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250604.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Wednesday, June 4, 2025, Vol. 26, No. 111 Headlines B E L G I U M ANHEUSER-BUSCH INBEV: Egan-Jones Retains BB+ Sr. Unsecured Ratings C Z E C H R E P U B L I C DRASLOVKA HOLDING: Moody's Cuts CFR to Caa1, Alters Outlook to Neg. E S T O N I A BIGBANK AS: Moody's Alters Outlook on Ba1 Deposit Ratings to Neg. F R A N C E IQERA GROUP: Moody's Ups CFR to ‘Caa3’, Outlook Stable G E O R G I A TBC BANK: Moody's Assigns First Time 'Ba3' Issuer Ratings I R E L A N D BLUEMOUNTAIN EUR 2016-1: S&P Raises F-R Notes Rating to 'BB-(sf)' CARLYLE EURO 2017-3: Moody's Cuts Rating on EUR11.1MM E Notes to B3 L U X E M B O U R G OHI GROUP: Moody's Puts 'B2' CFR on Review for Downgrade S P A I N BBVA CONSUMER 2025-1: Moody's Gives B3 Rating to EUR21.1MM Z Notes T U R K E Y KOC HOLDING: S&P Affirms 'BB+/B’ ICRs, Outlook Stable U N I T E D K I N G D O M AIDRIVERS LTD: Alvarez & Marsal Named as Administrators ALFRED CHARLES: FRP Advisory Named as Administrators JD WETHERSPOON: Egan-Jones Retains B- Senior Unsecured Ratings MARSTON'S ISSUER: S&P Affirms 'B+ (sf)' Rating on Class B Notes TECHNIPCFMC PLC: Egan-Jones Cuts Senior Unsecured Ratings to BB+ - - - - - ============= B E L G I U M ============= ANHEUSER-BUSCH INBEV: Egan-Jones Retains BB+ Sr. Unsecured Ratings ------------------------------------------------------------------ Egan-Jones Ratings Company on May 5, 2025, maintained its 'BB+' foreign currency and local currency senior unsecured ratings on debt issued by Anheuser-Busch InBev NV. Headquartered in Belgium, Anheuser-Busch InBev NV brews beer. =========================== C Z E C H R E P U B L I C =========================== DRASLOVKA HOLDING: Moody's Cuts CFR to Caa1, Alters Outlook to Neg. ------------------------------------------------------------------- Moody's Ratings downgraded Draslovka Holding Alpha a.s.' (Draslovka or the company) long-term corporate family rating to Caa1 from B3 and probability of default rating to Caa1-PD from B3-PD. Concurrently, Moody's downgraded to Caa1 from B3 the instrument ratings on the $348 million backed senior secured term loan B (term loan B) and $30 million senior secured revolving credit facility (RCF) both due December 2026 and issued by Manchester Acquisition Sub LLC, a subsidiary of Draslovka Holding Alpha a.s. The outlook on both entities has been changed to negative from stable. RATINGS RATIONALE "The downgrade of Draslovka's CFR to Caa1 reflects refinancing risk for the term loan B and RCF (together the credit facilities and issued by Manchester Acquisition Sub LLC) maturing in December 2026 due to sustained negative free cash flow (FCF) generation in the last three years with limited visibility for significant improvement in 2025 and 2026," says Sebastien Cieniewski, Moody's Ratings lead analyst for Draslovka. Slower-than-expected recovery in earnings from a trough in 2022, delays in high-margin licensing sales of its Glycine Leaching Technology (GLT), interest payments, capital expenditures, and unfavorable working capital movements have all hurt FCF. These challenges represent constraints for Draslovka to refinance the full amount of debt in advance of maturity. The sustained negative FCF as well as the modest cash balance, fully drawn RCF, and increasing scheduled debt amortization in 2025 and 2026 result in a weak liquidity position. Nevertheless, Draslovka's shareholders have injected large amounts of equity over the last three years, with further contributions budgeted for 2025. Additionally, the company benefits from a relatively large pipeline of technology license sales which it can activate to partly offset further delays in GLT license sales in 2025 and 2026. While GLT has significant potential, illustrated by its capability to reduce chemicals needed in the leaching process as well as detoxification costs, sales of this technology have a limited track record and timing for signing future contracts is uncertain. Draslovka generated a negative Moody's adjusted FCF of $32 million in 2024 (-$48 million in 2023) despite a moderate improvement in the company's adjusted EBITDA to $86 million in 2024 from $80 million in prior year due primarily to interest payments of $42 million, capital expenditures of $37 million and large working capital outflow of $29 million reflecting the timing of collection of license sales. LIQUIDITY Draslovka's liquidity is weak, with only $22 million in cash and a fully drawn $30 million RCF as of December 2024. Based on Moody's assumptions, Moody's projects FCF to remain slightly negative to break-even in 2025 due to higher capital expenditures tied to the Natron Energy partnership and working capital consumption mainly due to the timing of collection of license sales, despite moderately improved earnings and lower interest costs. The company also faces a step up in scheduled debt amortization with $26 million of term loan repayments due in 2025. To cover shortfalls, Draslovka has benefitted from shareholder equity injections totaling $170 million over the past three years. The company may also generate proceeds in 2025 from the planned disposal of certain assets – although this remains subject to execution risk. The weaker-than-expected performance has diminished Draslovka's refinancing options for its credit facilities. Options may include an extension of the maturity for all or part of its debt or a debt restructuring to reduce the overall debt burden. Moody's may consider such scenarios as a distressed exchange which is an event of default under Moody's definitions. The Caa1 CFR reflects nevertheless Moody's expectations that shareholders will provide continued support to Draslovka, including to address the maturities of the company's credit facilities, reducing the risk of potential losses to debt holders. STRUCTURAL CONSIDERATIONS Manchester Acquisition Sub LLC's backed senior secured term loan B and the RCF are rated Caa1, in line with Draslovka's long-term CFR. This reflects their dominance in the capital structure and the fact that they share the same guarantor coverage and security package. OUTLOOK The negative outlook reflects the risk of higher cash burn in 2025 if Draslovka does not close the planned disposal of certain assets which may require higher shareholders' contributions to support liquidity. It also reflects the uncertainty around the timing and nature of the debt refinancing. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Positive pressure on Draslovka's ratings could arise if the company's liquidity position improves significantly, including through the addressing of Manchester Acquisition Sub LLC's 2026 debt maturities in a timely manner as well as a return to sustained positive FCF generation without reliance on shareholders' equity injections. A positive action would also require improved liquidity and expectations for sustained improvement in operational performance that indicate a sustainable capital structure. Negative rating pressure would arise if Draslovka's operating performance deteriorates in the next couple of quarters leading to a weaker-than-projected FCF generation further weakening the company's liquidity position. Additionally, Moody's would downgrade the ratings in a scenario where refinancing of credit facilities is delayed or Moody's assumes that any debt restructuring may result in more meaningful losses for debtholders. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Chemicals published in October 2023. COMPANY PROFILE Draslovka is a leading producer of cyanide (CN)-based chemicals and industrial services. Chemicals produced are used in sectors such as agriculture, mining, automotive and pharmaceuticals. Draslovka delivers services to the mining industry focusing on green leaching solutions. ============= E S T O N I A ============= BIGBANK AS: Moody's Alters Outlook on Ba1 Deposit Ratings to Neg. ----------------------------------------------------------------- Moody's Ratings has affirmed all ratings and assessments of Bigbank AS (Bigbank): the Ba1/NP long- and short-term deposit ratings, the ba2 Baseline Credit Assessment (BCA) and Adjusted BCA, the Baa2/P-2 long- and short-term Counterparty Risk Ratings, and the Baa2(cr)/P-2(cr) long- and short-term Counterparty Risk Assessments. The outlook on the long-term deposit ratings was changed to negative from stable. RATINGS RATIONALE -- AFFIRMATION OF ALL RATINGS AND ASSESSMENTS The affirmation of all the ratings and assessments of Bigbank reflects the affirmation of the bank's BCA and Adjusted BCA, along with unchanged loss given failure and government support assumptions. Bigbank's ba2 BCA reflects its robust capitalisation and solid liquidity buffers. The bank's capital position is tightly managed by the fast-growing bank, supplementing common equity tier 1 (CET1) capital with periodic issuance of additional tier 1 and tier 2 capital issuance, to maintain all capital ratios in excess of its regulatory buffers. Its liquidity buffers, which are largely made up by central bank reserves, have declined, falling to 18% as of March 2025 from 26% as of March 2024, yet remain at solid levels. These strengths are balanced against risks stemming from the bank's deposits, which represent more than 95% of the bank's total funding as of December 2024. In particular, the proportion of foreign deposits is high, as they accounted for 91% of total deposits as of December 2024. While these deposits are sourced through the bank's proprietary online platform and are almost wholly covered by the Estonian deposit guarantee schemes, they are largely on-demand and not linked to transaction accounts, with limited or no broader customer relationships. As such, Moody's views them as more price- and risk-sensitive, and potentially more volatile. In addition, the share of on-demand savings deposits has remained high, while in recent years the average lending maturities have lengthened following the growth in the bank's non-consumer lending portfolio. Furthermore, Moody's assessments reflects elevated asset risks associated with the bank's rapid loan growth and expansion into non-core markets, which has contributed to a non-performing loans ratio of 5.2% as of March 2025, significantly above its rated Baltic peers. It also reflects the bank's equity investment portfolio which brings potential asset price volatility not captured in credit quality indicators. The ba2 BCA also reflects elevated risk appetite, demonstrated by the bank's strategy to rapidly expand its balance sheet and grow in multiple non-core markets, and concentrated ownership by two individuals, resulting in key person and governance risks. -- OUTLOOK CHANGE TO NEGATIVE The change in outlook to negative from stable on the long-term deposit ratings reflects Bigbank's declining profitability as it shifts toward lower margin lending and lower than expected growth in its Baltics deposit book. This comes alongside a recent reduction in liquid assets, which provide buffers against potential outflows of its more price sensitive deposit funding. Profitability, measured as net income to tangible assets, declined to 1.2% in 2024 from 2.7% in 2021, primarily due to narrowing net interest margins as the bank increased its exposure to lower-yielding assets. However, this shift has not been accompanied by a corresponding reduction in asset risk. The share of Stage 2 and Stage 3 mortgage and business loans has risen, while provisioning coverage has declined to levels below peers, indicating a deterioration in credit quality and the potential for higher loan loss provisions. This bank's earnings increased slightly in first quarter in 2025, rising to 1.3% of tangible assets, but the negative outlook reflects expectations of further margin pressure from declining interest rates, alongside potentially higher credit costs stemming from the bank's growing non-consumer lending portfolio. In 2024, the bank launched transaction accounts in its home market of Estonia, but uptake has been slow. This has contributed to elevated funding risks and a higher average funding cost relative to some peers. Additionally, the bank reduced its liquidity buffers during the year, despite maintaining a significant reliance on foreign deposits, resulting in a weaker funding and liquidity profile. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS An upgrade of Bigbank's ratings is unlikely given the negative outlook on its long-term deposit ratings. However, the outlook could return to stable through a combination of stabilised profitability with net income to tangible assets around 1.5% on a sustainable basis, a significant reduction in the share of foreign deposits, and reduced asset risks with lower lending growth and a fall in non-performing loans consistently below 3.5%. The bank's ratings could be downgraded if its profitability weakens further (for example, with net income over tangible assets below 1.25%), alongside a still high share of foreign deposits. A downgrade could also be triggered by a weakening in other solvency factors, such as the non-performing loans ratio rising above 7% or ongoing balance sheet expansion resulting in the CET1 ratio falling below 12.5%. Additionally, a significant decline in the volume of loss-absorbing liabilities could also lead to downgrade. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Banks published in November 2024. =========== F R A N C E =========== IQERA GROUP: Moody's Ups CFR to ‘Caa3’, Outlook Stable ---------------------------------------------------------- Moody's Ratings has upgraded the corporate family rating of iQera Group SAS (iQera) to Caa3 from Ca and assigned a Caa3 backed senior secured rating to iQera's newly issued floating rate notes. At the same time, the backed senior secured rating of iQera's existing bonds, which will be delisted following the transaction has been affirmed at Ca. The issuer outlook remains stable. The rating action is triggered by the completion of iQera's court-supervised restructuring process and closing of the restructuring transaction on May 28. The transaction includes a 35% write-down of the existing bonds in exchange for equity in the company and the issuance of new floating rate notes maturing in 2030. As part of the restructuring transaction, iQera's existing backed senior secured bonds will be delisted. Subsequent to the action, Moody's will withdraw the Ca ratings of iQera's existing notes following their delisting. RATINGS RATIONALE The upgrade of iQera's CFR to Caa3 from Ca reflects several factors, notably the near-term benefits of the restructuring transaction on the company's financial flexibility as well as the envisaged repositioning of the business model towards loan servicing with lower deployment of own capital in a co-investment partnership with its new majority owner. Improvements in leverage, interest coverage and the extension of its debt maturity profile following the 35% debt-to-equity conversion are considered credit positive. The upgrade also reflects the anticipated positive operating cash flows over the coming quarters while the company will implement its revised business strategy. iQera's ratings, however, remain significantly constrained by considerable negative financing cash flows, tight liquidity, reduced earnings power and relatively high leverage. While the extension of debt maturities will provide the business with some financial stability, it will need to build a track record of successfully transforming its business model before needing to re-finance its debt again ahead of the next debt maturities that comprise a EUR50 million revolving credit facility due in 2029 as well as the EUR389 million new floating rate notes and a EUR30 million new money facility, all maturing in 2030. Given the remaining significant challenges for iQera in terms of managing the transformation of its business model while its financial flexibility remains stretched, as well as its previous propensity to resort to debt restructuring at the expense of creditors, Moody's have maintained a one notch negative adjustment for corporate behavior and risk management in the Caa3 CFR. As a result, the credit impact score under Moody's framework for assessing environmental, social and governance (ESG) considerations has been maintained at CIS-5, reflecting the unchanged high risk governance issuer profile score (IPS) of G-5. The Caa3 backed senior secured rating of the newly issued floating rate notes reflects iQera's CFR and the results of Moody's loss-given-default analysis of the company's new debt structure following the restructuring. The affirmation of the backed senior secured rating of iQera's existing bonds at Ca prior to their delisting remains based on an expected loss approach, reflecting Moody's views that debtholders will have to bear losses above 35 %, thereby taking account of the realised loss rate to bondholders in the partial debt-to-equity conversion as well as foregone coupons. OUTLOOK The stable outlook on iQera reflects better visibility over the company's financial profile following the completion of the court-supervised debt restructuring process, supporting the multi-year process of repositioning its business model. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS iQera's ratings could be upgraded if cash flow and profitability improve faster than envisioned under its business plan, liquidity increases, leverage reduces and if it demonstrates success in refinancing its debt well ahead of maturity. An upgrade of the CFR may lead to a corresponding change in iQera's senior secured debt rating. iQera's ratings could be downgraded if profitability and cash flows fall short of business plan projections, liquidity declines, leverage increases, and if the company cannot demonstrate renewed access to capital markets by refinancing its maturing debt well ahead of time. A downgrade of the CFR will lead to a corresponding change in iQera's senior secured debt rating. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Finance Companies published in July 2024. ============= G E O R G I A ============= TBC BANK: Moody's Assigns First Time 'Ba3' Issuer Ratings --------------------------------------------------------- Moody's Ratings has assigned first-time Ba3/NP long- and short-term issuer ratings to TBC Bank Group PLC (TBC PLC, the group). The outlook on the long-term issuer ratings is negative. TBC PLC is a UK-registered banking group with operations in Georgia and Uzbekistan. It is the holding company of JSC TBC Bank (TBC Bank; deposits Ba2 negative, Baseline Credit Assessment ba2), one of the largest banks in Georgia with a market share in terms of assets of 39% as of the end of 2024, and TBC Uzbekistan (TBC UZ; unrated), a rapidly growing digital financial ecosystem that includes an online payment service and a digital bank focusing on cash loans and credit cards and has recently-launched services for micro, small and mid-sized businesses. TBC Bank is the largest subsidiary of the group, representing 92% of TBC PLC's assets and 95% of profit before tax as of end-2024. RATINGS RATIONALE -- ASSIGNMENT OF ISSUER RATINGS Given that TBC Bank makes up the bulk of the TBC PLC's assets and revenues and their financial metrics were broadly similar, TBC PLC's Ba3 long-term issuer ratings reflect the standalone creditworthiness of TBC Bank and are positioned one notch lower than TBC Bank's ba2 Baseline Credit Assessment (BCA) and Adjusted BCA. This is driven by the structural subordination of TBC PLC's senior unsecured creditors to those of TBC Bank and limited double leverage. TBC Bank's ba2 BCA reflects the bank's strong profitability with a return on assets (RoA) of 3.6% for 2024 (same for TBC PLC), underpinned by its dominant market position and strong capital, with a tangible common equity to risk-weighted assets ratio of 15.8% as of end-2024 (TBC PLC: 15.4%). It also reflects elevated credit risks from lending in foreign currency coupled with rapid credit growth, a high level of deposit dollarisation, moderate reliance on more confidence-sensitive non-resident deposits and some market funding, mitigated by liquid banking assets at 29% of tangible banking assets (same for TBC PLC). Moreover, although the group's operations in Uzbekistan are growing rapidly Moody's expects Georgia to continue to account for more than 80% of assets and loans in the coming years. TBC PLC is exposed to more challenging operating conditions and higher asset risk in Uzbekistan ('Weak-' Macro Profile) compared to Georgia ('Weak+' Macro Profile). Given TBC UZ's unsecured-lending focus in Uzbekistan, its cost of risk was a high 6.3% in 2024, compared to 0.5% in Georgia (0.8% in aggregate for TBC PLC). However, lending in Uzbekistan is done exclusively in local currency and exhibits a wide net interest margin of 24.4% driving a return on assets of 7.2%. While TBC PLC relies on upstreamed dividends and interest from its operating subsidiaries, it has limited own debt outstanding and most of that debt is on-lent to subsidiaries at similar terms including the same seniority and equivalent or shorter maturity, which drives modest double leverage and therefore incremental liquidity risk taken on by the holding company. Moody's also do not expect the group to change this approach in the near future. The assigned ratings also incorporate TBC PLC's environmental, social and governance (ESG) considerations, as per Moody's General Principles for Assessing Environmental, Social and Governance Risks methodology. According to Moody's assessments TBC PLC faces low governance risks, reflected in a Governance Issuer Profile Score (IPS) of G-2. Overall, the Credit Impact Score (CIS) of CIS-2 indicates that ESG considerations do not have a material impact on the current rating. -- NEGATIVE OUTLOOK The negative outlook on the Ba3 long-term issuer ratings is aligned with the negative outlook on TBC Bank's Ba2 long-term deposit ratings and is driven by the negative outlook on the Ba2 Georgian sovereign rating. In case of a downgrade of the Government of Georgia's rating, TBC Bank's ba2 BCA would likely be downgraded because its standalone creditworthiness is interlinked with that of the sovereign, driving a downgrade of its deposit ratings and TBC PLC's long-term issuer ratings. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS An upgrade of TBC PLC's ratings is unlikely given the negative outlook on its long-term ratings. However, in line with the outlook on TBC Bank's ratings, the outlook on the long-term group's issuer ratings may change to stable if the outlook on the Government of Georgia's rating changes to stable. TBC PLC's ratings could be downgraded in case the Government of Georgia's rating is downgraded and TBC Bank's BCA is therefore downgraded. TBC Bank's BCA could also be downgraded if operating conditions in Georgia weaken (as reflected in Moody's Macro Profile), or if the bank's solvency and liquidity were to deteriorate materially. Specifically, this could be the result of a sharp rise in problem loans, significant capital outflows or a material increase in deposit dollarisation, and a large depreciation of the Georgian lari. TBC PLC's ratings could also be downgraded if its double leverage increases beyond 115% leading us to consider a further downward notch to holding company obligation, or in case operations outside of Georgia become a more significant part of the group's assets and revenues, increase risk and lead to a deterioration in the consolidated creditworthiness of the holding company, particularly if not compensated by enhanced buffers. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Banks published in November 2024. ============= I R E L A N D ============= BLUEMOUNTAIN EUR 2016-1: S&P Raises F-R Notes Rating to 'BB-(sf)' ----------------------------------------------------------------- S&P Global Ratings raised its credit ratings on BlueMountain EUR CLO 2016-1 DAC's class B-R notes to 'AAA (sf)' from 'AA+ (sf)', class C-R notes to 'AA+ (sf)' from 'AA (sf)', class D-R notes to 'AA (sf)' from 'A (sf)', class E-R notes to 'BBB+ (sf)' from 'BB (sf)', and class F-R notes to 'BB- (sf)' from 'B- (sf)'. At the same time, S&P affirmed its 'AAA (sf)' rating on the class A-R notes. The rating actions follow the application of its global corporate CLO criteria, and its credit and cash flow analysis of the transaction based on the April 2025 trustee report. S&P's ratings address timely payment of interest and ultimate payment of principal on the class A-R and B-R notes and ultimate payment of interest and principal on the class C-R, D-R, E-R, and F-R notes. Since S&P reviewed the transaction in April 2024: -- The portfolio's weighted-average rating is unchanged at 'B'. -- The portfolio has become less diversified since the closing analysis (the number of performing obligors has increased to 83 from 141). -- The portfolio's weighted-average life has decreased to 2.960 years from 3.532 years. -- The percentage of 'CCC' rated assets has increased to 8.90% from 5.52%. -- The scenario default rates (SDRs) have increased at the 'AAA', 'AA+', and 'AA' rating levels but decreased for all other rating scenarios. This is mainly due to an increase in the percentage of 'CCC' rated assets, a reduction in the portfolio's weighted-average life, and decreased diversification across obligors and industries in the portfolio. Portfolio benchmarks Current Previous SPWARF 3,047.80 2,935.78 Default rate dispersion (%) 669.68 653.19 Weighted-average life (years) 2.960 3.532 Obligor diversity measure 73.40 122.88 Industry diversity measure 19.385 23.248 Regional diversity measure 1.266 1.369 SPWARF--S&P Global Ratings' weighted-average rating factor. On the cash flow side: -- The transaction's reinvestment period ended in April 2022. The class A-R notes have deleveraged by more than EUR221 million since then and have a current outstanding balance of EUR14.18 million -- No class of notes is deferring interest. All coverage tests are passing as of the April 2025 trustee report. Transaction key metrics Current Previous Total collateral amount (mil. EUR)* 175.67 325.70 Defaulted assets (mil. EUR) 0.00 3.09 Number of performing obligors 83 141 Portfolio weighted-average rating B B 'CCC' assets (%) 8.90 5.52 'AAA' SDR (%) 59.44 58.38 'AAA' WARR (%) 35.31 35.90 *Performing assets plus cash and expected recoveries on defaulted assets. SDR--scenario default rate. WARR--Weighted-average recovery rate. Credit enhancement Current (%) Current (based on the Jan 2024 Class amount (EUR) trustee report) Previous (%) A-R 14,188,437 91.92 49.80 B-R 50,000,000 63.46 34.45 C-R 26,400,000 48.44 26.35 D-R 21,800,000 36.03 19.65 E-R 25,000,000 21.80 11.98 F-R 11,200,000 15.42 8.54 Sub 44,200,000 N/A N/A Credit enhancement = [Performing balance + cash balance + recovery on defaulted obligations (if any) – tranche balance (including tranche balance of all senior tranches)]/ [Performing balance + cash balance + recovery on defaulted obligations (if any)]. N/A--Not applicable. S&P said, "In our view, the portfolio is diversified across obligors, industries, and asset characteristics. The aggregate exposure to the top 10 obligors is now 18.70%. Hence, we have performed an additional scenario analysis by applying adjustments for spread and recovery compression. We have considered these sensitivities in our assigned ratings. At the same time, 32.46% of the assets pay semiannually. The CLO has a smoothing account that helps to mitigate any frequency timing mismatch risks. "Due primarily to continued deleveraging of the senior notes--which has increased available credit enhancement--we raised our ratings on the class B-R, C-R, D-R, E-R, and F-R notes, as the available credit enhancement is now commensurate with higher levels of stress. "At the same time, we affirmed our rating on the class A-R notes. "The cash flow analysis indicated higher ratings than those currently assigned for the class C-R, D-R, E-R, and F-R notes. However, we have considered that the manager may still reinvest unscheduled redemption proceeds and sale proceeds from credit-impaired and credit-improved assets. Such reinvestments (as opposed to repayment of the liabilities) may prolong the repayment profile for the most senior class of notes. We also considered the current macroeconomic environment, and these classes' seniority. "Counterparty, operational, and legal risks are adequately mitigated in line with our criteria. "Following the application of our structured finance sovereign risk criteria, we consider the transaction's exposure to country risk to be limited at the assigned ratings, as the exposure to individual sovereigns does not exceed the diversification thresholds outlined in our criteria." CARLYLE EURO 2017-3: Moody's Cuts Rating on EUR11.1MM E Notes to B3 ------------------------------------------------------------------- Moody's Ratings has taken a variety of rating actions on the following notes issued by Carlyle Euro CLO 2017-3 DAC: EUR26,500,000 Class B-1 Senior Secured Deferrable Floating Rate Notes due 2031, Upgraded to Aa3 (sf); previously on May 17, 2023 Upgraded to A1 (sf) EUR10,000,000 Class B-2 Senior Secured Deferrable Floating Rate Notes due 2031, Upgraded to Aa3 (sf); previously on May 17, 2023 Upgraded to A1 (sf) EUR20,500,000 Class C Senior Secured Deferrable Floating Rate Notes due 2031, Upgraded to Baa1 (sf); previously on May 17, 2023 Affirmed Baa2 (sf) EUR11,100,000 Class E Senior Secured Deferrable Floating Rate Notes due 2031, Downgraded to B3 (sf); previously on May 17, 2023 Affirmed B2 (sf) Moody's have also affirmed the ratings on the following notes: EUR234,000,000 (Current outstanding amount EUR133,833,369) Class A-1-R Senior Secured Floating Rate Notes due 2031, Affirmed Aaa (sf); previously on May 17, 2023 Affirmed Aaa (sf) EUR29,500,000 Class A-2-A Senior Secured Floating Rate Notes due 2031, Affirmed Aaa (sf); previously on May 17, 2023 Upgraded to Aaa (sf) EUR15,000,000 Class A-2-B Senior Secured Fixed Rate Notes due 2031, Affirmed Aaa (sf); previously on May 17, 2023 Upgraded to Aaa (sf) EUR23,500,000 Class D Senior Secured Deferrable Floating Rate Notes due 2031, Affirmed Ba2 (sf); previously on May 17, 2023 Affirmed Ba2 (sf) Carlyle Euro CLO 2017-3 DAC, issued in December 2017 and refinanced in June 2021, is a collateralised loan obligation (CLO) backed by a portfolio of mostly high-yield senior secured European loans. The portfolio is managed by CELF Advisors LLP. The transaction's reinvestment period ended in July 2022. RATINGS RATIONALE The upgrades on the ratings on the Class B-1, B-2 and C notes are primarily a result of the deleveraging of the senior notes following amortisation of the underlying portfolio since the payment date in April 2024; the downgrade to the rating on the Class E notes is due to the continued deterioration in the credit quality, WAC and WAS of the underlying collateral pool since the payment date in April 2024. The Class A-1-R notes have paid down by approximately EUR69.7 million (29.8% of original balance) in the last 12 months and EUR100.2 million (42.8%) since closing. As a result of the deleveraging, over-collateralisation (OC) has increased. According to the trustee report dated April 2025[1] the Class A, Class B Class C, Class D and Class E OC ratios are reported at 150.2%, 128.0%, 118.2%, 108.6% and 104.6% compared to April 2024[2] levels of 141.4%, 123.9%, 115.8%, 107.8% and 104.4%, respectively. Moody's notes that the April 2025 principal payments are not reflected in the reported OC ratios. The credit quality has deteriorated as reflected in the deterioration in the average credit rating of the portfolio (measured by the weighted average rating factor, or WARF) and an increase in the proportion of securities from issuers with ratings of Caa1 or lower. According to the trustee report dated April 2025[1], the WARF was 3138, compared with 3059 in April 2024[2]. Securities with ratings of Caa1 or lower currently make up approximately 6.8% of the underlying portfolio, versus 5.9% in April 2024. The affirmations on the ratings on the Class A-1-R, A-2-A, A-2-B and D 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 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: EUR283.9 million Defaulted Securities: EUR0 Diversity Score: 41 Weighted Average Rating Factor (WARF): 3129 Weighted Average Life (WAL): 3.3 years Weighted Average Spread (WAS) (before accounting for Euribor floors): 3.6% Weighted Average Coupon (WAC): 3.8% Weighted Average Recovery Rate (WARR): 44.3% Par haircut in OC tests and interest diversion test: 0% 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: -- Long-dated assets: The presence of assets that mature beyond the CLO's legal maturity date exposes the deal to liquidation risk on those assets. Moody's assumes that, at transaction maturity, the liquidation value of such an asset will depend on the nature of the asset as well as the extent to which the asset's maturity lags that of the liabilities. Liquidation values higher than Moody's expectations would have a positive impact on the notes' ratings. 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. =================== L U X E M B O U R G =================== OHI GROUP: Moody's Puts 'B2' CFR on Review for Downgrade -------------------------------------------------------- Moody's Ratings has placed OHI Group S.A. (OHI)'s B2 corporate family rating and the B2 rating of its $400 million Backed Senior Secured Global Notes due 2029 on review for downgrade. Previously, the outlook was stable. RATINGS RATIONALE / FACTORS THAT COULD LEAD TO A DOWNGRADE OR UPGRADE The review process was triggered by OHI's delay in reporting FY 2024 audited financials. The delay in finalizing the audit is related to OHI's reaudit of its prior year financial statements in accordance with US Public Company Accounting Board Standards. Separately, OHI has announced an intent to file a confidential registration statement relating to an initial public offering of its shares in the United States. OHI has also published certain preliminary unaudited financial metric. The indenture requires delivery of the audited financial statements by April 30, 2025. The failure to deliver the audited financial statements by the due date has not resulted in an event of default as 25% of creditors would first need to provide notice of the failure to deliver the audited financials by the due date and OHI would then have 60 days to cure the breach. OHI also intends to solicit creditors' waiver of the due date as it finalizes its audit process. The review process will focus on (i) OHI's ability to report audited financials in the next three weeks; (ii) on OHI's financial and operating performance vis-à-vis Moody's initial expectations and (iii) on the company's most recent liquidity profile and refinancing risk. The inability to publish audited financial statements within the next three weeks would trigger a downgrade of the rating. Moody's could also downgrade the rating if the company's liquidity deteriorates or if leverage (measured by debt-to-EBITDA) is sustained above 4x. Change in financial policy, such as using significant amounts of debt to accelerate fleet expansion or dividend payments, could also lead to a downgrade. The failure to successfully complete liability management initiatives and reinforce its cash balance would also trigger a downgrade of the rating. Conversely, Moody's could confirm the rating if credit metrics and liquidity are in line with Moody's initial expectations. Given the current review for downgrade, an upgrade of the rating is unlikely. OHI's Moody's-adjusted leverage has remained above 5x over the last 3 years, but Moody's expected the ratio to decline to 3x-4x from 2024 onwards due to the ramp-up of the existing service contracts. Moody's also expected OHI to have an adequate liquidity after the issuance, of the senior secured notes with about EUR79 million in cash and EUR179 million in debt amortizations until 2027. Moody's expected the company's cash flow from operations to amount to around $100-200 million per year from 2024 onwards, which is sufficient to cover maintenance investment requirements in its fleet, however the company will continue to rely on external funding to fund fleet growth. Based on preliminary unaudited financials from December 2024, OHI had EUR52 million in cash, total debt of EUR667 million and net leverage of around 4.4x. COMPANY PROFILE Headquartered Luxembourg and founded in Lisbon, Portugal and founded in 2001, OHI is a leading provider of helicopter transportation services to personnel working on offshore installations, onshore installations and urban air mobility in Brazil. The company operates a fleet of 96 medium aircraft equivalent (MACE), about 70% of which are leased, and has operations in Brazil, Guyana and Mozambique. In 2024, on a preliminary unaudited basis, the company reported net revenues of EUR420 million with a reported EBITDA margin of 36.4%. The principal methodology used in these ratings was Oilfield Services published in January 2023. ========= S P A I N ========= BBVA CONSUMER 2025-1: Moody's Gives B3 Rating to EUR21.1MM Z Notes ------------------------------------------------------------------ Moody's Ratings has assigned the following definitive ratings to Notes issued by BBVA CONSUMER 2025-1, FT: EUR2,021M Class A Floating Rate Asset Backed Notes due August 2038, Definitive Rating Assigned Aa2 (sf) EUR88.1M Class B Floating Rate Asset Backed Notes due August 2038, Definitive Rating Assigned A3 (sf) EUR88.3M Class C Floating Rate Asset Backed Notes due August 2038, Definitive Rating Assigned Baa3 (sf) EUR70.4M Class D Floating Rate Asset Backed Notes due August 2038, Definitive Rating Assigned Ba1 (sf) EUR21.1M Class Z Floating Rate Asset Backed Notes due August 2038, Definitive Rating Assigned B3 (sf) Moody's have not assigned any rating to the EUR82.2M Class E Floating Rate Asset Backed Notes due August 2038. RATINGS RATIONALE The transaction is a static cash securitisation of Spanish unsecured consumer loans originated by Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) (A3/A3(cr), A2 LT Bank Deposits). The portfolio consists of consumer loans used for several purposes, such as car acquisition, property improvement and other undefined or general purposes. BBVA also acts as servicer, collection account bank and issuer account bank provider of the transaction. The provisional portfolio consists of approximately EUR2,711.4 million of loans as of 18 March 2025 pool cut-off date. A final portfolio of EUR2,350 million has been selected at random from the provisional portfolio to match the final Notes issuance amount. The Reserve Fund has been funded to 1.0% of the Class A and B Notes balance at closing and the total credit enhancement for the Class A Notes is 14.90%. The ratings are primarily based on the credit quality of the portfolio, the structural features of the transaction and its legal integrity. The transaction benefits from credit strengths such as the granularity of the portfolio, the excess spread-trapping mechanism through a 6 months artificial write off mechanism, the high average interest rate of 7.4% and the financial strength and securitisation experience of the originator. However, Moody's notes that there is a risk of yield compression as 97.8% of the loans in the pool has the option of an automatic discount on the loan interest rate as a result of the future cross selling of other products. Moreover, Moody's notes that the transaction features some credit weaknesses such as a complex structure including interest deferral triggers for junior Notes, pro-rata payments on all asset-backed Notes from the first payment date, the high linkage to BBVA and limited liquidity available in case of servicer disruption. Various mitigants have been put in place in the transaction structure such as sequential redemption triggers to stop the pro-rata amortization. Hedging: all the loans are fixed-rate loans, whereas the Notes are floating-rate liabilities. As a result, the issuer is subjected to a fixed-floating interest-rate mismatch. To mitigate the fixed-floating rate mismatch, the issuer has entered into a swap agreement with BBVA. Under the swap agreement, (i) the issuer pays a fixed rate of 2.1835%, (ii) the swap counterparty pays 3M Euribor, (iii) the notional as of any date will be the outstanding balance of Classes A-E Notes. Moody's analysis focused, amongst other factors, on: (i) an evaluation of the underlying portfolio of consumer loans and the eligibility criteria; (ii) historical performance provided on BBVA's total book and past consumer loan ABS transactions and performance of previous BBVA Consumo deals; (iii) the credit enhancement provided by subordination, excess spread and the reserve fund; (iv) the liquidity support available in the transaction by way of principal to pay interest; and (v) the overall legal and structural integrity of the transaction. MAIN MODEL ASSUMPTIONS Moody's determined a portfolio lifetime expected mean default rate of 5.0%, expected recoveries of 20.0% and portfolio credit enhancement ("PCE") of 17.0%. The expected mean default rate and recoveries capture Moody's expectations of performance considering the current economic outlook, while the PCE captures the loss Moody's expects the portfolio to suffer in the event of a severe recession scenario. Expected defaults and PCE are parameters used by us to calibrate its lognormal portfolio loss distribution curve and to associate a probability with each potential future loss scenario in the ABSROM cash flow model to rate Consumer ABS. Portfolio expected mean default rate of 5.0% is in line with recent Spanish consumer loan transaction average and is based on Moody's assessments of the lifetime expectation for the pool taking into account (i) historic performance of the loan book of the originator, (ii) performance track record on most recent BBVA consumer deals, (iii) benchmark transactions, and (iv) other qualitative considerations. Portfolio expected recoveries of 20.0% are higher than recent Spanish consumer loan average and are based on Moody's assessments of the lifetime expectation for the pool taking into account (i) historic performance of the loan book of the originator, (ii) benchmark transactions, and (iii) other qualitative considerations. The PCE of 17.0% is in line with other Spanish consumer loan peers and is based on Moody's assessments of the pool taking into account the relative ranking to originator peers in the Spanish consumer loan market. The PCE of 17.0% results in an implied coefficient of variation ("CoV") of 50.7%. The principal methodology used in these ratings was "Moody's Approach to Rating Consumer Loan-Backed ABS" published in July 2024. Factors that would lead to an upgrade or downgrade of the ratings: Factors or circumstances that could lead to an upgrade of the ratings of the Notes would be (1) better than expected performance of the underlying collateral; or (2) a lowering of Spain's sovereign risk leading to the removal of the local currency ceiling cap. Factors or circumstances that could lead to a downgrade of the ratings would be (1) worse than expected performance of the underlying collateral; (2) deterioration in the credit quality of BBVA; or (3) an increase in Spain's sovereign risk. =========== T U R K E Y =========== KOC HOLDING: S&P Affirms 'BB+/B’ ICRs, Outlook Stable ------------------------------------------------------- S&P Global Ratings affirmed its 'BB+' and 'B' long-term and short-term issuer credit ratings on Türkiye-based investment holding company Koc Holding A.S. S&P said, "We anticipate Koc will maintain a large net cash position in the next 12 months thanks to its prudent financial policy and resilient dividend income. The company's net cash position was about Turkish lira (TRY) 39.7 billion ($1.05 billion) as of March 31, 2025, based on its portfolio value at that date. This is in line with the company's track record of maintaining a net cash position or very low debt since 2014, with its adjusted loan-to-value ratio staying well below the 10% maximum we view as commensurate with the 'bbb-' stand-alone credit profile (SACP). We project Koc's net cash position will remain supported by its conservative financial policy, moderate shareholder distributions, and a resilient dividend stream from its investee assets. This is despite more challenging market conditions from prolonged domestic inflation, slower GDP growth, and a limited depreciation of the lira affecting both domestic and export-oriented companies. Overall, we forecast total dividends received, management fees, and interest income will decline moderately to about TRY37.0 billion-TRY 41 billion from TRY47.1 billion in 2024, mainly due to lower announced dividends from two of Koc's large investee assets, Yapi Kredi (a domestic bank; not rated) and Ford Otomotiv Sanayi A.S. (a car manufacturer; BB/Stable/--). We understand that this is being offset by paying lower dividends to Koc's shareholders of about TRY17.5 billion in 2025, compared with TRY22.5 billion paid in 2024; this represents a 22% reduction. We also expect the investment holding will remain prudent regarding acquisition spending, such that it will maintain a solid net cash position through year-end. "The criteria exception that enables us to rate Koc one notch above our 'BB' T&C assessment on Türkiye reflects our expectation that the company can maintain sufficient cash in U.S. dollars at international banks to cover any potential dollar-denominated debt. We typically apply our T&C rating cap to companies, such as Koc, that are not exporters and generate more than 90% of their stand-alone cash flow in Türkiye, implying a rating of 'BB'. In Koc's case, more than 90% of its income comes from dividends from investments in the country. As of March 31, 2025, the company did not have foreign or local financial debt. We think Koc has ample U.S. dollar holdings at international banks, and do not anticipate this cash would be depleted for other reasons. In addition, the company has passed our sovereign stress tests, indicating that it would have enough liquidity to cover its obligations in the next 12 months, in the event of a sovereign default. We do not expect Koc's ability to use its U.S. dollar holdings to pay dollar-denominated obligations would be restricted by exchange or repatriation controls. As a result, we deviate from our criteria for rating above the sovereign by adding one notch, and therefore rate Koc foreign currency long-term rating one notch above our 'BB' T&C assessment on Türkiye." S&P will continue to apply this criteria exception so long as: -- The company meets our T&C stress test requirements; -- The amount of cash in U.S. dollars held offshore exceeds Koc's U.S. dollar liabilities; and -- S&P perceives no heightened risks of a repatriation of the company's offshore U.S. dollar holdings. S&P monitors quarterly these three factors, which are the conditions to be rated one notch above the T&C assessment. The company passed these requirements as of the end of March 2025. The stable outlook on Koc mirrors that on Türkiye. S&P could take a negative rating action on the company following a similar rating action on Türkiye, or if: -- Koc cannot pass our T&C stress test; -- The company depletes its U.S. dollar cash balance abroad; or -- Its U.S. dollar holdings abroad become subject to repatriation requirements or exchange controls. S&P said, "We could take a positive rating action on Koc following a similar rating action on Türkiye, implying an upgrade of the sovereign by one notch to 'BB' and of the T&C assessment to 'BB+'. An upgrade would also require the company to continue to meet our requirements for being rated up to one notch above our T&C assessment, and that we continue to assess its SACP at 'bbb-' or higher." =========================== U N I T E D K I N G D O M =========================== AIDRIVERS LTD: Alvarez & Marsal Named as Administrators ------------------------------------------------------- Aidrivers Ltd was placed into administration proceedings in the High Court of Justice, Business and Properties Court of England and Wales, Insolvency Companies List (ChD), No CR-2025-003265, and Paul Berkovi and Robert Croxen of Alvarez & Marsal Europe LLP were appointed as administrators on May 27, 2025. Aidrivers Ltd specialized in business and domestic software development. Its registered office and principal trading address is at Crimson Court, 1390 Uxbridge Road, Uxbridge, England, UB10 0NE. The joint administrators can be reached at: Paul Berkovi Robert Croxen Alvarez & Marsal Europe LLP Suite 3 Regency House 91 Western Road Brighton BN1 2NW Tel No: +44 (0) 20 7715 5200 Any person who requires further information may contact: Amy Ramshaw Alvarez & Marsal Europe LLP Tel No: +44 (0) 20 7715 5223 Email: INS_AIDRIL@alvarezandmarsal.com ALFRED CHARLES: FRP Advisory Named as Administrators ---------------------------------------------------- Alfred Charles Homes (Bracey's Field) Ltd was placed into administration proceedings in the High Court of Justice, Court Number: CR-2025-003538, and David Hudson and Philip David Reynolds of FRP Advisory Trading Limited were appointed as administrators on May 22, 2025. Alfred Charles Homes engaged in construction activities. Its registered office is at Swiss House, Beckingham Street, Tolleshunt Major, Maldon, CM9 8LZ Its principal trading address is at Floor 2, 110 Cannon Street, London, EC4N 6EU The joint administrators can be reached at: David Hudson Philip David Reynolds FRP Advisory Trading Limited 2nd Floor, 110 Cannon Street London, EC4N 6EU Further details contact: The Joint Administrators Tel No: 020 3005 4000 Alternative contact: Lawrence Cormack Email: cp.london@frpadvisory.com JD WETHERSPOON: Egan-Jones Retains B- Senior Unsecured Ratings -------------------------------------------------------------- Egan-Jones Ratings Company on May 5, 2025, maintained its 'B-' foreign currency and local currency senior unsecured ratings on debt issued by JD Wetherspoon PLC. EJR also withdrew its rating on commercial paper issued by the Company. Headquartered in Watford, United Kingdom, JD Wetherspoon PLC owns and operates group of pubs throughout the United Kingdom. MARSTON'S ISSUER: S&P Affirms 'B+ (sf)' Rating on Class B Notes --------------------------------------------------------------- S&P Global Ratings affirmed its 'BB+ (sf)' credit ratings on Marston's Issuer PLC's class A2, A3, and A4 notes and 'B+ (sf)' rating on the class B notes. While the class A and B notes as explained later in the publication have upside potential due to an improved debt service coverage ratio (DSCR), S&P believes downside risk remains as the pub sector is still under pressure from relatively soft consumer sentiment and high labor costs. Further, the improvement of 1 notch observed in the Class A and B notes is not entirely driven by performance but benefits from higher tax credit that the Issuer is entitled to. Hence any upside potential will likely materialize only if the company continues to prove resilience to and navigate cost pressures and soft consumer sentiment. S&P therefore affirmed its 'BB+ (sf)' and 'B+ (sf)' ratings on class A and B notes respectively. Marston's Issuer is a corporate securitization of the U.K. operating business of the managed and tenanted pub estate operator Marston's Pubs Ltd. (Marston's Pubs; the borrower). The transaction originally closed in August 2005 and was subsequently tapped in November 2007. Recent performance and macroeconomic considerations In the fiscal year 2024 ended Sept. 30, 2024, Marston's Issuer disposed of 63 pubs from the securitized portfolio (five managed and 58 tenanted), leading to a total of 845 outlets at the end of fiscal year 2024, of which 259 were managed and 586 were tenanted. The issuer reported total revenue of GBP438.9 million that increased by about 4% from fiscal 2023, underpinned by price increases, which were more prominent in the first half of fiscal 2024 with higher inflation, and ongoing premiumization trend that supports spend per head. Coupled with tight cost control and productivity measures, the issuer's reported EBITDA margin improved to 22.5% from 20.4% in 2023, which is below pre-COVID levels of close to 28% in 2019. At the same time, with the strategic disposal of non-core pubs over the years, EBITDA per pub has inched slightly higher than 2019 level. Trading through the first half of fiscal 2025 (period ending Mar. 29, 2025) was within S&P's forecast. The group parent Marston's PLC reported a like-for-like sales increase of 2.9%, which is materially below the 7.3% in the same period for 2024. The slower growth was reflected in the issuer's topline for the first half which was flattish to the previous year, while company-reported EBITDA margin for the first half improved to 21.1% from 18.6% in the same period of fiscal 2024. S&P said, "We note that price inflation began to ease since the second half of fiscal 2024. In addition, volume in the pub sector has become softer amid weak consumer sentiment and macroeconomic uncertainty. As the U.K. job market weakens with a fall in payrolled employment in the recent months and vacancies dipping below pre-covid levels, we expect volume and spend per head for the sector to remain suppressed by tight discretionary spending, which will dampen topline expansion in fiscal 2025 and beyond as pub operators respond with slower price increases. "We continue to expect the profitability of the sector to stabilize at a lower equilibrium compared to pre-covid-19 levels, reflecting weak consumer sentiment and structurally higher labor costs (due to a higher national living wage and employers' national insurance contributions from the U.K. Autumn Budget). We also consider the persistently high input and electricity costs amid ongoing regional conflicts and supply chain uncertainties from escalating tariff tensions. In our view, what underpins a stabilized margin in our forecast periods-albeit at a lower level-is that large operators will still have some headroom in streamlining costs in labor scheduling, energy use, and menu engineering and scaling up the efficiency initiatives throughout their estate, amongst broader efforts in capturing footfall through ongoing estate upgrades. "Our base case does not assume material impact on margins from Marston's disposal of its 40% stake in its joint venture with Carlsberg considering the long-term supply agreement in place and the ongoing logistics service provision to Carlsberg by Marston's." Rating Rationale The transaction features two classes of notes (class A and B), the proceeds of which have been on-lent to Marston's Pubs, via issuer-borrower loans. The operating cash flows generated by Marston's Pubs are available to repay its borrowings from the issuer that, in turn, uses those proceeds to service the notes. Each class of notes is fully amortizing. Marston's Issuer's primary sources of funds for principal and interest payments due on the outstanding notes are the loan interest and principal payments from the borrower and amounts available under the liquidity facility. S&P said, "We have applied our corporate securitization criteria as part of our rating analysis on the notes in this transaction. Our ratings address the timely payment of interest and principal due on the notes, excluding any subordinated step-up coupons. They are based primarily on our ongoing assessment of the borrowing group's underlying business risk profile (BRP), and the robustness of operating cash flows supported by structural enhancements." Business risk profile S&P continues to assess the borrower's business risk profile (BRP) as fair, which is supported by the business benefitting from the suburban locations of its portfolio of pubs and operations benefitting from a mix of managed and tenanted pubs. DSCR analysis S&P's cash flow analysis serves to both assess whether cash flows will be sufficient to service debt through the transaction's life and to project minimum DSCRs in our base-case and downside scenarios. Counterparty risk S&P said, "We do not consider the liquidity facility or bank account agreements to be in line with our counterparty criteria. Therefore, in the case of Marston's Issuer's non-derivative counterparty exposures, the maximum supported rating is constrained by our long-term issuer credit rating (ICR) on the lowest rated bank account provider. "We have assessed the strength of the collateral framework as weak under the criteria based on our review of the following items in the collateral support annex: (i) a lack of volatility buffers; (ii) we do not consider some types of collateral eligible under our criteria; and (iii) currency haircuts are not specified. In the case of a collateralized hedge provider that is a U.K. bank, the applicable counterparty rating under our counterparty risk criteria is the resolution counterparty rating (RCR). As a result, the maximum supported rating for the issuer's derivative exposures is limited to a counterparty's RCR. "However, our ratings are not currently constrained by our ICRs on any of the counterparties, including the liquidity facility, and bank account providers or the RCR on the derivative counterparty." Outlook S&P said, "We expect the pub sector's margins to stabilize at a new, lower equilibrium over the next 12 months as the sector grapples with demand and cost headwinds. We see a deviation in the recovery trajectory of EBITDA per pub, with tenanted pubs expected to recover to 2019 levels by 2025-2027, while managed pubs continue to remain subdued in the forecast period. We expect pub operators to continue to prioritize agility in meeting shifting consumer preferences, efficiency of their operations, and cash generation, underpinning the new margin levels and growing the maintenance covenant headroom." For many rated pub operators, their significant freehold property portfolios offer substantial operational and financial flexibility. Proceeds generated from disposals provide an additional source of funding for capital investment underpin strategic initiatives. For example, in 2024, Marston's Pubs generated GBP40.2 million from disposals of non-core asset sales. S&P still expects the quality of earnings to remain the defining factor in the pub operators' credit profile compared with the amount of real estate ownership. Downside scenario S&P said, "We may consider lowering our rating on the class A notes if their minimum projected DSCRs in our base case scenario fall below 1.20x coverage or if our downside scenario deteriorates each class's resilience-adjusted anchor. "We could also lower our rating on the class B notes if the minimum projected DSCR in our base-case scenario falls below a 1.10x coverage or if our downside scenario worsens each class's resilience-adjusted anchor. "This could be brought about if we thought Marston's Pubs' liquidity position had weakened, for example, due to a material decline in cash flows for example a materially lower tax credit that the Issuer is entitled to, a tightening of covenant headroom, or reduced access to the overall group's committed liquidity facilities. This could also happen if a deterioration in trading conditions related to a general reduction in consumers' disposable income reduces cash flows available to the borrowing group to service its rated debt. However, the quality of earnings will, in our view, be largely driven by the ability to manage inflationary cost pressures. If the borrower's revenue- and margin-driving measures are less effective in mitigating cost headwinds compared to our forecast, or if there are any challenges in working capital management leading to significant cash outflows, that would weaken CFADS, use up the existing covenant headroom, or lead to lower profitability equilibrium than expected, there may be a negative effect on our ratings on the notes." Upside scenario S&P said, "Amid ongoing macroeconomic uncertainties around weak consumer sentiment and geopolitical tensions, we do not anticipate raising our assessment of Marston's Pubs' BRP over the near to medium term. We could raise our ratings on the class A or B notes if our assessment of the borrower's overall creditworthiness improves, which reflects its financial and operational strength over the short to medium term. In particular, we would consider lower leverage and the ability to generate higher cash flows, as well as higher covenant headroom, when evaluating the scale of any improvement. Also, we could raise our ratings on the class A and B notes, if the company continues to prove resilience to and navigate cost pressures and soft consumer sentiment." TECHNIPCFMC PLC: Egan-Jones Cuts Senior Unsecured Ratings to BB+ ---------------------------------------------------------------- Egan-Jones Ratings Company on May 6, 2025, upgraded the foreign currency and local currency senior unsecured ratings on debt issued by TechnipFMC PLC to BB+ from BB. Headquartered in London, United Kingdom, TechnipFMC plc provides oilfield services. ********* 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. 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