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250520.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Tuesday, May 20, 2025, Vol. 26, No. 100 Headlines F R A N C E COLISEE GROUP: S&P Upgrades LT ICR to 'CCC-', On Watch Developing POSEIDON BIDCO: Moody's Cuts CFR to 'B3', Outlook Negative TARKETT PARTICIPATION: S&P Rates New EUR1,035MM Term Loan B 'B+' I R E L A N D ALKERMES PLC: S&P Affirms 'BB' ICR on Prepayment of Debt CONTEGO CLO III: Moody's Affirms B1 Rating on EUR8.25MM F Notes NORDIC AVIATION: S&P Withdraws 'B' LongTerm Issuer Credit Rating PENTA CLO 19: Fitch Assigns 'B-sf' Final Rating on Class F Notes PENTA CLO 19: S&P Assigns B-(sf) Rating on Class F Notes WILTON PARK: Fitch Assigns 'B-(EXP)sf' Rating on Class F-R Notes WILTON PARK: S&P Assigns Prelim. B-(sf) Rating on Cl. F-R Notes L U X E M B O U R G GARFUNKELUX HOLDCO 2: Fitch Lowers IDR to 'C' on Debt Restructuring N E T H E R L A N D S ABERTIS INFRAESTRUCTURAS: Fitch Rates New Hybrid Notes 'BB(EXP)' ABERTIS INFRAESTRUCTURAS: S&P Rates EUR500MM Securities 'BB' CENTRIENT HOLDING: Moody's Raises CFR to 'B2', Outlook Stable COLOSSEUM DENTAL: Fitch Assigns 'B' LongTerm IDR, Outlook Stable EASTERN EUROPEAN: Fitch Gives Final 'BB' Rating on EUR500MM Notes TRIVIUM PACKAGING: Moody's Affirms 'B3' CFR, Outlook Remains Stable VEON LTD: Fitch Alters Outlook on 'BB-' LongTerm IDR to Stable S P A I N RURAL HIPOTECARIO IX: Moody's Ups EUR10.5MM D Notes Rating to Ba3 S W E D E N SBB HOLDING: Fitch Affirms 'CCC+' Issuer Default Rating SBB PARENT: Fitch Affirms 'CCC' Issuer Default Rating U N I T E D K I N G D O M ASIMI FUNDING 2025-1: S&P Assigns B-(sf) Rating on X-Dfrd Notes CAPRI HOLDINGS: Fitch Affirms 'BB' LongTerm IDR, Outlook Negative EUROHOME UK 2007-1: Fitch Lowers Rating on Cl. B2 Notes to 'BB+sf' HOLVIL LIMITED: CG&Co Named as Administrators KOKOON TECHNOLOGY: KRE Corporate Named as Administrators MAVEN PREMIUM BARS: Interpath Advisory Named as Administrators OCADO GROUP: Fitch Rates GBP300-Mil. 2030 Unsecured Notes 'B-' ORION MIDCO: Fitch Assigns 'B(EXP)' LongTerm IDR, Outlook Positive PIERPONT BTL 2025-1: Fitch Assigns 'BB+(EXP)' Rating on 2 Tranches TULLOW OIL: Moody's Downgrades CFR to Caa2, Outlook Remains Negativ WOLSELEY GROUP: Fitch Assigns B(EXP) LongTerm IDR, Outlook Positive WOLSELEY GROUP: S&P Assigns Prelim. 'B' LT ICR, Outlook Stable - - - - - =========== F R A N C E =========== COLISEE GROUP: S&P Upgrades LT ICR to 'CCC-', On Watch Developing ----------------------------------------------------------------- S&P Global Ratings raised its long-term issuer credit rating on France-based nursing home operator Colisee Group to 'CCC-' from 'SD' (selective default) and raised its issue rating on the company's term loan B to 'CCC-' from 'D' (default). S&P placed the ratings CreditWatch with developing implications. The CreditWatch status indicates uncertainty about the company's capital structure and the impact of the turnaround plan's impact. S&P anticipates resolving the CreditWatch placement within the coming months, as S&P gains clarity on the new capital structure S&P said, "The 'CCC-' rating reflects our view that the group's capital structure is unsustainable given our expectation of weak credit metrics. Despite the waiver agreement with lenders to postpone interest payment on the term loan B to support liquidity, the company remains current on its other obligations, supporting the upgrade. Colisee operates in the capital-intensive private nursing home market, which continues to recover from the pandemic and subsequent inflation. Therefore, we think the company depends on favorable business conditions to improve its financial performance to generate free cash flow and reduce leverage. We forecast Colisee's S&P Global Ratings-adjusted leverage to land at about 11.0x, compared with at 9.2x leverage in 2023, and its fixed-charge coverage ratio to fall below 1.0x, at about 0.9x in 2024 compared with 1.23x a year earlier. Deterioration of credit metrics mostly stemmed from exacerbated pressures on the cost base, mostly owing to staffing and rental costs increasing that hampered EBITDAR. However, Colisee reported resilient top-line growth of about 5%, supported by increasing average daily rates and improving occupancy rates across regions. We forecast the group will improve its leverage on the benefits from its turnaround plan and assuming continued industry recovery. While we think the company has sufficient near-term liquidity to implement its turnaround initiatives, we expect it will continue to generate FOCF deficits for at least the next 12 months with a weak (albeit improving) fixed-charge coverage ratio near 1.0x. "We expect to resolve the CreditWatch placement in the coming months once we gain more clarity on the capital structure and the turnaround plan's implication. The CreditWatch placement reflects Colisee's waiver agreement and ongoing restructuring negotiations for a potential recapitalization, which should address capital structure issues. Colisee is still reassessing its capital structure, so we lack visibility on what shape it could ultimately take and the implications for credit metrics. With the current capital structure, we see the risk of a conventional or selective default as remaining high in the next six months given the company's weak credit metrics and potential delay in the turnaround's plan execution. "The CreditWatch placement reflects the uncertainty regarding the company's new capital structure and the implications of the turnaround plan. It indicates that we could raise, lower, or affirm the ratings in the next 90 days as we gain clarity on the restructuring's progress and the benefits from the turnaround plan. "If Colisee's recapitalization process breaks down in the next 90 days and the company faces a liquidity-debt service shortfall, we could lower our ratings, signaling increased default risk. Conversely, if the group successfully recapitalizes its capital structure in the next 90 days, we could affirm or raise our ratings on the company. "We expect to resolve the CreditWatch in the next months as we gain clearer insights into the recapitalization process." POSEIDON BIDCO: Moody's Cuts CFR to 'B3', Outlook Negative ---------------------------------------------------------- Moody's Ratings has downgraded the corporate family rating of Poseidon BidCo S.A.S (Ingenico or the company) to B3 from B2, and the company's probability of default rating to B3-PD from B2-PD. Concurrently, the ratings on the company's EUR277.5 million senior secured revolving credit facility (RCF) and EUR1.1 billion senior secured term loan B2 have also been downgraded to B3 from B2. The outlook remains negative. "The rating action reflects the sharp deterioration of Ingenico's financial performance in 2024 and Moody's expectations that the company's financial metrics will remain weak over the next 12-18 months" said Fabrizio Marchesi, a Moody's Ratings Vice President-Senior Analyst and lead analyst for the company. "The rating action also reflects Moody's expectations that Ingenico will nonetheless gradually improve its financial performance and maintain adequate liquidity", added Mr. Marchesi. RATINGS RATIONALE Ingenico's financial performance deteriorated sharply in 2024, with revenue and company adjusted EBITDA falling 35% and 57%, respectively, on a year-over-year basis. This was driven by an industry-wide decline in demand, following the particularly strong order cycle which existed between Q3/22 and Q3/23. Moody's-adjusted EBITDA, which includes adjustments for exceptional items that Moody's considers recurring as well as capitalized development costs, dropped to EUR91 million in 2024 from EUR333 million in the prior year. As a result, Moody's-adjusted leverage spiked to 13.9x as of December 31, 2024, up from 3.6x, while Moody's-adjusted EBITA/interest was only 0.7x and Moody's-adjusted free cash flow (FCF) was negative EUR52 million. Moody's believes that it will take time for market demand to recover, that the global POS terminal market remains highly competitive and that there is significant execution risk associated with restoring Ingenico's revenue and profitability. Moody's forecasts is for revenue to gradually improve to around EUR1.0 billion by December 2026 (well below EUR1.4 billion in 2022 and 2023) with company adjusted EBITDA rising to EUR185 million in 2025 and EUR215 million in 2026 (compared to EUR318 million in 2022 and EUR389 million in 2023) on the back of top-line gains and cost savings. This should drive an improvement in Moody's-adjusted leverage towards 9x, Moody's-adjusted EBITA/interest to around 1.2x and break-even levels of Moody's-adjusted FCF in by December 2026. However, Moody's highlights that additional growth in revenue and company adjusted EBITDA towards at least EUR1.1 billion and around EUR250 million will be required in 2027 in order to ensure that financial metrics are solidly in line with a B3 CFR. Ingenico's rating is supported by the company's leading market positions in the global point of sale (POS) terminal market, underpinned by a large installed base; significant geographic revenue diversification and large customer base; and technological know-how and solid R&D capabilities. Concurrently, the rating is constrained by Ingenico's narrow business focus and exposure to the cyclical, very competitive, and mature POS terminal market; the risk that an increasing share of online payment transactions may hamper its POS installed base growth; and the potential for debt-financed acquisitions or dividend payments. ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) CONSIDERATIONS Ingenico has been controlled by investment funds managed by Apollo Global Management, Inc, which owns 97% of the company, since 2022, with the remainder held by management. The company has historically demonstrated an aggressive financial policy as evidenced by a EUR159 million cash distribution made to shareholders in 2024, which was financed via cash on balance sheet. Ingenico's board structure and policies reflect concentrated control and decision making, while financial disclosure is more limited relative to publicly-listed companies. These considerations are reflected in Ingenico's G-4 Issuer Profile Score (IPS), which reflects overall exposure to governance risk, as well as the company's Credit Impact Score (CIS) of CIS-4. LIQUIDITY Moody's considers Ingenico's liquidity to be adequate. As of December 31, 2024, liquidity consisted of EUR90 million of cash on balance sheet as well as access to a EUR277.5 million senior secured RCF, EUR110 million of which was drawn. Although the company has drawn an additional EUR70 million of the senior secured RCF in the first quarter of 2025, Moody's considers that overall liquidity is sufficient to satisfy minimum liquidity requirements of EUR70 million. The senior secured RCF features a springing Senior Secured Net Leverage ratio test, which is tested when the senior secured RCF is drawn above 40%. In the first quarter of 2025, the company obtained a covenant reset for the six quarters until June 30, 2026 (inclusive). As per Moody's current forecasts, Moody's do not expect covenant breaches based on Moody's expectations for growth in revenue and company adjusted EBITDA in 2026 and beyond. STRUCTURAL CONSIDERATIONS Ingenico's capital structure includes a EUR277.5 million senior secured RCF due in March 2028 and a EUR1.1 billion senior secured term loan B2 due in March 2030. The security package provided to senior secured lenders consists of pledges over shares and intercompany receivables, which Moody's considers to be weak. The B3 ratings on the senior secured RCF and senior secured term loan B2 are in line with the CFR, reflecting the pari-passu nature of the facilities. The B3-PD probability of default rating is at the same level as the CFR, reflecting Moody's assumptions of a 50% family recovery rate. RATING OUTLOOK The negative outlook reflects the company's elevated Moody's-adjusted leverage and the weakness of the company's other financial metrics. The outlook also takes into account the execution risk associated with the improvement in financial performance that is required to restore financial metrics to levels that are consistent with a B3 CFR and ensure covenant compliance from the third quarter of 2026 onwards. The outlook could be stabilised if the company demonstrates a gradual and sustained improvement in revenue and profitability such that company adjusted EBITDA rises towards EUR250 million, with Moody's-adjusted EBITDA of at least EUR175 million, and Moody's-adjusted leverage improves towards 7.0x, with Moody's-adjusted EBITA/interest of around 1.5x and Moody's-adjusted FCF/debt in the low-single digits, all on a sustained basis. A stabilization would also require the company to maintain at least adequate liquidity and a successful extension of the senior secured RCF beyond its current March 2028 maturity date. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Positive pressure on the ratings is unlikely at this stage but could develop over time if Ingenico records growth in revenue and Moody's-adjusted EBITDA and develops a track record of maintaining Moody's-adjusted leverage below 5.0x, Moody's-adjusted EBITA/interest around 2.0x and Moody's-adjusted FCF/debt at mid-single-digit levels. Any positive rating pressure would also require the company to maintain at least adequate liquidity and demonstrate less aggressive financial policies, refraining from material debt-funded acquisitions or shareholder distributions. Negative rating pressure could occur if the company does not at least meet Moody's expectations for organic revenue and EBITDA recovery such that it becomes clear that the conditions for a stabilization of the rating will not be met. A rating downgrade could also occur if the company's liquidity were to deteriorate so that it is no longer adequate or if the risk of a distressed exchanged, as per Moody's definitions, increases. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Business and Consumer Services published in November 2021. COMPANY PROFILE Ingenico is a leading authentication and payment initiation provider globally. It provides POS terminals and embedded software, which permit the authentication of cardholders and initiation of payments, as well as POS-related services. In 2024, the company generated revenue of EUR911 million and EUR168 million of company adjusted EBITDA. TARKETT PARTICIPATION: S&P Rates New EUR1,035MM Term Loan B 'B+' ---------------------------------------------------------------- S&P Global Ratings assigned its 'B+' issue and '3' recovery rating to the EUR1,035 senior-secured term loan B (TLB). S&P's ratings on Tarkett Participation (Tarkett; B+/Positive/--) are unaffected by the transaction . The '3' recovery rating on the company's senior secured facility indicates its expectation of meaningful (50%-70%; rounded estimate: 60%) recovery in a default scenario. S&P views Tarkett's announcement of a EUR50 million add-on to its existing facilities as credit neutral. The refinancing of the existing euro and dollar TLBs with a three-year maturity extension and providing a EUR50 million add-on alongside cash on balance will strengthen the company's debt maturity and liquidity profile. The revolving credit facility (RCF) has been increased by EUR50 million as a result of the company's growth. The rating on the proposed instruments is subject to S&P's review of the final terms and conditions. In S&P's view, the proposed transaction would be leverage neutral, since Tarkett intends to use the proceeds to refinance its existing EUR988 million TLB, with the remaining proceeds to fund transaction fees, original issue discount, future bolt-on acquisitions, and the squeeze-out. The increase of debt is credit neutral because the cash is netted off of its debt calculation. In March 2025, S&P revised the outlook to positive on the issuer credit rating on Tarkett. This reflects the improving profitability over 2024, higher-than-expected profits, and the improving rating headroom. Tarkett has been able to maintain its selling prices as the raw price material fell, which led to favorable inflation balance. The programs introduced in 2024 to optimize the company's footprint and save costs also reduced Tarkett's cost base; this boosted its profitability. S&P said, "Our base case points to S&P Global Ratings-adjusted EBITDA of about EUR340 million-EUR350 million in 2025. That should translate to about 3.8x-4.0x S&P Global Ratings-adjusted leverage in 2025, then decreasing to 3.4x-3.6x in 2026. We forecast that Tarkett will maintain adjusted FFO to debt above 16% in 2025-2026." Key Metrics Period ending 2023a 2024a 2025e 2026f (Mil. EUR) EBITDA 268 292 340-350 350-370 EBITDA margin (%) 8.0 8.8 9.7-9.9 10.0-10.2 Free operating cash flow (FOCF) 177 156 90-110 110-130 Debt/EBITDA (x 4.5 3.9 3.8-4.0 3.4-3.6 FFO/debt (%) 13.4 17.4 17-19 19-21 FOCF/debt (%) 14.6 13.6 7-9 8-10 EBITDA interest coverage (x) 4.5 4.7 5.0-5.5 5.0-5.5 FFO--Funds from operations. a--Actual. e--Estimate. f--Forecast. Issue Ratings -- Recovery Analysis Key analytical factors -- S&P rates the EUR1,035 million senior secured TLB due April 2031 and the EUR400 million RCF due January 2031 issued by Tarkett 'B+' with a '3' recovery rating, indicating that S&P anticipates meaningful recovery (50%-70%; rounded estimate 60%) in the event of a default. -- The recovery rating is constrained by the priority liabilities, namely the factoring facilities, and the significant amount of senior secured debt in the capital structure. -- The documentation includes a minimum guarantor coverage test (80% for EBITDA, excluding entities that cannot become a guarantor) and customary clauses. The documentation is covenant-light and includes one leverage covenant on the senior facilities, to be tested only if the RCF is at least 40% drawn. -- In S&P's hypothetical default scenario, it assumes subdued conditions in the renovation and commercial markets, coupled with an increase in competitive pressure and high prices for important raw materials, leading to a significant decline in the sale of flooring products and lower profitability. -- S&P values the business as a going concern, based on Tarkett's leading market position in the flooring solutions and sport surfaces, well-invested manufacturing plants, and customer diversification. Simulated default assumptions -- Year of default: 2029 -- Jurisdiction: France -- Implied enterprise value multiple: 5.5x Simplified waterfall -- Gross enterprise value at default: About EUR1, 088.9 million -- Administrative costs: 5% -- Net value available: EUR1,034.5 million -- Priority claims: EUR102.3 million* -- First-lien claims: About EUR1,502.8 billion --Recovery range: 50%-70% (rounded estimate 60%) --Recovery rating: 3 *All debt amounts include six months of prepetition interest. RCF assumed to be 85% drawn at default. ============= I R E L A N D ============= ALKERMES PLC: S&P Affirms 'BB' ICR on Prepayment of Debt -------------------------------------------------------- S&P Global Ratings affirmed its 'BB' issuer credit rating on Ireland-based biopharmaceutical company Alkermes PLC. S&P said, "The stable outlook reflects our expectation that Alkermes' growth from ARISTADA and LYBALVI will mitigate the impact of VIVITROL's loss of exclusivity in 2027 and the manufacturing and royalty decline. It also reflects our expectation the company will seek to supplement its growth through internally developed products as well as some acquisitions, which could bring leverage back up." Alkermes PLC recently prepaid its remaining outstanding debt, at the end of the first quarter with more than $900 million of cash and investments on the balance sheet. S&P said, "While Alkermes has paid off its debt in 2024, we continue to expect the company may need to invest in its pipeline to ensure future growth. Leverage has fallen to 0.1x, with only about $75 million of reported lease liabilities and no long-term debt at year-end. We continue to expect growth from the company's proprietary products, with LYBALVI becoming the largest revenue source for Alkermes by 2026. However, its pipeline and future growth prospects is heavily reliant on the success of ALKS 2680. While we do not expect the company to make large acquisitions in the immediate future, the success of ALKS 2680 remains uncertain, and we believe the company would need to supplement the pipeline, with greater urgency if ALKS 2680 does not advance. Though we believe the company's $900 million of cash and investments on the balance sheet provides it with significant sources to supplement growth, the company specified it would like to bring in additional assets to bolster its pipeline. Meanwhile, we continue to expect VIVITROL to grow in the low- to mid-single digit range, stemming largely from growth in treatment of alcohol dependence. We expect the company to expand its sales force to maintain low-single digit growth in ARISTADA despite increasing competition. "An increase in research and development (R&D) and sales will weigh down margins in 2025 and 2026. We expect the company to invest heavily in hypersomnolence disorders and its orexin program, moving into confirmatory Phase II studies for both NT1 and NT2, and initiate its Phase II study in idiopathic hypersomnia in the first half of 2025. We expect the combination of substantial investments in the expansion of the company's psychiatry sales team and increased R&D investment to dampen margins. "We expect the potential impact of tariffs and Medicaid changes to be limited, though uncertainty persists. The company manufactures all its proprietary products in the U.S. limiting its exposure to changes in tariffs. The majority of its manufacturing supply chain is sourced domestically, with about a small amount of active pharmaceutical ingredients, accounting for about 5% of cost of goods sold (COGS), imported from suppliers abroad. Meanwhile, Medicaid contributes close to 50% for all three proprietary products. Alkermes addresses patients that suffer from substance abuse (generally alcoholism) and serious mental health illnesses who are oftentimes considered disabled. While a Medicaid cut is not factored into our base-case expectations, we believe this may limit the impact of potential Medicaid cuts on the company. "The stable outlook reflects our expectation the company will pursue acquisitions to augment its pipeline, but that leverage will remain below 3x." S&P could lower its rating on Alkermes if adjusted debt to EBITDA increases above 3x. This could occur if the company: -- Pursues significant debt-financed acquisitions or shareholder rewards that increase leverage materially; or -- Underperforms our expectations; for example, if Lybalvi does not grow as quickly as S&P anticipates, Vivitrol revenue declines faster than it anticipates, or products in the pipeline require material more investment than expected. S&P said, "Although unlikely within the next year or two, we could raise the rating on Alkermes if the company significantly diversifies its portfolio without leverage straying from our expectations. In this scenario, the company would need to articulate a convincing financial policy whereby leverage would be sustained under 2x. We view this as unlikely because we expect the company will acquire assets to strengthen its pipeline." CONTEGO CLO III: Moody's Affirms B1 Rating on EUR8.25MM F Notes --------------------------------------------------------------- Moody's Ratings has upgraded the ratings on the following notes issued by Contego CLO III DAC: EUR18,240,000 Class C-R Senior Secured Deferrable Floating Rate Notes due 2030, Upgraded to Aaa (sf); previously on Dec 13, 2024 Upgraded to Aa1 (sf) EUR15,900,000 Class D-R Senior Secured Deferrable Floating Rate Notes due 2030, Upgraded to Aa1 (sf); previously on Dec 13, 2024 Upgraded to A1 (sf) EUR19,950,000 Class E-R Senior Secured Deferrable Floating Rate Notes due 2030, Upgraded to Baa2 (sf); previously on Dec 13, 2024 Upgraded to Ba1 (sf) Moody's have also affirmed the ratings on the following notes: EUR181,500,000 (Current outstanding amount EUR31,188,648) Class A-R Senior Secured Floating Rate Notes due 2030, Affirmed Aaa (sf); previously on Dec 13, 2024 Affirmed Aaa (sf) EUR7,000,000 Class B-1-R Senior Secured Fixed Rate Notes due 2030, Affirmed Aaa (sf); previously on Dec 13, 2024 Affirmed Aaa (sf) EUR28,160,000 Class B-2-R Senior Secured Floating Rate Notes due 2030, Affirmed Aaa (sf); previously on Dec 13, 2024 Affirmed Aaa (sf) EUR8,250,000 Class F Senior Secured Deferrable Floating Rate Notes due 2030, Affirmed B1 (sf); previously on Dec 13, 2024 Upgraded to B1 (sf) Contego CLO III DAC, issued in April 2016 and refinanced in April 2018, is a collateralised loan obligation (CLO) backed by a portfolio of mostly high-yield senior secured European loans. The portfolio is managed by Five Arrows Managers LLP. The transaction's reinvestment period ended in July 2022. RATINGS RATIONALE The rating upgrades on the Class C-R, Class D-R and Class E-R notes are primarily a result of the deleveraging of the Class A-R notes following amortisation of the underlying portfolio since the last rating action in December 2024. The affirmations on the ratings on the Class A-R, Class B-1-R, Class B-2-R and Class F notes are primarily a result of the expected losses on the notes remaining consistent with their current rating levels, after taking into account the CLO's latest portfolio, its relevant structural features and its actual over-collateralisation ratios. The Class A-R notes have paid down by approximately EUR70.96 million (39.10%) since the last rating action in December 2024 and EUR150.31 million (82.82%) since closing. As a result of the deleveraging, over-collateralisation (OC) has increased across the capital structure. According to the trustee report dated April 2025 [1] the Class A/B, Class C, Class D, Class E and Class F OC ratios are reported at 176.65%, 149.57%,131.94% 114.94% and 109.13% compared to October 2024 [2] levels of 157.05%, 138.64%, 125.78%, 112.67% and 108.02%, respectively. Moody's notes that the April 2025 principal payments are not reflected in the reported OC ratios. The key model inputs Moody's uses in Moody's analysis, such as par, weighted average rating factor, diversity score and the weighted average recovery rate, are based on Moody's published methodology and could differ from the trustee's reported numbers. In Moody's base case, Moody's used the following assumptions: Performing par and principal proceeds balance: EUR143.75m Defaulted Securities: none Diversity Score: 25 Weighted Average Rating Factor (WARF): 3194 Weighted Average Life (WAL): 2.34 years Weighted Average Spread (WAS): 3.53% Weighted Average Coupon (WAC): 4.24% Weighted Average Recovery Rate (WARR): 43.68% The default probability derives from the credit quality of the collateral pool and Moody's expectations of the remaining life of the collateral pool. The estimated average recovery rate on future defaults is based primarily on the seniority of the assets in the collateral pool. In each case, historical and market performance and a collateral manager's latitude to trade collateral are also relevant factors. Moody's incorporates these default and recovery characteristics of the collateral pool into Moody's cash flow model analysis, subjecting them to stresses as a function of the target rating of each CLO liability it is analysing. Methodology Underlying the Rating Action: The principal methodology used in these ratings was "Moody's Global Approach to Rating Collateralized Loan Obligations" published in May 2024. Counterparty Exposure: The rating action took into consideration the notes' exposure to relevant counterparties, such as account bank, using the methodology "Structured Finance Counterparty Risks" published in May 2025. Moody's concluded the ratings of the notes are not constrained by these risks. Factors that would lead to an upgrade or downgrade of the ratings: The rated notes' performance is subject to uncertainty. The notes' performance is sensitive to the performance of the underlying portfolio, which in turn depends on economic and credit conditions that may change. The collateral manager's investment decisions and management of the transaction will also affect the notes' performance. Additional uncertainty about performance is due to the following: -- Portfolio amortisation: The main source of uncertainty in this transaction is the pace of amortisation of the underlying portfolio, which can vary significantly depending on market conditions and have a significant impact on the notes' ratings. Amortisation could accelerate as a consequence of high loan prepayment levels or collateral sales by the collateral manager or be delayed by an increase in loan amend-and-extend restructurings. Fast amortisation would usually benefit the ratings of the notes beginning with the notes having the highest prepayment priority. In addition to the quantitative factors that Moody's explicitly modelled, qualitative factors are part of the rating committee's considerations. These qualitative factors include the structural protections in the transaction, its recent performance given the market environment, the legal environment, specific documentation features, the collateral manager's track record and the potential for selection bias in the portfolio. All information available to rating committees, including macroeconomic forecasts, input from Moody's other analytical groups, market factors, and judgments regarding the nature and severity of credit stress on the transactions, can influence the final rating decision. NORDIC AVIATION: S&P Withdraws 'B' LongTerm Issuer Credit Rating ---------------------------------------------------------------- S&P Global Ratings withdrew its 'B' long-term issuer credit rating on aircraft lessor Nordic Aviation Capital DAC (NAC) and its core subsidiary NAC Aviation 29 DAC (NAC 29), at the company's request. The ratings were on CreditWatch with positive implications at the time of the withdrawal. The withdrawal follows the completed acquisition of NAC by aircraft lessor Dubai Aerospace Enterprise Ltd. (unrated) and the earlier redemption of its rated obligations, NAC 29's senior secured term loan B and senior secured notes. PENTA CLO 19: Fitch Assigns 'B-sf' Final Rating on Class F Notes ---------------------------------------------------------------- Fitch Ratings has assigned Penta CLO 19 DAC final ratings. Entity/Debt Rating ----------- ------ Penta CLO 19 DAC Class A Notes XS3043418071 LT AAAsf New Rating Class A-1 Loan LT AAAsf New Rating Class A-2 Loan LT AAAsf New Rating Class B Notes XS3043418238 LT AAsf New Rating Class C Notes XS3043418402 LT Asf New Rating Class D Notes XS3043418667 LT BBB-sf New Rating Class E Notes XS3043418824 LT BB-sf New Rating Class F Notes XS3043419129 LT B-sf New Rating Subordinated Notes XS3043419475 LT NRsf New Rating Transaction Summary Penta CLO 19 DAC is a securitisation of mainly senior secured obligations (at least 90%) with a component of senior unsecured, mezzanine, second-lien loans and high-yield bonds. Note proceeds have been used to purchase a portfolio with a target par of EUR400 million. The portfolio is actively managed Partners Group (UK) Management Ltd. The CLO has a 4.5-year reinvestment period and a 7.5-year weighted average life test (WAL). KEY RATING DRIVERS Average Portfolio Credit Quality (Neutral): Fitch assesses the average credit quality of obligors to be in the 'B' category. The Fitch weighted average rating factor of the identified portfolio is 23.5. 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 61.4%. Diversified Portfolio (Positive): The transaction has two Fitch matrix sets, one effective at closing corresponding to a 7.5-year WAL test and one effective six months later corresponding to a seven-year WAL test. The two matrices within each set correspond to a top 10 obligor concentration limit at 20% and, a fixed-rate asset limit at 10% and 5%, respectively. The transaction includes various concentration limits in the portfolio, including a maximum exposure to the three-largest Fitch-defined industries at 40%. These covenants ensure the asset portfolio will not be exposed to excessive concentration. WAL Step-Up Feature (Neutral): The transaction can extend the WAL by one year on the step-up date, which is one year after closing. The WAL extension is subject to the collateral quality tests being passed and the aggregate collateral balance (defaults at Fitch-calculated collateral value) being no less than the reinvestment target par balance. Portfolio Management (Neutral): The transaction has a 4.5-year reinvestment period and includes reinvestment criteria similar to those of other European transactions. Fitch's analysis is based on a stressed-case portfolio with the aim of testing the robustness of the transaction structure against its covenants and portfolio guidelines. Cash Flow Modelling (Positive): The WAL used for the transaction's Fitch-stressed portfolio is reduced by 12 months from the WAL covenant. This is to account for the strict reinvestment conditions envisaged by the transaction after its reinvestment period. These include passing both the coverage tests and the Fitch 'CCC' test post reinvestment as well as a WAL covenant that progressively steps down over time. Fitch believes these conditions would reduce the effective risk horizon of the portfolio during stress periods. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A 25% increase of the mean default rate (RDR) and a 25% decrease of the recovery rate (RRR) across all ratings of the current portfolio would have no impact on the class A debt and lead to downgrades of one notch each for the class B to E notes and to below 'B-sf' for the class F notes. Based on the current portfolio, downgrades may occur if the loss expectation is larger than initially assumed, due to unexpectedly high levels of defaults and portfolio deterioration. Due to the better metrics and shorter life of the current portfolio than the Fitch-stressed portfolio, the class B to F notes each display rating cushions of two notches and the class A debt does not have any rating cushion as it is already at the highest achievable rating. Should the cushion between the current portfolio and the Fitch-stressed portfolio be eroded either due to manager trading or negative portfolio credit migration, a 25% increase of the mean RDR and a 25% decrease of the RRR across all ratings of the Fitch-stressed portfolio would lead to downgrades of three notches each for the class A debt and the class E notes, four notches each for the class B and C notes, two notches for the class D notes and to below 'B-sf' for the class F notes. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade A 25% reduction of the RDR and a 25% increase in the RRR across all ratings of the Fitch-stressed portfolio would lead to upgrades of up to three notches each for the notes, except for the 'AAAsf' rated classes. During the reinvestment period, upgrades, which are based on the Fitch-stressed portfolio upgrades may occur on better-than-expected portfolio credit quality and a shorter remaining WAL test, enabling the notes to withstand larger-than-expected losses for the remaining life of the transaction. After the end of the reinvestment period, upgrades may result from stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread available to cover losses in the remaining portfolio. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY The majority of the underlying assets or risk-presenting entities have ratings or credit opinions from Fitch and/or other nationally recognised statistical rating organisations and/or European securities and markets authority-registered rating agencies. Fitch has relied on the practices of the relevant groups within Fitch and/or other rating agencies to assess the asset portfolio information or information on the risk-presenting entities. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. ESG Considerations Fitch does not provide ESG relevance scores for Penta CLO 19 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. PENTA CLO 19: S&P Assigns B-(sf) Rating on Class F Notes -------------------------------------------------------- S&P Global Ratings assigned its credit ratings to Penta CLO 19 DAC's class A-1 and A-2 loans and class A, B, C, D, E, and F notes. The issuer has also issued unrated subordinated notes. Under the transaction documents, the rated loans and notes will pay quarterly interest unless a frequency switch event occurs, upon which the loans and notes will pay semiannually. This transaction has a 1.50-year non-call period, and the portfolio's reinvestment period will end approximately 4.5 years after closing. The ratings reflect S&P's assessment of: -- The diversified collateral pool, which primarily comprises broadly syndicated speculative-grade senior secured term loans and bonds that are governed by collateral quality tests. -- The credit enhancement provided through the subordination of cash flows, excess spread, and overcollateralization. -- The collateral manager's experienced team, which can affect the performance of the rated loans and notes through collateral selection, ongoing portfolio management, and trading assessed under S&P's operational risk framework. -- The transaction's legal structure, which is bankruptcy remote. -- The transaction's counterparty risks, which are in line with S&P's counterparty rating framework. Portfolio benchmarks S&P Global Ratings' weighted-average rating factor 2,695.49 Default rate dispersion 541.63 Weighted-average life (years) 4.82 Obligor diversity measure 116.33 Industry diversity measure 19.941 Regional diversity measure 1.232 Transaction key metrics (modeled assumptions) Total par amount (mil. EUR) 400.00 Defaulted assets (mil. EUR) 0 Number of performing obligors 133 Portfolio weighted-average rating derived from S&P's CDO evaluator B 'CCC' category rated assets (%) 0.00 Target 'AAA' weighted-average recovery (%) 36.16 Target weighted-average spread (%) * 3.62 Target weighted-average coupon (%) * 5.65 *As a percentage of target par. Rating rationale S&P said, "Our ratings reflect our assessment of the collateral portfolio's credit quality, which has a weighted-average rating of 'B'. The portfolio primarily comprises 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. "In our cash flow analysis, we modeled the EUR400 million par amount, the covenanted weighted-average spread of 3.60%, and the covenanted weighted-average coupon of 4.30%, and the targeted weighted-average recovery rates at all rating levels. We applied various cash flow stress scenarios, using four different default patterns, in conjunction with different interest rate stress scenarios for each liability rating category. "The transaction's documented counterparty replacement and remedy mechanisms adequately mitigate its exposure to counterparty risk under our counterparty criteria. "Following the application of our structured finance sovereign risk criteria, the transaction's exposure to country risk is limited at the assigned ratings, as the exposure to individual sovereigns does not exceed the diversification thresholds outlined in our criteria. "The transaction's legal structure is bankruptcy remote, in line with our legal criteria. Our credit and cash flow analysis indicates that the available credit enhancement for the class B to E notes could withstand stresses commensurate with higher ratings than those assigned. However, as the CLO is still in its reinvestment phase, during which the transaction's credit risk profile could deteriorate, we have capped our ratings on these notes. The class A-1 and A-2 loans and class A and F notes can withstand stresses commensurate with the assigned ratings. "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 the class A-1 and A-2 loans and class A to F notes. "In addition to our standard analysis, to provide an indication of how rising pressures among speculative-grade corporates could affect our ratings on European CLO transactions, we have also included the sensitivity of the ratings on the class A-1 and A-2 loans and 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 industries. "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, we have not made any specific adjustments in our rating analysis to account for any ESG-related risks or opportunities." Penta CLO 19 is a European cash flow CLO securitization of a revolving pool, comprising euro-denominated senior secured and unsecured loans and bonds issued mainly by speculative-grade borrowers. Ratings list Amount Credit Class Rating* (mil. EUR) enhancement (%) Interest rate§ A AAA (sf) 110.40 38.00 Three/six-month EURIBOR plus 1.25% A-1 loan AAA (sf) 102.60 38.00 Three/six-month EURIBOR plus 1.25% A-2 loan AAA (sf) 35.00 38.00 Three/six-month EURIBOR plus 1.25% B AA (sf) 44.00 27.00 Three/six-month EURIBOR plus 1.75% C A (sf) 24.00 21.00 Three/six-month EURIBOR plus 2.35% D BBB- (sf) 28.00 14.00 Three/six-month EURIBOR plus 3.30% E BB- (sf) 19.00 9.25 Three/six-month EURIBOR plus 5.85% F B- (sf) 11.00 6.50 Three/six-month EURIBOR plus 8.57% Sub. NR 35.40 N/A N/A *The ratings assigned to the class A-1 and A-2 loans and class A and B notes address timely interest and ultimate principal payments. The ratings assigned to the class C, D, E, and F notes address ultimate interest and principal payments. §The payment frequency switches to semiannual and the index switches to six-month EURIBOR when a frequency switch event occurs. EURIBOR--Euro Interbank Offered Rate. NR--Not rated. N/A--Not applicable. WILTON PARK: Fitch Assigns 'B-(EXP)sf' Rating on Class F-R Notes ---------------------------------------------------------------- Fitch Ratings has assigned Wilton Park CLO DAC reset notes expected ratings. The assignment of final ratings is contingent on the receipt of final documents conforming to information already reviewed. Entity/Debt Rating ----------- ------ Wilton Park CLO DAC Class A-R LT AAA(EXP)sf Expected Rating Class B1-R LT AA(EXP)sf Expected Rating Class B2-R LT AA(EXP)sf Expected Rating Class C-R LT A(EXP)sf Expected Rating Class D-R LT BBB-(EXP)sf Expected Rating Class E-R LT BB-(EXP)sf Expected Rating Class F-R LT B-(EXP)sf Expected Rating Transaction Summary Wilton Park CLO DAC (reset) is a securitisation of mainly senior secured obligations (at least 96%) with a component of senior unsecured, mezzanine, second-lien loans and high-yield bonds. Note proceeds from the issuance are expected to be used to redeem the existing rated notes and to purchase a portfolio with a target par of EUR400 million. The portfolio is actively managed by Blackstone Ireland Limited. The collateralised loan obligation (CLO) has a 4.5-year reinvestment period and a 7.5-year weighted-average life (WAL) test. KEY RATING DRIVERS Average Portfolio Credit Quality (Neutral): Fitch assesses the average credit quality of obligors at 'B'/'B-'. The Fitch weighted-average rating factor (WARF) of the identified portfolio is 24.7. High Recovery Expectations (Positive): At least 96% of the portfolio will comprise senior secured obligations. The recovery prospects for these assets are more favourable than for second-lien, unsecured and mezzanine assets. The Fitch weighted-average recovery rate (WARR) of the identified portfolio is 61.2%. Diversified Portfolio (Positive): The transaction will include various concentration limits, including a maximum exposure to the three largest Fitch-defined industries in the portfolio at 40%, a maximum fixed-rate obligation limit of 12.5% and a top 10 obligor concentration limit of 20%. These covenants are intended to ensure the asset portfolio will not be exposed to excessive concentration. Portfolio Management (Neutral): The transaction will have a reinvestment period of about 4.5 years and will include reinvestment criteria similar to those of other European transactions. Its analysis is based on a stressed-case portfolio with the aim of testing the robustness of the deal structure against its covenants and portfolio guidelines. WAL Step-Up Feature (Neutral): The transaction can extend the WAL by 12 months on the step-up date, which is 12 months after closing. The WAL extension is subject to conditions, including passing the collateral quality and coverage tests and the adjusted collateral principal amount is at least equal to the reinvestment target par balance. Cash Flow Modelling (Positive): The WAL used for the Fitch-stressed portfolio is 12 months shorter than the WAL covenant to account for structural and reinvestment conditions after the reinvestment period, including passing the over-collateralisation and Fitch 'CCC' limitation tests, and a WAL covenant that gradually steps down over time. In Fitch's opinion, these conditions reduce the effective risk horizon of the portfolio during stress periods. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade 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 have no impact on the class A notes and would lead to downgrades of one notch each for the class B1 to E notes, to below 'B-sf' for the class F notes. Based on the identified portfolio, downgrades may occur if the loss expectation is larger than initially assumed, due to unexpectedly high levels of default and portfolio deterioration. Due to the better metrics and shorter life of the identified portfolio than the Fitch-stressed portfolio, the class B, D and E notes each display a rating cushion of two notches and the class C and F notes each have a cushion of one notch. 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% fall in the RRR across all ratings of the Fitch-stressed portfolio would lead to downgrades of up to four notches for the notes. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade A 25% reduction of the mean RDR and a 25% rise in the RRR across all ratings of the Fitch-stressed portfolio would lead to upgrades of up to three notches for the notes, except for the 'AAAsf' rated notes. During the reinvestment period, upgrades, which are based on the Fitch-stressed portfolio, may occur on better-than-expected portfolio credit quality and a shorter remaining WAL test, enabling the notes to withstand larger-than-expected losses for the remaining life of the transaction. After the end of the reinvestment period, upgrades may result from stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread 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 other nationally recognised statistical rating organisations and European Securities and Markets Authority-registered rating agencies. Fitch has relied on the practices of the relevant groups within Fitch and 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 Wilton Park CLO 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. WILTON PARK: S&P Assigns Prelim. B-(sf) Rating on Cl. F-R Notes --------------------------------------------------------------- S&P Global Ratings assigned its preliminary credit ratings to Wilton Park CLO DAC's A-R, B-1-R, B-2-R, C-R, D-R, E-R, and F-R notes. The issuer has unrated Z-1, Z-2, and subordinated notes outstanding from the existing transaction. The reinvestment period will be approximately 4.55 years, while the non-call period will be 1.46 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 sS&P's assessment of: -- The diversified collateral pool, which primarily comprises broadly syndicated speculative-grade senior secured term loans and bonds that are governed by collateral quality tests. -- The credit enhancement provided through the subordination of cash flows, excess spread, and overcollateralization. -- The collateral manager's experienced team, which can affect the performance of the rated notes through collateral selection, ongoing portfolio management, and trading. -- The transaction's legal structure, which S&P expects to be bankruptcy remote. -- The transaction's counterparty risks, which S&P expects to be in line with its counterparty rating framework. Portfolio benchmarks S&P Global Ratings weighted-average rating factor 2,875.59 S&P Global Ratings weighted-average rating factor (excluding defaulted assets) 2,820.27 Default rate dispersion 523.14 Weighted-average life (years) 4.23 Weighted-average life (years) extended to cover the length of the reinvestment period 4.54 Obligor diversity measure 162.08 Industry diversity measure 21.41 Regional diversity measure 1.27 Transaction key metrics Total par amount (mil. EUR) 402.32 Defaulted assets (mil. EUR 3.10 Number of performing obligors 214 Portfolio weighted-average rating derived from our CDO evaluator B 'CCC' category rated assets (%) 1.66 Target 'AAA' weighted-average recovery (%) 36.15 Target weighted-average spread (net of floors; %) 3.56 Target weighted-average coupon (%) 3.59 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, S&P assumed a starting collateral size of less than target par (i.e., the EUR400 million target par minus the EUR4.5 million maximum reinvestment target par adjustment amount). S&P said, "In our cash flow analysis, we also modeled the covenanted weighted-average spread of 3.56%, the target weighted-average coupon of 3.59%, 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-1-R, B-2-R, and C-R 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-R, D-R, and E-R notes can withstand stresses commensurate with the assigned preliminary ratings. For the class F-R notes, S&P's credit and cash flow analysis indicate that the available credit enhancement could withstand stresses commensurate with a lower preliminary rating. However, S&P has applied its 'CCC' rating criteria, resulting in a preliminary 'B- (sf)' rating on this class of notes. The ratings uplift for the class F-R notes reflects several key factors, including: -- The class F-R notes' available credit enhancement, which is in the same range as that of other CLOs S&P has rated and that has recently been issued in Europe. -- The preliminary portfolio's average credit quality, which is similar to other recent CLOs. -- S&P's model generated break-even default rate at the 'B-' rating level of 22.20% (for a portfolio with a weighted-average life of 4.54 years), versus if we were to consider a long-term sustainable default rate of 3.1% for 4.54 years, which would result in a target default rate of 14.07%. -- 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. S&P said, "Following this analysis, we consider that the available credit enhancement for the class F notes is commensurate with the assigned preliminary 'B- (sf)' rating. "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-R, B-1-R, B-2-R, C-R, D-R, E-R, and F-R notes. "In addition to our standard analysis, we have also included the sensitivity of the ratings on the class A-R to E-R 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-R notes." Environmental, social, and governance S&P regards the exposure to environmental, social, and governance (ESG) credit factors in the transaction as being broadly in line with its 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 S&P's ESG benchmark for the sector, no specific adjustments have been made in our rating analysis to account for any ESG-related risks or opportunities. Wilton 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-R AAA (sf) 244.00 39.00 Three/six-month EURIBOR plus 1.45% B-1-R AA (sf) 35.50 27.63 Three/six-month EURIBOR plus 2.10% B-2-R AA (sf) 10.00 27.63 4.90% C-R A (sf) 24.00 21.63 Three/six-month EURIBOR plus 2.65% D-R BBB- (sf) 28.50 14.50 Three/six-month EURIBOR plus 3.75% E-R BB- (sf) 17.50 10.13 Three/six-month EURIBOR plus 6.70% F-R B- (sf) 12.50 7.00 Three/six-month EURIBOR plus 9.50% Z-1 NR 37.60 N/A N/A Z-2 NR 37.60 N/A N/A Sub notes NR 37.60 N/A N/A *The preliminary ratings assigned to the class A-R, B-1-R, and B-2-R notes address timely interest and ultimate principal payments. The preliminary ratings assigned to the class C-R, D-R, E-R, and F-R 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. =================== L U X E M B O U R G =================== GARFUNKELUX HOLDCO 2: Fitch Lowers IDR to 'C' on Debt Restructuring ------------------------------------------------------------------- Fitch Ratings has downgraded Garfunkelux Holdco 2 S.A.'s (Lowell) Long-Term Issuer Default Rating (IDR) to 'C' from 'CC' and Garfunkelux Holdco 3 S.A.'s (GH3) senior secured debt rating to 'C' from 'CC'. The Recovery Rating on the senior secured debt is 'RR4'. Key Rating Drivers The downgrades follow Lowell's announcement that it has reached an agreement with its revolving credit facility (RCF) lenders regarding it amendment and extension and launched a formal consent solicitation backing its earlier announced refinancing deal. According to the proposed transaction terms, senior secured noteholders will receive GBP165million of the GBP1.6 billion notes paid down in cash, GBP250 million reinstated as newly created HoldCo debt (subordinated to the new OpCo notes) and the remaining GBP1.2 billion as new OpCo notes. The transaction will also result in a GBP35 million paydown of the RCF, with GBP50 million reinstated as a revolving facility and the remainder as a term facility. The securitisation facilities remain in place and will be rolled or refinanced. In its view, the proposed transaction will result in a material reduction in terms for the senior secured noteholders compared with the existing contractual terms and is being conducted to avoid a default, which Fitch would perceive as a distressed debt exchange (DDE) under its Non-Bank Financial Institutions Rating Criteria. This is because of the proposed maturity extension, with a portion of the debt principal to either be subject to a haircut or converted to payment-in-kind notes. Improved Post-transaction Debt Maturity: Upon closing of the transaction, maturity for Lowell's senior secured notes and RCF will be extended to 2028 and 2029. Moderately increased interest costs on the senior secured notes and the RCF will consume some of the cash interest expense improvement, constraining Lowell's interest coverage ratio below 3.0x after the transaction (excluding proceeds from future asset sales and securitisations from EBITDA). High Leverage: In Fitch's view, Lowell's leverage remains high, despite recent portfolio sales and securitisations aimed at freeing up liquidity. Its reported net debt/EBITDA (including proceeds from asset sales and securitisation) ratio was 4.0x at end-2024, above the company's target of 3.0x, driven by the timing of asset sales. Its gross debt/EBITDA ratio (excluding proceeds from assets sales) was a high 6.0x at end-2024, but Fitch expects this to decrease on completion of the transaction, due to the proposed net reduction in senior secured notes. Lowell's tangible equity is negative, due to sizeable past acquisitions and pre-tax losses, so it does not provide balance-sheet support for its capitalisation and leverage assessment, although Fitch treats shareholder loans as equity by Fitch. Profitability Pressures, Resilient Collections: Lowell's profitability remained weak with a 5% negative pre-tax return on average assets in 2024. Despite cost-efficiency measures having been put in place, profitability has been undermined by high funding costs, an increase in other operating expenses, as well as additional goodwill impairment in DACH in 2024. Collection performance on own portfolios remained robust in 2024 (100% of Lowell's projections in 2024), but future cash receipts will be adversely affected by portfolio sales and depend on continuous portfolio acquisitions (2024: GBP390 million book value). Fitch expects bottom-line profitability to remain under pressure, despite a moderate improvement in leverage following the refinancing transaction. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Fitch expects to downgrade Lowell's Long-Term IDR to a default level rating before re-rating the company on completion of the debt restructuring and based on its financial profile after the transaction. Fitch will reassess Lowell's credit profile with a particular focus on the sustainability of its leverage and liquidity profile. Based on Fitch's projections of Lowell's post-closing EBITDA and outstanding gross debt, Fitch expects its gross debt/EBITDA ratio to improve but remain high at around 4.5x-5.0x after the refinancing transaction (excluding proceeds from asset disposals from EBITDA). This will likely constrain Lowell's Long-Term IDR to the 'CCC' or lower end of 'B' rating categories. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Lowell's high leverage and weak interest coverage ratio after the transaction will likely constrain its rating to the 'CCC' or low 'B' rating categories in the near term. Beyond that, Lowell's rating trajectory will largely depend on its ability to contain leverage, improve its interest coverage ratio while retaining its debt purchasing and servicing franchise. DEBT AND OTHER INSTRUMENT RATINGS: KEY RATING DRIVERS The 'C' rating of GH3's senior secured debt, junior to Lowell's sizeable RCF, reflects Fitch's view of average recoveries of this debt class. DEBT AND OTHER INSTRUMENT RATINGS: RATING SENSITIVITIES The secured notes' rating is sensitive to changes in Lowell's Long-Term IDR. Improved recovery expectations, for instance, as a result of a thinner layer of debt senior to the notes, could be positive for the notes' rating. ADJUSTMENTS The Standalone Credit Profile has been assigned below the implied Standalone Credit Profile due to the following adjustment reason(s): weakest link - funding, liquidity & coverage (negative). The business profile score has been assigned below the implied score due to the following adjustment reason(s): business model (negative). The earnings & profitability score has been assigned below the implied score due to the following adjustment reason(s): earnings stability (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 Garfunkelux Holdco 2 S.A. has an ESG Relevance Score of '4' for Customer Welfare - Fair Messaging, Privacy & Data Security due to the importance of fair collection practices and consumer interactions and the regulatory focus on them, which has a negative impact on the credit profile, and is relevant to the rating[s] in conjunction with other factors. Garfunkelux Holdco 2 S.A. has an ESG Relevance Score of '4' for Financial Transparency due to the significance of internal modelling to portfolio valuations and to associated metrics such as estimated remaining collections, which has a negative impact on the credit profile, and is relevant to the rating[s] 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 ----------- ------ -------- ----- Garfunkelux Holdco 3 S.A. senior secured LT C Downgrade RR4 CC Garfunkelux Holdco 2 S.A. LT IDR C Downgrade CC ===================== N E T H E R L A N D S ===================== ABERTIS INFRAESTRUCTURAS: Fitch Rates New Hybrid Notes 'BB(EXP)' ---------------------------------------------------------------- Fitch Ratings has assigned Abertis Infraestructuras Finance B.V.'s (Abertis Finance) proposed callable deeply subordinated capital securities an expected rating of 'BB+(EXP). The Outlook is Stable. The proposed securities will qualify for 50% equity credit. The final rating is contingent on the receipt of final documents conforming materially to the preliminary documentation reviewed. The new hybrid notes are guaranteed by Abertis Infraestructuras SA (Abertis) and their proceeds will be used for part repayment of its outstanding hybrid notes. RATING RATIONALE The notes are deeply subordinated, and coupon payments can be deferred at the option of the issuer. These features are reflected in the 'BB+(EXP)' rating, which is two notches lower than Abertis's senior unsecured rating. The 50% equity credit reflects their cumulative interest coupon, a feature that is more debt-like in nature. The new notes will rank equally with Abertis's 'BB+' rated outstanding EUR2 billion hybrids issued during November 2020 January 2021 and November 2024. KEY RATING DRIVERS Ratings Reflect Deep Subordination: The proposed notes are rated two notches below Abertis's senior unsecured rating of 'BBB', given their deep subordination relative to senior obligations. The notes only rank senior to the claims of equity shareholders. Fitch believes Abertis intends to maintain a consistent amount of hybrids in the capital structure of EUR2 billion, and therefore apply 50% equity credit to the full amount of hybrid securities. Equity Treatment: The new securities will qualify for 50% equity credit as they are deeply subordinated, have a remaining effective maturity of at least five years, and full discretion to defer coupons for at least five years and limited events of default. These are key equity-like characteristics, affording Abertis greater financial flexibility. The interest coupon deferrals are cumulative, a feature more debt-like in nature, resulting in 50% equity treatment and 50% debt treatment of the hybrid notes by Fitch. Despite the 50% equity treatment, Fitch treats coupon payments as 100% interest. Mandatory Interest Payment Possible: Abertis will be obliged to make a mandatory settlement of deferred interest payments under certain circumstances, including the declaration of a cash dividend. Under the existing shareholders' agreement, the dividend policy is flexible and may be adjusted to maintain an investment-grade rating threshold. However, Fitch notes that perceived deterioration in the shareholders' agreement, leading to decreasing flexibility in the dividend policy, could negatively affect the equity credit of the hybrid notes. Effective Maturity Date: The proposed hybrid is perpetual, but Fitch deems its effective remaining maturity as the date from which the issuer will no longer be subject to replacement language (second step-up date), which discloses the company's intent to redeem the instrument at its reset date with the proceeds of a similar instrument or with equity. This is applicable even if the coupon step-up is within Fitch's aggregate threshold of 100bp. The equity credit of 50% would change to 0% five years before the effective maturity date. The issuer has the option to redeem the notes in the three months immediately preceding and including the first reset date, which is at least 5.75 years from the expected issue date, and on any coupon payment date thereafter. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Fitch-adjusted leverage above 6.2x by 2025 under the Fitch rating case Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Positive rating action is currently unlikely given Abertis's acquisitive strategy TRANSACTION SUMMARY Abertis is a large Spanish-based infrastructure group with network under management predominantly located in Spain, France, Brazil, Chile, US and Mexico. Date of Relevant Committee July 4, 2024 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 ----------- ------ Abertis Infraestructuras Finance B.V. Abertis Infraestructuras, S.A./Toll Revenues - Second Lien - Expected Ratings/1 LT BB+(EXP) Expected Rating ABERTIS INFRAESTRUCTURAS: S&P Rates EUR500MM Securities 'BB' ------------------------------------------------------------ S&P Global Ratings assigned its 'BB' issue rating to the optionally deferrable and subordinated EUR500 million hybrid capital securities to be issued by Abertis Infraestructuras Finance B.V. and guaranteed by Abertis Infraestructuras S.A. (Abertis; BBB-/Stable/A-3). The purpose of the issuance is to refinance a similar amount of hybrid that has its first call date in November 2025. The instrument lost its intermediate equity content in February 2025 when S&P published its updated hybrid criteria, as the instrument contains a sliding step-up feature that shortens its effective maturity date if the issuer is downgraded to sub-investment grade. The proposed hybrid issuance does not include any sliding step-up feature, and it is assigned an 'intermediate equity content' until its first reset date. The terms are largely in line with the ones of the latest hybrid issuance in November 2024. S&P said, "As per Abertis' commitment to maintain a permanent layer of hybrids having an intermediate equity content, we expect the remaining hybrid instrument that lost its intermediate equity content under our updated criteria (EUR750 million) to be refinanced ahead of its first call date (January to April 2027). Including this refinancing, we expect the amount of hybrids with intermediate equity content to represent about 6%-7% of the company's capitalization. "The proposed securities will have intermediate equity content until their first reset date, which will be five years and nine months from issuance. During this period, the securities meet our criteria in terms of ability to absorb losses or conserve cash if needed." S&P derives its 'BB' issue rating on the proposed securities by applying two downward notches from its 'BBB-' long-term issuer credit rating on Abertis. These notches comprise: -- A one-notch deduction for subordination because the rating on Abertis is at 'BBB-' or above; and -- A one-notch deduction to reflect payment flexibility--the deferral of interest is optional. S&P said, "The number of downward notches applied to the issue rating reflects our view that Abertis is unlikely to defer interest. Should our view change, we could increase the number of downward notches applied. "In addition, to reflect our view of the proposed securities' intermediate equity content, we allocate 50% of the related payments on these securities as a fixed charge, and 50% as equivalent to a common dividend, in line with our hybrid capital criteria. The 50% treatment of principal and accrued interest also applies to our adjustment of debt." Abertis can redeem the securities for cash on any date in the three months between the first call and first reset dates, then on every interest payment date. Although the proposed securities are nominally long dated/perpetual, the company can call them at any time for events that are external or remote (such as a change in tax deductibility, tax gross-up, rating agency treatment, or change of control). S&P said, "In our view, the statement of intent to replace the instrument, combined with Abertis' financial policy, mitigates the group's ability to repurchase the notes on the open market. In addition, Abertis can call the instrument any time at a make-whole premium. It has stated that it does not intend to exercise this make-whole call option unless it has already issued replacement securities that S&P Global Ratings assesses as having equal or higher equity content. Accordingly, we do not view it as a call feature in our hybrid analysis, although it is referred to as a make-whole call clause in the hybrid documentation." S&P said, "We understand that the interest on the proposed securities will increase by 25 basis points (bps) five years after the first reset date. It will then increase by an additional 75 bps at the second step-up, being 20 years after the first reset date, independently of the issuer credit rating level. We view any step-up above 25 bps as presenting an incentive to redeem the instrument, and therefore treat the date of the second step-up as the instrument's effective maturity." Key Factors in S&P's Assessment Of The Instruments' Deferability S&P said, "In our view, Abertis' option to defer payment on the proposed securities is discretionary. This means it may elect not to pay accrued interest on an interest payment date because doing so is not an event of default. However, Abertis will have to settle any outstanding deferred interest payments in cash if it declares or pays an equity dividend or interest on equally ranking securities and it redeems or repurchases shares or equally ranking securities. We see this as a negative factor. Still, this condition remains acceptable under our methodology because once the issuer has settled the deferred amount, it can still choose to defer on the next interest payment date." Key Factors In S&P's Assessment Of The Instruments' Subordination The proposed securities (and coupons) constitute direct, unsecured, and subordinated obligations of Abertis, ranking senior to its common shares. CENTRIENT HOLDING: Moody's Raises CFR to 'B2', Outlook Stable ------------------------------------------------------------- Moody's Ratings has upgraded Centrient Holding B.V.'s (Centrient or the company) long-term corporate family rating to B2 from B3 and its probability of default rating to B2-PD from B3-PD. Concurrently, Moody's have also assigned B2 ratings to the proposed senior secured notes due in 2030 totaling EUR600 million to be issued by Centrient Holding B.V. The outlook is stable. Previously, the ratings were on review for upgrade. Proceeds from the issuance will be used to fully refinance the existing EUR515 million senior secured first-lien term loan B2 due 2027 and EUR83 million second-lien term loan due 2028. The rating on the existing debt will be withdrawn upon repayment of these facilities. RATINGS RATIONALE The review for upgrade, initiated on April 1, 2025, is now complete following the company's announcement on 12 May 2025 regarding its refinancing plans for its 2027 and 2028 maturities. Moody's understands that the refinancing process is well underway, and Centrient is confident in securing refinancing for its upcoming maturities at more favorable funding costs compared to its current debt cost. The transaction improves the liquidity profile of the company as it reduces the refinancing risks. Also, Moody's expects that the adjusted debt to EBITDA ratio for 2024, pro forma Centrient's proposed refinancing, will remain unchanged at 5.7x, making the transaction leverage neutral. Moody's do not anticipate significant shareholder distributions or debt-funded acquisitions that could materially alter Moody's initial deleveraging expectations. The financial performance of Centrient has improved over the past three years resulting in Moody's-adjusted EBITDA of around EUR110 million in 2024 which still includes adjustments largely related to the Astral incident and the company's strategic options plan. The 2024 EBITDA generation thus provides a solid springboard for further organic EBITDA improvements supported by lower adjustments. Moody's-adjusted debt/EBITDA in 2024 was 5.7x and Moody's expects gross leverage to approach 5.0x in 2025, despite some softening in the company's performance during the first three months of 2025 (as disclosed in the Offering Memorandum for the notes) due to the impact of high catch-up sales in January 2024, a decrease in semi-synthetic penicillin production impacted by the upgrade of the company's facility in Mexico in early 2025 and delayed phasing of customer demand for statins into later this year. The B2 CFR reflects Centrient's strong positions in the global antibiotics market, in particular for semi-synthetic cephalosporin (SSC) and also semi-synthetic penicillin (SSP) active pharmaceuticals ingredients (APIs), and also strong regional positions in antifungals in the US, finished dosage forms (FDFs) for Amoxi and statins in Europe; long-standing relationships with its main customers; and continued profitability recovery. The B2 CFR also takes into account the small scale, where incidents such as the one at the Astral facility can have an over-proportional negative impact on profitability; a competitive pricing environment due to global competition; high leverage and a weak, but improving free cash flow track record; as well as pressure from public health care providers in Europe over reimbursement schemes and public health policies. A comprehensive review of all credit ratings for the respective issuer(s) has been conducted during a rating committee. LIQUIDITY Centrient's liquidity is good. The company at 2024 year-end had around EUR40 million of cash on hand and access to a new proposed 4.5 year EUR85 million super senior revolving credit facility (RCF), which Moody's expects will remain fully undrawn at closing of the contemplated refinancing transaction. In 2024, the company benefited from a release of working capital and still moderate capital investments that supported good free cash flow (FCF) generation. Moody's expects FCF in 2025 and 2026 to moderate due to a ramp-up of capital investments, largely to cater for future growth, but also to pay for the separation of shared services at Centrient's Delft plant in the Netherlands. STRUCTURAL CONSIDERATIONS The B2 ratings assigned to the proposed EUR600 million senior secured notes (SSN) is in line with the CFR, reflecting the fact that this instrument represents most of the company's financial debt. The SSN and super senior RCF will share the same security package and guarantees, with the RCF benefiting from priority claim on enforcement proceeds. The security package comprises pledges over the shares of the borrower and guarantors as well as bank accounts and intragroup receivables. Moody's considers the security package to be weak, consistent with Moody's approach for shares-only pledges. OUTLOOK The stable outlook assumes that Centrient will reduce Moody's-adjusted gross leverage towards 5.0x over the next 12-18 months, supported by organic revenue growth, while maintaining healthy Moody's-adjusted FCF. Moody's do not anticipate significant shareholder distributions or debt-funded acquisitions that could materially alter Moody's initial deleveraging expectations. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Moody's could upgrade Centrient's ratings if gross leverage decreases towards 4.0x; EBITDA/interest expense rises above 3.0x; and cash flow generation strengthens, resulting in FCF/debt rising to the high-single-digit percentages, all on a sustained basis. Moody's could downgrade Centrient's ratings if it experiences any material quality/operational disruption issues or non-compliance with regulatory standards; or gross leverage were to remain above 5.5x; EBITDA/interest expense falls below 2.0x; or liquidity weakens. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Chemicals published in October 2023. COMPANY PROFILE Centrient, headquartered in Rotterdam/the Netherlands, is a leading manufacturer of active pharmaceutical ingredients (API) and supplier of finished dosage forms (FDF) to pharmaceutical companies. Centrient generated preliminary revenues of around EUR610 million and reported EBITDA of EUR105 million in 2024 and when excluding Astral. The company has been owned by private equity firm Bain Capital since 2018. COLOSSEUM DENTAL: Fitch Assigns 'B' LongTerm IDR, Outlook Stable ---------------------------------------------------------------- Fitch Ratings has assigned Colosseum Dental Finance BV (Colosseum) a final Long-Term Issuer Default Rating (IDR) of 'B'. The Outlook is Stable. Fitch has also assigned Colosseum's new term loan B (TLB) a final 'B+' senior secured instrument rating with a Recovery Rating of 'RR3'. The final ratings are in line with the expected ratings Fitch assigned on February 18, 2025, and the TLB terms broadly conform to the information already received. Colosseum has also extended the maturities of the payment in kind (PIK) debt and shareholder loan outside the restricted group (at Colosseum AG level) beyond the maturity of the new TLB. The ratings balance Colosseum's strong local competitive positions in defensive European dental care markets, its scale and geographic diversification with high leverage and weak but improving free cash flow (FCF) generation. The Stable Outlook reflects Fitch's expectation that Colosseum is comfortably positioned in the current rating category. Key Rating Drivers Defensive and Diversified Operations: Colosseum's rating is underpinned by its satisfactory market position as a pan-European dental care business, with a strong customer focus. Its strategy is to leverage economies of scale and standardisation, creating leading regional dental chains across Western Europe through the acquisition of dental practices, consolidating the highly fragmented market. The group has strong and highly profitable operations in Switzerland, Germany and the Nordics, and is gradually improving the profitability of its large operations in the Netherlands and relatively smaller operations in Italy, the UK and France. Regulation Influences Business Risk: Fitch views Colosseum's regulatory environments as relatively stable, with a long-term focus on outcomes and value favouring the development of strong private health care markets. Dental care reimbursement is less regulated in many countries than for other healthcare providers, with an above-average share of private payments/co-payments, introducing a higher degree of volatility and exposure to consumer spending power. However, these payments are relatively stable over the cycle, as necessary treatments may be delayed but are unlikely to be cancelled. In the less regulated private pay market, Fitch considers Colosseum has the capacity to implement retail and customer relationship management frameworks to patients by optimising price plans and creating relationships that are profitable in the long term. Improving Margins: Fitch expects Colosseum's EBITDA margin expansion to continue. It already improved from 5% in 2020 to above 10% in 2023. Fitch expects significant expansion towards 13% in 2024 and 14% in 2025, followed by a gradual improvement towards 15% by 2028. Fitch expects that this will lead to FCF after earn-outs from previous acquisitions turning positive in 2025 and increasing towards the mid-single digits by 2027. FCF Turning Positive: FCF is supported by modest working capital inflows and low capital intensity. As the company benefits from organic growth and operating efficiencies, Fitch expects that the countries that will contribute the most to increased FCF will be Germany and the lower margin countries of France, the UK and the Netherlands. Fitch expects that the company will maintain high margins in the Nordics and above-group-average margins in Switzerland. High Leverage to Moderate: The significant EBITDA expansion over 2021-2024 reduced Fitch's EBITDAR leverage to 7.7x in 2023 and 6.2x in 2024 pro forma for the transaction. Fitch forecasts further deleveraging to below its 5.5x positive sensitivity by 2026, supported by revenue growth and margin improvement. There is further potential for deleveraging by acquiring dental practices at low multiples. Fitch-defined debt does not include the PIK and shareholder loan issued outside the restricted group at Colosseum AG level, which Fitch treats as equity, after their maturity has been extended beyond the TLB maturity. Supportive Shareholder: Fitch views the involvement of Jacobs Holding AG (JAG), a long-term investor, as positive for Colosseum's strategic development. JAG has demonstrated its support through equity and shareholder loan injections since it created the company in 2017. Fitch does not expect any dividend payments or other shareholder returns during the four-year rating horizon to 2028. Consolidation Potential, M&A-Driven Growth: Its rating assumes Colosseum continues its 'buy-and-build' strategy to consolidate the fragmented European dental care market. The rating case assumes EUR350 million of additional acquisitions between 2025 and 2028. Despite being debt funded, Fitch views the successful implementation of a buy-and-build strategy with strong discipline around asset selection and multiples paid as critical to enhance deleveraging prospects for the wider group. This reflects its assumption of modest acquisition multiples and the use of performance earn-outs to partially defer some acquisitions costs. Peer Analysis EMEA-based peers rated within the 'B' category tend to be constrained by weak credit metrics, with EBITDAR leverage averaging 6.0x-7.0x and tight EBITDAR fixed-charge cover metrics around 1.5x-2.0x. Their highly leveraged balance sheets often reflect aggressive financial policies focused on debt-funded acquisitions, as their strategies often involve consolidation of fragmented care markets and generating benefits from scale and standardised management structures, given the limited room for maximising organic returns. Fitch rates Colosseum at the same level as veterinary operator IVC Acquisition Midco Ltd (B/Stable), fertility clinic operator Inception Holdco S.a.r.l. (B/Stable), French hospital operator Almaviva Developpement (B/Stable), Finnish social care and private healthcare provider Mehilainen Yhtyma Oy (B/Stable). Fitch rates it one notch below Germany hospital operator Schoen Klinik SE (B+/Stable) and one notch higher than Median B.V. (B-/Stable), a pan-European healthcare operator. Fich compares Colosseum with diagnostic lab-testing companies including Ephios Subco 3 S.a.r.l. (Synlab, B/Stable), Inovie Group (B/Negative) and Laboratoire Eimer Selas (B/Negative). Lab-testing companies tolerate high leverage relative to their ratings due to strong operating and cash flow margins combined with non-cyclical revenue patterns, high visibility amid sector regulation, large business scale and wide geographic footprints. Key Assumptions - Organic sales growth averaging 2.5% over 2025-2028 - Fitch-estimated acquisitions of EUR113 million in 2025, followed by EUR80 million per year until end-2028 - M&A assumptions: 6.0x multiple for M&A, 16% EBITDA margin, 75% of purchase price upfront payment, the balance paid thought earnouts in four equal instalments from the year after the acquisition - EBITDA margin improves from 12.6% 2024 to 13.6% in 2025 on operating improvements, further increasing towards 15.2% by 2028 - Operating leases at 4.9% of sales. Fitch's lease debt based on a 4.5x implied lease multiple in 2025-2028 - Capex at 5.0% in 2024 and between 3.5% and 4.5% over 2025-2028 - Maintenance capex at 2.5% of sales until 2028, total capex includes earn-outs until 2028 - No dividends till 2028 Recovery Analysis Fitch expects that in a bankruptcy Colosseum would most likely be sold or restructured as a going concern (GC) rather than liquidated. Fitch estimates a post-restructuring GC EBITDA at about EUR140 million, which includes the contribution from the recent acquisitions. Fitch applies a distressed enterprise value/EBITDA multiple of 6.0x, in line with most healthcare providers that it rates in EMEA, such as Inception Holdco, Almaviva and Median. After deducting 10% for administrative claims, the allocation of value in the liability waterfall results in a Recovery Rating of 'RR3' for the new senior secured debt, comprising the EUR1,050 million TLB and EUR175 million new RCF. Fitch assumes the RCF to be fully drawn prior to distress. Fitch treats shareholder loan and PIK notes as equity and do not include into the recovery analysis. This indicates a 'B+' instrument rating, one notch above the IDR. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - EBITDA margin erosion towards 10% due to operational underperformance or inability to successfully integrate new acquisitions - Adverse regulatory changes resulting in profitability erosion - EBITDAR leverage sustained above 7.0x due to operating underperformance or as a result of opportunistic and aggressively debt-funded M&A. - FCF margin neutral to negative on sustained basis - EBITDAR fixed-charge coverage below 1.5x Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Sustainable EBITDA margin improvement towards or above 16% on a sustainable basis driven by successful execution of the strategic plan and successful integration of new acquisitions - Continued supportive regulatory environment on the main markets of presence - EBITDAR leverage sustainably below 5.5x. - FCF margin constantly trending towards mid-single digit territory - EBITDAR fixed-charge coverage sustainably above 2.5x Liquidity and Debt Structure Fitch views Colosseum's liquidity as satisfactory. Post-executed refinancing, Fitch expects the company to have EUR122 million of unrestricted cash on balance. Fitch restricts EUR10 million from cash, which it deems restricted for daily operations and therefore not available for debt service. After the executed refinancing, the new EUR175 million RCF due 2031 will be undrawn, and Fitch expects the company to partially use it over the rating horizon to finance its M&A activity. Fitch also expects Colosseum to generate low-to-mid single-digit FCF from 2025, which should support its liquidity. The issued EUR1.050 billion TLB matures in 2032. The maturity of the existing EUR136 million PIK notes and the EUR216 million shareholder loan have been extended to 2033. Issuer Profile Colosseum Dental is Europe's largest pan-European dental care provider, based in Switzerland. 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 Colosseum Dental Finance BV has an ESG Relevance Score of '4' for Exposure to Social Impacts due to operations in a healthcare market, which is subject to sector regulation, as well as budgetary and pricing policies adopted in the markets of operations. Any material adverse regulatory changes could constrain the companies' ability to improve operating efficiency. This 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 ----------- ------ -------- ----- Colosseum Dental Finance BV LT IDR B New Rating B(EXP) senior secured LT B+ New Rating RR3 B+(EXP) EASTERN EUROPEAN: Fitch Gives Final 'BB' Rating on EUR500MM Notes ----------------------------------------------------------------- Fitch Ratings has assigned Eastern European Electric Company B.V.'s (EEEC) EUR500 million five-year, senior secured bond a final rating of 'BB' with a Recovery Rating of 'RR4'. The issuance is rated in line with EEEC's 'BB' Long-Term Issuer Default Rating (IDR). The notes constitute direct, unsubordinated and unconditional obligations of the issuer and are secured by pledges over EEEC's Bulgarian and German bank accounts, pledges over receivables and over shares in EEEC and some of its subsidiaries. The proceeds will be used mainly to refinance debt. The assignment of the final rating follows the receipt of debt documentation confirming the information received. Key Rating Drivers Instrument Rating Aligned with IDR: EEEC's senior secured rating reflects category 2 first-lien instruments and based on its Corporate Recovery Ratings and Instruments Ratings Criteria they should be rated 'BB+'/'RR2' for an entity with a 'BB' IDR. However, Fitch applies a jurisdictional cap at 'RR4' with no uplift, based on its Country-Specific Treatment of Recovery Ratings Rating Criteria. This reflects that Bulgaria (where all EEEC's subsidiaries are located) is a group D country with no allowed uplift above the IDR. EUR500 Million Bond: The notes will slightly increase EEEC's debt, which Fitch had incorporated into its forecasts. The proceeds will repay EEEC's EUR472 million debt under the senior facility agreement and will be distributed to Eastern European Electric Company II B.V. (EUR12.2 million), its parent, to partially repay its holdco facility agreement; EUR10 million will be for commissions and fees, with the EUR5.8 million left for general corporate purposes. Regulated Income in Distribution: EEEC's credit profile benefits from the high share of regulated electricity distribution in its EBITDA, which has low business risk and greater cash flow predictability than its supply and trade segment. Based on its conservative assumptions, Fitch forecasts distribution EBITDA will average BGN170 million annually between 2025 and 2028, supported by a higher projected rate of return and its ability to keep technological losses below the level approved by the regulator. Normalisation of Distribution Results: Distribution EBITDA was BGN171 million in 2024, down from BGN221 million in 2023, when results were supported by lower costs of network losses, which were adjusted in 2024 through the Z-factor. The company managed to keep technological losses below the level approved by the regulator (5.94% in 2024 versus approved 7% in the seventh regulatory period lasting until mid-2027). Fitch expects this good performance to continue over the next four years. Full Supply Liberalisation in 2026: Fitch projects EEEC's EBITDA in supply and trade to average about BGN65 million annually in 2025-2028 with market liberalisation not immediately translating into higher results. Under the first step of liberalisation from 1 July 2025, Fitch expects the company to realise a similar profit margin as it has to date, when supply companies earn 7% profit margin on sales. With full liberalisation from 1 January 2026, EEEC's profit margin is likely to gradually improve. Grid Digitalisation Capex: EEEC plans BGN620 million capex in 2025-2028, with BGN76 million financed by the Modernisation Fund. The investments in digitalisation of the grid should lead to lower technological losses, remunerated under the distribution tariff, as well as cost efficiencies. The ability to quickly disconnect non-paying households should support debt collection, particularly as market liberalisation could result in higher household prices and increased receivables. Stabilisation of Financial Results: Fitch expects the company's EBITDA to normalise from 2025, averaging BGN230 million annually in 2025-2028, after an extraordinary 2023 and 2024 performance in which Fitch-calculated EBITDA reached BGN252 million in 2024. This will be supported by predictable regulated distribution and the less predictable supply segment following market liberalisation. EEEC is also likely to leverage its experience in trade activities on the free energy market. Moderate Leverage: Fitch expects EEEC's funds from operations (FFO) net leverage to decline to 3.0x on average between 2026 and 2028, from 3.6x in 2024 and in 2025, based on its expectations of stable EBITDA, average annual consolidated capex of BGN155 million in 2025-2028 and a 50% dividend payout ratio from 2026. Part of Eurohold Group: EEEC is fully owned by Eurohold Bulgaria AD (B/Stable) through intermediate holding companies. Based on its Parent-Subsidiary Linkage (PSL) Criteria, Fitch follows the stronger subsidiary path and assess legal ringfencing as 'porous' between EEEC and Eurohold, which is due to a dividend lock-up covenant in EEEC's debt documentation in relation to 3.5x EBITDA net leverage. EEEC's financial separation from its parent results in 'porous' access and control. Impact of Eurohold Ownership: 'Porous' legal ringfencing and access and control mean that EEEC can be rated up to two notches above Eurohold's consolidated profile (excluding the insurance business), which Fitch assesses at 'BB-' as Eurohold's rating is notched down twice below its consolidated profile due to its structural subordination in the group. As a result, more than a one-notch downward revision of Eurohold's consolidated credit profile would lead to a downgrade of EEEC as its rating would be constrained. Peer Analysis EEEC's regional peer is Romania-based Societatea Energetica Electrica S.A. (Electrica; BBB-/Stable), in which the Romanian state owns a 49.8% stake. Electrica has higher debt capacity than EEEC, largely due to its higher share of regulated EBITDA from electricity distribution (at about 80%) than EEEC's. Another peer is Czechia-based ENERGO-PRO a.s. (EPas, BB-/Negative), which has operations in the Bulgarian electricity distribution and supply market, but higher geographical diversification as it also operates in Turkiye, Georgia, Spain and Brazil. EPas also owns hydro power plants in several countries and has slightly lower debt capacity than EEEC. EEEC is smaller than Poland's Energa S.A. (BBB+/Stable) and Bulgarian Energy Holding EAD (BB+/Stable, Standalone Credit Profile: bb). It is focused on the distribution of electricity and supply, while Energa and Bulgarian Energy Holding are integrated utilities. Key Assumptions Fitch's Key Assumptions within its Rating Case for the Issuer - EBITDA normalising at an average of about BGN230 million annually in 2025-2028, after exceptionally good results in 2023-2024. - Cumulative capex in 2025-2028 of about BGN620 million, focusing on network infrastructure development. - Dividends at 50% of net income in 2026-2028, when EBITDA net leverage is below 3.5x. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Lower profitability and cash generation leading to FFO net leverage above 4.5x and FFO interest coverage below 3.4x on a sustained basis. - Big weakening of the business profile with lower predictability of cash flow, which may lead to a tighter leverage sensitivity or a downgrade. - A more than one-notch downward revision of Eurohold's consolidated profile (excluding the insurance business), assuming unchanged links with the parent. - Stronger links with the parent, reflected in open legal ring-fencing or access and control under its PSL Rating Criteria. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - FFO net leverage below 3.5x and FFO interest coverage above 4.4x on a sustained basis. Liquidity and Debt Structure At end-2024, EEEC had BGN168 million of available cash, with BGN72 million of Fitch-projected positive free cash flow over the next 12 months, compared with BGN72 million of short-term debt maturities, including BGN48 million under the senior credit facility. Following the bond issuance, EEEC's debt amortisation profile will improve, with limited repayments over the next four years before the bond maturity in 2030. Issuer Profile EEEC is part of Eurohold Bulgaria, consolidating the group's energy business in Bulgaria. EEEC has a leading market position in Bulgaria with 40% market share in electricity distribution and a strong market position in supply and trade. Date of Relevant Committee May 6, 2025 MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Eastern European Electric Company B.V. senior secured LT BB New Rating RR4 BB(EXP) TRIVIUM PACKAGING: Moody's Affirms 'B3' CFR, Outlook Remains Stable ------------------------------------------------------------------- Moody's Ratings has affirmed the B3 long term corporate family rating and the B3-PD probability of default rating of Trivium Packaging B.V. (Trivium or the company), a leading supplier of metal packaging solutions for the food and personal care industries. Concurrently, Moody's have assigned a B2 rating to the proposed EUR500 million senior secured term loan B (TLB) due 2030 issued by Trivium Packaging Finance B.V., a subsidiary of Trivium. The B2 rating on the existing fixed and floating rate backed senior secured notes due 2026 and the Caa2 rating on the backed senior unsecured notes due 2027 that are issued by Trivium Packaging Finance B.V. remain unchanged. The outlook remains stable for both entities. Proceeds from the senior secured term loan B, together with other senior secured and second lien debt, will be used to refinance the existing debt, to fund general corporate purposes and to pay the transaction fees. "The rating affirmation balances the stability of Trivium's operating performance under difficult market conditions, supported by progress under its value creation plan, and the capacity to sustain higher interest costs, with its high gross leverage and limited deleveraging over the next 12 to 18 months given the low growth prospects of the food and personal care metal can industry," said Donatella Maso, Moody's Ratings Vice President–Senior Credit Officer and lead analyst for Trivium. "The action also assumes that the company will be able to fully refinance the debt maturing in 2026 and 2027 before it becomes current," added Ms Maso. RATINGS RATIONALE The proposed refinancing is slightly credit negative for Trivium. The company is timely addressing its 2026-2027 debt maturities, in a two-part transaction, with a marginal increase in leverage, as adjusted by Moody's but unadjusted for metal revaluation, which remains elevated at around 7.0x but within the guidance for the B3 rating category. However, the transaction will likely result in higher interest costs, hampering the company's interest and cash flow cover ratios. Since 2019, the company has delivered a broadly stable Moody's adjusted EBITDA, excluding the effect of inventory revaluation, despite external shocks such as the pandemic, input cost inflation and customer destocking. Trivium's operating performance was supported by its value creation plan, which entailed high restructuring costs. Nevertheless, the company delivered positive free cash flow (FCF), except in 2022. During 2022-2024, Trivium has also invested $215 million in new facilities to increase capacity to match customer demand or win new contracts. Trivium will likely benefit from past growth investments and restructuring actions with an anticipated modest increase in Moody's adjusted EBITDA to approximately $490 million by 2026 compared to $456 million 2024, allowing for limited deleveraging. This will be driven by low single-digit volume growth, the achievement of cost savings and reduced restructuring costs. Additionally, the company is expected to generate marginally positive FCF due to lower growth capital expenditures, which will offset higher interest expenses if Trivium were to refinance its entire capital structure in the current interest rate environment. However, there are downside risks to Moody's forecasts driven by the potential for temporary negative impact from US tariffs on steel and aluminum, key raw materials for Trivium. The B3 CFR continues to reflect the commoditised nature of most of Trivium's products; limited organic growth prospects due to its presence in mature end-markets; the company's relatively concentrated customer base, which has exhibited consolidation trends historicall, although mitgated by its long-standing relationships and multiyear supply agreements; its exposure to fluctuations in raw materials (primarily aluminum and steel) and input prices, largely offset by contractual pass-through clauses in most contracts; and its exposure to currency fluctuations. The B3 rating is supported by the company's large scale in the relatively consolidated non-beverage can metal packaging industry; its leading market positions in substantially all sub-segments of this industry in most geographies where it operates; and its geographically diversified and well-invested footprint. LIQUIDITY Trivium's liquidity profile is adequare over the next 12 to 18 months, assuming the full refinancing of its senior secured and unsecured notes. Its liquidity is supported by $104 million of cash on balance sheet at close; full availability under the $330 million asset-based loan (ABL) facility due 2027; and sufficient funds from operations (FFO). These sources are considered sufficient to cover seasonal fluctuations in working capital and capital expenditures. The ABL facility includes a minimum fixed coverage ratio of 1.0x, which will be tested on a quarterly basis when its availability reduces below 10%. Moody's expects that the company will maintain ample capacity under its covenant. STRUCTURAL CONSIDERATIONS The B3-PD PDR is aligned with the CFR based on a 50% family recovery rate, as is typical for transactions including both bonds and bank debt. The B2 instrument rating of the senior secured term loan B is one notch above the CFR reflecting the pari passu ranking with the senior secured notes and presence of subordinated debt in the capital structure. COVENANTS Notable terms of the TLB documentation include the below. The following are proposed terms, and the final terms may be materially different. Guarantors will be incorporated in France, Germany, Italy, the Netherlands, England and Wales, the Unites States, and the Czech Republic and the guarantors and security will align with the senior secured notes. Security includes first priority over assets that secure the Notes, excluding ABL Collateral; second priority over accounts, inventory, investment property and all ABL Collateral. Incremental facilities are permitted up to 100% of EBITDA. Unlimited pari passu debt is permitted up to closing date senior secured net leverage ratio (SSNLR) of 4.7x. Unlimited junior debt is permitted up to closing date total net leverage ratio (TNLR) of 6.3x. Unlimited unsecured debt is permitted up to closing TNLR or fixed charge coverage ratio of 2.0x. Unlimited restricted payments are permitted up to a TNLR of equal to or less than 0.5x within 6.3x, and unlimited investments are allowed if the TNLR is 6.3x or lower. Adjustments to consolidated EBITDA include "run-rate" cost savings expected to be realised within 36 months and capped to 30% of consolidated adjusted EBITDA. RATIONALE FOR THE STABLE OUTLOOK The stable outlook reflects Moody's expectations that Trivium's operating performance will remain resilient in an uncertain macroeconomic environment. The outlook also incorporates Moody's assumptions that the company will continue to generate positive FCF and maintain adequate liquidity by timely addressing its 2026-2027 debt maturities. A comprehensive review of all credit ratings for the respective issuer(s) has been conducted during a rating committee. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Positive pressure on the rating could arise from sustained EBITDA growth, such that Trivium's Moody's-adjusted debt/EBITDA remains below 6.5x along with positive FCF, on a sustained basis. Negative pressure on the rating could arise if the company's operating performance deteriorates; its Moody's-adjusted debt/EBITDA increases above 7.5x; its FCF turns negative or its liquidity weakens. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Packaging Manufacturers: Metal, Glass and Plastic Containers published in April 2025. COMPANY PROFILE Trivium is a leading supplier of infinitely-recyclable metal packaging solutions. Its products mainly include metal packaging in the form of cans and aerosol containers, and serve a broad range of end use markets including food, personal care and homecare. In 2024, Trivium had 49 facilities, located in 19 countries and had approximately 7,400 employees. In 2024, the company generated revenue of $3 billion and EBITDA of $456 million as adjusted by Moody's. Trivium is majority owned by an entity controlled by Ontario Teachers Pension Plan (OTPP) with a 58% share, while Ardagh Group S.A. holds the remaining 42%. VEON LTD: Fitch Alters Outlook on 'BB-' LongTerm IDR to Stable -------------------------------------------------------------- Fitch Ratings has revised the Outlook on VEON Ltd.'s Long-Term Issuer Default Rating (IDR) to Stable from Negative and affirmed the Long-Term Issuer Default Rating (IDR) at 'BB-'. Fitch affirmed VEON Holdings B.V.'s and VEON Midco B.V.'s senior unsecured notes at 'BB-' with a Recovery Rating of 'RR4'. The Outlook revision to Stable reflects the removal of near-term refinancing risks due to its expectation that outstanding debt due in 2025 will be repaid in full. Fitch expects cash flow from operations (CFO) less capex/total debt to be negative until 2027 due to support for network and service investments, although consistently improving as capex declines. Its credit metrics deconsolidate operations in Ukraine. The ratings reflect VEON's well-diversified revenue base across six markets, market-share leadership and low Fitch-defined EBITDA net leverage. Rating constraints are a weak operating environment and foreign exchange risks, including a mismatch between debt and cash flow generation with inherent transfer and convertibility (T&C) risks in some markets. Key Rating Drivers Near-Term Refinancing Risks Recede: The revision of the Outlook to Stable follows the delivery of the 2023 and 2024 audit reports and repayment of a USD471 million bond maturing in April 2025, using operating cash and asset sales. The revolving credit facility was repaid and cancelled in 2024. Fitch also expects VEON to fully repay its USD77 million equivalent rouble bond maturing in June 2025. Fitch believes refinancing risks are manageable, given sufficient cash available at the holding company to service interest costs, supplemented by cash upstreaming and leverage headroom. However, the absence of timely progress on refinancing the USD1 billion bond due in November 2027 may create negative rating pressure over time. T&C risks also exist, despite a positive cash flow contribution from countries with higher sovereign ratings, like Kazakhstan. Digital Services, Strategic Goal: VEON is shifting away from providing commoditised connectivity services to digital service providers using artificial intelligence. Increasing 4G capacity and penetration, and improving socio-economic conditions, supported by lower customer acquisition and distribution costs, justifies the provision of multi-play services. This typically helps generate higher average revenue per user and reduce churn. Digital revenues have reached 11% of total revenues from around 5% in 2021, with Pakistan indicating notable success. The sale of towers in Pakistan to Engro Corp. and of fixed-line provider TNS+ in Kazakhstan, and the acquisition of ride-hailing business Uklon in Ukraine demonstrate VEON's desire to move to technology and platform services. Fitch does not factor in the tower transaction as the deal has not closed but it could generate up to USD563 million proceeds in Pakistan. EBITDA Margin Dilution: Provision of digital services tends to generate a lower EBITDA margin than telecoms services due to the higher operating costs of IT infrastructure and service provision. Therefore, as digital revenues grow, Fitch expects absolute EBITDA to grow but the EBITDA margin to decline, partly offset by efficiency gains and operating leverage benefits. Fitch also anticipates greater volatility in certain digital services such as content, which tend to be cyclical and event driven. Fitch forecasts the Fitch-defined EBITDA margin to fall from 35% in 2024 to 32% by 2027 (consolidated). Mixed Performance, Diversified Asset Portfolio: Performance in 2024 was mixed across VEON's geographies, with growth in Pakistan and Kazakhstan in 4G users, revenue and EBITDA offset by deterioration in metrics in Bangladesh due to political unrest and macroeconomic challenges driving churn. However, VEON's geographically diversified operating assets provide some divestment flexibility without dramatic changes to its operating profile in the long term. VEON has a mix of fast-growing developing markets. Operating pressures in one country can often be mitigated by strong performance in others. Conservative Leverage, Negative Cashflow: Fitch estimates Fitch-defined EBITDA net leverage, excluding Ukraine, will remain around 2.5x by 2026. Fitch estimates Fitch-defined CFO less capex/total debt, excluding Ukraine, will be negative until 2027 due to capex, albeit improving from high single digits toward neutral as capex declines. VEON has executed share-buyback programmes of up to USD65 million so far, with USD8 million used in 2024 from USD30 million announced in August and a further USD35 million launched in 1Q25. However, Fitch does not assume any material structural shifts towards more shareholder-friendly policies, including dividends. Operating-Environment Risks: Fitch assesses the applicable Country Ceiling to be Kazakhstan, which has a Country Ceiling of 'BBB+'. EBITDA from Kazakhstan is sufficient to cover gross interest payments at current leverage. However, VEON operates in countries with an overall weighted average operating environment of 'BB-', excluding Ukraine. Even in the absence of T&C risks, Fitch considers the ratings of corporates operating in such markets to be adversely influenced by factors such as fragile economic structures and uncertain governance and regulation. Its rating thresholds for VEON are therefore tighter than those for peers operating in more developed markets. FX Mismatch: VEON faces a mismatch between its cash flows in local currencies and its foreign-currency debt, although mitigated by most gross debt being in local currency. Fitch estimates 50%-70% of weighted average capex is denominated in foreign currency. De-merger Completed: VEON's de-merger of Kyivstar was completed in April 2025 ahead of a partial listing on the Nasdaq expected in 3Q25. The remaining operating entities and 2027 notes moved to the new holding company, VEON Midco B.V., on the same terms, from VEON Holdings B.V, with a guarantee from VEON Amsterdam B.V. Fitch expects VEON will retain a majority share in Kyivstar, consolidating the entity. Fitch continues to monitor credit metrics excluding Kyivstar as Fitch does not expect it to pay dividends and it is not a guarantor of holding company debt. There is a possibility that funds generated from the listing may be transferred to the holding company to support liquidity. Peer Analysis VEON benefits from established market positions across its operating footprint. It is the leading mobile operator in various high-growth emerging markets. Axian Telecom (B+/Stable), Africell Global Holdings Ltd (B-/Stable) and Liquid Telecommunications Holdings Limited (CCC+) are peers operating in countries with weak operating environments. VEON has more financial flexibility at its rating than these companies, reflecting its stronger operating profile as a facilities-based mobile operator with well-established or leading positions in its markets. VEON's ratings reflect the negative impact of the weaker operating environment mix, which restricts its debt capacity for any given rating compared with operators like Matterhorn Telecom Holding S.A. (BB-/Stable) and VodafoneZiggo Group B.V. (B+/Stable) in developed European markets. Key Assumptions Its assumptions are based on VEON excluding operations in Ukraine: - Mid-single-digit reported US dollar revenue growth across the portfolio to 2028 - Fitch-defined EBITDA margins (including lease costs) falling from 31% to 29%, with growth in digital revenues diluting EBITDA margins - Capex (including for spectrum) at USD600 million-USD700 million a year between 2025 and 2028 - No dividends between 2025 and 2028 - Net M&A inflows of USD100 million in 2025 - Share buy-backs of USD57 million 2025 Recovery Analysis Fitch rates VEON's senior unsecured rating at 'BB-' in accordance with its Corporates Recovery Ratings and Instrument Ratings Criteria, under which it applies a generic approach to instrument notching for 'BB' rated issuers, resulting in a Recovery Rating of 'RR4', aligned to the IDR. RATING SENSITIVITIES Factors That Could, Individually or Collectively, Lead to a Negative Rating Action/Downgrade - CFO less capex/total debt in low single digits combined with lower visibility on cash flow circulation across key subsidiaries leading to weaker liquidity - EBITDA net leverage sustained above 4.0x Factors That Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Improvement in the operating environment of the countries in which VEON is present or a favourable change in the geographical mix of cash flows, and continued strong market position in countries of operation - Improving cash flow profile with clear visibility of CFO less capex/total debt trending towards 5% - Maintenance of a conservative capital-allocation policy and leverage profile - EBITDA interest coverage consistently above 6x Liquidity and Debt Structure VEON's cash at end-December 2024 was around USD1 billion, excluding cash in Ukraine and relating to banking operations in Pakistan, with USD481 million held at the holding company. In addition, during 1Q25 VEON received dividends and USD100 million from the sale of TNS+. In April 2025, VEON repaid its USD471 million note with holding cash and drew a short-term loan of USD210 million to support liquidity. VEON no longer has a revolving credit facility, having repaid and cancelled it during 2024, limiting access to additional committed liquidity. However, Fitch believes a combination of holding company cash, lower holding company debt and expected dividends from operating companies should cover holding company interest and operating costs. VEON's next material debt maturity will be the USD1 billion bond in November 2027. Issuer Profile VEON is a facilities-based mobile network operator with leading or well-established competitive positions in most of its countries of operations including Pakistan, Ukraine, Kazakhstan, Bangladesh and Uzbekistan. 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 ----------- ------ -------- ----- Veon Midco B.V. senior unsecured LT BB- Affirmed RR4 BB- VEON Holdings B.V. senior unsecured LT BB- Affirmed RR4 BB- VEON Ltd. LT IDR BB- Affirmed BB- ========= S P A I N ========= RURAL HIPOTECARIO IX: Moody's Ups EUR10.5MM D Notes Rating to Ba3 ----------------------------------------------------------------- Moody's Ratings has upgraded the ratings of five notes in RURAL HIPOTECARIO IX, FTA. The rating action reflects the better than expected collateral performance and increased levels of credit enhancement for the affected notes. EUR210M Class A3 Notes, Upgraded to Aa1 (sf); previously on Apr 4, 2023 Upgraded to Aa2 (sf) EUR29.3M Class B Notes, Upgraded to A1 (sf); previously on Apr 4, 2023 Upgraded to Baa3 (sf) EUR28.5M Class C Notes, Upgraded to Baa3 (sf); previously on Apr 4, 2023 Upgraded to B2 (sf) EUR10.5M Class D Notes, Upgraded to Ba3 (sf); previously on Apr 4, 2023 Upgraded to Caa2 (sf) EUR15M Class E Notes, Upgraded to Ca (sf); previously on Apr 8, 2011 Downgraded to C (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 decreased key collateral assumptions, namely the portfolio Expected Loss (EL) and MILAN Stressed Loss assumptions due to better than expected collateral performance. 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 collateral performance has been better than Moody's expected since one year ago. 90 days plus arrears currently stand at 0.83% of current pool balance showing a decreasing trend over the past year. Cumulative defaults currently stand at 5.07% of original pool balance, only slightly up from 5.03% a year earlier. Moody's decreased the expected loss assumption to 2.14% as a percentage of current pool balance due to the improving performance. The revised expected loss assumption corresponds to 2.03% as a percentage of original pool balance, decreased from 2.64%. 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 decreased the MILAN Stressed Loss assumption to 7.3% from 9.5%. Increase in Available Credit Enhancement Class A3 Notes, Class B Notes and Class C Notes are amortizing pro-rata. However, sequential amortization of Class D Notes, given performance trigger not met, and a non-amortizing reserve fund led to the increase in the credit enhancement available in this transaction. Furthermore, upon the pool factor falling below 10% of original pool balance (currently at 11.27%), all classes of notes will be amortising sequentially. For instance, the credit enhancement for the most senior tranche affected by the rating action increased to 13.89% from 12.25% since the last rating action. Counterparty Exposure The rating actions took into consideration the notes' exposure to relevant counterparties, such as servicer, account banks or swap providers. 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. Please see Residential Mortgage-Backed Securitizations methodology for further information on Moody's analysis at the initial rating assignment and the on-going surveillance in RMBS. 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 E D E N =========== SBB HOLDING: Fitch Affirms 'CCC+' Issuer Default Rating ------------------------------------------------------- Fitch Ratings has affirmed SBB - Samhällsbyggnadsbolaget i Norden Holding AB's (SBB Holding) Long-Term Issuer Default Rating (IDR) and its senior unsecured debt rating at 'CCC+'. The Recovery Rating is 'RR4'. The ratings reflect SBB Holding's weak credit profile with Fitch-calculated net debt /EBITDA above 22.0x during 2025-2028 and interest coverage at about 1.0x. SBB Holding's sustainability depends on its ability to raise ample liquidity to meet its SEK5.8 billion bond maturities in 2026, given challenging conditions in debt capital markets. SBB Holding's consolidated community service portfolio, valued at SEK20.8 billion at end-2024, has maintained stable rents and operational metrics. Similarly, its 62%-owned Sveafastigheter AB's (IDR: BBB-(EXP)/Positive) SEK28.1 billion residential-for-rent portfolio and 49%-owned Nordiqus AB's SEK38.7 billion education portfolio have shown stable performance. Key Rating Drivers Directly Held Community Service Portfolio: Within SBB Holding's consolidated SEK52.4 billion investment property portfolio, about SEK21 billion is the directly held community service properties. This sub-portfolio has an indirect and a direct government tenant base, including government departments, municipalities and elderly care. Fitch views SBB Holding's long-term, government-linked rental income from CPI-indexed rents as lower risk and with a higher debt capacity than commercial properties. The portfolio achieved above-inflation like-for-like rental income growth in 2024, a 90% occupancy, and it has a long average lease length of eight years. The community service portfolio also has two 100%-owned Castlelake-financed vehicles, totalling SEK15 billion of community service assets, which have their own secured debt. Sveafastigheter Equity Investment: Sveafastigheter's SEK28.1 billion residential-for-rent portfolio is located in growing regions around Sweden, including Stockholm-Mälardalen, university cities, Malmö-Öresund and Gothenburg. This stable business profile is combined with moderate leverage and a forecast interest cover above 2x. Fitch deconsolidates Sveafastigheter and only includes its potential recurring rental-derived cash dividends within SBB Holding's EBITDA. Nordiqus Equity Investment: SBB Holding also owns 49.8% of Nordiqus, with Brookfield holding the rest. This is a SEK38.7 billion portfolio of Nordic educational assets benefiting from mostly government funding-backed, long-term rental contracts. Fitch deconsolidates Nordiqus and includes its cash dividend payments or interest income on its SEK4.1 billion vendor loans within SBB Holding's EBITDA. Weak Financial Profile: SBB Holding's leverage remains very high. Without cash dividends from its joint ventures (JVs), Fitch forecasts net debt/EBITDA at above 22.0x during 2025-2028. Fitch expects SBB Holding to be able to cover its cash interest expense during 2025 and 2026 with cash from operations, helped by its low average cost of debt of about 2.37%. Beyond 2027, the expiration of some of this low-cost debt and interest-rate hedges will be replaced by higher-cost market-rate instruments. This is likely to reduce EBITDA net interest cover to below 1.0x, necessitating SBB Holding to deleverage significantly. Options to Raise Liquidity: Fitch expects SBB Holding to raise liquidity to repay its SEK5.8 billion 2026 and SEK7.8 billion 2027 bonds, if capital markets remain challenging. Options include asset sales, sale of retained JV stakes and raising external capital on its community service portfolio, possibly through asset-backed transactions, a strategic partnership or an IPO. If SBB Holding opts to segregate a portion of its debt specifically for its community service portfolio, this would effectively make its parent SBB - Samhallsbyggnadsbolaget i Norden AB (SBB Parent) more of an investment holding company for its remaining debt holders. Debt Delinked from SBB Parent: Fitch views SBB Holding's debt as delinked from SBB Parent's. SBB Holding's exchanged bonds have no cross-default with SBB Parent. SBB Holding cannot upstream cash to SBB Parent, if this negatively affects its bondholders due to restrictive covenants in the bond documentation. Peer Analysis Within the community service portfolio, SBB Holding's peer is Assura plc (A-/Rating Watch Negative), which builds and owns modern general practitioners' facilities in the UK, with approved rents indirectly paid by the state National Health Service and a similar 11.2 years weighted average unexpired lease term (WAULT). At GBP3.1 billion (EUR3.6 billion), its portfolio is smaller than SBB Parent's consolidated group portfolio. Reflecting Assura's community service activities, its net initial yield as of end-March 2024 was 5.1% versus SBB Holding's 5.7% for its Nordic community service assets at end-2024. Assura has a 99% occupancy rate and specific-use assets. Assura's downgrade rating sensitivity to 'BBB+' includes net debt/EBITDA greater than 9x. The smaller EUR0.8 billion portfolio of higher-rated Norwegian-based Public Property Invest ASA (PPI; BBB/Stable) is also community service-focused with public sector tenants. PPI's business profile is, however, paired with a stronger balance sheet with net debt/EBITDA below 8x, loan-to-value of about 45% and an interest cover of about 2x. Under Fitch's EMEA Real Estate Navigator, many of SBB group's portfolio factors are investment-grade. Key Assumptions Fitch's Key Assumptions Within Its Rating Case for the Issuer - Moderate rental growth of 3.5% a year, driven by CPI-indexation and rental uplifts - Stable net rental income margins - Cash received from JVs of about SEK250 million a year, mostly comprising interest on Nordiqus' vendor loan - Completion of existing development projects by 2025 and modest spend thereafter. Total capex to average about SEK300 million annually to 2028 Recovery Analysis Its recovery analysis assumes that SBB Holding would be liquidated rather than restructured as a going-concern (GC) in a default. SBB Holding's recoveries are based on the end-2024 independent valuation of the investment property portfolio. Fitch has used the end-2024 non-pledged property values of about SEK21.4 billion as unencumbered investment property assets. This deducts pledged properties transferred to Sveafastigheter after end-3Q24. Fitch applies a standard 20% discount to these values. Fitch assumes no cash is available for recoveries. This analysis also attributes zero value to various investments in equity stakes, including the SEK9.1 billion Nordiqus equity, SEK4.7 billion Sveafastigheter equity and SEK5.3 billion Nordiqus vendor loan. After deducting a standard 10% for administrative claims, the total amount of unencumbered investment property assets Fitch assumes available to unsecured creditors is about SEK15.4 billion. Fitch's principal waterfall analysis generates a ranked recovery for senior unsecured debt of 'RR4', leading to a 'CCC+' unsecured debt rating. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Failure to execute, or provide visibility, of a plan to address the August 2026 debt maturity - Actions pointing to a widespread potential renegotiation of SBB Holding's debt terms and conditions, including a material reduction in lenders' terms sought to avoid a default - Reduction in SBB Holding's directly held unencumbered investment property portfolio relative to its unsecured debt would lead to a lower Recovery Rating and senior unsecured rating Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Evidence that refinancing risk has eased, including improved capital markets receptivity to the SBB group - Proceeds from successful disposals used to prepay the sizeable 2026 debt maturities, and increasing liquidity - A material reduction in leverage Liquidity and Debt Structure SBB Holding's available cash at end-2024 was SEK1.1 billion, of which SEK308 million was attributed to Sveafastigheter. This is further supported by a SEK2.5 billion asset-backed facility signed during 4Q24, which remains undrawn. SBB Holding has no debt maturing in 2025, but Fitch expects cash to be upstreamed to repay SBB Parent's remaining 2025 unsecured bond maturities of about SEK1 billion without breaching SBB Holding's bond covenants. SBB Holding's next major debt maturity is in August 2026. SBB Holding's end-2024 average cost of debt was 2.37%, excluding hybrids (averaging 3.3%), the higher-coupon Morgan Stanley preference shares (at 13% cost) in SBB Residential Property AB and the debt raised in the non-consolidated Castlelake-funded SBB Infrastructure AB and SBB Social Facilities (375bp-500bp plus STIBOR/EURIBOR). Derivatives, together with fixed-rate debt, provide interest rate coverage of SBB Holding's debt for three years on average. 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 SBB Holding has an ESG Relevance Score of '4' for Governance Structure to reflect previous key person risk (the previous CEO) and continuing different voting rights among SBB Parent shareholders affording greater voting rights to the key person. SBB Holding has an ESG Relevance Score '4' for Financial Transparency, reflecting an ongoing investigation by the Swedish authorities into the application of accounting standards and disclosures. Both these considerations have a negative impact on the credit profile and are relevant to the ratings in conjunction with other factors. These factors are, however, improving under the new SBB management. 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 ----------- ------ -------- ----- Samhallsbyggnadsbolaget i Norden Holding AB (publ) LT IDR CCC+ Affirmed CCC+ senior unsecured LT CCC+ Affirmed RR4 CCC+ SBB PARENT: Fitch Affirms 'CCC' Issuer Default Rating ----------------------------------------------------- Fitch Ratings has affirmed SBB - Samhällsbyggnadsbolaget i Norden AB's (SBB Parent) Long-Term Issuer Default Rating (IDR) at 'CCC' and its senior unsecured debt rating at 'CC'. The Recovery Rating is 'RR6'. SBB Parent's ratings continue to reflect its weakened capital structure, following the transfer of most of its assets and debt to its subsidiary Samhällsbyggnadsbolaget i Norden Holding AB (publ) (SBB Holding; IDR: CCC+) as part of a voluntary tender and exchange offer of bonds in December 2024. SBB Parent's remaining SEK3.2 billion of directly held assets cannot meaningfully support its SEK17 billion of retained debt, including hybrids. These assets are attached to their relevant secured debt and are not available to SBB Parent's predominantly unsecured and subordinated bondholders. Key Rating Drivers January 2025 Bonds Repaid: As expected, SBB Parent repaid its SEK4 billion January 2025 bonds, mainly with proceeds from the Sveafastigheter AB (publ) (BBB-(EXP)/Positive) IPO. Its end-2024 cash and access to a SEK2.5 billion asset-backed facility cover its remaining 2025 bond maturities. Equity Participation by Aker: Aker Property Group's (Aker) sale of assets, announced today, to Public Property Invest ASA (PPI; IDR: BBB/Stable) in which SBB Parent owns 33.4%, also involves the exchange of some of Aker's PPI shares for SBB Parent's shares. On conclusion of the transaction, Aker will hold 9.03% of SBB Parent's equity. The transaction does not include any cash proceeds for the SBB Parent shares and does not improve SBB Parent's current financial profile. If approved by SBB Parent shareholders, they will have enlisted a co-shareholder who could help improve the capital structure. Bondholder Litigation Discontinued: On January 13, 2025, SBB Parent announced the discontinuation of a formal claim by a sole bondholder of an interest coverage covenant breach tested in 2022. Unsecured Creditors' Assets Insufficient: About SEK3.2 billion of income-producing assets retained at SBB Parent are pledged to specific retained SEK2.4 billion of secured debt. Rental income is insufficient to service SBB Parent's other retained debt and will rely on cash upstreamed from SBB Holding to help meet these interest payments and redeem debt maturities due in 2026 and beyond. Headroom exists under SBB Holding's unsecured bond incurrence-based covenants to allow upstreaming of cash (or restricted distributions, as defined in SBB Holding's bond documentation) to SBB Parent. Options to Raise Liquidity: SBB Parent, on a standalone basis, does not have many options to raise cash to repay its bonds maturing in 2026 and thereafter. It has the limited option to raise some liquidity by selling its equity stake in PPI. Beyond that, it is reliant on liquidity being upstreamed from SBB Holding whose own various liquidity options include asset sales, sale of retained joint venture stakes, raising external capital on its remaining wholly owned community service portfolio, possibly through asset-backed transactions similar to the Castlelake JVs, forming another strategic partnership, or undertaking an IPO. Weak Credit Profile: SBB Parent's ratings are driven by its small asset base and insufficient rental income generation, which translates into less than 1x EBITDA net interest cover, despite the resumed deferral of its hybrid coupons. Fitch differentiates SBB Parent's weakened credit profile from its stronger subsidiary, SBB Holding, and the structural subordination of its bondholders by rating SBB Parent one notch below SBB Holding's IDR. Peer Analysis Within the community service portfolio, SBB group's peer is Assura plc (A-/Rating Watch Negative), which builds and owns modern general practitioners' facilities in the UK, with approved rents indirectly paid by the state National Health Service and a similar 11.2 years weighted average unexpired lease term (WAULT). At GBP3.1 billion (EUR3.6 billion), its portfolio is smaller than SBB Parent's consolidated group portfolio. Reflecting Assura's community service activities, its net initial yield as of end-March 2024 was 5.1% versus SBB Holding's 5.7% for its Nordic community service assets at end-2024. Assura has a 99% occupancy rate and specific-use assets. The smaller EUR0.8 billion portfolio of higher-rated Norwegian-based PPI (BBB/Stable) is also community service-focused, with public-sector tenants. PPI's business profile is, however, paired with a stronger balance sheet with net debt/EBITDA below 8x, loan-to-value of about 45% and an interest cover of about 2x. Under Fitch's EMEA Real Estate Navigator, many of the SBB group's portfolio factors are investment-grade. Key Assumptions Fitch's Key Assumptions Within Its Rating Case for the Issuer: - Moderate rental growth of 3.5% a year, driven by CPI-indexation and rental uplifts - Stable net rental income margins to 2028 - Hybrid interest deferred Recovery Analysis Its recovery analysis assumes that SBB Parent would be liquidated rather than restructured as a going-concern (GC) in a default. Recoveries are based on an independent valuation of its investment property portfolio at end-2024. Fitch has used SBB Parent's directly held properties' values of about SEK3.2 billion, to which it has applied a standard 20% discount. Fitch has used SBB Parent's retained unsecured and subordinated hybrid debt amounts, after some bonds were exchanged into bonds at SBB Holding. Fitch assumes no cash is available for recoveries. This analysis attributes zero value to various investments in equity stakes, including the SEK1.9 billion attributable value of PPI's equity. After deducting a standard 10% for administrative claims, Fitch assumes that no unencumbered investment property assets are available to unsecured creditors. Its existing directly held investment property is designated for SEK2.4 billion secured creditors who rank ahead of SBB Parent's unsecured creditors. Fitch's principal waterfall analysis generates a ranked recovery for senior unsecured debt of 'RR6', leading to a 'CC' unsecured debt rating. Given the structural subordination of SBB Parent's hybrids, Fitch estimates a ranked recovery of 'RR6'. As loss absorption has been triggered with the deferral of coupons, the instrument rating is 'C', three notches below SBB Parent's IDR. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Failure to execute, or provide visibility, of a plan to address the 2026 debt maturity - Actions pointing to a widespread potential renegotiation of SBB Parent's debt terms and conditions, including a material reduction in lenders' terms sought to avoid a default Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Evidence that refinancing risk has eased, including improved capital markets' receptivity to the SBB group - A material reduction in leverage Liquidity and Debt Structure At end-2024, SBB Parent's available liquidity was about SEK2.5 billion. It also has access to an undrawn SEK2.5 billion asset-backed facility held at SBB Holding. It has no revolving credit facilities available for drawdown. Available cash resources are sufficient to cover SBB Parent's residual 2025 maturities. The next material debt maturity, following the repayment of its retained 2025 bonds, is its euro-denominated (SEK71 million-equivalent) bond in September 2026. SBB Parent's average cost of debt at end-2024 was 2.43%, excluding hybrids (averaging 3.3%). 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 SBB Parent has an ESG Relevance Score of '4' for Governance Structure to reflect previous key person risk (the previous CEO) and continuing different voting rights among shareholders affording greater voting rights to the key person. SBB Parent has an ESG Relevance Score '4' for Financial Transparency, reflecting an ongoing investigation by the Swedish authorities into the application of accounting standards and disclosures. Both these considerations have a negative impact on the credit profile and are relevant to the ratings in conjunction with other factors. These factors are, however, improving under the new management within the SBB group. 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 ----------- ------ -------- ----- SBB – Samhallsbyggnadsbolaget i Norden AB LT IDR CCC Affirmed CCC ST IDR C Affirmed C Subordinated LT C Affirmed RR6 C senior unsecured LT CC Affirmed RR6 CC senior unsecured ST C Affirmed C SBB Treasury Oyj senior unsecured LT CC Affirmed RR6 CC =========================== U N I T E D K I N G D O M =========================== ASIMI FUNDING 2025-1: S&P Assigns B-(sf) Rating on X-Dfrd Notes --------------------------------------------------------------- S&P Global Ratings assigned its credit ratings to Asimi Funding 2025-1 PLC's class A, B-Dfrd, C-Dfrd, D-Dfrd, E-Dfrd, F-Dfrd, and X-Dfrd notes. At closing, the issuer also issued unrated class G notes, and Y and Z certificates. Asimi Funding 2025-1 is the second public securitization of a portfolio of unsecured consumer loans originated and serviced by Plata Finance Ltd. (Plata) in the U.K. As part of the transaction's prefunding mechanism, the issuer may purchase additional loans by the first interest payment date, up to a maximum amount of GBP52.4 million (21.4% of the potential maximum portfolio). The notes redeem pro rata (class A to G notes), subject to sequential amortization triggers. The class A notes benefit from a dedicated fully funded reserve fund and the remaining rated notes benefit from a general reserve fund. Both reserve funds are available to provide liquidity support and pay interest (on specified notes) and expenses. Plata is the initial servicer of the loans, with Equiniti Gateway Ltd. (trading as Lenvi) acting as standby servicer. Barclays Bank PLC acts as the interest rate swap provider. Ratings Class Rating Class size (%) A AAA (sf) 60.0 B-Dfrd AA (sf) 8.5 C-Dfrd A (sf) 9.5 D-Dfrd BBB (sf) 6.5 E-Dfrd BB (sf) 8.0 F-Dfrd B (sf) 4.0 G NR 3.5 X-Dfrd B- (sf) 5.0 Y Certs NR N/A Z Certs NR N/A NR--Not rated. N/A—Not applicable. CAPRI HOLDINGS: Fitch Affirms 'BB' LongTerm IDR, Outlook Negative ----------------------------------------------------------------- Fitch Ratings has affirmed Capri Holdings Limited's (Capri) Long-Term Issuer Default Rating (IDR) at 'BB'. The Rating Outlook remains Negative. Capri's 'BB' rating and Negative Outlook reflect ongoing top-line and EBITDA declines in its portfolio. In addition, the Negative Outlook indicates potential for EBITDAR leverage to be sustained above 3.0x and EBITDAR fixed charge coverage to be sustained below 2.0x over the next 12 to 24 months as Capri works to stabilize portfolio performance while facing weak consumer spending and uncertainty around tariffs. To support the 'BB' rating, Capri needs to stabilize operations, expanding the top line and EBITDA meaningfully from an expected $315 million in fiscal 2026, in addition to repaying debt over the next 12 to 24 months. Fitch notes that proceeds from the recently announced Versace sale could aid in deleveraging in the near term and help offset potential negative impacts if consumer spending weakens further. Key Rating Drivers Proposed Versace Sale: On April 10, 2025, Capri announced that it is selling Versace for $1.375 billion to Prada S.p.A. The transaction is expected to close in the second half of calendar 2025 and Fitch expects Capri to deploy, at minimum, $700 million of the proceeds toward debt reduction, as stipulated by the terms of the credit agreement. Versace generated approximately $880 million and $10 million in revenue and EBITDA, respectively, for the LTM period ending Dec. 28, 2024. At its peak in fiscal 2022, Versace generated approximately $1.1 billion in revenue and $235 million in EBITDA. Assuming $700 million in debt reduction, Fitch expects the transaction could provide an approximate 0.9x deleveraging opportunity in fiscal 2026. The sale of Versace will decrease the overall brand, geographic, and product profile diversification of the portfolio, with Versace being more heavily skewed toward apparel, Asia, and men's products relative to Michael Kors and Jimmy Choo. However, Fitch acknowledges that post the sale, Capri will have more time to focus on its repositioning efforts at Michael Kors and Jimmy Choo. Ongoing Top-Line and EBITDA Declines: Fitch expects EBITDA, pro forma for the Versace sale, to decline to $315 million in fiscal 2026 (ending March 2026) from an estimated $360 million in fiscal 2025, driven by a low-double-digit top-line decline at Michael Kors and Jimmy Choo. This compares to proforma EBITDA of approximately $700 million in fiscal 2024 and a peak $1.1 billion in fiscal 2022. Capri has underperformed since early 2023, partly due to brand-specific issues at Michael Kors, exacerbated by management missteps and underinvestment during the merger process. Fitch expects near-term results will also be impacted by declines in consumer sentiment, business disruption, and rising costs from evolving U.S. tariff policies. Discretionary categories could see revenue down as much as mid-single digits with outsized EBITDA declines due to tariff-related cost pressure. Fitch expects Capri's fiscal 2026 top-line results could be weaker due to the company's ongoing portfolio repositioning efforts. Elevated Execution Risk: Capri shared medium-term growth targets for its portfolio in February 2025, identifying fiscal 2026 as a reset year. Beginning in fiscal 2027, management expects revenue to grow in the mid-to-high-single-digit range, driven by high-single-digit growth at Michael Kors and mid-single-digit growth at Jimmy Choo. Fitch expects Capri could require 12 to 24 months to stabilize its business, with Michael Kors and Jimmy Choo returning to low-single-digit and mid-single-digit top-line growth, respectively, in fiscal 2027. This assumes that Capri corrects its pricing strategy, addresses product offerings and stabilizes wholesale. Fitch views execution risk as high. EBITDA Below Historical Levels: Fitch expects Capri's EBITDA, pro forma for the Versace sale, to expand from an estimated $360 million in fiscal 2025 to approximately $465 million by fiscal 2028, meaningfully below the $960 million to $1.1 billion range seen in fiscal 2022 and 2023. This assumes stabilization of top-line trends in fiscal 2027 and EBITDA margin expansion from an expected 8.0% in fiscal 2025 to the low double digits. Capri must balance investments with cost efficiencies to achieve this expansion. Reasonable FCF: Due to EBITDA declines, Fitch expects free cash flow (FCF) to trend in the $80 million to $200 million range beginning in fiscal 2025. This is compared to an average of around $450 million over the last four years. Historically, Capri has used cash generation for debt repayment, share repurchases and business investment. After the merger was terminated, the company announced that its capital allocation priorities will be investing in the business, repaying debt and returning cash to shareholders. Moderate Leverage, Weak Coverage: Fitch expects Capri's EBITDAR leverage to climb to the mid-3x range in fiscal 2025, from 2.6x in fiscal 2024, driven by EBITDA declines. EBITDAR leverage could return to 3.0x in fiscal 2026, aided by deleveraging proceeds from the Versace sale. To support a 'BB' rating, Capri needs to bring EBITDAR leverage back below 3.0x. The 3.0x EBITDAR leverage threshold is low for a 'BB' rating and is balanced by the company's weak EBITDAR fixed charge coverage. This is expected to be in the mid-1x range in fiscal 2025 and could return to 2.0x over the next 24 months, in line with EBITDA expansion. Parent-Subsidiary Linkage: Fitch's analysis includes a strong subsidiary/weak parent approach between the parent, Capri, and its subsidiaries, Michael Kors (USA) Inc. and Michael Kors (Switzerland) GmbH. Fitch assesses the quality of the overall linkage as high, which results in an equalization of their IDRs. Peer Analysis Similarly rated peers include Signet Jewelers Ltd. (Signet; BB+/Stable), Samsonite Group S.A. (Samsonite; BB+/Stable) and Levi Strauss & Co. (Levi; BBB-/Stable). Signet and Samsonite remain Under Criteria Observation (UCO) given their new treatment of leases, as detailed in Fitch's RAC published on Dec. 12, 2024. The UCO designation indicates that the existing ratings may change due to the application of the final criteria. Signet's ratings consider good execution from a top-line and margin standpoint, which supports Fitch's longer-term expectations of low-single-digit revenue and EBITDA growth. The rating reflects Signet's leading market position as a U.S. specialty jeweler with an approximately 9% share of a highly fragmented industry. Samsonite's rating considers the company's status as the world's largest travel luggage company, with strong brands and historically good organic growth. Levi's ratings reflect its position as one of the world's largest branded apparel manufacturers, with broad channel and geographic exposure, and good execution in terms of both the top line and margins. This supports Fitch's medium-term expectations of low-single-digit revenue and EBITDA growth. Key Assumptions The below assumptions are pro forma for the Versace sale. - Fitch expects that revenue declined in the mid-teens to $4.4 billion in fiscal 2025 (ended March 2025), driven by double-digit declines at Michael Kors and Versace. Fitch expects organic revenue to decline in the low double digits in fiscal 2026, as the company works through its ongoing portfolio repositioning efforts compounded by ongoing softness in consumer spending for discretionary goods driven in part by the inflationary impact from recent tariffs; - Fitch's base case assumes that fiscal 2026 revenue declines to $3.2 billion, accounting for the sale of Versace, which is expected to generate approximately $825 million in revenue in fiscal 2025; - Beginning in fiscal 2027, revenue growth could turn flat to slightly positive, driven by low-single-digit growth at Michael Kors and low-to-mid-single-digit growth at Jimmy Choo; - EBITDA to contract to approximately $360 million in fiscal 2025, from $780 million in fiscal 2024, driven by top-line declines and gross margin contraction. EBITDA could decline further in fiscal 2026, to $315 million, driven by top-line deleveraging, which is partially offset by the company's ongoing cost savings initiatives and tightened inventory management. Fitch projects that Versace will generate flat to slightly negative EBITDA in fiscal 2025; - FCF to be around $100 million in fiscal 2025 assuming a modest working capital inflow and capital expenditures around $125 million. Beginning in fiscal 2026, FCF could trend in the $100 million to $200 million range, assuming an EBITDA rebound, and annual capital expenditure (capex) averaging around $175 million. Fitch expects Capri to deploy FCF toward debt reduction, in line with its historical practice; - EBITDAR leverage to climb to the mid-3x range in fiscal 2025, from 2.6x in fiscal 2024, driven by significant EBITDA declines. Fitch expects EBITDAR leverage to moderate to below 3x by fiscal 2027, driven by EBITDA expansion and debt repayment. At minimum, Fitch expects that Capri will deploy $700 million from the Versace proceeds toward debt reduction; - Interest rate assumptions: The revolving credit facility (SOFR+2.00%) and term loan facility (SOFR+2.00%) are both floating rate instruments. Fitch's annual SOFR assumptions are as follows: fiscal 2025 4.75%, fiscal 2026 4.00%, fiscal 2027 4.0%, and fiscal 2028 4.0%; - Achieving the above assumptions could result in a revision of Capri's Outlook to Stable. Recovery Analysis Fitch does not employ a waterfall recovery analysis for issuers that are assigned ratings in the 'BB' category. Due to the distance to default, Recovery Ratings in the 'BB' category are not computed by bespoke analysis. Instead, they serve as a label to reflect an estimate of the risk of these instruments relative to other instruments in the entity's capital structure. Fitch affirmed Capri Holdings Limited's, Michael Kors (Switzerland) GmbH's and Michael Kors (USA), Inc.'s (co-borrowers) secured revolving credit facility at 'BBB-'/'RR1'. In addition, Fitch affirmed the secured term loan facility at 'BBB-'/'RR1'. The credit facilities are secured by certain U.S. assets and intellectual property. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - A slower than expected top-line and EBITDA recovery; - EBITDAR leverage sustained above 3.0x; - EBITDAR fixed charge coverage sustained below 2.0x. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Fitch could revise the Outlook to Stable if EBITDAR leverage is sustained below 3.0x and EBITDAR fixed charge coverage is around 2.0x. This could be accomplished through a combination of an EBITDA rebound and debt repayment. In addition, Fitch would need increased confidence in the company's ability to stabilize operations, as evidenced through revenue and EBITDA expansion beginning in fiscal 2027. An upgrade to 'BB+' could result from the following: - Low-single-digit growth, along with EBITDA expansion and debt repayment; - EBITDAR leverage sustained below 2.5x; - EBITDAR fixed charge coverage approaching the high-2x range. Liquidity and Debt Structure As of Dec. 28, 2024, Capri had $356 million in cash and $978 million in availability on its revolving credit facility. The company's debt structure as of Dec. 28, 2024, consisted of its $1.5 billion unsecured revolving credit facility due July 2027, $450 million in unsecured term loan debt maturing Oct. 31, 2025, and a EUR450 million term loan facility borrowed under Gianni Versace S.r.l., which matures in December 2025. In February 2025, Capri amended its credit agreement. As part of this amendment, Capri secured its $1.5 billion revolving credit facility and entered a new $700 million secured term loan. The credit facilities are secured by certain U.S. assets and intellectual property. The revolving facility is co-borrowed by Capri Holdings, Michael Kors (USA), Inc. and Michael Kors (Switzerland) GmbH. The term loan is co-borrowed by Michael Kors (USA) Inc. for the USD tranche, and Michael Kors (Switzerland) GmbH for the Euro tranche. Issuer Profile Capri Holdings Limited is a leading global manufacturer and retailer of accessories and leather goods, primarily handbags and footwear. Pro forma for the Versace sale, Capri's portfolio consists of two brands: Michael Kors and Jimmy Choo. Summary of Financial Adjustments Historical and projected EBITDA is adjusted to add back non-cash stock-based compensation and exclude non-recurring charges. Fitch uses the balance sheet reported lease liability as the capitalized lease value when computing lease-equivalent debt. 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 ----------- ------ -------- ----- Michael Kors (USA), Inc. LT IDR BB Affirmed BB senior secured LT BBB- Affirmed RR1 BBB- Michael Kors (Switzerland) GmbH LT IDR BB Affirmed BB senior secured LT BBB- Affirmed RR1 BBB- Capri Holdings Limited LT IDR BB Affirmed BB senior secured LT BBB- Affirmed RR1 BBB- EUROHOME UK 2007-1: Fitch Lowers Rating on Cl. B2 Notes to 'BB+sf' ------------------------------------------------------------------ Fitch Ratings has downgraded Eurohome UK Mortgages 2007-1 plc (EH 07-1) class B2 and affirmed all other ratings. It has also affirmed Eurohome UK Mortgages 2007-2 plc (EH 07-2). The Outlook on EH 07-1's class B1 notes has been revised to Negative from Stable. Entity/Debt Rating Prior ----------- ------ ----- Eurohome UK Mortgages 2007-1 plc Class A XS0290416527 LT AAAsf Affirmed AAAsf Class B1 XS0290420396 LT A-sf Affirmed A-sf Class B2 XS0290420982 LT BB+sf Downgrade BBBsf Class M1 XS0290417418 LT AAAsf Affirmed AAAsf Class M2 XS0290419380 LT AA+sf Affirmed AA+sf Eurohome UK Mortgages 2007-2 plc Class A3 XS0311693484 LT AAAsf Affirmed AAAsf Class B1 XS0311695778 LT A+sf Affirmed A+sf Class B2 XS0311697394 LT BBB+sf Affirmed BBB+sf Class M1 XS0311694029 LT AAAsf Affirmed AAAsf Class M2 XS0311695182 LT AA+sf Affirmed AA+sf Transaction Summary EH 07-1 and EH 07-2 are static securitisations of non-conforming loans originated by DB UK under the "DB Mortgages" brand. DB UK was established in early 2006 and is a wholly-owned subsidiary of Deutsche Bank AG (DB). DB UK was the UK arm of DB's global mortgage lending platform and ceased originating in 2007. KEY RATING DRIVERS Increased Senior Fees Drive Downgrade: Fitch has increased its senior fixed fee assumptions for both transactions due to actual fees remaining above expectations. While EH 07-2's ratings were strong enough to absorb increased fee assumptions, the class B2 notes for EH 07-1 were not, leading to their downgrade. Fitch will continue to monitor fees expenses to ensure actual fees are reflected in its modelling. Loss Severity Drives Negative Outlooks: The reported loss severity to date has been 38.9% and 37.5% for EH 07-1 and EH 07-2, respectively, since closing. These loss severity figures imply a recovery rate (RR) below Fitch's base case assumptions for both transactions. Fitch stressed the RR assumptions in its analysis, which contributed to the Negative Outlooks on the class B1 and B2 notes for both transactions. Fitch will monitor loss severity rates from any future sold possessions and may revise its base case RR assumptions, which could lead to downgrades in future analysis. Worsening Arrears: The proportion of loans in arrears for both transactions has increased since the last reviews a year ago. As of March 2025, EH 07-1's one-month plus arrears have increased to 18.1%, from 15.6% a year earlier. EH 07-2 has seen a greater increase to 29.6%, from 24.9% previously. In addition, there has been a migration to late-stage arrears for both transactions, with loans greater than three months in arrears increasing to 13.3% and 22.6%, from 11.6% and 19.3% in March 2024, for EH 07-1 and EH 07-2, respectively. This has resulted in increased foreclosure frequency assumptions. Sequential Principal Payments: Both transactions continue to amortise sequentially and will do so until maturity, following irreversible breaches of triggers on cumulative losses and aggregate balance of foreclosed loans. The sequential amortisation has led to a build-up in credit enhancement available to the notes and this has supported the rating actions taken. This is despite the general reserve fund for both transactions being below target, which has been factored into the analysis. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade The transactions' performance may be affected by changes in market conditions and economic environment. Weakening economic performance is strongly correlated to increasing levels of delinquencies and defaults that could reduce credit enhancement available to the notes. Additionally, unanticipated declines in recoveries could also 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 the weighted average foreclosure frequency and a 15% decrease in the weighted average recovery rate would lead to downgrades of up to two notches for the class B1 notes in both transactions, five notches for the class B2 notes in EH 07-1 and two notches for the class B2 notes in EH 07-2. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Stable to improved asset performance driven by stable delinquencies and defaults would lead to increasing credit enhancement and, potentially, upgrades. Fitch found that 15% decrease in the weighted average foreclosure frequencies and a 15% increase in the weighted average recovery rate would lead to upgrades of up to five notches for the class B1 notes in EH 07-1 and four notches in EH 07-2. The class B2 notes could be upgraded by up to five notches in EH 07-1 and five notches in EH 07-2. 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 pools and the transactions. Fitch has not reviewed the results of any third-party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. Fitch did not undertake a review of the information provided about the underlying asset pools ahead of the transactions' closing. The subsequent performance of the transactions over the years is consistent with the agency's expectations given the operating environment and Fitch is therefore satisfied that the asset pool information relied upon for its initial rating analysis was adequately reliable. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. ESG Considerations EH 07-1 and EH 07-2 have an ESG Relevance Score of '4' for Customer Welfare - Fair Messaging, Privacy & Data Security due to the pools comprising an interest-only maturity concentration of legacy non-conforming owner-occupied (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. EH 07-1 and EH 07-2 have an ESG Relevance Score of '4' for Human Rights, Community Relations, Access & Affordability due to a significant proportion 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. HOLVIL LIMITED: CG&Co Named as Administrators --------------------------------------------- Holvil Limited was placed into administration proceedings in the High Court of Justice, Business & Property Courts of England & Wales, Insolvency & Companies List, No CR-2025-MAN-000674 and Edward M Avery-Gee and Nick Brierley of CG&Co were appointed as administrators on May 8, 2025. Holvil Limited engaged in the buying and selling of own real estate. Its registered office and principal trading address is at 452 Manchester Road, Heaton Chapel, Stockport, SK4 5DL. The joint administrators can be reached at: Edward M Avery-Gee Nick Brierley CG&Co 27 Byrom Street Manchester, M3 4PF For further details, contact: Heather Thomson Tel No: 0161 358 0210 Email: Heather.Thomson@cg-recovery.com KOKOON TECHNOLOGY: KRE Corporate Named as Administrators -------------------------------------------------------- Kokoon Technology Ltd was placed into administration proceedings in the High Court of Justice, Court Number: CR-2025-003225, and Paul Ellison and Chris Errington of KRE Corporate Recovery Limited were appointed as administrators on May 13, 2025. Kokoon Technology is a manufacturer of consumer electronics. Its registered office and principal trading address is at 2b27 South Bank Technopark, 90 London Road, London, SE1 6LN. The joint administrators can be reached at: Paul Ellison Chris Errington KRE Corporate Recovery Limited Unit 8, The Aquarium, 1-7 King Street Reading, RG1 2AN For further details contact: Chloe Brown Email: chloe.brown@krecr.co.uk Tel No: 01189 479090 MAVEN PREMIUM BARS: Interpath Advisory Named as Administrators -------------------------------------------------------------- Maven Premium Bars & Restaurants Limited was placed into administration proceedings in the High Court of Justice, Business and Property Courts of England and Wales, Insolvency and Companies List (ChD), No CR-2025-003184, and Samuel Birchall and Christopher Robert Pole of Interpath Advisory, Interpath Ltd, were appointed as administrators on May 9, 2025. Maven Premium Bars engagedin business support service activities. Its registered office is at Interpath Ltd, 10 Fleet Place, London, EC4M 7RB Its principal trading address is at 8 St. Martin`s Place, London, WC2N 4JH The joint administrators can be reached at: Samuel Birchall Christopher Robert Pole Interpath Advisory, Interpath Ltd 10 Fleet Place, London EC4M 7RB For further details contact: Seb Wharton Tel No: 0161 529 9026 OCADO GROUP: Fitch Rates GBP300-Mil. 2030 Unsecured Notes 'B-' -------------------------------------------------------------- Fitch Ratings has assigned Ocado Group PLC's (B-/Stable) GBP300 million 2030 notes a final senior unsecured instrument rating of 'B-' with a Recovery Rating of 'RR4'. This is aligned with Ocado's Long-Term Issuer Default Rating (IDR) and existing unsecured instrument rating, which Fitch has affirmed. The rating reflects the high execution risk for Ocado in reaching scale and profitability due to the slow deployment of the company's infrastructure by its partners, while its liquidity position is being eroded by high capex. This is balanced by a record of satisfactory liquidity management, supporting growth investment. Fitch expects Ocado to maintain adequate cash to fund capex in FY25-FY28 (financial year ending November), assuming the group refinances its 2025-2027 maturities. The Stable Outlook reflects reduced refinancing risks following its recent refinancing transactions and shrinking cash losses. Key Rating Drivers Refinancing Risk Mostly Addressed: Ocado has used parts of the completed GBP300 million bond to repay GBP206 million of its 2025 and 2026 maturities, and plans to use the rest and cash to repay the remaining GBP191 million at their respective maturities. The latest transaction, which follows its GBP700 million refinancing in 2024, would address most of its immediate refinancing risk. Continued timely refinancing of maturities is key to the rating and supports liquidity. The availability of its due August 2027 revolving credit facility (RCF) depends on the refinancing of its 2026 and 2027 debt by July 2026. Slower EBITDA Improvement: Ocado's expected gradually improving EBITDA generation supports its rating. Its FY24 Fitch-adjusted EBITDA at GBP84 million was slightly above its projection of GBP73 million. However, Fitch now forecasts a slower increase in EBITDA following a further delay in the Kroger customer fulfilment centre (CFC) opening to 2026. Its forecast includes only seven CFC openings compared with eight previously and a slightly slower module roll-out. This translates into EBITDA of GBP103 million for FY25 and GBP186 million for FY26, compared with the previously anticipated GBP146 million and GBP201 million. Better Liquidity, Tight Cash Control: Ocado's FYE24 cash position of GBP730 million was around GBP160 million above its forecast, following a sharper-than-anticipated reduction of capex, support and technology costs, as well as net working capital management improvement. Fitch views the slower EBITDA growth from the delayed CFC rollout as mitigated by the company's expectation of lower capex and further cost-cutting. These should slow its cash burn, yielding a FY27 cash position of almost GBP240 million, excluding any drawdowns on its RCF to fund its business plan execution. Deeply Negative FCF but Improving: Ocado's free cash flow (FCF) outflow of GBP250 million in FY24 was GBP85 million better than Fitch expected, supported by cost-cutting and fewer CFC openings. Fitch projects FCF in FY25-FY28 will remain deeply negative, although gradually improving by nearly GBP100 million by FY27 due to cost and capex reductions. Management indicates further scope for a reduction in technology and support costs and plans to limit technology R&D capex to 20% of recurring revenue by FY27, which would enable it to limit excessive cash outflows. Cash Position Supports Investment Plans: Ocado does not plan to increase debt beyond refinancing needs. Its projections indicate the group will be able to support its medium-term capex programme with on-balance-sheet cash, without drawing on the RCF. In its view, this is an adequate liquidity buffer for the business, supporting the Stable Outlook. However, this liquidity cushion is contingent on the group's rigorous cost reduction and EBITDA expansion, in combination with moderated capex. High Execution Risk: Fitch sees high execution risk in Ocado's plan to ramp up existing CFCs, roll out new ones and deliver efficiencies to drive earnings growth. Profit growth plans rest on the addition of seven new international CFCs over the next three years and on reaching full capacity by the fifth or sixth year of going live. CFCs have seen slower-than-anticipated ramp-up, due to weaker online grocery demand, alternative less capital-intensive solutions being available to grocers and operational challenges. Its forecasts do not include new CFC projects coming onstream in FY25 in the US. Scale and Cost Control: Fitch believes Ocado's business should generate adequate profit margins once it reaches scale, with EBITDA margins improving towards 14% by FY26. Its forecast incorporates decreasing direct operating costs, including technology and support costs. It targets a reduction in annual technology costs, to GBP60 million (from GBP93 million in FY24) by FY27, and of cash support costs, to GBP150 million (GBP174 million in FY24). Peer Analysis Compared with Irel Bidco S.a.r.l (IFCO, B+/Stable), which provides reusable packaging containers, Ocado is less established and faces higher execution risk. The former is a global leader in a niche market and benefits from scale, geographic diversification and longstanding customer relationships. Ocado will have similar characteristics once it reaches its targeted scale, with a contracted revenue base, low customer churn and high switching costs due to its bespoke technology. This helps offset some of its reliance on Kroger as a key customer. At scale, Ocado should demonstrate solid profitability for the rating, with an EBITDA margin rising towards 18%, below IFCO's margin of above 20%. Leverage metrics are currently not a key rating driver for Ocado during the growth phase but its expectation of a reduction to around 5.4x by FY27 supports the rating. This is slightly above the expected leverage for IFCO at about 5.0x at end-2024. Fitch also compares Ocado with Polygon Group AB (B/Negative), a leader in the property damage restoration industry in Europe. Both companies have leading market positions and similar scale. Ocado has better geographic diversification and revenue visibility than Polygon, which has shorter contracts, although faces higher execution risk. Fitch expects Polygon's EBITDA leverage to reduce to 6.5x by 2026, nearly one turn below Ocado's. Key Assumptions Fitch's Key Assumptions Within Its Rating Case for the Issuer - Revenue for the technology solutions division to grow to GBP633 million in FY26 as CFCs are ramped up and rolled out - Revenues for UK logistics increasing towards GBP769 million by FY26 - EBITDAR for the technology solutions division to rise to GBP242 million in FY27 from around GBP100 million in FY25 - EBITDAR for UK logistics to gradually grow to around GBP40 million in FY27 from about GBP34 million in FY25 - Lease cost on average GBP30 million a year in FY25-FY27 - Gross capex (excluding ORL) averaging GBP318 million a year in FY25-FY28 - Cash inflows of GBP58 million from the Autostore settlement in FY25 - No dividends from ORL - No M&A or common dividend payment Recovery Analysis The recovery analysis assumes that Ocado would be reorganised as a going concern in bankruptcy rather than liquidated. Fitch has assumed a 10% administrative claim and the value available to creditors to consist Ocado restricted group, (excluding ORL). Ocado's going concern EBITDA is based on FY25 EBITDA for the restricted group, capturing CFCs that are under construction and opening soon. Fitch expects GBP95 million (unchanged) of this would be available to creditors after a restructuring due to execution risks in the international technology division while recognising a more established UK business. Fitch has used an unchanged 6.0x enterprise value/EBITDA multiple, reflecting the strong growth of Ocado's business and its market position. Additionally, Fitch attributes half of its estimated GBP0.6 billion going concern valuation of ORL business to Ocado's cash flow waterfall. A default of ORL would not be simultaneous ,so the joint venture valuation is based on an expected sustainable medium-term EBITDA of GBP75 million at an 8x multiple, which is not a distressed valuation.. Any additional debt at the joint venture above the assumed GBP30 million RCF will affect the value attributed to it. Ocado's GBP300 million secured RCF ranks ahead of its other existing debt. The currently outstanding senior unsecured notes rank equally with its GBP736 million of new and existing convertibles. Fitch has reduced the outstanding debt by GBP94 million by netting off the unused new bond proceeds earmarked for debt repayment to address residual untendered bonds due in FY25-FY26. The outcome of the recovery analysis for senior unsecured notes is 'B-'/'RR4', aligning with Ocado's Long-Term IDR. Additional debt ranking ahead or equally with unsecured notes would lower the Recovery Rating of the notes to 'RR5'. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Insufficient liquidity to fund at least two years of capex - Continued execution challenges, such as further delays in the roll-out of new CFCs, inability to scale up existing CFCs, or deliver technology or support cost efficiencies, preventing EBITDA from reaching at least GBP100 million in FY25 and at least GBP150 million by FY26, and a faster cash burn than captured in its rating cae - Readily available cash materially below GBP500 million at FYE25 Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Fitch does not envisage positive rating action during FY25-FY28, due to execution risks associated with its transformation into a solutions and business service provider. However, over the long term, evidence of greater maturity of the business, with increasing scale and diversification and lower upfront capex would indicate successful execution of Ocado's growth strategy and be positive for the rating, together with: - EBITDA rising towards GBP200 million - Sufficient positive FCF generation to fund growth capex - EBITDA interest coverage recovering towards 1.5x - Visibility of EBITDA gross leverage falling below 6.5x on a sustained basis Liquidity and Debt Structure The restricted group (excluding ORL) had an adequate but declining cash position, with around GBP730 million in cash and a fully undrawn GBP300 million RCF at FYE24. Together with cash generated from operations and receipts from the Autostore settlement, Fitch expects this to support high capex in FY25-FY28. Fitch forecasts available liquidity of about GBP879 million at FYE25. Its GBP300 million RCF has been extended to 2027, but benefits from springing maturity if notes maturing in 2026 and 2027 are not refinanced by July 2026. The group issued GBP300 million in senior unsecured notes due in 2030 and repaid GBP206 million of its 2025 and 2026 senior notes through a tender offer. The remaining GBP94 million from the new debt is expected to be used for repaying the outstanding amounts of 2025 and 2026 senior notes at maturity, alongside cash on the balance sheet. Issuer Profile Ocado is a technology company that develops end-to-end operating solutions for online grocery retail. It also has its own grocery retail operations, which are ring-fenced in a joint venture with Marks and Spencer Group Plc. Summary of Financial Adjustments The ratings reference Ocado's restricted group only (as defined by its bond documentation) and exclude ORL. 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 ----------- ------ -------- ----- Ocado Group PLC LT IDR B- Affirmed B- senior unsecured LT B- Affirmed RR4 B- senior unsecured LT B- New Rating RR4 B-(EXP) ORION MIDCO: Fitch Assigns 'B(EXP)' LongTerm IDR, Outlook Positive ------------------------------------------------------------------ Fitch Ratings has assigned first-time expected Long-Term Issuer Default Ratings (IDRs) of 'B(EXP)' to Orion Midco Ltd and its subsidiaries, Orion Bidco Ltd and Orion US Finco Inc. (collectively OSTTRA), with a Positive Outlook. Additionally, Fitch assigned a 'BB-(EXP)' instrument rating and 'RR2' Recovery Rating to OSTTRA's $1.3 billion first-lien term loan, and 'CCC+(EXP)' instrument rating and 'RR6' Recovery Rating to its $300 million second-lien term loan. OSTTRA benefits from a strong niche market position, decent revenue visibility and countercyclical attributes. However, these strengths are offset by high leverage and customer concentration risks. The Positive Outlook reflects Fitch's expectation for successful execution of OSTTRA's carve-out plan, with steady improvements in free cash flow and leverage over time. This could lead to an upgrade within 24 months if Fitch believes credit measures will continue to strengthen. The final ratings are subject to final documentation conforming to the drafts reviewed by Fitch. Key Rating Drivers Credit Metrics to Strengthen: Fitch expects EBITDA leverage in the mid-6x area on a pro forma basis through 2025, improving to the mid-5x area by end-2027. Although starting leverage is high, the company should generate solid cash flow, particularly as carve-out costs abate, with forecast (CFO-capex)/debt of 4.0% in 2026, climbing to 5.6% in 2027. Carve-out risks seem manageable, as the company mainly operates independently and has Transition Service Agreements with its current owners. Fitch believes sponsor KKR & Co. Inc.'s (A/Stable) carve-out expertise will contribute to a successful, budget-aligned outcome. Moderate Financial Policy: OSTTRA plans to pursue a financial policy that balances debt reduction with growth investments. M&A does not appear to be a key pillar of OSTTRA's strategy, and the company has indicated its desire to strengthen its credit profile, post carve-out. However, Fitch's financial forecast assumes no debt repayment, because the excess cash flow sweep is set at a level that is unlikely to necessitate mandatory repayments, coupled with the possibility that the financial sponsor ownership may lead to shareholder-friendly actions. Customer Concentration Poses Risks: OSTTRA has a highly concentrated customer base, with its top 11 customers accounting for over half of revenue. Fitch considers the company's relationships with these Tier 1 banks to be strong, evidenced by an average duration of 21 years and no material customer attrition, except in M&A cases. However, this concentration poses a risk, as the banks wield considerable bargaining power and play a pivotal role in OSTTRA's network. Losing a major customer could adversely affect both revenue and the strength of OSTTRA's network. This risk is mitigated by limited alternative platforms to move to. Strong Niche Market Position: OSTTRA holds 90%-plus market share in certain high-volume areas of Post Trade Processing (rates/derivatives, FX and credit) and Trade Lifecycle (triResolve). Its solutions serve as essential market infrastructure with few alternatives, are deeply embedded in customers workflows, and benefit from significant network effects, making them challenging to replace. Competition largely consists of point solutions, or products lacking a network that includes both buy-side and sell-side participants, a crucial element of OSTTRA's offering. However, with EBITDA of approximately $250 million, the company is small on an absolute basis and relative to competitors. Decent Revenue Visibility: About one-third of OSTTRA's revenue comes from subscriptions, with the remainder generated through volume-based transactions that are generally recurring. Volume risk is partly offset by a discount curve pricing model, where fee-for-service rates are initially higher until certain volume thresholds are met. The business benefits from countercyclical attributes due to interest rate and FX movements during economic volatility. Over-the-counter (OTC) rates and FX derivatives have experienced steady growth over the past decade, a trend that Fitch expects to continue due to rate volatility, geopolitical uncertainty, a move toward shorter tenor instruments and other factors. Rating Linkage: Fitch rates Orion Midco Ltd (Holdco and financial statement filer), Orion US Finco and Orion Bidco based on a consolidated credit profile with the same IDRs. Fitch uses the stronger subsidiary path because the Standalone Credit Profiles (SCPs) of Orion US Finco and Orion Bidco are stronger than Orion Midco's. Legal ringfencing is open, with modest restrictions on intercompany flows, while access and control are also open. Additionally, Orion Midco and the first-tier subsidiaries of Orion US Finco and Orion Bidco are guarantors, which joins the group together. Peer Analysis OSSTRA's ratings highlight its position as a leading provider of post-trade solutions in the global OTC derivatives market. Its solutions are hard to replace due to strong network effects and deep integration into customer workflows. Despite its small size, the company enjoys significant economies of scale in its markets, leading to strong profitability, with an EBITDA margin in the 50% area. Fitch projects its leverage and (CFO-capex)/debt ratio to be around 6x and 4.0%, respectively, in 2026, aligning with other 'B' rated companies in the TMT sector. OSTTRA is comparable to data and analytics firms like Boost Parent, LP (B/Stable; dba J.D. Power) and Neptune BidCo US Inc. (B+/Stable; dba Nielsen), both of which have strong market positions and profitability. J.D. Power shares similar limited diversification attributes with OSTTRA. However, it has historically maintained leverage above 6x on a sustained basis due in-part to its focus on debt-funded M&A. Fitch expects Nielsen's leverage to be below 5.5x. Its scale and stronger credit metrics justify the one-notch rating differential relative to OSTTRA. Key Assumptions - Annual revenue increase of 4%-5%, driven by low-single-digit growth in trade processing and optimization, mid-single digit expansion in trade lifecycle, combined with modest near-term contributions from growth initiatives; - EBITDA margin improvement to 51.6% by 2028, from 48.7% in 2024, as revenue gains outpace cost increases; - Non-recurring costs of approximately $20 million-$25 million annually in 2025-2026 for transition, growth investments, and tech upgrades, dropping to $10 million or less thereafter; - Stock-based compensation estimated at $10 million in 2025, with gradual increases through the forecast period; - SOFR at 4.00% in 2025, dropping to 3.50% in 2026 and 2027; - Cash taxes of $36 million in 2025 and growing annually; - Capital expenditure intensity of 4% annually as a percentage of revenue; - Debt repayments of $13 million in amortization annually, with no voluntary or excess cash flow sweep repayments. Recovery Analysis Key Recovery Rating Assumptions - The recovery analysis assumes that OSTTRA would be reorganized as a going-concern in bankruptcy rather than liquidated. - Fitch has assumed a 10% administrative claim. - The $150 million revolver is fully drawn at the time of restructuring. - Residual value from non-guarantors, which account for 35% of EBITDA, will be available to satisfy 1L and 2L claims in order of priority due to the equity pledge from the Holdco guarantor, Orion Midco Ltd. Going-Concern (GC) Approach Fitch's GC EBITDA assumption reflects a distressed scenario whereby OSTTRA experiences the loss of a significant portion of business from its largest customers, resulting in a revenue decline of a little over $52 million. Fitch assumes the company has limited ability to offset this revenue decline with cost cuts given its fixed cost structure and the potential for increased investments to mitigate additional customer losses. Fitch assumes that EBITDA stabilizes at $181 million, which represents its estimate of sustainable port-reorganization GC EBITDA. EV Multiple: Fitch assumes a 7.0x EV multiple, which reflects the company's strong market position and good FCF conversion. The multiple is supported by the following: Transaction Multiples: Comparable transactions have generally been conducted at multiples in excess of 12x adjusted EBITDA. Comparable Public Companies: Peer providers of technology to the financial services space have EV/EBITDA multiples of 13x upwards. Comparable Reorganization Multiples: Median reorganization multiples for the TMT industry have historically been ~5.9x (per 2024 TMT bankruptcy case study). While this provides a point-of-reference, there are no direct peers in this data set upon which a recovery multiple can be based. Further, many of the examples in this report reflect secularly challenged businesses, which may limit the relevance. Recovery: Fitch expects recovery on the first-lien term loan of 'RR2', resulting in a 'BB-' instrument rating, and recovery on the second lien term loan of 'RR6', resulting in a 'CCC+' instrument rating. OSTTRA's economic value is spread across multiple jurisdictions, all within 'A' country groupings according to Fitch's "Country-Specific Treatment of Recovery Ratings Criteria," resulting in no cap on the recovery ratings. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade The Outlook could be stabilized if credit measures appear unlikely to be sustained below the positive rating sensitivities, including due to the possibility of a change in financial policy; - EBITDA leverage sustained above 7.0x; - CFO-capex/debt below 2.5% on a sustained basis; - Increased competition or material operational challenges. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Expectation that EBITDA leverage will be sustained at or below 5.5x; - Expectation that (CFO-capex)/debt will exceed 5.0% on a sustained basis; - Evidence of financial discipline that is supportive of deleveraging. Liquidity and Debt Structure At the close of the transaction, Fitch expects liquidity to be solid, with $20 million in cash and full access to the company's $150 million revolving credit facility. Fitch anticipates that the company will generate positive free cash flow throughout the rating period. Scheduled principal repayments are modest at $13 million annually, and there are no near-term debt maturities. The revolving credit facility will mature five years after the transaction closes, the first lien term loan will mature seven years after the transaction closes, and the second lien term loan will mature eight years after. Issuer Profile Orion Midco and its subsidiary entities are leading providers of post-trade solutions for the global OTC derivatives market. The company provides comprehensive post-trade offerings and workflow solutions for various asset classes. Date of Relevant Committee May 13, 2025 MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery ----------- ------ -------- Orion Midco Ltd LT IDR B(EXP) Expected Rating Orion US Finco Inc. LT IDR B(EXP) Expected Rating senior secured LT BB-(EXP) Expected Rating RR2 Senior Secured 2nd Lien LT CCC+(EXP)Expected Rating RR6 Orion Bidco Ltd LT IDR B(EXP) Expected Rating PIERPONT BTL 2025-1: Fitch Assigns 'BB+(EXP)' Rating on 2 Tranches ------------------------------------------------------------------ Fitch Ratings has assigned Pierpont BTL 2025-1 PLC expected ratings. The assignment of final ratings is contingent on the receipt of final documents conforming to information already reviewed. Entity/Debt Rating ----------- ------ Pierpont BTL 2025-1 PLC A LT AAA(EXP)sf Expected Rating B LT AA-(EXP)sf Expected Rating C LT A(EXP)sf Expected Rating D LT BBB+(EXP)sf Expected Rating E LT BB+(EXP)sf Expected Rating X LT BB+(EXP)sf Expected Rating Transaction Summary Pierpont BTL 2025-1 PLC is a securitisation of buy-to-let (BTL) mortgages originated in England, Wales and Scotland by LendInvest BTL Limited (LendInvest), and MT Finance (MTF), which entered the BTL mortgage market in 2017 and 2022, respectively. LendInvest and MTF are the named servicers for their respective sub-pools (67% of the total pool for LendInvest and 33% for MTF) with servicing activities delegated to Pepper (UK) Limited. This is the third transaction in the Pierpont series and the second to be rated by Fitch. KEY RATING DRIVERS Prime BTL Underwriting: The pool has a weighted average (WA) original loan-to-value ratio of 75.1%, a Fitch calculated WA interest coverage ratio of 104.9% and consists predominantly of interest-only loans. LendInvest and MTF's lending policies are in line with those of prime BTL lenders and the transaction's attributes are in line with peer BTL transactions rated by Fitch. MTF has limited BTL origination performance data history, so Fitch assigned an originator adjustment of 1.1x. Specialist Properties: By current balance, 38.2% of the properties are classed as houses in multiple occupation or multi-unit freehold blocks. These properties are generally higher-yielding and require active management. Both LendInvest and MTF require landlords to have a minimum of 12 months' experience when advancing against these properties. They attract a higher foreclosed sale adjustment discount in Fitch's asset analysis, which affects the WA recovery rate (WARR) calculation. Fixed Hedging Schedule: The issuer will enter into a swap at closing to mitigate the interest rate risk from fixed-rate mortgage loans prior to their reversion date. The swap notional will be based on a pre-defined schedule assuming a constant prepayment rate (CPR) based on past borrower prepayment behaviour on comparable mortgage products. If the loans prepay ahead of the schedule or default, the issuer will be over-hedged. The excess hedging is beneficial to the issuer in a rising interest-rate scenario and detrimental when interest rates are falling. Product switches will be repurchased, mitigating the potential for pool migration towards lower-yielding assets and the need for additional hedging. Fixed Loans Reversions Affect CPR: Most fixed rate loans in the final pool have a tenor of five years and the reversion dates are concentrated in a few months in 2029. Fitch therefore expects prepayment rates to remain low post-closing, particularly considering the high early repayment charges that borrowers face within the first few years from origination. This will limit potential excess spread compression and the risk of over-hedging arising from high CPR in the early years of the transaction. As a result, Fitch applied alternative high CPR assumptions for the first five years of the transaction's life compared to its standard assumptions. In a selected sample of UK RMBS transactions, Fitch found prepayment rates tended to follow portfolio reversion schedules. This has formed the basis for deriving the alternative assumptions run in Fitch's cash flow analysis. This criteria variation results in a multi-notch difference for all notes from the model-implied ratings (MIR) when using the standard high CPR assumptions. Unrated Representations and Warranties Provider: LendInvest and MT Finance are not rated by Fitch and will have an uncertain ability to make substantial repurchases from the pool in the event of a material breach of representations and warranties. As part of its analysis Fitch placed more emphasis on a materially clean agreed-upon procedures report and prior file review. Deviation From MIR: Fitch has assigned the class E notes a rating one notch below their MIR. This is due to the transaction's reliance on excess spread, which forms the only source of support for the class E notes, and therefore its rating has been constrained to 'BB+sf'. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade The transaction's performance may be affected by changes in market conditions and the economic environment. Weakening economic performance is strongly correlated to increasing levels of delinquencies and defaults that could reduce the credit enhancement available to the notes. In addition, unexpected declines in recoveries could result in lower net proceeds, which may make certain notes susceptible to potential negative rating action depending on the extent of the decline in recoveries. Fitch conducts sensitivity analyses by stressing a transaction's base-case FF and RR assumptions. For example, a 15% WAFF increase and a 15% WARR decrease would result in model-implied downgrades of up to one notch for the class A and D notes and two notches for the class B, C and X notes. There is no implied impact on the class E notes. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Stable to improved asset performance driven by stable delinquencies and defaults would lead to increasing credit enhancement and potential upgrades. Fitch tested an additional rating sensitivity scenario by applying a decrease in the WAFF of 15% and an increase in the WARR of 15%, implying upgrades of up to two notches for the class B, C and D and notes. The class E and X notes are already at their rating cap. The class A notes are already rated at the maximum AAAsf. CRITERIA VARIATION Fitch applied a criteria variation to the CPR assumptions in 'high' stresses contained in the UK RMBS Rating Criteria. This is based on historical data observed that suggest prepayment rates may remain low until a loan approaches the contractual reversion rate. As a result, Fitch amended the CPR assumptions in years one to five of its cash flow modelling projections. The result is a multi-notch impact on the class A to E notes and the class X notes, which forms the basis of Fitch's rating assignment. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Fitch reviewed the results of a third party assessment conducted on the asset portfolio information, and concluded that there were no findings that affected the rating analysis. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. 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. TULLOW OIL: Moody's Downgrades CFR to Caa2, Outlook Remains Negativ ------------------------------------------------------------------- Moody's Ratings has downgraded the long term corporate family rating of Tullow Oil plc (Tullow) to Caa2 from Caa1, along with the company's probability of default rating to Caa2-PD from Caa1-PD. Concurrently, Moody's downgraded to Caa2 from Caa1 the rating of the outstanding c.$1.385 billion ($1.8 billion face value) backed senior secured notes due 2026. The outlook remains negative. RATINGS RATIONALE The one-notch downgrade of Tullow's ratings reflects the company's (i) approaching maturity wall and uncertainty about how this will be addressed and (ii) overall weak liquidity position (as per Moody's definition), even after considering the expected near-term receipt of c.$300 – 380 million of cash proceeds from recently announced divestitures in Gabon and Kenya. ESG CONSIDERATIONS Moody's revised the ESG Credit Impact Score for Tullow to CIS-5 from CIS-4, indicating that the company's ratings are lower than they would have been if exposure to ESG risks did not exist and that the negative impact is more pronounced than for issuers scored CIS-4. This reflects governance risks arising from a high quantum of funded debt approaching maturity that weighs on Tullow's weak liquidity position and sustainability of the capital structure. Tullow also faces very high exposure to environmental and social risks, given the company's focus on upstream oil and gas activities. Tullow's Caa2 CFR is three notches below the scorecard-indicated outcome (based on historic metrics for the financial year ended December 2024) of B2. The difference reflects the company's elevated refinancing risk in the context of a highly-leveraged capital structure, exposure to volatile hydrocarbon prices and a smaller earnings and cashflow generation capacity pro forma for the intended asset disposals. LIQUIDITY Tullow's liquidity is weak on account of significant debt obligations maturing in May 2026, but also as a result of (i) projected neutral to mildly positive free cash flow under Moody's base case scenario (which excludes volumes from the Gabonese assets) and (ii) absence of sources of external liquidity upon the expiry of the revolving credit facility in June 2025. STRUCTURAL CONSIDERATIONS Tullow's capital structure currently comprises: -- A $250 million senior secured revolving credit facility expiring in June 2025, ranking super senior in an enforcement scenario -- $1,385 million of senior secured notes due in May 2026 (2026 SSNs), amortising by $100 million on May 15, 2025 -- A $400 million five-year term facility provided by Glencore Energy UK Ltd. This facility is secured by the same collateral as the 2026 SSNs but subordinated in right of payment in an enforcement scenario The backed senior secured instrument rating of Caa2 is in line with Tullow's CFR and reflects the status of the bond as the largest piece of debt in the company's capital structure, ranking ahead of the Glencore-backed facility. RATING OUTLOOK The negative outlook reflects the upcoming maturity of the company's senior secured notes in 12 months' time and the more difficult refinancing prospects given market dynamics, financial leverage, and exposure to volatile hydrocarbon prices. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Given the negative outlook, a rating upgrade is currently unlikely and would nevertheless require a meaningful improvement in operating performance, liquidity and, ultimately, in Moody's assessments of the sustainability of Tullow's capital structure, for instance on the back of a successful refinancing of the backed senior secured notes due May 2026. Conversely, Tullow's ratings could be downgraded further if the likelihood of a default under Moody's definitions increases or if recovery expectations weaken. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Independent Exploration and Production published in December 2022. COMPANY PROFILE Headquartered in the United Kingdom, Tullow is an independent oil and gas exploration and production (E&P) company operating in West Africa. Average daily production in 2024 amounted to 61 thousand barrels of oil equivalent (kboepd), of which 83% was produced in Ghana (Caa2 positive). Tullow is listed on the London and Ghanaian stock exchanges. WOLSELEY GROUP: Fitch Assigns B(EXP) LongTerm IDR, Outlook Positive ------------------------------------------------------------------- Fitch Ratings has assigned Wolseley Group Holdings Limited an expected Long-Term Issuer Default Rating (IDR) of 'B(EXP)'. The Outlook is Positive. Fitch has assigned an expected rating of 'B+(EXP)'/RR3 to the group's proposed GBP350 million notes. The assignment of final ratings is contingent on the receipt of final documents. The ratings reflect Wolseley's solid business profile underpinned by its market-leading positions, particularly in plumbing and heating (P&H), and diversification in its products and customer base set against its concentration on the UK and Irish market. The group's exposure to cyclical construction is mitigated by its focus on the more resilient renovation, maintenance and improvement P&H end-markets. The rating is constrained by the expected increase in leverage. However, the Positive Outlook is driven by the expected deleveraging over the financial years July 2026 to 2028 (FY26 to FY28) as EBITDA margins recover with rising volumes and the implementation of cost-efficiency programmes. Key Rating Drivers Increased Debt, Expected Deleveraging: Fitch expects an increase in leverage in FY25 following the issuance of the new senior secured notes, as part of the proceeds will be used for dividend distribution. Fitch expects Wolseley's EBITDA leverage to reduce from FY26 as EBITDA margins improve and the capital structure remains stable, with no further issuances planned. The group previously demonstrated its ability to reduce leverage after the acquisition by private equity company Clayton, Dubilier & Rice in 2021, maintaining low leverage during the market downturn while actively pursuing bolt-on M&A opportunities. Temporarily Constrained EBITDA Margin: The EBITDA margin decreased in FY24 due to declining volumes, product price deflation and increased labour costs. However, the group has recovered across all these areas in FY25. Wolseley has had consistent volume improvement since January 2025 and FY25 margins benefit from the full impact of the cost rationalisation programme, as the second phase was completed in June 2024. Current initiatives to reviewing commercial terms and simplifying customer deal structures allowing for optimised pricing and product ranges are expected to further support the expected EBITDA improvement in the further years. Limited FCF Generation: In FY25, free cash flow (FCF) will be constrained by the planned extraordinary dividend as part of the refinancing transaction. FCF will subsequently be limited by increased interest payments and working-capital outflows supporting growth. Fitch expects the FCF margin to rise above 1% from FY28, supported by projected revenue growth and improving EBITDA margin. Exposure to Cyclical End-Markets: Wolseley benefits from diversified end-markets positioned for cyclical recovery and structural growth, bolstered by UK government policies and various initiatives. They are exposed to the cyclical UK construction and housebuilding sectors, but also have substantial exposure to the P&H segment's renovation, maintenance and improvement market, which tends to be more resilient. Geographical Concentration: Wolseley's operations are limited to the UK and Ireland, unlike more diversified peers such as Winterfell Financing S.a.r.l. (Stark; B-/Stable) and Quimper AB (B+/Stable), which operate in multiple countries. This limited geographical diversification constrains the rating. Long-Term Growth Potential: Wolseley is strategically positioned to capitalise on the rise of heat pumps in the UK, especially with the expected implementation of government policies requiring low-carbon heating solutions in new builds. The timing of these policy changes remains unclear, but Wolseley's robust market position in traditional boilers will also sustain long-term growth. The group is also well positioned for the expected growth of the infrastructure sector in the UK, notably within utilities and power. Peer Analysis Wolseley maintains a solid business profile with market-leading positions and diversification in its products and customer base, although its operations are predominantly concentrated in the UK with a growing presence in Ireland. Wolseley's business profile is weaker than those of Travis Perkins Plc (BB+/Stable), Quimper, and Stark. It is smaller, with FY24 revenue of GBP2.2 billion, below Travis Perkins' GBP4.9 billion in FY23, Quimper's GBP3.9 billion in FY23, and Stark's GBP6.6 billion in FY24. Wolseley also has less geographical diversification than Stark and Travis Perkins. However, Wolseley has a stronger financial profile than Stark, and Fitch forecasts its EBITDA margin to improve over FY25-FY26, from 3.9% to 4.2%, outperforming Stark's growth of 2.3% to 3.6%. Fitch forecasts Wolseley to begin deleveraging from FY26 to 4.7x, achieving a more favourable leverage profile than Stark (FY26: 7.9x). Wolseley's EBITDA margins (FY25 3.9%) are considerably weaker than Quimper's (FY25 9.7%), but they share a comparable leverage profile and deleveraging trajectory. Key Assumptions Fitch's Key Assumptions within Its Rating Case for the Issuer - Revenue growth of 2.3% in 2025, 4.6% in 2026, 6.1% in 2027 and 8.2% in 2028 - Net M&A at about GBP15 million annually in 2025-2028 - EBITDA margin improvement from 2025 due to increased volumes and improved cost efficiencies resulting in a margin of 3.9% in 2025, 4.2% in 2026, 4.5% in 2027 and 4.9% in 2028 - Capex to increase to 1.5% of revenue in 2025 and then gradually decrease year on year until 1.0% in 2028 - Working-capital requirement at 0.4%-0.9% of revenue in 2025-2028 Recovery Analysis - The recovery analysis assumes that Wolseley would be reorganised as a going concern in bankruptcy rather than liquidated. Fitch has assumed a 10% administrative claim. - The going-concern EBITDA of GBP75 million reflects Fitch's view of a sustainable, post-reorganisation EBITDA level on which Fitch bases the enterprise valuation (EV). In such a scenario, stress on EBITDA would most likely result from failure to regain volumes and implement cost-saving initiatives, affecting profitability generation, effectively representing a post-distress cash flow proxy for the business to be liquidated. - Fitch applies a distressed EV/EBITDA multiple of 5.5x to calculate the post-reorganisation EV, reflecting Wolseley's high market share, challenging operating environment and potential for further growth. The multiple is in line with those of Stark and Quimper. - For the purpose of the recovery analysis, Fitch assumes a highest drawn amount of GBP185 million asset-backed loan (ABL) at a super senior level followed by the GBP350 million notes. - The waterfall analysis output for the senior secured debt (GBP350 million note) generated a ranked recovery in the 'RR3' band, indicating an instrument rating of 'B+'. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - EBITDA gross leverage above 6.0x on a sustained basis - EBITDA margin below 3.5% on a sustained basis - Consistently negative FCF - EBITDA interest coverage below 2.0x Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - EBITDA gross leverage below 5.0x on a sustained basis - EBITDA margin above 4.5% on a sustained basis - Sustained positive FCF - EBITDA interest coverage above 3.0x - Liquidity and Debt Structure At the end of March 2025, Wolseley had Fitch-adjusted readily available cash of GBP117 million and had drawn GBP115 million of the available GBP305 million ABL facility after the transaction. The ABL is due to mature in April 2030. Fitch forecasts negative FCF in 2025 and neutral-to-positive FCF in 2026-2028. Wolseley's post-transaction outstanding debt will consist of GBP350 million notes maturing in January 2031, and a GBP305 million ABL maturing in April 2030. Issuer Profile Wolseley is a leading specialist merchant of heating, ventilation, and air conditioning plumbing, renewables, sanitary ware, infrastructure and utility products in the UK and Ireland. Date of Relevant Committee May 7, 2025 MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery ----------- ------ -------- Wolseley Group Finco Plc senior secured LT B+(EXP) Expected Rating RR3 Wolseley Group Holdings Limited LT IDR B(EXP) Expected Rating WOLSELEY GROUP: S&P Assigns Prelim. 'B' LT ICR, Outlook Stable -------------------------------------------------------------- S&P Global Ratings assigned its preliminary 'B' long-term issuer credit rating to U.K.-based specialist merchant distributor Wolseley Group Holdings Ltd. S&P assigned its preliminary 'B' issue rating to the company's proposed GBP350 million senior secured notes due January 2031. The preliminary recovery rating is '3' (recovery range: 50%-70%; rounded estimate: 50%). S&P does not rate the company's asset-backed loan (ABL). S&P said, "The final ratings will depend on our receipt and satisfactory review of all final transaction documentation. Accordingly, the preliminary ratings should not be construed as evidence of the final ratings. If the terms and conditions of the final transaction depart from the material we have already reviewed, or if the transaction does not close within what we consider to be a reasonable timeframe, we reserve the right to withdraw or revise our ratings. "Wolseley Group Holdings Ltd. is a leading U.K.-based specialist merchant distributor. Wolseley was carved out from Ferguson PLC in an acquisition completed by CD&R in January 2021; since then it has operated exclusively in the U.K. and Ireland markets. Wolseley is a leading specialist merchant of heating, ventilation, and air conditioning (HVAC), plumbing, renewables, sanitaryware, infrastructure, and utility products in these two markets. The company is exposed to resilient end markets; repair, maintenance, and improvements (RMI), and new build, like larger peers Patagonia Holdco 3 Ltd. (Huws Gray; CCC+/Stable/--) and SIG PLC (B/Negative/--). Wolseley's overexposure to the non-discretionary RMI segment, along with balanced contribution from the two segments--55% and 45% of revenue in fiscal 2024 for RMI and new build, respectively--has been a key element in containing the impact from subdued construction activity in the past. Wolseley's business model benefits from a diverse product offering alongside specialist knowledge available in branches, similar to SIG PLC. "Well-diversified supplier and customer bases ensure continuity of operations. We believe Wolseley has favorable low supplier and customer concentration. The company sources more than 400,000 stock keeping units (SKUs) from over 3,000 suppliers, predominantly in the U.K., with no supplier accounting for more than 8% of cost of goods sold. The fact that the top 10 suppliers account for about 30% of the cost of sales mitigates potential supply chain disruptions, in our view. Wolseley serves more than 75,000 active trade customers across the U.K. and Ireland. We view the company's customer base as adequately diversified, with the top 10 customers accounting for only 9% of revenue. "Wolseley's modest scale of operations and focus on the U.K. end market constrain our rating. With annual revenue of about GBP2.3 billion, Wolseley is smaller than other competitors in the sector, including peers SIG PLC, BME Group Holding B.V. (B-/Negative/--), Stark Group (Winterfell Financing Sarl; B-/Stable/--) and Quimper AB (B+/Stable/--). Moreover, Wolseley's activity is concentrated exclusively in end markets of the U.K. and Ireland (93.5% and 6.5% of revenue, respectively). We view this as high geographical concentration compared with the aforementioned peers, which enjoy a more diversified market presence, predominantly across Europe. "Wolseley is deploying digital technology to simplify processes. Wolseley has made significant investment in digitalization, including launching the Plumb App in June 2024 and redesigning its website in March 2025. We believe that Wolseley's focus on strengthening digital capabilities will simplify and strengthen the purchase process. The company reported digital revenue in the Plumbing & Heating division of about GBP160 million for the 12 months ended in January 2025. Furthermore, updated digital processes have significantly reduced the time required to open cash and credit accounts--to about 60 minutes from one to two weeks previously. We note that Wolseley includes near-term investment initiatives focused on IT and digital in its capital expenditure (capex). "We think the heat pump segment has long-term growth potential. Wolseley is the U.K. market leader in the heat pump segment, which we think has significant long-term growth potential, driven by government initiatives to make heat pumps the primary heating source for housing and gradually replace gas boilers. The government aims for about 600,000 installations per year by 2028, with adoption influenced by financing options, the electricity-to-gas price ratio, and installer expertise. Until 2028, we expect the heat pump market will remain relatively small due to the large installed base of gas boilers in the U.K. and the boiler market will continue to thrive due to ongoing repair and maintenance needs. "We project that Wolseley will report resilient performance in fiscal 2025, followed by sales growth in fiscal 2026 . Similar to that of other peers operating in the U.K. market, like Patagonia and SIG, Wolseley's performance is affected by subdued sales volumes and the indirect impact of the recent U.S. tariffs. Wolseley's revenue growth has been constrained by the prolonged market downturn and weak customer sentiment. We anticipate that the U.K. market will begin to recover in late 2025, continuing through 2026. We project stable revenue of about GBP2.3 billion in fiscal 2025, due to the challenging market environment. In fiscal 2026, we project revenue will increase by 5.3%-5.5% to about GBP2.4 billion, reflecting the anticipated volume recovery and positive customer sentiment. Nevertheless, we note that our estimates carry a certain degree of uncertainty due to current market conditions and the potential indirect consequences of the tariff implementation under the Trump administration and its impact on the global economy. "Cost-saving initiatives and decreasing restructuring costs should lead to improved profitability. We expect Wolseley will optimize its gross margin profile and cost setup through an ongoing procurement and category management initiative and through constant monitoring of its operating expenditure base. This, combined with reducing restructuring costs related to completed acquisitions to about GBP1 million in fiscal 2026 from GBP7 million in fiscal 2025, should lead to gradually improving profitability. We forecast S&P Global Ratings-adjusted EBITDA of about GBP120 million-GBP140 million in fiscal 2025, translating to an S&P Global Ratings-adjusted EBITDA margin of about 5.6%-5.8%. This would be an increase from 5.3% in fiscal 2024, which was mainly due to challenging market conditions and was partly offset by lower restructuring costs. We expect the S&P Global Ratings-adjusted EBITDA margin to improve to about 5.9%-6.4% in fiscal 2026-2027, driven mainly by market recovery, operating leverage, and lower restructuring costs. "We anticipate FOCF after lease payments will turn positive in fiscal 2026. We expect Wolseley will maintain its resilient through-the-cycle cash flow performance. We anticipate limited working capital outflow, which combined with decreasing restructuring costs will compensate for the higher cash interest expenses following the refinancing transaction. We project annual capex will be about GBP30 million-GBP35 million in fiscal 2025-2026, representing about 1.0%-1.5% of revenue, of which about 55%-60% will relate to maintenance capex. We project about GBP45 million-GBP50 million in cash interest payments and limited working capital cash outflow of about GBP5 million-GBP10 million over the same period. This results in our estimate of negative FOCF, after lease payments, of about GBP2 million-GBP3 million in fiscal 2025, and we expect FOCF after lease payments to turn positive at about GBP15.5 million-GBP17.5 million in fiscal 2026. We typically use FOCF after lease payments as a credit metric for entities in the building materials distribution sector, as defined by S&P Global Ratings, as it serves as an indicator of the potential consumption of the company's liquidity headroom. "We anticipate that Wolseley' capital structure will be highly leveraged upon completion of the transaction, with S&P Global Ratings-adjusted debt to EBITDA at about 4.8x-5.0x in fiscal 2025. Following the refinancing, we expect that S&P Global Ratings-adjusted debt will include the new senior secured notes of about GBP350 million, used for refinancing the existing GBP219 million senior secured loan and for shareholder remuneration of about GBP121 million, along with the extended ABL of GBP305 million. We note that the company has no pension liabilities, lease liabilities are about GBP170 million, and there are no outstanding factoring programs. We expect leverage will decline to 4.2x-4.4x in fiscal 2026 from our estimate of 4.8x-5.0x at the end of fiscal 2025, mostly due to improving profitability. Given its ownership by private equity company CD&R, we believe Wolseley's appetite for deleveraging is low and assume that self-generated cash flow will be used to fund external development opportunities rather than debt reduction. We therefore do not deduct cash balances from our calculation of adjusted debt. Nevertheless, we expect Wolseley will deleverage below the 5.0x leverage trigger faster than other financial sponsor-owned distributors like BME and Stark Group. "The stable outlook reflects our expectation of a gradual recovery in EBITDA over the next 12-18 months, driven by modest sales volume growth and cost-saving initiatives. As a result, S&P Global Ratings-adjusted debt to EBITDA should improve comfortably below 5.0x in fiscal 2026 from about 4.8x-5.0x in fiscal 2025. We also expect the company to maintain EBITDA interest coverage comfortably above 2.0x, a comfortable liquidity buffer with a long-dated maturity profile, and positive FOCF, after lease payments, of about GBP15.5 million-GBP17.5 million in fiscal 2026. In fiscal 2025, we expect negative FOCF, after lease payments, of about GBP2 million-GBP3 million." S&P could lower the rating if: - Leverage remains elevated--higher than 6.0x--without any prospects of a quick recovery; - FOCF after lease payments is persistently negative and this leads to a considerable weakening in liquidity; - Financial policy, especially for acquisitions and shareholders distributions, is not supportive of the current rating level. In S&P's view, there is limited probability of an upgrade over the next 12 months, reflecting the lack of a track record of S&P Global Ratings-adjusted debt to EBITDA below 5.0x and the possibility that private equity ownership could translate into more aggressive financial policy, leading to higher leverage. For this reason, S&P could consider raising the rating if: - Adjusted debt to EBITDA remains consistently below 5.0x on a sustained basis; - The company maintains solid positive FOCF after lease payments; - Shareholders show a strong commitment to maintaining leverage at a level commensurate with a higher rating. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2025. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter Chapman at 215-945-7000. * * * End of Transmission * * *