B+(EXP)' --------------------------------------------------- Fitch Ratings has assigned IPD 3 B.V.'s (IPD) proposed EUR620 million due 2031 notes an expected 'B+(EXP)' senior secured rating. The Recovery Rating is 'RR3'. The notes are rated a notch above IPD's Long-Term Issuer Default Rating (IDR) of 'B' to reflect their senior secured status in IPD's capital structure and above-average recovery prospects. The proceeds will be used primarily to refinance the company's EUR590 million fixed-rate notes due June 2028. The final rating is contingent on the receipt of final documentation conforming to information already received. Despite slightly higher debt post-refinancing, Fitch expects the company's EBITDA growth to help reduce Fitch-defined EBITDA gross leverage towards 4.7x at end-2028. The Stable Outlook reflects its expectations of IPD's prudent approach to further acquisitions, continued moderate margin improvement through a well-managed cost structure and economies of scale, and organic revenue growth. Key Rating Drivers Leverage to Gradually Decrease: Fitch expects the proposed EUR620 million notes to have a broadly neutral effect on leverage, with a 0.1x increase in the company-defined EBITDA gross leverage. Fitch expects that contributions from bolt-on acquisitions and organic growth will help reduce Fitch-defined EBITDA leverage to 5.6x at end-2025 and towards 4.7x at end-2028 from 5.8x at end-2024. Deleveraging may be slower if the company decides to pursue bolt-on acquisitions using its revolving credit facility (RCF), as demonstrated in early 2024. Resilient Margin, Expansion to Continue: Margins are resilient, as IPD is able to pass on cost inflation to customers, particularly wages, which represent 55%-60% of operating expenditure. The company is focused on cost control and higher-margin businesses. Fitch expects sluggish economic growth in Europe to reduce opportunities for margin expansion and will keep organic revenue growth in mid-single digits. However, its base case still assumes IPD will continue to see gradual EBITDA margin gains, to above 31% by 2026. This will be driven by cost control, contributions from acquired businesses and economies of scale. Sustainable Organic Growth: IPD reported strong organic revenue growth of 5.5% in 2024. This was driven by the expansion of subscription-based technology solutions, especially for automotive and environmental health and safety services, increase in prices and the solid performance of its tradeshows business. Interest Cover to Improve: Fitch expects EBITDA interest coverage to improve to its sensitivity of 2.8x in 2025 and to above 3.0x from 2026. This is driven by an expected sharply lower coupon on the proposed fixed-rate notes of 8% and a gradually improving EBITDA. An expected decrease in Euribor will also reduce interest expense on its EUR520 million floating-rate notes. Fitch sees further upside to the floating-rate note margin once the current hedge, which keeps the margin above the market rate, expires in September 2025. Interest cover assumptions do not consider any additional debt in the next four years. Bolt-on Acquisitions to Remain: IPD's strategy assumes organic growth and M&A. The company has accelerated expansion over the last couple of years, spending EUR177 million on acquisitions in 2021-2024, of which EUR115 million was in 2024. Fitch expects IPD to use EUR25 million-35 million a year from 2025, as 2024 transactions have reduced headroom for larger debt-funded expansion. The company has sufficient liquidity as Fitch assumes that its EUR130 million RCF, which may be increased to EUR150 million as part of the proposed refinancing, will remain fully undrawn. Takeover of a bigger target could also expose IPD to integration risks. Exposure to Cyclical End-Markets: In 2024, about 70% of IPD's revenue came from more cyclical end-markets, such as construction (30%-35% excluding public sector), auto aftermarket (22%) and diversified industrials (20%). Its customer base comprises predominately SMEs, which may be more vulnerable to recession than larger companies. The customer base remained resilient during the last pandemic-related economic crisis, due in part to government and EU support, but also because IPD's services are often an essential part of its customers' business and account for a low proportion of their operating costs, making them less likely to be scaled back. No Major Impact from Tariffs: Fitch does not expect tariffs imposed by the US to have a major impact on IPD. This is because revenue generated from the US is modest, with the majority invoiced by its US-based subsidiary. Additionally, clients from potentially affected sectors, like automotive or construction, operate within the European market. High Proportion of Subscription Revenue: Contracted sales are the backbone of IPD's business. The data and information segment, mainly in the form of subscriptions, represents about 60% of revenue. Customer contracts, typically lasting one to three years, provide profit and cash flow generation visibility. The company benefits from strong revenue retention rates of around 90%, even for non-subscription services. Established Position in Niches: IPD offers a wide range of platforms and services but two-thirds of its revenue is generated from 15 key brands, which are strongly positioned within their respective niche markets. Broad data sets and experience in tailoring information to customer needs, combined with reliable services, also enhance the loyalty of its customers, as reflected in 86% recurring sales, and create barrier to entry for potential competitors. Peer Analysis IPD's high leverage and smaller scale are the key differentiating factors compared with larger peers, such as RELX PLC (BBB+/Stable), Thomson Reuters Corporation (BBB+/Stable) and Daily Mail and General Trust Plc (BB+/Stable). IPD benefits from a strong share of subscription revenues and has a well-established position in its core segments, but is more exposed to more cyclical end-markets and less diversified globally than these peers. Its modest scale also makes it more vulnerable in recession, and its face-to-face business is exposed to event risks. Key Assumptions - Revenue growth of 6.1% in 2025, 5.8% in 2026, 5.4% in 2027 and 4.8% in 2028. - Fitch-defined EBITDA margin of 30.8% in 2025 and exceeding 31% from 2026. - Capex at 8.6% of revenue between 2025 and 2028. - Bolt-on acquisitions of EUR25 million-35 million a year in 2025-2028. Recovery Analysis - Fitch assumes that IPD would be considered a going concern in bankruptcy and reorganised rather than liquidated. - A 10% administrative claim. - Fitch slightly revises a post-restructuring going concern EBITDA to EUR154 million, reflecting organic growth and acquisitions completed in 2024. - Fitch continues to apply an enterprise value multiple of 5.5x to estimate a post-reorganisation value. - After deducting 10% for administrative claims, Fitch calculates recovery prospects for the senior secured instruments would remain in the 'RR3' recovery rating band, assuming IPD's super senior secured RCF is increased to EUR150 million (assumed fully drawn in a default). This implies a one-notch uplift to the ratings relative to the IDR, leading to a senior secured debt rating of 'B+(EXP)'/'RR3' for its proposed EUR620 million senior secured debt. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Fitch-defined EBITDA leverage above 6.0x on a sustained basis. - Fitch-defined EBITDA interest coverage failing to improve to 2.8x. - EBITDA margin deterioration towards 20%. - Free cash flow margin below 3% on a sustained basis. - Sizeable, fully debt-funded acquisitions. - Material loss of subscription contracts and decline in the trade shows and information and insights businesses. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Fitch-defined EBITDA leverage below 4.5x on a sustained basis. - Fitch-defined EBITDA interest coverage above 3.3x on a sustained basis. - Free cash flow margin above 8% on a sustained basis. - Improved visibility on EBITDA and cash flow generation, with reduced exposure to the face-to-face business. - Stronger-than-expected rebound in the trade shows, and information and insights segments. Liquidity and Debt Structure At end-2024, IPD had adequate liquidity comprising a fully undrawn EUR130 million RCF due 2028 (to be extended as part of the refinancing) and a cash balance of EUR95 million. It has modest working capital swings and no material debt maturities until 2028 (under its debt structure), when its EUR590 million fixed-rate notes are due. Fitch expects the maturity of the new, increased (to EUR620 million) fixed-rate notes to be extended until 2031 once the refinancing is done. This would align the fixed-rate notes maturity with EUR520 million floaters that mature in June 2031. Issuer Profile IPD is a leading European business information services provider located in France. Date of Relevant Committee 20 June 2024 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 ----------- ------ -------- IPD 3 B.V. senior secured LT B+(EXP) Expected Rating RR3 ========= S P A I N ========= BANKINTER 11: Moody's Affirms Rating B1 Rating on EUR9.8M D Notes ----------------------------------------------------------------- Moody's Ratings has upgraded the ratings of seven notes in AyT GENOVA HIPOTECARIO X, FTH, BANKINTER 11, FTH and BANKINTER 13, FTA. The rating action reflects better than expected collateral performance for AyT GÉNOVA HIPOTECARIO X, FTH and increased levels of credit enhancement for the affected notes. Moody's affirmed the ratings of the notes that had sufficient credit enhancement and an expected tranche loss commensurate with the current ratings. AyT GENOVA HIPOTECARIO X, FTH EUR787.5M Class A2 Notes, Affirmed Aa1 (sf); previously on Oct 26, 2023 Affirmed Aa1 (sf) EUR15.75M Class B Notes, Upgraded to Aa3 (sf); previously on Oct 26, 2023 Upgraded to A1 (sf) EUR11.55M Class C Notes, Upgraded to A2 (sf); previously on Oct 26, 2023 Upgraded to Baa1 (sf) EUR14.7M Class D Notes, Upgraded to Baa2 (sf); previously on Oct 26, 2023 Upgraded to Ba2 (sf) BANKINTER 11, FTH EUR816.8M Class A2 Notes, Affirmed Aa1 (sf); previously on Oct 26, 2023 Affirmed Aa1 (sf) EUR15.6M Class B Notes, Affirmed Aa1 (sf); previously on Oct 26, 2023 Affirmed Aa1 (sf) EUR15.3M Class C Notes, Upgraded to Aa1 (sf); previously on Oct 26, 2023 Upgraded to Aa3 (sf) EUR9.8M Class D Notes, Affirmed B1 (sf); previously on Oct 26, 2023 Affirmed B1 (sf) EUR12.5M Class E Notes, Affirmed Ca (sf); previously on Nov 29, 2005 Definitive Rating Assigned Ca (sf) BANKINTER 13, FTA EUR1397.4M Class A2 Notes, Affirmed Aa1 (sf); previously on Oct 26, 2023 Affirmed Aa1 (sf) EUR22.4M Class B Notes, Upgraded to Aa1 (sf); previously on Oct 26, 2023 Affirmed Aa2 (sf) EUR24.1M Class C Notes, Upgraded to Aa2 (sf); previously on Oct 26, 2023 Affirmed A2 (sf) EUR20.5M Class D Notes, Upgraded to A3 (sf); previously on Oct 26, 2023 Upgraded to Baa3 (sf) EUR20.6M Class E Notes, Affirmed Ca (sf); previously on Nov 22, 2006 Definitive Rating Assigned Ca (sf) The maximum achievable rating is Aa1 (sf) for structured finance transactions in Spain, driven by the corresponding local currency country ceiling of the country. RATINGS RATIONALE The rating action is prompted by an increase in credit enhancement for the affected tranches and, for AyT GÉNOVA HIPOTECARIO X, FTH, decreased key collateral assumptions, namely the portfolio Expected Loss (EL) assumption, due to better than expected collateral performance. AyT GÉNOVA HIPOTECARIO X, FTH Revision of Key Collateral Assumptions As part of the rating action, Moody's reassessed Moody's lifetime loss expectation for the portfolio reflecting the collateral performance to date. The performance has continued to be stable since 1 year ago. 90 days plus arrears currently stand at 0.21% of current pool balance showing a stable trend over the past year. Cumulative defaults currently stand at 1.71% of original pool balance, constant from 1.71% a year earlier. Moody's decreased the expected loss assumption to 0.87% as a percentage of current pool due to better than expected performance. The revised expected loss assumption corresponds to 0.63% as a percentage of original pool balance, slightly decreased from 0.75%. Moody's reassessed loan-by-loan information to estimate the loss Moody's expects the portfolio to incur in a severe economic stress. As a result, Moody's have maintained the MILAN Stressed Loss assumption at 4.40%. Increase in Available Credit Enhancement The transaction is currently repaying the notes based on a pro rata allocation of principal. This is because the reserve fund is fully funded at target floor and all asset performance triggers are met due to good asset performance. The non amortizing reserve fund led to the increase in credit enhancement in this transaction. Furthermore, pool factor currently stands at 12.4% close to the 10% level below which the transaction will switch to sequential amortization and after which credit enhancement levels supporting the tranches are expected to further increase. The credit enhancement for the Classes B, C and D notes affected by the rating action increased to 9.00%, 6.80% and 4.00% from 8.05%, 5.85% and 3.05% since the last rating action, respectively. Counterparty Exposure The rating actions took into consideration the notes' exposure to relevant counterparties, such as servicer, account banks or swap providers. Moody's assessed the exposure to Banco Santander, S.A. (Spain) (A3(cr) / P-2(cr)) acting as swap counterparty. Moody's analysis considered the risks of additional losses on the notes if they were to become unhedged following a swap counterparty default by using the CR assessment as reference point for swap counterparties. Moody's concluded that the ratings of the Class B notes are constrained by the swap agreement between the issuer and Banco Santander, S.A. (Spain). BANKINTER 11, FTH Revision of Key Collateral Assumptions The performance has slightly deteriorated since 1 year ago. 90 days plus arrears currently stand at 0.58% of current pool balance, compared to 0.31% one year ago. Cumulative defaults currently stand at 0.65% of original pool balance, constant from 0.65% a year earlier. Moody's maintained the expected loss assumption at 1.01% as a percentage of current pool balance. The revised expected loss assumption corresponds to 0.29% as a percentage of original pool balance, slightly decreased from 0.36%. Moody's reassessed loan-by-loan information to estimate the loss Moody's expect the portfolio to incur in a severe economic stress. As a result, Moody's have maintained the MILAN Stressed Loss assumption at 4.50%. Increase in Available Credit Enhancement The transaction has been repaying the notes based on a sequential allocation of principal since the 10% pool factor sequential amortization trigger was breached. This trigger is uncurable. The reserve fund amount is currently not fully funded, although the amount of cash available in the reserve fund has remained stable over the last years. Sequential amortization and the constant amount available in the reserve fund have led to the increase of credit enhancement available for this transaction. The total credit enhancement available for the Class C notes affected by the rating action increased to 12.15% from 8.79% since the last rating action. Expected deterioration of credit enhancement for Class D For this transaction Moody's expects draws in the reserve fund as the transaction deleverages. This is driven by the non asset-backed Class E interest payments being paid senior to the reserve fund replenishment. Class E is currently not amortizing. This feature of the transaction will increase the cost of capital in the transaction, leading to negative excess spread that will need to be covered by the reserve fund. As the reserve fund is the only source of credit enhancement for Class D, the draws on the reserve fund will negatively affect the credit enhancement of this tranche, which has been incorporated into Moody's analysis. BANKINTER 13, FTA Revision of Key Collateral Assumptions The performance has continued to be stable since 1 year ago. 90 days plus arrears currently stand at 0.37% of current pool balance showing a stable trend over the past year. Cumulative defaults currently stand at 2.02% of original pool balance, constant from 2.01% a year earlier. Moody's maintained the expected loss assumption at 1.10% as a percentage of current pool. The revised expected loss assumption corresponds to 0.87% as a percentage of original pool balance, slightly decreased from 0.95%. Moody's reassessed loan-by-loan information to estimate the loss Moody's expects the portfolio to incur in a severe economic stress. As a result, Moody's have maintained the MILAN Stressed Loss assumption at 4.30%. Increase in Available Credit Enhancement The transaction is currently repaying the notes based on a pro rata allocation of principal. This is because the reserve fund is fully funded at target floor and all asset performance triggers are met due to good asset performance. The non amortizing reserve fund led to the increase in credit enhancement in this transaction. Furthermore, pool factor currently stands at 11.6% close to the 10% level below which the transaction will switch to sequential amortization and after which credit enhancement levels supporting the tranches are expected to further increase. The credit enhancement for the Classes B, C and D notes affected by the rating action increased to 11.29%, 8.18% and 5.53% from 10.04%, 6.93% and 4.29% since the last rating action, respectively. The interest deferral trigger that allows interest on the Class C and D notes to be subordinated is not expected to be breached, given the good performance so far, and interest payments on both classes have always been paid timely. Moody's analysis considered the very low likelihood of prolonged interest shortfalls on these notes in future. The principal methodology used in these ratings was "Residential Mortgage-Backed Securitizations" published in October 2024. The analysis undertaken by Moody's at the initial assignment of ratings for RMBS securities may focus on aspects that become less relevant or typically remain unchanged during the surveillance stage. Factors that would lead to an upgrade or downgrade of the ratings: Factors or circumstances that could lead to an upgrade of the ratings include (1) performance of the underlying collateral that is better than Moody's expected, (2) an increase in available credit enhancement, (3) improvements in the credit quality of the transaction counterparties and (4) a decrease in sovereign risk. Factors or circumstances that could lead to a downgrade of the ratings include (1) an increase in sovereign risk, (2) performance of the underlying collateral that is worse than Moody's expected, (3) deterioration in the notes' available credit enhancement and (4) deterioration in the credit quality of the transaction counterparties. ===================== S W I T Z E R L A N D ===================== AVOLTA AG: S&P Affirms 'BB+' Long-Term ICR, Outlook Stable ---------------------------------------------------------- S&P Global Ratings affirmed its 'BB+' long-term issuer credit and issue ratings on Avolta AG and on its existing rated instruments. The stable outlook reflects S&P's expectation that Avolta will continue to adhere to its prudent financial policy targets and reduce and maintain S&P Global Ratings–adjusted debt to EBITDA below 4.0x over the next 12 months, while continuing to generate significant free operating cash flow (FOCF) after leases. Avolta reported solid operating performance in 2024 on the back of strong leisure demand and robust performance across all regions and channels. The company's revenue reached CHF13.7 billion in 2024 compared with CHF12.8 billion in 2023, with core turnover (which excludes fuel sales) of CHF13.5 billion, representing growth of 8.9% at constant exchange rates. This growth was primarily driven by a 6.3% organic growth rate, reflecting strong leisure demand and robust performance across Avolta's main regions and channels. S&P's adjusted EBITDA metric shows an increase to CHF2.8 billion from CHF2.5 billion in 2023, delivering a margin improvement of 90 basis points (bps), driven by disciplined cost control, active portfolio management, and synergies from the Autogrill acquisition. Core EBITDA reached CHF1.3 billion in 2024 versus about CHF1.1 billion in 2023, reflecting a 40-bp margin improvement. These results marginally surpassed its base-case expectations and demonstrate the group's ability to robustly execute its strategy while continuing to deliver on its business plan. S&P also acknowledges the group's ongoing efforts with initiatives like Club Avolta, a global loyalty program with over 10 million members and contributing more than 5% of 2024 revenue. In addition, it notes the increased focus on Avolta's hybrid and smart store concepts, for enhanced customer insights. Avolta generated stronger than anticipated FOCF after leases, resulting in some reduced financial leverage in 2024, even after considering CHF200 million of treasury share repurchases. FOCF after concession payments rose to CHF505 million in 2024, up 27.5% from CHF396 million in 2023. This is higher than our previous expectation of CHF448 million, and the improvement stems from sound core EBITDA and containment of capital expenditure (capex), which was lower than the 4% historical levels (3.5% revenue in 2024). Net financial leverage (management definition based on core EBITDA and net financial debt) improved to 2.1x (or 1.9x excluding the share repurchases) in 2024 versus 2.6x in 2023. That said, a pronounced increase in lease liabilities, following an already significant increase in 2023, led to weaker-than-anticipated S&P Global Ratings-adjusted credit metrics for 2024. Adjusted funds from operations (FFO) to debt reached 17.2% and adjusted debt to EBITDA was 4.1x, in 2024, versus 17.3% and 4.2x, respectively, in 2023. S&P said, "In 2023, we accounted for the 12-year extension of Aena contracts with fixed payment terms materially weighing on our ratios. In 2024, although we anticipated broadly stable lease obligations, we saw an increase of about EUR667 million of adjusted debt related to lease liabilities versus 2023. This primarily stems from the announced Free Duty acquisition in Hong Kong, which--although is expected to strengthen Avolta's positioning in the Asia-Pacific region--adds notable existing lease obligations to the group. Absent merger and acquisition activity, which we don't currently forecast in our base case, we expect lease liabilities should remain at least stable in the medium term, since we understand that no sizable contracts are due for renewal in the next few years. We note, however, that fluctuations in lease liabilities are inherent to the business model and will likely drive volatility in our adjusted credit metrics around the expected range. These include modifications to existing contracts and currency translation adjustments, among others." S&P said, "We expect management to maintain a prudent financial policy, resulting in credit metrics remaining sound over the coming 12-18 months, despite the recently announced share buyback program. In January, Avolta initiated a share buyback program to repurchase up to CHF200 million shares for subsequent cancellation. This initiative follows the December 2024 cancellation of 6.1 million shares, representing 4% of the issued share capital. The company's financial policy is unchanged; it aims to maintain net financial leverage at 1.5x-2.0x with flexibility of up to 2.5x, while distributing one-third of its equity free cash flow to shareholders, and the remaining two-thirds for deleveraging its balance sheet and strategic business development. "We also note Avolta recently extended the RCF by two years to 2029, obtaining a margin reduction that will result in interest savings of CHF10 million per year. At the same time, we acknowledge that the group is exploring alternatives to refinance the upcoming CHF500 million convertible notes due March 2026 and CHF300 million senior notes due in April 2026. We note that although we are within 12 months of maturity, the group has significant liquidity to address both maturities if needed. "In our view, travel will remain one of the top priorities for consumers' discretionary spending, but uncertainties related to the U.S. tariffs, labor constraints, and the pace of central bank monetary easing could weigh on consumer confidence. That said, the group's naturally diverse operations should enable it to offset some global traffic uncertainties and achieve solid ongoing positive momentum that should support continued earnings growth. This prompts us to forecast S&P Global Ratings-adjusted debt to EBITDA improving to 3.9x (net financial leverage to 2.0x) and FFO to debt to 18.4%, while we expect FOCF after full concession payments to remain strong at about CHF485 million in 2025. "The stable outlook reflects our expectations that Avolta will deliver strong credit metrics on the back of continued sound operating performance thanks to air traffic recovery and solid execution of its group strategy. We also assume Avolta, while adhering to its prudent financial policy targets, will reduce and maintain S&P Global Ratings–adjusted debt to EBITDA below 4.0x. In particular, we forecast Avolta's return to its target reported net financial leverage of 1.5x-2.0x (equivalent to adjusted leverage of 3.3x-3.9x) in the next 12 months, and the ratio should remain within that range absent material acquisitions. "We could take a negative rating action if S&P Global Ratings-adjusted debt to EBITDA remains above 4.0x (in conjunction with reported net financial leverage exceeding 2.0x), while cash flow is weaker than in our forecast. Over the next 12-24 months, we could downgrade Avolta if it posts adjusted debt to EBITDA persistently above 4.0x, or if discretionary cash flow after all concession payments and dividends turns negative for a prolonged period. This could occur if the company deviates from its financial policy or if its operating performance sharply deteriorates because of a general slowdown in air traffic or prolonged changes in consumer preferences that result in reduced spending on travel retail. "We could raise our ratings if Avolta's credit metrics strengthen sustainably with adjusted debt to EBITDA staying well below 3.0x and the company generates strong FOCF after all concession payments sufficient to fully cover dividends and preserve its net reported leverage within the target range, even in case of material acquisitions or operating setbacks. This would also hinge on the company maintaining a track record of strict adherence to its stated financial policy--once regular dividend payments resume--and maintaining a robust competitive position and profitability." =========================== U N I T E D K I N G D O M =========================== ARDONAGH MIDCO 2: Fitch Ups LT IDR to 'B', Then Withdraws Rating ---------------------------------------------------------------- Fitch Ratings has upgraded Ardonagh Midco 2 Ltd's Long-Term Issuer Default Rating (IDR) to 'B' from 'B-'. Fitch has also assigned Ardonagh Group Holdings Limited (Ardonagh) a first-time IDR of 'B'. The Rating Outlook is Stable. Fitch has upgraded instrument ratings for the group's senior secured debt to 'B+' from 'B', and senior unsecured notes to 'CCC+' from 'CCC'. The 'B' IDR reflects Ardonagh's sustainable business model, a substantially expanded business scale and greater geographical diversification following recent acquisitions, despite its elevated leverage - which is trending below 7x, a comfortable level for the rating. Fitch estimates Ardonagh will sustain high organic growth, driving profits over the medium term resulting in Fitch-defined mid- to high-single digit free cash flow (FCF) generation beyond 2025. Fitch has withdrawn the rating of Ardonagh Midco 2 Ltd's due to the reorganization of the rated entity whereby Ardonagh Group Holdings Limited is the entity producing consolidated financial statements for the group. Key Rating Drivers Deleveraging Capacity: Fitch forecasts Fitch-defined EBITDA leverage will decrease to 6.7x by end-2025 from 9.7x on a reported basis at end-2024 (including discontinued operations) and remain below 7.7x until 2028, following latest acquisitions. This leverage reduction will be driven by strong organic growth and M&A synergies, enabling a swift deleveraging to levels compatible with its 'B' sensitivities. Fitch expects the company to continue pursuing acquisition opportunities which, coupled with the absence of a formulated leverage target, remain an area to monitor before Fitch considers further positive rating action. While its upgrade incorporates the assumption of additional, smaller scale M&A, any significant acquisitions funded aggressively could potentially impact the rating or its Outlook. Improving Profitability Driven by Synergies: Fitch expects Fitch-defined EBITDA margin to increase to 33.7% in 2025 from 28.4% in 2024, following Ardonagh's recent acquisitions, new team hires and cost-saving programmes. It completed a transformational acquisition of the Australian broker PSC Insurance Group (PSC), which is EBITDA accretive across Specialty and APAC. Ardonagh's operational focus allows for volumes and earnings to grow in later years, due to continuing extraction of synergies from bolt-on M&A with successful integration and maturing producer hires, resulting in sustained EBITDA margins in its base case. Fitch also assumes that successful business growth and cost savings efforts would drive solid FCF generation from 2026 above mid-single digits which would be solid for the rating. Interest Coverage Aligned with 'B' Rating: Ardonagh's debt refinancing and repricing in February 2025 has improved its financial flexibility through lower interest costs and a simplified capital structure. Fitch projects lower interest rates to gradually improve the company's interest cover metrics, with Fitch-defined EBITDA interest coverage rising above 2x from 2026. This metric will remain within 'B' rating thresholds even though Fitch forecasts incremental debt raised for additional M&A activity. M&A Growth Strategy: Fitch considers Ardonagh's M&A growth strategy a key rating factor constraining its IDR to the 'B' category. The company, which has completed 68 deals during 2024, is expected to continue prioritising acquisitions. Acquisitions have historically been funded by a mix of debt and equity. They have not all been debt-funded, yet a high-interest-rate environment has constrained the group's financial flexibility between 2023 and 2024. However, integration risk is manageable as the company invested in platforms supporting operational efficiencies derived from M&A activities. Enhanced Diversification: Ardonagh's diversification was bolstered by the sale of its UK retail business, which experienced lower growth compared to other segments. It also experienced the expansion of its operations in the APAC region, primarily through the acquisition of PSC. This expansion increased the share of APAC in the group's gross written premium mix from 5% in 2021 to 18% in 2024. The company enjoys strong geographical diversification, with a presence in the stable retail markets of UK and Europe and in North America through its Specialty wholesale segment. The company also experiences an expanding market in Australia, where organic growth rates surpass those in other regions. Insurer diversification is also a credit-positive factor, as no single insurance company contributes more than 10% of Ardonagh's revenue. Stable Business Model: Ardonagh's business profile remains strong with aspects that are commensurate with a 'BB' rating category, including scale and exposure to resilient through-the-cycle industry. Fitch expects the industry to exhibit much lower revenue and earnings declines in a recession than other sectors, given the highly sticky nature of insurance products. The company's focus solely on insurance, which Fitch believes has lower cyclicality during downturns versus consulting services - where some of its larger US- based peers compete. Revised Debt Capacity: The stability in Ardonagh's business model and increased scale of the group in recent years, whilst maintaining solid profitability, have prompted Fitch to loosen its EBITDA leverage thresholds for the 'B' rating within the 6.2x-7.7x range. This brings its debt capacity for the 'B' rating more aligned with that of close peers, including those from North America. Fitch expects Ardonagh to comfortably operate within these thresholds post- PSC integration. Peer Analysis Ardonagh's 'B' rating reflects its strong historical growth, solid profitability, and diverse business lines. The company ranks among the top 20 global insurance brokers, with greater scale and product diversity than independent European brokers like DIOT - SIACI TopCo SAS (B/Stable). However, it remains relatively small with higher financial leverage compared to larger global brokers such as Marsh & McLennan Companies, Inc. (A-/Stable), Aon Public Limited Company (BBB+/Stable), Willis Towers Watson plc (BBB+/Stable), and Arthur J. Gallagher & Co. (BBB+/Stable). Ryan Specialty Holdings, Inc. (BB+/Stable) is a similarly sized US peer with less leverage and stable mid-double-digit FCF. Truist Insurance Holdings, LLC (B/Stable) is comparable to Ardonagh in size and profitability but has high EBITDA leverage - albeit expected to decline to the low-7x over the rating horizon, and weak interest coverage. Navacord Intermediate Holdings Inc. (B/Stable) is smaller and less diverse, being based only in Canada, and exhibits high leverage. Similar to Ardonagh, Fitch considers Navacord's aggressive M&A growth strategy a key rating factor constraining its IDR to the 'B' category. The company, which has spent over USD2.1 billion on 117+ deals, is expected to continue prioritizing acquisitions. Key Assumptions - Organic annual revenue growth of 7%-8.8% over the ratings horizon plus contributions from incremental M&A through 2028; - Fitch-defined EBITDA margin to reach 33.7% in 2025, including the impact of acquisitions completed in 2024 and 1Q25, and remain conservatively broadly flat during 2026-2028; - Working capital outflows of 5.5% of revenue in 2025 and 3% of revenue in 2026-2028; - Capex at 2.1% of revenue during 2025-2028; - Fitch assumes Ardonagh will continue its growth-driven M&A strategy and will incur cash outflows related to purchase and integration costs of GBP50 million-GBP70 million per annum. Incremental acquisitions are funded via internal cash flow and incremental debt; - No dividend or shareholder remuneration between 2025 and 2028. Recovery Analysis RECOVERIES ASSUMPTIONS - Fitch uses a going-concern (GC) approach for Ardonagh in its recovery analysis, assuming that it would be a GC in the event of a bankruptcy rather than be liquidated; - A 10% administrative claim; - Its analysis assumes a post-restructuring GC EBITDA of around GBP520 million compared with its expected pro-forma EBITDA of over GBP709 million in 2025; - An enterprise value (EV) multiple of 5.5x to calculate a post-restructuring valuation; - Based on current metrics and assumptions, the waterfall analysis results in a 'B+' instrument rating for the TLBs and senior secured notes with a Recovery Rating of RR3, one notch above the IDR, and a 'CCC+' instrument rating for the senior unsecured notes, two notches below Ardonagh's IDR with a Recovery Rating of 'RR6'. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Operational challenges or deteriorating market conditions that result in lower EBITDA margins and lead to negative FCF on a sustained basis; - EBITDA leverage above 7.7x for a sustained period; - EBITDA interest coverage below 1.8x for a sustained period. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - EBITDA Leverage below 6.2x on a sustained basis; - EBITDA interest coverage above 2.5x for a sustained period; - (CFO-capex)/Debt sustained in mid-single digits. Liquidity and Debt Structure Ardonagh has an adequate liquidity position, underpinned by GBP453 million of available cash at end-2024 and access to an undrawn senior secured RCF of GBP290 million (GBP325 million total RCF limit). Fitch projects FCF to turn positive in 2025, resulting from reduced pressure of interest costs as well as enhanced EBITDA generation, and to grow to mid-single digit margin in 2026-2028. The group benefits from a relaxed debt maturity profile, following the debt refinancing occurred during 2024 and early 2025 with most debt expiring in 2031. Issuer Profile Ardonagh is in top 20 largest insurance brokers globally. Its strategy is to operate across global property and casualty insurance and specialty broking markets. Ardonagh faces minimal balance sheet risk as it does not underwrite policies directly. 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 ----------- ------ -------- ----- Ardonagh Group Holdings Limited LT IDR B New Rating Ardonagh Finco Limited senior secured LT B+ Upgrade RR3 B Ardonagh Group Finance Ltd senior unsecured LT CCC+ Upgrade RR6 CCC Ardonagh Midco 2 Ltd LT IDR B Upgrade B- LT IDR WD Withdrawn Ardonagh FinCo B.V. senior secured LT B+ Upgrade RR3 B Ardonagh Group FinCo Pty Limited senior secured LT B+ Upgrade RR3 B Ardonagh Finco LLC senior secured LT B+ Upgrade RR3 B BARROW FUNDING: Fitch Affirms 'B-sf' Rating on Class F Notes ------------------------------------------------------------ Fitch Ratings has affirmed Barrow Funding PLC, as detailed below. Entity/Debt Rating Prior ----------- ------ ----- Barrow Funding PLC A XS2755901266 LT AAAsf Affirmed AAAsf B XS2755901696 LT AA-sf Affirmed AA-sf C XS2755902074 LT A-sf Affirmed A-sf D XS2755902587 LT BBB-sf Affirmed BBB-sf E XS2755903718 LT BB-sf Affirmed BB-sf F XS2755904013 LT B-sf Affirmed B-sf Transaction Summary The transaction is a securitisation of UK non-conforming owner-occupied (OO) mortgages originated by Bank of Scotland Plc (BoS) in the UK between 2003 and 2009. KEY RATING DRIVERS Stable Asset Performance: Arrears have remained stable since the transaction closed in May 2024. Loans in arrears by one month or more stood at 21.2% as of February 2025, up slightly from 19.4% in March 2024. The proportion of late-stage arrears, defined as loans in arrears by three-months or more, have also remained stable over the same period. While on average there is no material increase in the proportion of loans that are in arrears, the loans in arrears have migrated towards being deeper in arrears, with loans in arrears by six months or more increasing to 12.7% as at February 2025, from 11.5% at transaction closing. Fitch expects asset performance to deteriorate in the UK non-conforming sector. Fitch accounted for this by stressing the default and recovery assumptions in the analysis. The outcome of this analysis supported the ratings actions taken. Increasing Credit Enhancement: The notes amortise sequentially, which has led to a build-up of credit enhancement (CE) since closing. Class A CE was 19.3% as at February 2025, versus 16% at transaction closing. This is despite excess spread being insufficient to fully cover the class Z principal deficiency ledger (PDL) debits. The build-up in CE has supported the affirmation of the note ratings. Ratings Below MIR: The ratings for class C, D, E and F notes are between two and seven notches below their model-implied ratings (MIR). Fitch has affirmed these ratings after assuming the continued presence of non-paying borrowers in the pool, lower-than-expected recovery rates and the potential for an unhedged proportion of fixed-rate loan product switches for forbearance reasons to arise. At transaction closing when assigning the ratings, the rating deviation from the MIR constituted a variation of the UK RMBS Rating Criteria. However, for existing ratings, affirming below the MIR is not a criteria variation. 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 CE available to the notes. In addition, unanticipated declines in recoveries could result in lower net proceeds, which may make certain notes susceptible to negative rating action, depending on the extent of the decline in recoveries. Fitch found that a 15% increase in weighted average foreclosure frequencies (WAFF) and a 15% decrease in weighted average recovery rate (WARR) would not have an effect on the ratings, due to the rating determination applied and described above. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Stable to improved asset performance driven by stable delinquencies and defaults would lead to increasing CE and, potentially, upgrades. Fitch found that a decrease in the WAFF of 15% and an increase in the WARR of 15% would lead to upgrades of up to three notches for the class B notes, five notches for the class C notes, eight notches for the class D notes, 10 notches for the class E and 11 notches for the class F notes. The class A notes are at the maximum achievable rating and cannot be upgraded. 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. Prior to the transaction closing, 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. ESG Considerations Barrow Funding PLC has an ESG Relevance Score of '4' for Customer Welfare - Fair Messaging, Privacy & Data Security due to the pool having an interest-only maturity concentration of legacy non-conforming OO loans of greater than 20%, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. Barrow Funding PLC has an ESG Relevance Score of '4' for Human Rights, Community Relations, Access & Affordability due to a significant portion of the pools containing OO loans advanced with limited affordability checks, 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. BRACCAN MORTGAGE 2025-1: S&P Puts Prelim 'B-' Rating to X Notes --------------------------------------------------------------- S&P Global Ratings assigned preliminary ratings to Braccan Mortgage Funding 2025-1 PLC's (Braccan 2025-1) class A, B, C-Dfrd, D-Dfrd, and X-Dfrd notes. At closing, the issuer will also issue unrated class Z notes and RC1 and RC2 residual certificates. Braccan 2025-1 is an RMBS transaction that securitizes a portfolio of buy-to-let (BTL) and owner-occupied mortgage loans secured on properties in the U.K. The loans in the pool were originated between 2015 and 2025, with most originated in 2024, by Paratus AMC Ltd., a nonbank specialist lender. The loans were originated under the Foundation Home Loans (FHL) brand. The collateral comprises first-lien U.K. BTL residential mortgage loans (69.6%), and owner-occupied mortgages (30.4%) advanced to complex income borrowers with limited credit impairments. There is high exposure to self-employed borrowers and first-time buyers within the owner-occupied proportion of the pool. At closing, the issuer will use the issuance proceeds to purchase the full beneficial interest in the mortgage loans from the seller. The issuer grants security over all its assets in favor of the security trustee. There are no rating constraints in the transaction under our counterparty, operational risk, or structured finance sovereign risk criteria. S&P considers the issuer to be bankruptcy remote. Preliminary ratings Class Prelim. rating* Class size (%) A AAA (sf) 89.70 B AA (sf) 5.00 C-Dfrd A (sf) 3.15 D-Dfrd BBB (sf) 2.15 X-Dfrd B- (sf) 2.00 Z NR 0.20 RC1 Residual Certificates NR N/A RC2 Residual Certificates NR N/A *S&P's preliminary ratings address timely receipt of interest and ultimate repayment of principal on the class A and B notes, and the ultimate payment of interest and principal on all the other rated notes. Its preliminary ratings also address timely receipt of interest and full immediate repayment of all previously deferred interest on the class C–Dfrd, D-Dfrd, and X-Dfrd notes when they become the most senior outstanding. NR--Not rated. N/A--Not applicable. HARBOUR ENERGY: Fitch Puts BB(EXP) Rating to New Fixed-Rate Notes ----------------------------------------------------------------- Fitch Ratings has assigned Harbour Energy PLC's (Harbour; BBB-/Stable) proposed perpetual resettable fixed-rate notes an expected subordinated rating of 'BB(EXP)'. The notes will be issued by Wintershall Dea Finance 2 B.V. and guaranteed by Harbour on a subordinated basis. The final rating is contingent upon receipt of final documentation conforming materially to information already received. Fitch has also affirmed a subordinated rating of 'BB' for existing hybrid notes. The planned notes are rated two notches below Harbour's Long-term Issuer Default Rating (IDR) and qualify for 50% equity credit as they are deeply subordinated and senior only to Harbour's share capital and rank pari passu with the existing subordinated notes. Coupon payments can be deferred at the issuer's discretion. The proceeds will partly refinance existing EUR650 million subordinated notes and the remainder will be used for general corporate purposes. Harbour's 'BBB-' IDR reflects its sizeable, diversified operations, and moderate leverage. Key Rating Drivers Hybrids Rating Reflects Deep Subordination: The proposed notes are rated two notches below Harbour's 'BBB-' IDR and senior unsecured rating, given their deep subordination and consequently lower recovery prospects in a liquidation or bankruptcy relative to senior obligations. The notes only rank senior to the claims of common equity shareholders and pari passu to the existing EUR650 million and EUR850 million subordinated notes. Equity Treatment: The notes qualify for 50% equity credit (EC) due to deep subordination, remaining effective maturity of more than five years, full discretion to defer coupons for at least five years and limited events of default. These are key equity-like characteristics, affording greater financial flexibility. EC is limited to 50%, given the cumulative interest coupon, a feature that is more debt-like in nature. Concurrently, Harbour has launched a consent solicitation for its existing EUR850 million hybrids, which has no impact on the Fitch-assigned EC or the rating for the existing notes. Fitch expects hybrids to remain a permanent feature of Harbour's capital structure. Effective Maturity Date: The hybrids are perpetual, but Fitch deems their effective maturity on the second step-up date. From this date, the coupon step-up is within Fitch's aggregate threshold rate of 100bp, but the issuer will no longer be subject to replacement language, which discloses the intent to redeem the instrument at its reset date with the proceeds of a similar instrument or with equity. According to Fitch's criteria, the 50% EC would change to 0% five years before the effective maturity date. The issuer has the option to redeem the notes starting from at least three months before the first interest reset date and on each interest payment date thereafter. Change of Control EC-Neutral: The terms of the hybrid notes provide Harbour with an option to repurchase them in the event of a change of control. If the notes are not called, the coupon will increase by 500bp, which does not negate the EC assigned to the notes. Harbour's IDR Mid-Sized Upstream Producer: Harbour's scale and diversification profile has significantly increased following the Wintershall Dea acquisition. Fitch expects its production profile to be stable with average annual production around 450 thousand barrels of oil equivalent per day (kboepd), around 60% of which will be natural gas, over 2025-2028. Production will primarily be focused on Norway and the UK, and to a lesser extent Argentina, Germany and North Africa. Reserve Life Weaker Than Peers: Harbour's 2P reserves increased after the acquisition of substantially all Wintershall Dea AG's upstream assets to 1.249 billion barrels of oil equivalent (boe). However, the group's 2P reserve life (eight years, based on production of 450kboepd) is weaker than that of peers like Aker BP ASA (BBB/Stable; 11 years on a 2P basis) or Energean plc (BB-/Stable; 24 years on a 2P basis). This is somewhat mitigated by Harbour's substantial pro forma 2C resource base at 1.9 billion boe. High Tax Reduces Debt Capacity: Harbour's Fitch-projected EBITDA net leverage remains fairly conservative at less than 1.0x on average over 2025-2028. However, its funds from operations (FFO) net leverage is affected by substantial tax payments due to its presence in high tax jurisdictions such as Norway and the UK. Fitch forecasts FFO net leverage to range between 1.0x and 2.0x over 2025-2028, although temporary deviations are possible such as during periods of lower oil and natural gas prices, which could require corrective actions such as opex, capex and/or dividend cuts. Average Production Costs, Decommissioning Obligations: The acquisition of Wintershall Dea's assets helped reduce average production costs. Fitch expects Harbour's operating costs to be around USD14/boe, which Fitch views as average. UK-focused Ithaca Energy plc's (BB-/Stable) production costs are around USD20/boe, while Aker BP's are USD6.2/boe. Harbour's decommissioning provisions relative to 2P reserves should fall to around USD4/boe, compared with pre-acquisition USD10/boe, Ithaca's USD7.5/boe and Aker BP's USD2/boe. However, projected decommissioning pre-tax expenses of around USD350-400 million a year will affect cash flows. Positive M&A Record: Harbour has a record of successfully integrating its acquisitions, like its reverse merger with Premier Oil. Following acquisitions, Harbour's focus has been on debt reduction, and its pre-acquisition net financial debt is minimal. Fitch expects Harbour's financial policy to remain prudent after the Wintershall Dea acquisition. Energy Transition Underway: Harbour plans to be Net Zero by 2050 for its gross operated Scope 1 and 2 CO2e emissions, with an interim target of a 50% reduction versus a 2018 baseline by 2030, supported by Wintershall Dea's gas-focused assets. Fitch assumes that at least in the medium term the impact of energy transition on oil and gas companies will be limited. However, over the longer term the oil and gas companies, and in particular pure upstream producers such as Harbour, may be subject to more rigorous regulation, and their margins could be affected by carbon taxes and other regulatory measures. They will also need to adjust to declining hydrocarbons demand. Peer Analysis Harbour's production (post-acquisition averaging 450kboe/d) is similar to that of peers like Aker BP (2024: 440kboe/d), Hess Corporation (BBB/Rating Watch Positive; pre-acquisition 494kboe/d) or APA Corporation (BBB-/Stable; 440kboe/d). Harbour's asset base is geographically more diversified than that of Aker BP (focused on Norway) or U.S. peers. However, its reserve life is weaker (2P reserve life of eight years, compared with Aker BP's 11 years), predominantly in view of Harbour's mature assets in the UK Continental Shelf. Operating costs for combined assets at USD14/boe are higher than Aker BP's 6.2/boe. Its forecast for Aker BP indicates negative free cash flow (FCF) driven by large capex compared with Harbour's positive FCF over the medium term. Key Assumptions - Oil and gas prices in line with Fitch's base case price deck - Production volumes averaging 450kboe/d over 2025-2028 - Capex at around USD2.1 billion in 2025, USD1.6 billion in 2026 and average USD1 billion a year over 2027-2028 (excluding expensed exploration expenses and decommissioning charges) - Decommissioning charges at USD300-400 million a year over 2025-2028 - Equity credit for the hybrid bonds at 50% RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Failure to replenish reserves and maintain a stable production profile - FFO net leverage consistently above 2x or EBITDA net leverage consistently above 1.5x - Aggressive M&A, dividend payments or other policies materially affecting the credit profile and leading to consistently negative FCF Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Material improvement in the business profile, including much higher reserve life - Adherence to a conservative financial policy with FFO net leverage below 1x or EBITDA net leverage below 0.5x on a sustained basis Liquidity and Debt Structure Harbour's liquidity remains comfortable with cash and cash equivalents at USD805 million as of end-2024. This is bolstered by a USD3 billion revolving credit facility (RCF), of which USD1.9 billion was undrawn as at end-2024. The RCF is set to mature in 2029. Fitch anticipates that FCF will remain largely positive in 2025-2028. Issuer Profile Harbour is an independent oil and gas exploration and production company. It is domiciled in the UK while its main assets are located in UK, Norway, Germany, North Africa and Latin America. 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 Harbour has an ESG Relevance Score of '4' for Waste & Hazardous Materials Management; Ecological Impacts due to significant decommissioning obligations, 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 ----------- ------ ----- Wintershall Dea Finance 2 B.V. 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