250623.mbx

250623.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Monday, June 23, 2025, Vol. 26, No. 124 Headlines A R M E N I A UNIBANK OJSC: Moody's Upgrades LongTerm Deposit Ratings to B1 F R A N C E ALTICE FRANCE: Chapter 15 Case Summary ALTICE FRANCE: Moody's Alters Outlook on 'Caa3' CFR to Stable ALTICE FRANCE: Seeks Chapter 15 Bankruptcy With $22 Billion Debt ILIAD SA: Fitch Alters Outlook on 'BB' LongTerm IDR to Positive STAN HOLDING: Fitch Affirms & Then Withdraws 'B' IDR G E R M A N Y CHEPLAPHARM ARZNEIMITTEL: Moody's Rates New EUR500MM Sec. Notes B3 LSF10 XL: Moody's Affirms 'B3' CFR, Outlook Remains Stable H U N G A R Y WIZZ AIR: Moody's Lowers CFR to 'Ba2', Outlook Remains Negative I R E L A N D AVOCA CLO XXI: Fitch Affirms 'B+sf' Rating on Class F Notes AVOCA CLO XXXVII: Fitch Assigns 'B-(EXP)sf' Rating on Class F Notes CITYJET DESIGNATED: Court Appoints Interpath as Joint Examiners CVC CORDATUS XI: Fitch Hikes Rating on Class F Notes to 'B+sf' HAYFIN EMERALD I: Fitch Hikes Rating on Class F-R Notes to 'Bsf' HAYFIN EMERALD II: Fitch Affirms 'B-sf' Rating on Class F-R Notes MAN GLG III: Moody's Affirms Ba2 Rating on EUR19.8MM Class E Notes I T A L Y CENTRO DELLE ALPI: DBRS Confirms BB(high) Rating on M Notes POP NPL 2020: DBRS Cuts Class B Notes Rating to CCsf SAN MARINO: Fitch Alters Outlook on 'BB+' LongTerm IDR to Positive TEAMSYSTEM SPA: Fitch Rates EUR1.2-Bil. Secured Notes 'B(EXP)' L U X E M B O U R G CURIUM BIDCO: Fitch Affirms 'B' LongTerm IDR, Outlook Stable N E T H E R L A N D S DARLING GLOBAL: Fitch Rates EUR750MM Sr. Notes Due 2032 'BB+' UNIT4 GROUP: Fitch Affirms 'B' LongTerm IDR, Outlook Stable P O L A N D MBANK SA: Fitch Assigns 'BB+(EXP)' Rating on Sub. Tier 2 Notes R U S S I A BAKAI BANK: Fitch Assigns 'B-' LongTerm IDR, Outlook Stable NAVOIYURAN: Fitch Assigns 'BB-' LongTerm IDR, Outlook Stable STATE BANK FOR FOREIGN ECONOMIC: Fitch Assigns 'BB-' LongTerm IDRs S P A I N IM BCC CAPITAL 1: Fitch Hikes Rating on Class D Notes to 'BB+sf' T U R K E Y PEGASUS HAVA: Fitch Alters Outlook on BB- LongTerm IDRs to Positive U K R A I N E UKRENERGO: Fitch Affirms LongTerm IDR at 'Restricted Default' U N I T E D K I N G D O M ARMSON ENGINEERING: FRP Advisory Named as Administrators BELLIS ACQUISITION: Fitch Gives 'BB(EXP)' Rating on EUR595MM Debt BLETCHLEY PARK 2025-1: Moody's Assigns Ba1 Rating on Class E Notes LF SOLUTIONS: Begbies Traynor Named as Administrators PEPCO GROUP: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable RRE LOAN 27: Moody's Assigns (P)Ba3 Rating to EUR18.5MM D Notes SOCIETA DI PROGETTO: DBRS Confirms BB(high) Rating on Cl. A3 Notes VIDESCAPE LIMITED: TruSolv Limited Named as Administrators VMED O2 UK: Fitch Affirms 'BB-' IDR, Outlook Negative WATKINS DRINKS: Interpath Ltd Named as Administrators WOLSELEY GROUP: Fitch Assigns 'B' Final LongTerm IDR, Outlook Pos. - - - - - ============= A R M E N I A ============= UNIBANK OJSC: Moody's Upgrades LongTerm Deposit Ratings to B1 ------------------------------------------------------------- Moody's Ratings has upgraded Unibank OJSC's (Unibank) long-term local and foreign currency bank deposit ratings to B1 from B2 and changed the outlook on these ratings to stable from positive. Concurrently, Moody's upgraded the bank's Baseline Credit Assessment (BCA) and Adjusted BCA to b2 from b3, upgraded the bank's long-term local and foreign currency Counterparty Risk Ratings (CRRs) to B1 from B2, and upgraded the long-term Counterparty Risk Assessment (CR Assessment) to B1(cr) from B2(cr). In addition, Moody's affirmed the Not Prime (NP) short-term local and foreign currency bank deposit ratings, NP short-term local and foreign currency CRRs and the NP(cr) short-term CR Assessment. RATINGS RATIONALE The upgrade of Unibank's BCA and Adjusted BCA to b2 from b3 is driven by a significant improvement in loan book quality and profitability over the last two years, while maintaining strong liquidity buffers. The upgrade of the bank's long-term local and foreign currency bank deposit ratings to B1 from B2 follows the upgrade of the BCA. Since 2022 Unibank has materially decreased the share of its problem loans (PLs; defined as Stage 3 lending under IFRS 9) and improved provisioning coverage thanks to partial repayments and write-offs of its legacy corporate portfolio. As a result, the PL ratio has declined to 3.2% as of year-end 2024 from 18.9% at the end of 2022. Meanwhile problem loan coverage has improved to 88% from 43% over the same period. In Moody's views, the current loan portfolio is now of more robust credit quality with lower credit concentrations. Unibank improved its profitability, in terms of return on tangible assets to 2.3% in 2024 from 1.4% in 2023 and 1.1% in 2022. The net financial result of AMD8.2 billion last year was largely driven by net interest income amid 35% growth in the loan portfolio. The bank's recurring revenue will continue to improve in the next 12-18 months thanks to stronger net interest margin and fee and commission income stemming from growing loan portfolio and transaction business. Unibank's capital adequacy remains modest compared to local peers with Tangible Common Equity (TCE)/risk-weighted assets (RWA) ratio at 10.2% compared with 10.4% at the end of 2022. Moody's expects capital adequacy will remain broadly flat and within a 10%-11% range over the next 12-18 months amid ongoing loan book growth and dividend payouts. The bank has remained reliant on customer deposits, while the share of market funding amounted to 12% of tangible assets as of year-end 2024 compared with 9% as of year-end 2022. Unibank maintains a healthy liquidity cushion at 31% of total assets as of year-end 2024 broadly flat compared with year before. Unibank's B1 long-term foreign and local currency deposit ratings are based on the bank's b2 BCA, and Moody's assessments of a moderate probability of government support for the bank in the event of need. This is attributed to the bank's market share of about 5% in retail deposits, which translates into one notch of rating uplift to Unibank's long-term deposit ratings. RATING OUTLOOK The outlook on Unibank's long-term deposit ratings is stable, reflecting Moody's views that the bank will maintain its sound fundamentals over the next 12-18 months. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Unibank's BCA could be upgraded if there is a material improvement in the bank's capital adequacy and asset quality while maintaining robust profitability and liquidity cushion. The upgrade of the long-term deposit ratings is unlikely, as the notching uplift resulting from moderate government support will diminish at a higher level of the bank's BCA. The stable outlook on the long-term deposit ratings of Unibank could be changed to negative, or its BCA could be downgraded if there were signs of erosion of the bank's financial fundamentals, namely asset quality, capitalisation or profitability. Unibank's long-term deposit ratings could be downgraded if the likelihood of government support diminishes due to an erosion of the bank's market share in retail deposits. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Banks published in November 2024. The net effect of any adjustments applied to rating factor scores or scorecard outputs under the primary methodology(ies), if any, was not material to the ratings addressed in this announcement. =========== F R A N C E =========== ALTICE FRANCE: Chapter 15 Case Summary -------------------------------------- Nine affiliates that concurrently filed voluntary petitions for relief under Chapter 15 of the Bankruptcy Code: Debtor Case No. ------ -------- Altice France S.A. (Lead Case) 25-11349 16, rue du General Alain de Boissieu 75015 Paris, France Altice B2B France SAS 25-11351 Completel SAS 25-11352 SFR Fibre SAS 25-11353 SFR Presse Distribution SAS 25-11354 SFR Presse SAS 25-11355 Societe Francaise du Radiotelephone – SFR SA 25-11356 Ypso France SAS 25-11357 Numericable U.S. LLC 25-11358 Business Description: Altice France is a telecommunications operator that provides high-speed internet, digital and analog television, fixed-line, and mobile telephone services across France. It serves over 26 million customers, including government, residential, and business clients. Founded in 2002, the Company expanded through acquisitions such as Numericable and SFR, and operates as a subsidiary of Luxembourg-based Altice France Holding S.A. Chapter 15 Petition Date: June 17, 2025 Court: United States Bankruptcy Court Southern District of New York Judge: Hon. Michael E Wiles Foreign Representative: Laurent Halimi 16, rue du General Alain de Boissieu, 75015 Paris, France Foreign Proceeding: Sauvegarde Acceleree reorganization proceedings under French law currently pending before the Tribunal des Activites Economiques de Paris (Commercial Court of Paris, France) Foreign Representative's Counsel: Ryan Preston Dahl, Esq. Daniel Gwen, Esq. Lucas Brown, Esq. ROPES & GRAY LLP 1211 Avenue of the Americas New York, NY 10036 Tel: (212) 596-9000 Fax: (212) 596-9090 Email: ryan.dahl@ropesgray.com daniel.gwen@ropesgray.com lucas.brown@ropesgray.com Estimated Assets: Unknown Estimated Debt: Unknown A full-text copy of the Lead Debtor's Chapter 15 is available for free on PacerMonitor at: https://www.pacermonitor.com/view/3I7LX3Q/Altice_France_SA_and_Laurent_Halimi__nysbke-25-11349__0001.0.pdf?mcid=tGE4TAMA ALTICE FRANCE: Moody's Alters Outlook on 'Caa3' CFR to Stable ------------------------------------------------------------- Moody's Ratings has downgraded to D-PD from Ca-PD the probability of default rating of Altice France Holding S.A. (Altice France Holding), the parent company of French telecom operator Altice France S.A. (Altice France). Concurrently, Moody's have affirmed the Caa3 long-term corporate family rating, the C ratings on the senior unsecured instruments issued by Altice France Holding, and the Caa2 ratings on the backed senior secured and senior secured bank credit facilities instruments issued by Altice France. The outlook on both entities have been changed to stable from negative. The rating action follows the missed interest payment on May 15, 2025, for Altice France Holding's 2027 senior unsecured bonds, which had a 30-day grace period and the announced suspension of debt service on all classes of debt. The issuer started an accelerated safeguard proceedings on June 10, 2025 for an initial period of two months[1]. Moody's will reassess Altice France Holding's CFR, PDR and instrument ratings upon the completion of the proposed debt restructuring transaction. RATINGS RATIONALE Moody's have changed the outlook on the ratings to stable from negative to reflect Moody's expectations that it is unlikely that creditors will incur losses higher than those incorporated into the current ratings. The Caa3 CFR reflects Altice France Holding's unsustainable capital structure before the restructuring, given the high leverage and its weak free cash flow, the competitive nature of the French market, and the complexity of the group structure. The Caa2 backed senior secured and senior secured bank credit facilities instruments issued by Altice France incorporates recovery expectation for creditors below 90% in line with the proposed transaction. The C on the senior unsecured instruments issued by Altice France Holding incorporates recovery below 35% in line with the proposed transaction. The recovery rates could be higher, including the indirect equity stake in Altice France. LIQUIDITY At March 2025, Altice France Holding had EUR3 billion of cash at pro forma for the full drawing of the EUR1.2 billion revolving credit facility. Debt maturities over the 2025-26 period totals approximately EUR1.8 billion. If the restructuring is completed as planned, total cash will amount to EUR1.4 billion, which mostly includes the full drawdown of the EUR1.2 billion RCF. The first significant debt maturity will be in 2028 when EUR1 billion of bonds mature. RATIONALE FOR STABLE OUTLOOK The stable outlook reflects Moody's views that it is unlikely that creditors will incur losses higher than those incorporated into the current ratings. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Upward pressure could develop if the company delivers a solid operating performance with sustainable revenue and EBITDA growth, which combined with the completion of the debt restructuring, leads to a more sustainable capital structure. The ratings could be downgraded if expected recovery rates for lenders are lower than Moody's current expectations. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Telecommunications Service Providers published in November 2023. Altice France Holding's Caa3 rating is four notches below the scorecard-indicated outcome of B2, reflecting the company's unsustainable capital structure and expected recoveries for creditors assuming the planned restructuring is completed as planned. COMPANY PROFILE Altice France is a leading telecom operator in France. In 2024, the company had 19.4 million mobile subscribers and 6.1 million fixed-line subscribers, of which 5.1 million were fast-fibre connections. In 2024, Altice France reported revenue and adjusted EBITDA (as defined by the company) of EUR10.1 billion and EUR3.4 billion, respectively. ALTICE FRANCE: Seeks Chapter 15 Bankruptcy With $22 Billion Debt ---------------------------------------------------------------- Yun Park of Law360 reports that Altice France SA has petitioned a New York bankruptcy judge to acknowledge its insolvency case in France, pointing to over 19.2 billion euros ($22 billion) in debt and financial strain caused by rising expenses and heightened competition. About Altice France SA Altice France provides wireless telecommunication services. The Company offers fiber optic network solutions for all type of media. Altice France serves customers in France. Altice France sought relief under Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No. 25-11349) on June 17, 2025. Honorable Bankruptcy Judge Michael E. Wiles handles the case. The Debtor is represented by Ryan Preston Dahl, Esq. at Ropes & Gray LLP. ILIAD SA: Fitch Alters Outlook on 'BB' LongTerm IDR to Positive --------------------------------------------------------------- Fitch Ratings has revised Iliad SA's (Iliad) and Iliad Holding S.A.S.'s Outlooks to Positive from Stable, while affirming their Long-Term Issuer Default Ratings (IDR) at 'BB'. The Positive Outlook reflects its expectation that EBITDA net leverage and cash flow from operations (CFO) less capex/gross debt are likely to trend to a 'BB+' level in 2026 and 2028. It also reflects its expectations that Fitch-defined free cash flow (FCF) will significantly increase by 2028. Excluding potential M&A, Fitch expects Iliad Holding to manage its company-defined leverage below its internal limit of 4.0x. Fitch expects that this would be broadly consistent with the upgrade thresholds of the rating. The ratings are based on a consolidated rating profile, reflecting Iliad Holding's 97% ownership of Iliad. Iliad is an integrated telecom operator present in France, Poland and Italy. Its operating profile is anchored in its French operations and considers Iliad's strong positions in Poland and its 15% share of the Italian mobile market. Key Rating Drivers Strong Market Positions: Iliad has a solid position in France, which contributed 68% of its EBITDAaL (EBITDA after leases) in 2024). This is based on the deployment of its mobile and fixed network and partnerships with infrastructure providers. Iliad is the second largest operator in fixed broadband and a number four in mobile, with 23% and 19% subscriber market shares at end-2024, respectively. Its technology and pricing innovation, alongside an industry-leading cost structure, enabled it to build a well-entrenched position in fixed broadband with strong cash generation. This is underscored by its domestic EBITDAaL margin of about 40%. In Poland, Iliad enjoys leadership in mobile and is the second largest operator in fixed broadband. Its acquisition of the Polish mobile operator, Play, in 2020 and cable operator, UPC Poland, in 2022 have enabled Iliad to create an integrated, fixed and mobile operator in Poland. Break-Even in Italy: Fitch-defined operating FCF (EBITDAaL less capex including spectrum) in Italy reached break-even in 2024 and Fitch expects it to increase to about EUR153 million in 2028. Iliad has made good progress since entering the Italian market in 2018, reaching 11.6 million mobile subscribers at end-2024. Revenues rose to EUR1.15 billion in 2024, from EUR0.7 billion in 2020, while EBITDAaL margin increased to 26.9%, from a negative 19.7%. The latter was enabled by the deployment of its own network and converting variable into fixed costs, while reducing national roaming charges. Increased Leverage Capacity: Fitch has relaxed EBITDA net leverage sensitivities by 0.1x each to 3.8x for an upgrade and to 4.4x for a downgrade. Fitch has also relaxed the CFO less capex/debt sensitivity for an upgrade to 8.5%, from 9%, and for a downgrade to 6.5%, from 7%. This reflects Iliad's strong technological and execution expertise and continued FCF improvement. Competitive French Market: The telecoms market in France has four participants with either full or partial ownership of their mobile and end-to-end fixed broadband networks. Competition in mobile has intensified since 2H24, as operators like Altice seek to stabilise their customer base. This has made profitable revenue growth through increasing subscribers harder, although Iliad has been successful in maintaining its EBITDAaL margin in France, at around 40% in 2024 by trying to find the balance between value and volume and with strong cost control. Restricted Perimeter Basis: Fitch rates Iliad Holding in line with its restricted perimeter basis as detailed in its debt indenture. Millicom International Cellular S.A. (BB+/Stable) and Atlas Investissement (through which Iliad Holding owns 40% of Millicom) are designated as unrestricted subsidiaries under Iliad Holding's documentation. Hence, in the event of a Millicom sale, the proceeds can be upstreamed to Iliad Holding shareholders and will not be accessible to its debtholders. Millicom's operations are ringfenced from Iliad and Atlas, and there are no cross-default provisions or guarantees between Iliad Holding and Millicom or between Iliad Holding and Atlas. Robust FCF Generation Ability: Fitch expects Iliad Holding's pre-dividend FCF to turn positive in 2025, increasing to almost EUR1.2 billion in 2028, or 10% of revenues. This will be supported by capex declining to around 16% of revenue in 2028, from 23% in 2024, due mainly to the nearing completion of the fibre and 5G network rollout in France. FCF generation will also be supported by increased dividends from affiliates and joint ventures (Millicom, Tele2, eircom and IFT), averaging almost EUR200 million a year in 2025-2028. Strong Deleveraging Capacity: EBITDA net leverage remained broadly stable, at 4.3x in 2024, despite spending EUR1.1 billion on M&A (a minority stake in Tele2 and financing part of the acquisition of Millicom shares). Its rating case envisages a deleveraging capacity of about 0.3x-0.4x a year for Illiad Holding, supported by improved FCF generation. Fitch expects EBITDA net leverage to decrease to 3.7x at end-2026, below its upgrade threshold of 3.8x, and further to 3.0x by end-2028. This assumes modest dividends and no M&A. Improving CFO Less Capex/Gross Debt: Fitch expects CFO less capex/gross debt to be about 1%-4% in 2025-2027 and to increase to 8.7% in 2028, versus its upgrade threshold of 8.5%. This reflects a considerable improvement on its historically negative trend due to high network investments in France and Italy. The metric improvement will be driven by a deceleration in capex intensity and its expectation that the company would use part of its FCF for debt deduction. Consolidated Rating Approach: Fitch sees a strong linkage between Iliad Holding and Iliad, its stronger subsidiary, based on its Parent Subsidiary Linkage (PSL) Criteria. Iliad Holding's ownership and control of Iliad lead to 'open' access and control, while covenant restrictions in its bank loan indentures are not strong enough on their own to establish effective ringfencing. Iliad's Standalone Credit Profile (SCP) is one notch higher than the consolidated rating profile at 'bb+', due to lower leverage at the operating subsidiary. Peer Analysis Iliad's operating profiles in France and Poland are broadly in line with those of other alternative telecoms operators with well-entrenched domestic positions and varying degrees of ownership of both fixed- and-mobile network assets, such as The Sunrise Holding Group (BB-/Positive), Telenet Group Holding N.V (BB-/Stable) and VMED O2 UK Limited (BB-/Negative), although Iliad owns only 50% of its fixed network in Poland. Iliad Holding's and Iliad's higher IDRs reflect their lower leverage. Fitch rates Iliad Holding and Iliad on a par with Masorange Holdco Limited (BB/Positive). The loosening of the EBITDA net leverage sensitivities for Iliad Holding and Iliad has brought them largerly in line with those of the latter. Masorange has a stronger market position, following the merger between MasMovil and Orange Spain (with above a 40% consolidated market share in Spain, in fixed broadband and mobile) and full ownership of its fixed and mobile infrastructure. Iliad is more geographically diversified than Masorange and benefits from a fibre co-investment model in France but it operates in a more competitive French market and is building scale in Italy. Iliad's operating profile is weaker than that of domestically focused incumbent operators, such as Royal KPN N.V. (BBB/Stable). The stronger operating profile of incumbent operators reflects their higher service revenue market share in mobile and fixed, network infrastructure ownership, network scale economics of servicing of all subsectors and a market structure dominated by two to three overlapping mobile or local loop network infrastructures. Key Assumptions - Revenue to rise 4%-4.5% in 2025-2028. - Fitch-defined EBITDA margin of 34%-35% in 2025-2028. - Net dividends received from associates less dividends paid to minority shareholders at Iliad Holding consolidated level (restricted perimeter) averaging at almost EUR150 million a year in 2025-2028. - Capex including spectrum at about 21% of revenue in 2025, gradually declining to around 16% by 2028. - Dividends paid by Iliad Holding of EUR200 million in 2025 and EUR100 million a year in 2026-2028. - Proceeds from divestitures of EUR430 million in 2025. - No M&A in 2025-2028. - Net debt repayment at Iliad Holding consolidated level (restricted perimeter) of about EUR3 billion cumulatively in 2025-2028. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Iliad Holding's consolidated Fitch-defined EBITDA net leverage above 4.4x on a sustained basis - CFO less capex consistently at or below 6.5% of gross debt - Iliad Holding's EBITDA (excluding Iliad, including interest earned from inter-company loans) below 1.5x gross interest - A major erosion of Iliad's market share in mobile or fixed broadband in France and Poland and operating FCF Factors that Could, Individually or Collectively, Lead to Changing the Outlook to Stable - Expectations that the company will manage leverage at the higher end of Iliad Holdings financial policy of 4x company-defined EBITDA net leverage - Delays in FCF growth that prevents sufficient improvement in CFO less capex / gross debt Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Sustained competitive position in France and Poland and improved scale in Italy underscored by considerable positive FCF generation - Iliad Holding's consolidated Fitch-defined EBITDA net leverage below 3.8x on a sustained basis - Iliad Holding's consolidated CFO less capex consistently at or above 8.5% of gross debt - Iliad Holding's EBITDA (excluding Iliad, including interest earned from inter-company loans) above 2x gross interest Liquidity and Debt Structure Iliad has comfortable liquidity, with cash and cash equivalents of almost EUR1 billion at end-2024 and undrawn revolving credit facilities (RCF) at Iliad of EUR2 billion available until July 2029 and at Play of EUR500 million. In addition, Iliad had a EUR300 million available credit line from EIB. This should be more than sufficient to cover about EUR3.5 billion of debt maturing in 2025-2026. In 2Q25, the company extended maturities at Play to 2030 from 2026. At end-March 2025 Iliad had EUR4.4 billion of liquidity (including cash and available credit facilities), which is enough to cover debt maturities in 2025-2027. Iliad Holding had an undrawn EUR300 million revolving credit facility maturing in January 2028 and cash and cash equivalents of EUR172 million at end-2024. Fitch expects Iliad Holding to receive about EUR500 million in dividends from Iliad in 2025 and about EUR300 million a year in 2026-2028. Fitch also expects Iliad Holding to receive more than EUR110 million in dividends from Tele2 and Atlas. This comfortably covers annual interest payments and other company net outflows expected in 2025-2028. At end-2024, Iliad Holding had EUR1.5 billion maturing in 2028. Fitch-defined consolidated gross debt was EUR16.5 billion at end-2024, of which EUR11.2 billion was issued by Iliad and the remainder by Iliad Holding. The level of gross debt issued by the former leads to structural subordination of the debt issued by the holding company. As result, the debt issued by the latter is rated one notch lower than its IDR. Issuer Profile Iliad Group is one of Europe's leading telecoms operators, with more than 50.5 million subscribers in France, Poland and Italy and EUR10 billion in revenues in 2024. MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Iliad SA LT IDR BB Affirmed BB senior unsecured LT BB Affirmed RR4 BB Iliad Holding S.A.S. LT IDR BB Affirmed BB senior secured LT BB- Affirmed RR5 BB- STAN HOLDING: Fitch Affirms & Then Withdraws 'B' IDR ---------------------------------------------------- Fitch Ratings has affirmed Stan Holding SAS's (Voodoo) Long-Term Issuer Default Rating (IDR) at 'B' with a Stable Outlook and removed the ratings from Rating Watch Negative. Fitch has simultaneously withdrawn all ratings. The RWN removal reflects the completed refinancing with the EUR220 million senior secured term loan B (TLB) fully repaid with a combination of available cash on balance and new loans. This has improved the company's financial flexibility with a longer-dated debt structure. The affirmation reflects Voodoo's evolving business model towards hybrid and casual games that has resulted in improved revenue visibility balanced by its small scale, opportunistic M&A strategy with high execution risks, fierce competition and limited platform and genre diversification. The ratings are supported by structural growth drivers in mobile game consumption, Voodoo's niche market position, and moderate Fitch-defined leverage, despite an aggressive financial policy. The IDR has been withdrawn for commercial reasons. The instrument ratings have been withdrawn because the senior secured debt has been fully redeemed. Key Rating Drivers Completed Refinancing: Voodoo has fully repaid the EUR220 million TLB with a combination of cash on balance and EUR179 million new loans. This has improved the company's debt and leverage profile by extending its maturity profile with final maturities in 2029 and 2030. Half of the new debt is amortising over four to five years supporting fast deleveraging in 2026 to 2028. Improving Leverage: Voodoo's Fitch-defined EBITDA leverage improved to 4.8x at end-2024 from 70x at end-2022, supported by revenue growth and higher profitability. Voodoo demonstrates strong capacity to deleverage organically, with leverage expected to remain below its negative sensitivity of 4x in 2025. This is primarily driven by EBITDA growth and partial debt repayment. Positive FCF: Fitch expects Voodoo's free cash flow (FCF) will remain positive at 3% of revenue in 2025, supported by increasing EBITDA and low capex, which are partly offset by interest payments and working capital outflows. Positive FCF supports the rating and enables the company to pay down debt. Successful Turnaround: Voodoo has turned around its finances, with its Fitch-defined EBITDA margin rebounding to an estimated 10% in 2024 from 0.8% in 2022, supported by higher revenue due to hybrid hits. The company has diversified from hyper-casual to hybrid and casual games after the tightening of Apple's privacy policy and slowing growth in hyper games. This makes Voodoo less reliant on ads and improves revenue visibility, with a higher share of in-app purchases, at 45% of revenue in 2024, up from 1% in 2021. Execution Risks from BeReal: The acquisition of BeReal has execution risks, given the social media application's limited revenue generation. Efforts to monetise the platform will take time and could encounter challenges if the user base continues to decline. It also increases Voodoo's exposure to revenues from advertising that are more volatile than in-app purchase revenue streams. If successful, the newly acquired app will contribute to Voodoo's revenue and EBITDA growth and improve product diversification. Fitch assumes BeReal will be loss-making in 2025. Small Scale: The rating is constrained by Voodoo's small scale, with estimated Fitch-defined EBITDA of EUR63million and FCF of EUR14 million in 2024. The video game industry is inherently hits-driven, which increases the volatility of cash flows. Voodoo manages this risk with data analysis, which helps it shift focus and efforts towards more successful projects. Its entry into the hybrid casual games market has diversified its active user base and generated additional revenue from in-app purchases. Supportive Industry, Fierce Competition: The mobile gaming market is fragmented and competitive due to low barriers to entry and attractive growth. The market is expected to expand at mid-single digits in 2025-2027, based on various market research data, and is set to be the fastest growing subsector in consumer spend. Voodoo is number three based on downloads, but the company's overall share of the mobile gaming market is limited. Dependence on Distribution Platforms: The tightening of Apple's privacy policy highlights the risks of Voodoo's high dependence on two major distribution platforms - Apple's App Store and Google Play. As an experienced publisher, Voodoo can tackle newly introduced changes and adapt better than smaller market participants. Fitch believes that Apple's change in policy has a structural impact on the mobile game subsector and expect higher customer acquisition costs in the hyper-casual, hybrid and casual subsectors. Peer Analysis Voodoo's peers in the broader gaming sector, such as Electronic Arts Inc. (A-/Stable) and Activision Blizzard (acquired by Microsoft Corporation in 2023), have far larger scale and more robust portfolios of established gaming franchises. They benefit from diversification by game console, PC and mobile revenues; low leverage; and strong FCF generation. Voodoo has higher revenue growth prospects than similarly sized companies exposed to TV, video and visual effects production, like Banijay S.A.S. (B+/Stable; standalone credit profile (scp) of 'b') and Subcalidora 1 S.a.r.l. (Mediapro; B/Stable). However, Banijay, one of the largest independent TV production companies, has more resilient income and a more diversified revenue and distribution platform. Mediapro, the Spain-based vertically integrated sports and media group, has stronger regional sector relevance, which is offset by limited diversification leading to high contract renewal risk, and by weaker FCF than Voodoo. Voodoo's rating is also comparable with that of the wider Fitch-rated technology group like IDEMIA Group S.A.S. (B/Stable), TeamSystem S.p.A. (B/Stable), and Unit4 Group Holding B.V. (B/Stable). Voodoo has lower revenue visibility than TeamSystem and Unit4, while IDEMIA benefits from a larger global scale and higher barriers to entry. Key Assumptions - Revenue growth of 16% in 2025 and 5% a year in 2026-2027 - Fitch-defined EBITDA margin of 10% in 2025-2027 - Cash capex (excluding development costs, which are expensed by Fitch) at 1% of revenue a year in 2026-2027 - Working capital outflows of 1%-2% of revenue a year between 2025 and 2027 - No dividend payments in 2025-2027 - M&A activity to be funded with FCF and equity Recovery Analysis Key Recovery Assumptions Not applicable as Fitch is not rating the new instruments. RATING SENSITIVITIES Not applicable as the ratings have been withdrawn. Liquidity and Debt Structure As of end-2024, Voodoo had EUR101 million of cash and cash equivalents. After the refinancing, the final maturities have been extended until 2029-2030 with EUR89 million amortising over the next four to five years. Issuer Profile Voodoo is a global mobile games publisher. 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 Stan Holding SAS has an ESG Relevance Score of '4' for Management Strategy due to an aggressive M&A strategy with high execution risks, 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. Following the rating withdrawal Fitch will no longer provide ESG scores for the company. Entity/Debt Rating Prior ----------- ------ ----- Stan Holding SAS LT IDR B Affirmed B LT IDR WD Withdrawn senior secured LT WD Withdrawn B+ ============= G E R M A N Y ============= CHEPLAPHARM ARZNEIMITTEL: Moody's Rates New EUR500MM Sec. Notes B3 ------------------------------------------------------------------ Moody's Ratings has assigned a B3 instrument rating to the EUR500 million backed senior secured notes due in 2031 issued by Cheplapharm Arzneimittel GmbH (Cheplapharm or the company). The company's other ratings, including its long-term corporate family rating of B3, probability of default rating of B3-PD, the senior secured and backed senior secured instrument ratings of B3, are not affected by this rating action. The outlook is also unaffected at stable. Cheplapharm intends to use the proceeds of the new notes to refinance the EUR500 million senior secured notes due in 2027. Moody's expects that credit metrics will remain largely unchanged with the contemplated refinancing transaction. RATINGS RATIONALE The B3 rating of the new backed senior secured notes reflect their pari passu ranking with Cheplapharm's existing senior secured debt. Moody's views positively that the company is proactively addressing its debt maturities well ahead of maturity. Cheplapharm's B3 rating continues to reflect its good therapeutic and geographical diversification and solid cash flow generation, supported by its asset light business model, although it is currently depressed by its operational issues which have been stabilising this year. The B3 rating remains constrained by the company's structural earnings decline in its existing off-patent product portfolio, prompting it to make product acquisitions to maintain or grow revenue, and an aggressive financial policy, with multiple debt-funded acquisitions undertaken in recent years, which have led to operational issues and delayed planned synergies. RATING OUTLOOK The stable outlook reflects Moody's expectations that Cheplapharm will be able to stabilise its operating performance within the next 12-18 months but that its credit metrics will meanwhile remain in line with a B3. The stable outlook also considers the maintenance of an adequate liquidity. LIQUIDITY Moody's expects Cheplapharm's liquidity to remain adequate in the next 12-18 months. The company had a cash balance of EUR173 million as of March 31, 2025 and Moody's expects it to generate annual Moody's-adjusted free cash flow (FCF) of EUR100- EUR150 million in the same period. Following the proposed refinancing, Cheplapharm's next large debt maturities are about EUR1 billion of senior secured notes due in January 2028. Cheplapharm has a EUR695 million senior secured revolving credit facility (RCF) due in February 2028 which has a springing maturity, ensuring that the senior secured RCF always matures before the remaining senior secured debt, pro forma the proposed refinancing. Earliest maturity date for the senior secured RCF is October 2027. The senior secured RCF is also subject to a springing covenant, which requires the company to maintain net senior secured debt/EBITDA of less than 6.0x if at least 40% of the senior secured RCF is drawn. The RCF was drawn at EUR250 million as of March 31, 2025. Cheplapharm's meets the covenant limit, but its leeway has reduced over the past few quarters. Moody's caution that if its net senior secured debt/EBITDA further increases, this could limit the access to its RCF to 40% of its size. STRUCTURAL CONSIDERATIONS Cheplapharm's debt comprises a senior secured term loan B, backed senior secured notes, senior secured notes, as well as a senior secured RCF, all rated B3 in line with the CFR. All these debt instruments have been issued by Cheplapharm, which is also the main operating company of the group, and they share the same collateral, which includes a first-priority pledge over Cheplapharm's shares as well as pledges over bank accounts and intercompany receivables. Moody's views this security package as relatively weak and therefore consider these debt instruments as unsecured in Moody's loss given default analysis. Moody's uses a family recovery rate of 50% appropriate for a debt structure comprising bank and bond debts. Cheplapharm's capital structure also comprises EUR500 million of shareholder loan which Moody's treats as equity. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING Moody's could upgrade Cheplapharm's rating if it is able to resolve its operational issues and stabilise its business, returning to the revenue trends it used to have, namely an organic revenue decline of about 3-5% per annum, and normalise its working capital needs. Quantitatively, Moody's would upgrade the rating if Cheplapharm maintains its Moody's-adjusted debt/EBITDA ratio below 5.5x and its cash flow from operations (CFO)/debt ratio above 10% on a sustained basis. An upgrade would also require the company to demonstrate a more cautious acquisition strategy. Conversely, Moody's could downgrade Cheplapharm's rating if it is not able to resolve its operational issues and its revenues continue to decline at higher rates than in the past. Quantitatively, Moody's could downgrade Cheplapharm's rating if it does not maintain a Moody's-adjusted debt/EBITDA ratio comfortably below 7.0x, or if its CFO/debt ratio remains below 5% for a prolonged period. Failing to maintain adequate liquidity, including a well spread debt maturity profile and timely refinancing of upcoming maturities, or a material deterioration in interest coverage metrics could also trigger negative pressure on the rating. PRINCIPAL METHODOLOGY The principal methodology used in this rating was Pharmaceuticals published in November 2021. COMPANY PROFILE Headquartered in Greifswald, Germany, Cheplapharm is a company focused on the marketing of off-patent, branded, prescription and niche drugs. Its business model relies on its ability to buy products with sufficient earnings potential at the right price, and the outsourcing of its production and distribution to reliable third parties. Cheplapharm's asset-light operations enable it to generate high cash flow, which it reinvests into new products, offsetting the structural earnings decline in its existing portfolio. In the 12 months that ended March 2025, the company generated EUR1.5 billion in revenue and company-adjusted EBITDA of EUR733 million. Cheplapharm is 50:50 owned by Sebastian Braun (Co-CEO of the group) and Bianca Juha (Chief Scientific Officer). LSF10 XL: Moody's Affirms 'B3' CFR, Outlook Remains Stable ---------------------------------------------------------- Moody's Ratings has affirmed the B3 long term Corporate Family Rating and B3-PD Probability of Default Rating of LSF10 XL Investments S.a r.l. (Xella). Moody's also affirmed the B3 rating of the backed senior secured term loan B4 (TL B4) and the backed senior secured revolving credit facility (RCF) due in 2027 issued by the guaranteed subsidiary LSF10 XL Bidco SCA. Concurrently, Moody's have assigned B3 ratings to a new backed senior secured term loan B5 (TL B5) and a new backed senior secured RCF due in 2030 to be issued by LSF10 XL Bidco SCA in a proposed amend-and-extend transaction (the Transaction). The outlook on both entities remains stable. RATINGS RATIONALE The affirmation of Xella's B3 CFR with a stable outlook recognizes the company's proactive approach to addressing refinancing risk. The Transaction aims to push Xella's substantial debt maturities, totaling about EUR1.7 billion, from 2028 to 2031, while also extending the maturity of its RCF from 2027 to 2030. The rating assumes that any remaining portion of the outstanding TL B4 due in 2028 will not be substantial and that Moody's-adjusted interest expense will remain broadly unchanged at around 6.0%-6.5% of adjusted debt. This rating action also highlights the decisive operational restructuring that Xella has executed during a severe downturn that started in the second half of 2022 without an increase in net debt. It managed to offset around EUR60 million in cumulative negative Moody's-adjusted free cash flow (FCF) over 2023 and 2024 — roughly equal to restructuring charges — through asset disposals. Xella has implemented various measures, including optimization of production network and personnel reduction, estimating EUR95 million in fixed and semi-fixed cost savings since 2022. These actions enhance operating leverage ahead of a market recovery. Although Xella's volumes are likely to gradually recover over the next 12-18 months, Moody's still expect them to remain about 20% below the 2021 peak in 2026. Moody's forecasts the company's Moody's-adjusted EBITDA to improve to around EUR170 million in 2025 and EUR230 million in 2026, including ongoing restructuring charges. Under this scenario, key Moody's-adjusted metrics in 2026, such as gross debt/EBITDA around 8x and EBITA/interest around 1.3x, will remain rather weak for the B3 rating. Xella's very good liquidity with sizeable excess cash is a mitigant. As of March 2025, it held around EUR230 million in cash and equivalents — well above about EUR20 million working cash need — alongside EUR260 million available under a EUR283.05 million RCF and around EUR20 million from ancillary facilities. These sources will comfortably cover its funding needs over the next 12–18 months, even accounting for seasonal cash flow patterns. There are no major debt maturities before the TL B4 is due. As activity rebounds, Xella will likely increase growth investments and rebuild working capital. Moody's forecasts negative Moody's-adjusted FCF around EUR30 million in 2025, which the company intends to largely offset through further asset sales, with an improvement to roughly breakeven in 2026. Although Xella has not made major acquisitions since URSA in 2018, M&A remain a risk in its fragmented addressable market. The B3 CFR may absorb smaller, cash-funded deals but has limited capacity for larger, debt-funded transactions or dividends to its shareholders. Despite the stable outlook, Xella's B3 CFR remains weakly positioned. While several markets have stabilized showing early signs of recovery, clear evidence of a major broad-based rebound remains limited. Furthermore, US tariffs could indirectly hinder the market recovery by dampening GDP growth and consumer confidence. Xella must also demonstrate its ability to maintain a leaner, more flexible cost structure and return to sustained positive adjusted FCF once market activity picks-up. ESG CONSIDERATIONS Governance considerations were among the key drivers of this rating action, which recognizes Xella's proactive approach to managing debt maturities and preserving liquidity. STRUCTURAL CONSIDERATIONS Xella's term loans as well as its RCFs are rated B3, in line with the CFR. In Moody's Loss Given Default (LGD) assessment, Moody's rank these instruments pari passu with Xella's trade payables, because they are guaranteed by operating subsidiaries accounting for at least 80% of the restricted group's assets and EBITDA. There are payment-in-kind notes outside of Xella's restricted group for an undisclosed amount. Although Moody's do not include them in the company's leverage calculation nor in the LGD assessment, Moody's considers their existence as credit negative. The B3 CFR assumes that their maturity will be also prolonged by three years. COVENANTS Moody's have reviewed the marketing draft terms for the TL B5. Notable terms include the following: -- Guarantor coverage will be at least 80% of consolidated EBITDA (determined in accordance with the agreement) and include all companies representing 5% or more of consolidated EBITDA. Companies incorporated in Bosnia and Herzegovina, China, Kosovo, Mexico, Romania, Russia, Serbia and Turkey are not required to provide guarantees or security. Security will be granted over key shares material bank accounts and key receivables. -- Unlimited pari passu debt is permitted up to a secured net leverage ratio of 5.0x, and unlimited total debt is permitted subject to a 2x fixed charge coverage ratio or a 5.0x total net leverage ratio. Unlimited restricted payments are permitted if the total net leverage ratio is 4.0x or lower. -- Adjustments to consolidated EBITDA include the full run rate of cost savings and synergies believed to be realisable within 24 months of the relevant event, uncapped but certified by the CFO or CEO where exceeding 10% of EBITDA and by accountants where exceeding 15% of EBITDA. The above are proposed terms, and the final terms may be materially different. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Moody's could upgrade Xella's B3 CFR, if it reduced its Moody's-adjusted gross debt/EBITDA well below 6.0x and increased its Moody's-adjusted EBITA/interest towards 1.75x on a sustained basis. The upgrade would also require Xella returning to sustained positive adjusted FCF, while maintaining comfortable liquidity. Conversely, Moody's could downgrade Xella's B3 CFR if it failed to improve its Moody's-adjusted gross debt/EBITDA below 7.5x and its Moody's-adjusted EBITA/interest above 1.0x. Moody's could temporarily accept weaker metrics if mitigated by sizeable excess cash. Sustained negative adjusted FCF or aggressive capital allocation impairing liquidity, for instance because of dividends, could also increase negative pressure. The principal methodology used in these ratings was Building Materials published in September 2021. The net effect of any adjustments applied to rating factor scores or scorecard outputs under the primary methodology(ies), if any, was not material to the ratings addressed in this announcement. COMPANY PROFILE Headquartered in Duisburg, Germany, Xella is a leading European provider of wall-building materials, such as autoclaved aerated concrete and calcium silicate units. In 2024, it generated around EUR1.0 billion in revenue. Xella was acquired by funds managed by the private equity firm Lone Star in a secondary leveraged buyout in April 2017. ============= H U N G A R Y ============= WIZZ AIR: Moody's Lowers CFR to 'Ba2', Outlook Remains Negative --------------------------------------------------------------- Moody's Ratings has downgraded Wizz Air Holdings plc's (Wizz Air) long-term corporate family rating to Ba2 from Ba1. Concurrently, Moody's downgraded Wizz Air's Probability of Default rating to Ba2-PD from Ba1-PD and Wizz Air Finance Company BV's backed senior unsecured notes as well as the backed senior unsecured medium term note program ratings to Ba2 from Ba1 and to (P)Ba2 from (P)Ba1, respectively. The outlook on both entities remains negative. "The rating action reflects the company's ongoing weak point-in-time credit metrics with a slower than expected recovery driven by the high level of groundings from the GTF engine issue that lead to higher costs beyond the agreed compensation levels" says Dirk Goedde, a Moody's Ratings Vice President – Senior Analyst and lead analyst of Wizz Air. "The grounding of aircraft has significantly hindered Wizz Air's growth plans, which are essential for improving profitability. The airline relies on growth to offset rising operating and inflation-related costs, but this strategy is undermined by its inability to fully utilize its fleet.", Mr. Goedde continued. RATINGS RATIONALE Wizz Air's financial performance in its fiscal year 2025 was weaker than expected and its financial metrics remained outside of the Ba1 rating category. Despite Wizz Air growing its total fleet, the full-year effect of the groundings from the GTF engine issue has reduced the planned expansion of its operating fleet so that the company's capacity as measured by available seat kilometers (ASK) was flat in FY25. While an improvement in load factor by 1pp to 91.2% and increase in yields catered for 4% revenue growth, structural cost increases did impact its profitability with Moody's adjusted EBIT-margin declining to 2.8% from 5.8%. Such increases included higher staff and network related costs but also higher indirect costs from the groundings such as higher maintenance costs as well as higher depreciation of the growing fleet albeit around 20% was not operational. While Moody's believes that the company can return to its previous growth pattern from new deliveries and the grounded part of its fleet being gradually reduced, credit metrics will remain subdued in the next 12-18 months. Based on the recent delivery schedule and under the assumption that the company will further improve load factors against slightly lower yields to stimulate demand while RASK (revenue per average seat kilometer) continues to grow, Moody's forecasts revenue growth of 12% and 10% in fiscal year 2026 and 2027 respectively. Although Moody's believes that the recently lower fuel prices will support a margin recovery, cost increases for staff and network will persist leading to an increase in its Moody's adjusted EBIT-margin towards 5% in 2026 with some upside thereafter. This increase leads to an improvement in Wizz Air's Moody's adjusted debt/EBITDA towards 5.0x and 4.8x in 2026 and 2027 respectively, from 5.9x in fiscal year 2025. Considering the ongoing fleet expansion, Moody's expects ongoing negative Moodys-adjusted free cash flow generation which will be compensated for by cash gains from sale-and-leaseback transactions (depending on the company's financing decisions) and contracted PDP refunds – both of which are excluded from Moodys adjusted free cash flow. More general, Wizz Air's rating remains supported by the company's superior cost base, its efficient fleet and focus on the growing CEE aviation market. The company's expansionary strategy remains unchanged and will benefit from these supportive factors, although it will require some time for new routes to become profitable and Moody's cannot rule out a margin of error as Wizz Air executes this growth strategy. Wizz Air's rating is also supported by the company's strong liquidity profile. The company had around EUR1.7 billion available cash and cash equivalents on balance sheet as per End of March 2025 or 32% of fiscal year 2025 revenue. Liquidity is deemed more than sufficient to maneuver through a 12-month period of weak operating conditions if market conditions deteriorate. Wizz Air faces debt maturities of EUR500 million backed senior unsecured notes in January 2026, issued by Wizz Air Finance Company BV and EUR272 million ETS repurchase obligation due in March 2026, with the latter being expected to be rolled over at maturity. OUTLOOK The negative outlook reflects credit metrics outside of the requirement for a Ba2 rating (e.g. Debt/EBITDA below 5.0x) and risks around a recovery and successful adoption of the expansion given the volatility in the industry. Moody's may stabilize the outlook if Wizz Air credit metrics in line with Moody's base case and absent any external negative effects. STRUCTURAL CONSIDERATIONS Wizz Air Finance Company BV's backed senior unsecured notes are rated Ba2, at the same level of Wizz Air's CFR, in line with Moody's Loss Given Default for Speculative-Grade Companies (LGD) methodology published in December 2015. This reflects the fact that the majority of the financial debt of Wizz Air is senior unsecured and issued by a finance subsidiary backed by the parent company of Wizz Air. However, the notes are structurally subordinated to the secured ETS financing as well as opco-liabilities such as lease liabilities given the lack of guarantees. Any further unsecured debt issuance may therefore create negative pressure on the instrument ratings. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Positive rating pressure could develop if on a Moody's adjusted basis (i) Wizz Air reduces its Debt/EBITDA sustainably below 4.0x , (ii) its EBIT margin exceeds 10% on a sustained basis, (iii) its (funds from operations + interest)/interest is maintained above 6.0x and (iv) its strong liquidity profile is maintained. Moody's could downgrade Wizz Air if over the next 12 to 18 months the company does not demonstrate an ongoing positive trajectory of metrics, and (i) gross adjusted debt to EBITDA remains sustainably above 5.0x, (ii) its (funds from operations + interest)/interest falls below 4.0x and (iii) adjusted EBIT margin below 5%. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Passenger Airlines published in August 2024. The net effect of any adjustments applied to rating factor scores or scorecard outputs under the primary methodology(ies), if any, was not material to the ratings addressed in this announcement. COMPANY PROFILE Wizz Air Holdings plc (Wizz Air is the largest low-cost airline in CEE and one of Europe's leading ultra-low-cost airlines that provide short- and medium-haul point-to-point routes. Established in 2003, Wizz Air has grown significantly and carried around 63.4 million passengers in 2025 (40 million in 2019). The company has 33 operating bases (+1 y-o-y) and serves around 200 airports (+20 y-o-y) in 55 countries (+1 y-o-y), with an A320/321 family fleet of about 231 aircraft (+23 y-o-y). Its core markets include Poland, Romania, Hungary and Bulgaria, which the company links to other CEE and Western European destinations, especially the UK. In fiscal 2025, Wizz Air generated revenue of around EUR5.3 billion (+4% y-o-y), with a company adjusted EBITDA of EUR1,134 million (-5% y-o-y). ============= I R E L A N D ============= AVOCA CLO XXI: Fitch Affirms 'B+sf' Rating on Class F Notes ----------------------------------------------------------- Fitch Ratings has upgraded Avoca CLO XXI DAC's class B and C notes and affirmed the others. Entity/Debt Rating Prior ----------- ------ ----- Avoca CLO XXI DAC A-1 XS2126166722 LT AAAsf Affirmed AAAsf A-2 XS2126167027 LT AAAsf Affirmed AAAsf B-1 XS2126167373 LT AAAsf Upgrade AA+sf B-2 XS2126167530 LT AAAsf Upgrade AA+sf C XS2126167886 LT AA-sf Upgrade A+sf D XS2126167969 LT BBB+sf Affirmed BBB+sf E XS2126168009 LT BB+sf Affirmed BB+sf F XS2126168421 LT B+sf Affirmed B+sf Transaction Summary Avoca CLO XXI DAC is a cash flow CLO comprising mostly senior secured obligations. The transaction is outside of its reinvestment period and the portfolio is actively managed by KKR Credit Advisors (Ireland). KEY RATING DRIVERS Deleveraging Transaction; Stable Performance: According to the last trustee report dated 30 April 2025, the class A-1 notes have paid down by about EUR67.6 million since its last review in July 2024, leading to an increase in credit enhancement for all rated notes. The transaction is just 0.3% below target par and there is one defaulted asset in the portfolio with a notional of EUR1 million. Exposure to assets with a Fitch-derived rating of 'CCC+' and below is 7.2% s calculated by the trustee, compared with a limit of 7.5%. The transaction has low near- and medium-term refinancing risk, with 4.9% of the portfolio maturing before end-2026, as calculated by Fitch. The increases credit enhancement and stable performance supports the upgrades. Comfortable Cushion Supports Stable Outlooks: All the notes have good default-rate buffers to support their ratings and should be capable of absorbing further defaults in the portfolio. 'B'/'B-' Portfolio: Fitch assesses the average credit quality of the underlying obligors at 'B'/'B-'. weighted average rating factor The weighted average rating factor of the current portfolio is 26.2 as calculated by Fitch under its latest criteria. High Recovery Expectations: Senior secured obligations comprise 99.10% of the portfolio. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. The Fitch-calculated weighted average recovery rate (WARR) of the current portfolio is 61.3% under its current criteria. Diversified Portfolio: The portfolio is well-diversified across obligors, countries and industries. The top 10 obligor concentration, as calculated by Fitch, is 13.2%, and no obligor represents more than 1.9% of the portfolio balance. Exposure to the three largest Fitch-defined industries is 29.9% as calculated by Fitch. Fixed-rate assets as reported by the trustee are at 8.60%, which is above the limit of 8.00%. Transaction Outside Reinvestment Period: The transaction exited its reinvestment period in October 2024, and the most senior notes are deleveraging. The weighted average life (WAL) and weighted average rating factor tests and maximum fixed-rate asset limit are failing, but the manager can continue to reinvest if these tests are maintained or improved. Therefore, Fitch's analysis is based on a stressed portfolio and tested the notes' achievable ratings across the Fitch matrices, since the portfolio can still migrate to different collateral quality tests. The recovery definition of this transaction is not in line with the current criteria and would result in an inflated WARR. As a result, Fitch applies a 1.5% haircut to the WARRs in its matrices. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Based on the current portfolio, downgrades may occur if the loss expectation is larger than initially assumed, due to unexpectedly high levels of default and portfolio deterioration. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Upgrades may occur on stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread available to cover losses in the remaining portfolio. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. The majority of the underlying assets or risk presenting entities have ratings or credit opinions from Fitch and/or other Nationally Recognized Statistical Rating Organizations and/or European Securities and Markets Authority registered rating agencies. Fitch has relied on the practices of the relevant groups within Fitch and/or other rating agencies to assess the asset portfolio information or information on the risk presenting entities. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. ESG Considerations Fitch does not provide ESG relevance scores for Avoca CLO XXI 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. AVOCA CLO XXXVII: Fitch Assigns 'B-(EXP)sf' Rating on Class F Notes ------------------------------------------------------------------- Fitch Ratings has assigned Avoca CLO XXXVII DAC notes expected ratings. The assignment of the final ratings is contingent on the receipt of final documents conforming to information already reviewed. Entity/Debt Rating ----------- ------ Avoca CLO XXXVII DAC Class A LT AAA(EXP)sf Expected Rating Class B LT AA(EXP)sf Expected Rating Class C LT A(EXP)sf Expected Rating Class D LT BBB-(EXP)sf Expected Rating Class E LT BB-(EXP)sf Expected Rating Class F LT B-(EXP)sf Expected Rating Subordinated Notes LT NR(EXP)sf Expected Rating Transaction Summary Avoca XXXVII DAC 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 will be used to fund a portfolio with a target par of EUR400 million. The portfolio is actively managed by KKR Credit Advisors (Ireland). The collateralised loan obligation (CLO) will have a 4.5-year reinvestment period and a 7.5-year weighted average life test (WAL) at closing. 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 25.1. High Recovery Expectations (Positive): At least 96% of the portfolio will comprise senior secured obligations. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. The Fitch-weighted average recovery rate of the identified portfolio is 60.7. Diversified Asset Portfolio (Positive): The transaction will include various concentration limits in the portfolio, including a fixed-rate obligation limit of 12.5%, a top 10 obligor concentration limit of 20% and a maximum exposure to the three-largest Fitch-defined industries of 40%. These covenants ensure the asset portfolio will not be exposed to excessive concentration. WAL Step-Up Feature (Neutral): The transaction could extend the WAL test by one year, from 18 months after closing, if the aggregate collateral balance (with defaulted obligations carried at the lower of Fitch's and Standard & Poor's collateral value) is at least at the reinvestment target par amount and all the tests are passing. Portfolio Management (Neutral): The transaction will have a reinvestment period of about 4.5 years and include 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 for the transaction's Fitch-stressed portfolio analysis is 12 months less than the WAL covenant. This is to account for the strict reinvestment conditions envisaged after the reinvestment period. These include passing both the coverage tests and the Fitch 'CCC' limit after reinvestment, and a WAL covenant that progressively steps down over time, both before and after the end of the reinvestment period. 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 An increase of the mean default rate (RDR) by 25% and a decrease of the recovery rate (RRR) by 25% at all rating levels in the identified portfolio would have no impact on the class A notes, lead to downgrades of two notches for the class B notes, one notch each for the class C to E notes, and to below 'B-sf' for the class F notes. Downgrades may occur if the build-up of the notes' credit enhancement following amortisation does not compensate for a larger loss expectation than initially assumed due to unexpectedly high defaults and portfolio deterioration. The class B, D, E and F notes each have a rating cushion of two notches, and the class C notes have a cushion of one notch due to the better metrics and shorter life of the identified portfolio than the Fitch-stressed portfolio. Should the cushion between the identified portfolio and the Fitch-stressed portfolio be eroded either due to manager trading or negative portfolio credit migration, a 25% increase of the mean RDR and a 25% decrease of the RRR across all ratings of the Fitch-stressed portfolio would lead to downgrades of four notches for the class B notes, three notches each for the class C and E notes, two notches each for the class A and D notes and to below 'B-sf' for the class F-R notes. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade A reduction of the mean RDR and an increase in the RRR each by 25% at all rating levels in the Fitch-stressed portfolio would result in upgrades of up to five notches for all notes, except for the 'AAAsf' rated notes. Upgrades during the reinvestment period, which are based on the Fitch-stressed portfolio, may occur on better-than-expected portfolio credit quality and a shorter remaining WAL test, allowing the notes to withstand larger-than-expected losses for the remaining life of the transaction. Upgrades after the end of the reinvestment period 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. Most 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 Avoca CLO XXXVII 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. CITYJET DESIGNATED: Court Appoints Interpath as Joint Examiners --------------------------------------------------------------- Kieran Wallace and Andrew O'Leary, each of Interpath (Ireland) Limited, were appointed as Joint Examiners of CityJet Designated Activity Company in accordance with the Companies Act 2014 by order of Mr. Justice Quinn of the High Court on May 26, 2025. The Company's registered address is at: Imbus House Dublin Airport Dublin K67 T680, Ireland The Joint Examiners can be reached at: Interpath (Ireland) Limited Riverside Two Sir John Rogerson Quay Dublin 2, Ireland Solicitors for the Joint Examiners can be reached at: A&L Goodbody LLP 3 Dublin Landings North Wall Quay Dublin 1, Ireland CVC CORDATUS XI: Fitch Hikes Rating on Class F Notes to 'B+sf' -------------------------------------------------------------- Fitch Ratings has upgraded CVC Cordatus Loan Fund XI DAC's class B to F notes, and affirmed the rest. Entity/Debt Rating Prior ----------- ------ ----- CVC Cordatus Loan Fund XI DAC Class A-R XS2310127027 LT AAAsf Affirmed AAAsf Class B-1R XS2310127613 LT AAAsf Upgrade AA+sf Class B-2R XS2310128264 LT AAAsf Upgrade AA+sf Class C-R XS2310128934 LT AA+sf Upgrade A+sf Class D-R XS2310129585 LT A+sf Upgrade BBB+sf Class E XS1859251370 LT BB+sf Affirmed BB+sf Class F XS1859251610 LT B+sf Upgrade Bsf Transaction Summary CVC Cordatus Loan Fund XI 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. The portfolio is actively managed by CVC Credit Partners Investment Management Limited (CVC). KEY RATING DRIVERS Deleveraging; Stable Performance: The rating actions reflect the transaction's deleveraging and resilient performance with portfolio losses below its rating case. They also reflect manageable near- and medium-term refinancing risk, with only 6.9% of the assets in the portfolio maturing before 2027. The class A notes have deleveraged EUR65.5 million since the last review in June 2024 based on the trustee report dated April 2025, increasing credit enhancement (CE) for all notes. The total par loss is limited at 0.03% of target par, well below its rating case assumptions. The portfolio has no reported defaults as of the latest trustee report. Large Cushion Supports Stable Outlooks: All notes have comfortable default-rate buffers to support their ratings and should be capable of absorbing further defaults in the portfolio. The notes have sufficient credit protection to withstand deterioration in the credit quality of the portfolio at their ratings. Failing Tests: The transaction is currently failing it's Fitch 'CCC' test which prohibits the manager from purchasing assets. However, according to the latest trustee report, the 'CCC' assets represented 7.7% of the total portfolio, against a limit of 7.5%, which means the transaction can start reinvesting again with fairly small changes in the portfolio. The transaction is also failing its Fitch weighted average rating factor and Fitch weighted average recovery rate (WARR) tests and weighted average life test, which are required to be maintained or improved if the transactions is to start reinvesting. 'B'/'B-' Portfolio: Fitch assesses the average credit quality of the underlying obligors at 'B'/'B-'. The weighted average rating factor of the current portfolio is 26.2, as calculated by Fitch under its latest criteria. About 8.8% of the portfolio is on Negative Outlook. High Recovery Expectations: Senior secured obligations comprise 97% of the portfolio. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. The Fitch-calculated weighted average recovery rate of the current portfolio is 59.4%. Diversified Portfolio: The portfolio is well-diversified across obligors, countries and industries. The top 10 obligor concentration, as calculated by Fitch, is 18.1%, and no obligor represents more than 2.3% of the portfolio balance. Exposure to the three largest Fitch-defined industries is 23.5%, as calculated by Fitch. Fixed-rate assets as reported by the trustee are at 8.1%, complying with the limit of 10%. Deviation from MIRs: The class E and F notes are two and three notches below their model-implied ratings (MIRs) respectively, while other class notes are in line with their MIRs. Over the last 12 months Fitch has observed substantial repricing on European loans, which has resulted in a decline in the weighted average spread in the portfolio. The class E and F notes have benefited less, due to their junior position, from deleveraging and remain exposed to further spread tightening in addition to credit losses. This vulnerability is reflected in their deviation from the MIRs. Transaction Out of Reinvestment Period: The transaction exited its reinvestment period in April 2023 and cannot reinvest due to it failing the Fitch CCC and Moodys Caa tests. However, if these tests are cured the manager can continue to reinvest unscheduled principal proceeds and sale proceeds. Given the potential for the manager to reinvest, Fitch's analysis is based on a portfolio where Fitch has stressed the transaction's covenants to their limits. Further, the recovery definition of this transaction is not in line with the current criteria and would result in an inflated WARR. As a result, a 1.5% haircut has been applied to the WARRs in the Fitch matrices. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Downgrades, which are based on the current portfolio, may occur if the loss expectation is larger than initially assumed, due to unexpectedly high levels of default and portfolio deterioration. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Upgrades may result from stable portfolio credit quality and deleveraging, leading to higher CE and excess spread available to cover losses in the remaining portfolio. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. Fitch has not reviewed the results of any third-party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. The majority of the underlying assets or risk-presenting entities have ratings or credit opinions from Fitch and/or other Nationally Recognised Statistical Rating Organisations and/or European Securities and Markets Authority- registered rating agencies. Fitch has relied on the practices of the relevant groups within Fitch and/or other rating agencies to assess the asset portfolio information or information on the risk-presenting entities. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. ESG Considerations Fitch does not provide ESG relevance scores for CVC Cordatus Loan Fund XI 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. HAYFIN EMERALD I: Fitch Hikes Rating on Class F-R Notes to 'Bsf' ---------------------------------------------------------------- Fitch Ratings has upgraded Hayfin Emerald CLO I DAC 's class D-R, E-R and F-R notes and affirmed the rest. Entity/Debt Rating Prior ----------- ------ ----- Hayfin Emerald CLO I DAC A-R XS2307881206 LT AAAsf Affirmed AAAsf B1-R XS2307881974 LT AA+sf Affirmed AA+sf B2-R XS2307882600 LT AA+sf Affirmed AA+sf C-R XS2307883244 LT A+sf Affirmed A+sf D-R XS2307883913 LT BBB+sf Upgrade BBBsf E-R XS2307884564 LT BB+sf Upgrade BBsf F-R XS2307884721 LT Bsf Upgrade B-sf Transaction Summary Hayfin Emerald CLO I DAC is a cash flow CLO mostly comprising senior secured obligations. The transaction is actively managed by Hayfin Emerald Management LLP and will exit its reinvestment period in September 2025. KEY RATING DRIVERS Better-Than-Expected Asset Performance: The positive rating actions reflect the transaction's resilient performance with portfolio losses below its rating case. The transaction is around 1.3% below par (calculated as the current par difference over the original target par) and defaults comprise 0.5% of the portfolio's outstanding principal balance. The transaction is also passing all its collateral-quality, portfolio-profile and coverage tests. Low Refinancing Risks: The transaction has low near- and medium-term refinancing risk, with no portfolio assets maturing in 2025 and 2.5% maturing in 2026. Comfortable default rate cushions also support the Stable Outlooks for the ratings. 'B'/'B-' Portfolio: Fitch assesses the average credit quality of the underlying obligors at 'B'. The weighted average rating factor of the current portfolio is 23.4, as calculated by Fitch under its latest criteria. High Recovery Expectations: Senior secured obligations comprise 97% of the portfolio. Fitch views the recovery prospects for these assets as more favorable than for second-lien, unsecured and mezzanine assets. The Fitch-calculated weighted average recovery rate of the current portfolio is 62.7%. Diversified Portfolio: The portfolio is well-diversified across obligors, countries and industries. The top 10 obligor concentration, as calculated by Fitch, is 19%, and no obligor represents more than 2.9% of the portfolio balance. Exposure to the three largest Fitch-defined industries is 34.9%, as calculated by the trustee. Fixed-rate assets reported by the trustee are at 9.7%, complying with the limit of 10%. Transaction Within Reinvestment Period: The transaction is within its reinvestment period until September 2025. In addition, after the reinvestment period, the manager can continue to reinvest unscheduled principal proceeds and sale proceeds from credit-impaired obligations and credit-improved obligations, subject to compliance with the reinvestment criteria. Given the manager's ability to reinvest, Fitch tested the ratings across Fitch test matrices in the documentation by stressing the portfolio to its covenanted limits. Since the recovery definition of this transaction is not in line with the current criteria and could result in an inflated weighted average recovery rate compared with the current criteria, a 1.5% haircut is applied across all Fitch test matrices. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Downgrades may occur if build-up of credit enhancement following amortisation does not compensate for a larger loss expectation than initially assumed, due to unexpectedly high levels of defaults and portfolio deterioration. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Upgrades may result from stable portfolio quality and notes amortisation, leading to higher credit enhancement across the structure. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. Fitch has not reviewed the results of any third-party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. The majority of the underlying assets or risk-presenting entities have ratings or credit opinions from Fitch and/or other Nationally Recognised Statistical Rating Organisations and/or European Securities and Markets Authority-registered rating agencies. Fitch has relied on the practices of the relevant groups within Fitch and/or other rating agencies to assess the asset portfolio information or information on the risk-presenting entities. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. ESG Considerations Fitch does not provide ESG relevance scores for Hayfin Emerald CLO I 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. HAYFIN EMERALD II: Fitch Affirms 'B-sf' Rating on Class F-R Notes ----------------------------------------------------------------- Fitch Ratings has upgraded Hayfin Emerald CLO II DAC 's class B-1R, B-2R, C-1R, C-2R and D-R notes and affirmed the rest. Entity/Debt Rating Prior ----------- ------ ----- Hayfin Emerald CLO II DAC A-R XS2331204482 LT AAAsf Affirmed AAAsf B-1R XS2331205299 LT AA+sf Upgrade AAsf B-2R XS2331205703 LT AA+sf Upgrade AAsf C-1R XS2331206420 LT A+sf Upgrade Asf C-2R XS2334474124 LT A+sf Upgrade Asf D-R XS2331207154 LT BBBsf Upgrade BBB-sf E-R XS2331207741 LT BB-sf Affirmed BB-sf F-R XS2331208392 LT B-sf Affirmed B-sf Transaction Summary Hayfin Emerald CLO II DAC is a cash flow collateralised loan obligation (CLO) comprising mostly senior secured obligations. The transaction is actively managed by Hayfin Emerald Management LLP and will exit its reinvestment period in August 2025. KEY RATING DRIVERS Better-Than-Expected Asset Performance: The positive rating actions reflect the transaction's resilient performance with portfolio losses below its rating case. The transaction is passing all tests and the par loss has improved to -1.2% below par in May 2025 from -1.6% in the last review in August 2024. Reported default represented around 1% of the portfolio balance in May 2025. The rating actions also reflect low near- and medium-term refinancing risk, with only 2.8% of the assets in the portfolio maturing before 2027. Large Cushion Supports Stable Outlooks: All notes have comfortable default-rate buffers to support their ratings and should be capable of absorbing further defaults in the portfolio. 'B'/'B-' Portfolio: Fitch assesses the average credit quality of the underlying obligors at 'B'/'B-'. The weighted average rating factor of the current portfolio is 23.3, as calculated by Fitch under its latest criteria. High Recovery Expectations: Senior secured obligations comprise 97.3% of the portfolio. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. The Fitch-calculated weighted average recovery rate of the current portfolio is 62.6%. Diversified Portfolio: The portfolio is well-diversified across obligors, countries and industries. The top 10 obligor concentration, as calculated by Fitch, is 19.4%, and no obligor represents more than 2.9% of the portfolio balance. Exposure to the three largest Fitch-defined industries is 35.7%, as calculated by Fitch. Fixed-rate assets reported by the trustee are at 8.5%, complying with the limit of 10%. Deviation from MIRs: The class D-R, E-R and F-R notes are below their model-implied ratings (MIRs) by one notch, two notches and one notch, respectively, while the rest are in line with their MIRs. The deviations reflect insufficient cushions at their MIRs, alongside uncertainties in macro-economic conditions and reinvestments that may result in a deteriorating portfolio credit profile. Transaction Inside Reinvestment Period: The transaction is within its reinvestment period until August 2025. In addition, after the reinvestment period, the manager can continue to reinvest unscheduled principal proceeds and sale proceeds from credit-impaired obligations and credit-improved obligations, subject to compliance with the reinvestment criteria. Given the manager's ability to reinvest, Fitch tested the ratings across Fitch test matrices in the documentation by stressing the portfolio to its covenanted limits. Since the recovery definition of this transaction is not in line with the current criteria and could result in an inflated weighted average recovery rate compared with the current criteria, a 1.5% haircut is applied across Fitch test matrices. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Based on the current portfolio, downgrades may occur if the loss expectation is larger than initially assumed, due to unexpectedly high levels of default and portfolio deterioration. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Upgrades may result from stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread available to cover losses in the remaining portfolio. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. Fitch has not reviewed the results of any third-party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. The majority of the underlying assets or risk-presenting entities have ratings or credit opinions from Fitch and/or other Nationally Recognised Statistical Rating Organisations and/or European Securities and Markets Authority- registered rating agencies. Fitch has relied on the practices of the relevant groups within Fitch and/or other rating agencies to assess the asset portfolio information or information on the risk-presenting entities. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. ESG Considerations Fitch does not provide ESG Relevance Scores for this transaction. 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. MAN GLG III: Moody's Affirms Ba2 Rating on EUR19.8MM Class E Notes ------------------------------------------------------------------ Moody's Ratings has upgraded the rating on the following notes issued by Man GLG Euro CLO III Designated Activity Company: EUR18,000,000 Class D Deferrable Mezzanine Floating Rate Notes due 2030, Upgraded to Aa1 (sf); previously on Feb 4, 2025 Upgraded to Aa3 (sf) Moody's have also affirmed the ratings on the following notes: EUR23,300,000 (Current outstanding amount EUR13,082,942) Class B-1 Senior Secured Floating Rate Notes due 2030, Affirmed Aaa (sf); previously on Feb 4, 2025 Affirmed Aaa (sf) EUR10,000,000 (Current outstanding amount EUR5,614,997) Class B-2-R Senior Secured Fixed Rate Notes due 2030, Affirmed Aaa (sf); previously on Feb 4, 2025 Affirmed Aaa (sf) EUR32,000,000 Class C Deferrable Mezzanine Floating Rate Notes due 2030, Affirmed Aaa (sf); previously on Feb 4, 2025 Upgraded to Aaa (sf) EUR19,800,000 Class E Deferrable Junior Floating Rate Notes due 2030, Affirmed Ba2 (sf); previously on Feb 4, 2025 Affirmed Ba2 (sf) EUR10,400,000 Class F Deferrable Junior Floating Rate Notes due 2030, Affirmed Caa3 (sf); previously on Feb 4, 2025 Affirmed Caa3 (sf) Man GLG Euro CLO III Designated Activity Company, issued in July 2017, is a collateralised loan obligation (CLO) backed by a portfolio of mostly high-yield senior secured European loans. The portfolio is managed by GLG Partners LP. The transaction's reinvestment period ended in October 2021. RATINGS RATIONALE The rating upgrade on the Class D notes is primarily a result of the deleveraging of the senior notes following amortisation of the underlying portfolio since the last rating action in February 2025. The affirmations on the ratings on the Class B-1, Class B-2-R, Class C, Class E 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 B-1 and Class B-2-R notes have paid down by approximately EUR14.3 million (42.9%) since the last rating action in February 2025. As a result of the deleveraging, over-collateralisation (OC) has increased for all tranches except for the Class F OC test. According to the trustee report dated May 2025[1] the Class A/B, Class C, Class D Class E and Class F OC ratios are reported at 535.8%, 197.6%, 145.8%, 113.2% and 101.3% compared to January 2025[2] levels of 278.7%, 165.9%, 135.1% 112.2% and 103.0%, respectively. The deleveraging and OC improvements primarily resulted from high prepayment rates of leveraged loans in the underlying portfolio. Most of the prepaid proceeds have been applied to amortise the liabilities. All else held equal, such deleveraging is generally a positive credit driver for the CLO's rated liabilities. 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: EUR97.5m Defaulted Securities: EUR9.3m Diversity Score: 33 Weighted Average Rating Factor (WARF): 3350 Weighted Average Life (WAL): 2.87 years Weighted Average Spread (WAS): 3.62% Weighted Average Coupon (WAC): 4.26% Weighted Average Recovery Rate (WARR): 43.21% Par haircut in OC tests and interest diversion test: 1.27% 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. -- Recovery of defaulted assets: Market value fluctuations in trustee-reported defaulted assets and those Moody's assumes have defaulted can result in volatility in the deal's over-collateralisation levels. Further, the timing of recoveries and the manager's decision whether to work out or sell defaulted assets can also result in additional uncertainty. Moody's analysed defaulted recoveries assuming the lower of the market price or the recovery rate to account for potential volatility in market prices. Recoveries 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. ========= I T A L Y ========= CENTRO DELLE ALPI: DBRS Confirms BB(high) Rating on M Notes ----------------------------------------------------------- DBRS Ratings GmbH confirmed its credit ratings on the notes issued by Centro delle Alpi SME S.r.l. (CdA SME or the Issuer) as follows: -- the Class A1, Class A2, Class A3 and Class A4 Notes (together the Class A Notes) at A (sf); and -- the Class M Notes (together with the Class A Notes, the rated notes) at BB (high) (sf). The credit ratings on the Class A Notes address the timely payment of interest and the ultimate repayment of principal by the legal final maturity date in July 2060, while the credit rating on the Class M Notes addresses the ultimate payment of interest and the ultimate repayment of principal by the legal final maturity date. CREDIT RATING RATIONALE The credit rating confirmations follow an annual review of the transaction and are based on the following analytical considerations: -- Portfolio performance, in terms of delinquencies, defaults, and losses, as of the May 2025 payment date; -- The one-year base case probability of default (PD) and default and recovery rates on the receivables; -- The credit enhancement currently available to the rated notes to cover the expected losses at their respective credit rating levels; and -- The revolving period expected to end on the June 2025 payment date. CdA SME is a revolving cash flow securitization collateralized by a portfolio of mortgage and unsecured loans to Italian small and medium-size enterprises (SMEs), entrepreneurs, artisans, and producer families. The loans were granted by Banca Popolare di Sondrio S.p.A. (PopSo), that also services the portfolio. The transaction is structured with a 24-month ramp-up period, scheduled to end in June 2025 (included), during which PopSo may sell new receivables to the Issuer subject to certain eligibility criteria and concentration limits. Additionally, the ramp-up period will terminate early if certain performance and non-performance based trigger events occur. The ramp-up period was terminated in September 2024, but an amendment agreement was signed to extend the ramp-up period until its originally scheduled end date in June 2025. During the ramp-up period, the purchase of new receivables will be funded through portfolio collections and/or via further instalment payments under the notes. The subscription of further notes will be subject to the maintenance of minimum subordination levels, as per the transaction documents. Until the May 2025 payment date, the Issuer had purchased only one subsequent portfolio. The purchase conditions require that the amount of loans benefitting from the Fondo Centrale di Garanzia (FCG) during the ramp-up period be at least 55.0% of the aggregate unsecured portfolio and that the weighted average guarantee coverage be at least 70.0%. Morningstar DBRS adjusted the recovery rates to account for the benefit of the guarantee. PORTFOLIO PERFORMANCE As of the 30 April 2025 portfolio cut-off date, delinquencies were low, with 90+-day arrears representing 0.1% of the outstanding portfolio balance. The gross cumulative default ratio stood at 0.1% of the initial and subsequent portfolio balance. PORTFOLIO ASSUMPTIONS AND KEY DRIVERS Morningstar DBRS maintained its base case one-year PDs for secured and unsecured loans at 3.4% and 2.1%, respectively. Morningstar DBRS continued to base its analysis on a worst-case portfolio created in line with the purchase conditions and the common and specific criteria applicable during the ramp-up period. Morningstar DBRS maintained its lifetime default and recovery assumptions as follows: -- at the A (sf) rating level to 32.8% and 40.2%, respectively; -- at the BB (high) (sf) rating level to 20.4% and 49.6%, respectively. CREDIT ENHANCEMENT Over-collateralization of the outstanding collateral portfolio and the cash reserve provide credit enhancement to the notes. As of the May 2025 payment date, credit enhancement to the Class A and the Class M Notes was 39.1% and 16.3%, respectively, up from 26.8% and 17.6%, respectively, at closing. The transaction is structured in a way such that minimum credit enhancement levels must be maintained during the ramp-up period, if further instalment payments under the notes are made. The transaction benefits from an amortizing cash reserve available that can cover shortfalls in expenses, senior fees, and interest payments on the Class A Notes and, prior to the occurrence of a Class M Notes Interest Subordination Event, on the Class M Notes. The target cash reserve is equal to the greater of 2.0% of the principal outstanding balance of the Class A Notes and 1.44% of the performing outstanding portfolio, with a floor of EUR 5.6 million. As of the May 2025 payment date, the cash reserve was at its target of EUR 29.3 million. BNP Paribas Succursale Italia acts as the account bank for the transaction. Based on Morningstar DBRS' private credit rating on the account bank, the downgrade provisions outlined in the transaction documents, and the structural mitigants inherent in the transaction structure, Morningstar DBRS considers the risk arising from the exposure to the account bank to be consistent with the credit rating assigned to the Class A Notes, as described in Morningstar DBRS' "Legal and Derivative Criteria for European Structured Finance Transactions" methodology. Morningstar DBRS' credit ratings on the rated notes address the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. Where applicable, a description of these financial obligations can be found in the transactions' respective press releases at issuance. Notes: All figures are in Euros unless otherwise noted. POP NPL 2020: DBRS Cuts Class B Notes Rating to CCsf ---------------------------------------------------- DBRS Ratings GmbH took the following credit rating actions on the notes issued by POP NPLs 2020 S.r.l. (the Issuer): -- Class A notes confirmed at BBB (high) (sf) -- Class B notes downgraded to CC (sf) from CCC (sf) Morningstar DBRS removed the Negative trend on the Class B notes, while the trend on the Class A notes remains Stable. The transaction represents the issuance of Class A, Class B, and Class J notes (collectively, the notes). The credit rating on the Class A notes addresses the timely payment of interest and the ultimate repayment of principal. The credit rating on the Class B notes addresses the ultimate payment of principal and interest. Morningstar DBRS does not rate the Class J notes. At issuance, the notes were backed by a EUR 919.9 million portfolio by gross book value consisting of Italian secured and unsecured nonperforming loans originated and sold to the Issuer by 15 Italian banks. Fire S.p.A. (Fire) and Special Gardant S.p.A. (together with Fire, the Special Servicers) service the receivables. Master Gardant S.p.A. acts as the master servicer, while Banca Finanziaria Internazionale S.p.A. (Banca Finint) has been appointed as backup servicer. CREDIT RATING RATIONALE The credit rating actions follow Morningstar DBRS' review of the transaction and are based on the following analytical considerations: -- Transaction performance: An assessment of portfolio recoveries as of March 2025 focusing on (1) a comparison between actual collections and the Special Servicers' initial business plan forecast, (2) the collection performance observed over recent months, and (3) a comparison between the current performance and Morningstar DBRS' expectations. -- Updated business plan: The Special Servicers' updated business plan as of December 2024, received in May 2025, and the comparison with the initial collection expectations. -- Portfolio characteristics: Loan pool composition as of March 2025 and the evolution of its core features since issuance. -- Transaction liquidating structure: The order of priority, which entails a fully sequential amortization of the notes (i.e., the Class B notes will begin to amortize following the full repayment of the Class A notes, and the Class J notes will amortize following the repayment of the Class B notes). Additionally, interest payments on the Class B notes become subordinated to principal payments on the Class A notes if the cumulative collection ratio (CCR) or present value cumulative profitability ratio (PV ratio) is lower than 90%. As of the May 2025 interest payment date (IPD), these triggers had not been breached. The actual figures for the CCR and PV ratio were at 121.2% and 127.8% as of the May 2025 IPD, respectively, according to the Special Servicers. -- Liquidity support: The transaction benefits from an amortizing cash reserve providing liquidity to the structure and covering potential interest shortfall on the Class A notes and senior fees. The cash reserve target amount is equal to 4.0% of the Class A notes' principal outstanding balance, and the recovery expenses cash reserve target amounts to EUR 150,000, both fully funded. TRANSACTION AND PERFORMANCE According to the latest investor report from May 2025, the outstanding principal amounts of the Class A, Class B, and Class J notes were EUR 69.4 million, EUR 25.0 million, and EUR 10.0 million, respectively. As of May 2025, the balance of the Class A notes had amortized by 71.2% since issuance, and the current aggregated transaction balance was EUR 104.4 million. As of March 2025, the transaction was performing above the Special Servicers' business plan expectations. The actual cumulative gross collections equaled EUR 214.3 million, whereas the Special Servicers' initial business plan estimated cumulative gross collections of EUR 176.2 million for the same period. Therefore, as of March 2025, the transaction was overperforming by EUR 38.1 million (21.6%) compared with the initial business plan expectations. Nevertheless, the overperformance reduced over time, as actual collections from April 2023 to March 2025 were below the Special Servicers' initial expectations. At issuance, Morningstar DBRS estimated cumulative gross collections for the same period of EUR 124.5 million at the BBB (sf) stressed scenario and EUR 161.0 million at the CCC (sf) stressed scenario. Therefore, as of March 2025, the transaction was performing above Morningstar DBRS' initial stressed expectations. Pursuant to the requirements set out in the receivable servicing agreement, in May 2025, the Special Servicers delivered an updated portfolio business plan. The updated portfolio business plan, combined with the actual cumulative gross collections of EUR 205.9 million as of December 2024, resulted in a total of EUR 335.2 million. This is 15.5% lower than the total gross disposition proceeds of EUR 396.8 million estimated in the initial business plan. Considering the material overperformance to date, this implies a substantial reduction in expected collections from the remaining exposures. Excluding actual collections as of March 2025, the Special Servicers' expected future collections from April 2025 amount to EUR 123.4 million. The updated Morningstar DBRS credit rating stress assumes a haircut of 19.0% at the BBB (high) (sf) stressed scenarios to the Special Servicers' updated business plan, considering future expected collections from April 2025. In Morningstar DBRS' CCC (sf) (or below) scenarios, the updated forecast was adjusted only in terms of actual collections to the date and timing of future expected collections. Considering the overperformance of cumulative actual collections and the rapid redemption, the Class A notes may now pass higher credit rating stresses in the cash flow analysis. However, Morningstar DBRS does not deem the senior principal redemption path to be sustainable yet, as also evidenced by the Special Servicers' underperformance compared with the initial business plan in the collection period between April 2023 and March 2025, and the Special Servicers' downward revision of total collection expectations according to the most recent business plan. In addition, Morningstar DBRS believes that higher credit ratings would not be commensurate with the transaction's risk considering the potential higher variability of nonperforming loans' cash flows and the exposure to the transaction account bank, considering the downgrade provisions outlined in the transaction documents. Hence, Morningstar DBRS confirmed the credit rating on the Class A notes at BBB (high) (sf) with a Stable trend. Morningstar DBRS observes a reduced likelihood that the Class B notes' obligations will be fully met at maturity. As of May 2025, EUR 2.1 million unpaid interest on the Class B notes had accrued, as the interest on the Class B notes ranking senior to the Class A notes' principal is capped at 12.0%. In addition, the reduction in the Special Servicers' total expected collections leaves a lower cushion for the full payment of the Class B notes' principal and interest. Therefore, Morningstar DBRS downgraded the credit rating on the Class B notes to CC (sf) from CCC (sf). The transaction's final maturity date is in November 2045. Notes: All figures are in euros unless otherwise noted. SAN MARINO: Fitch Alters Outlook on 'BB+' LongTerm IDR to Positive ------------------------------------------------------------------ Fitch Ratings has revised the Outlook on San Marino's Long-Term Foreign-Currency Issuer Default Rating (IDR) to Positive from Stable and affirmed the IDR at 'BB+'. Key Rating Drivers The revision of the Outlook reflects the following key rating drivers and their relative weights: High Improved Asset Quality, Capital Ratios: San Marino is continuing to reduce banking sector asset-quality risks, with non-performing loans (NPL) dropping to 19% at end-2024 from 56.2% in 2022. With increased securitisation and write-offs, net NPLs reached 12.1% in March 2025, down from 27.8% at end-2022. NPL ratios remain significantly above the EU average of 2.3% and Italy's 3.0% as of end-2024. However, Fitch expects the introduction of calendar provisioning in January 2024 to provide impetus in resolving legacy NPLs, further reducing net NPLs to near 10% by end-2025 and possibly curing legacy NPLs on a net basis by 2029. These measures typically pressure capital ratios, but Fitch expects banking sector solvency improvements to be sustained. The sector's Tier 1 ratio improved to 17.4% by December 2024 (in line with the EU average of 17.3%) from 16.1% a year earlier, supported by moderate profitability. Securitisation in Progress: Strong NPL recoveries have also enabled the early repayment of 50% of senior bonds, reducing state guarantee exposure to EUR35.1 million, with an escrow account (initially at 20% of ABS senior outstanding, currently 8%) further limiting the risk. The risk of contingent liabilities for the sovereign has eased, with net NPLs accounting for 6.3% of GDP at end-2024, However, risks remain for banks from retained mezzanine and junior notes, despite significant provisioning, as ongoing provisioning requirements continue to weigh on capital. Increased Resilience: In its view, there is improved resilience to outstanding legacy challenges in the banking sector, supported by consolidation, a reduction in its overall size and economic impact on the economy and increased integration with the EU. Public pension assets (roughly 20% of GDP with nearly 5% of GDP held outside the banking system) could contribute to the policy response in the event of liquidity pressures, helping mitigate the absence of a lender of last resort. The sale of a bank to foreign investors could enhance the banking sector's stability and aid the absorption of NPLs. Medium Public Debt Declining: San Marino's debt trajectory has improved since its previous review, primarily reflecting lower budget deficits. Fitch estimates that public debt will fall to 61.4% of GDP by end-2025, from a peak of 75.1% at end-2021. The government targets bringing debt below 60% of GDP over the medium term, which Fitch projects will happen by end-2026. Two perpetual bonds make up 40% of total government debt, featuring favourable interest rates and no additional refinancing risks. The government will gradually repay these to meet new capital requirements under the EU Association Agreement, starting with a EUR55 million repayment this year. Low Fiscal Deficits: San Marino's fiscal discipline remains strong, with fiscal deficits expected to stay below 1% of GDP after the pandemic. This is notably better than the 'BB' median budget deficit of 2.7%. Fitch estimates a fiscal deficit of around 0.7% of GDP in 2024, an improvement from its previous estimate of 1.0%, due to stronger direct tax revenues and lower expenditure. For 2025 and 2026, Fitch anticipates the budget deficit to average around 0.8% of GDP, supported by additional revenues from the income tax reform in 2026, although high interest costs will constrain further improvement. San Marino's 'BB+' IDRs also reflect the following key rating drivers: Structural Strengths, Financial Vulnerabilities: San Marino's 'BB+' rating is supported by high income levels, a resilient export sector and large net external creditor position, and a stable political system. The rating is weighed down by a high debt burden and banking sector vulnerabilities, the very small size of the economy, limited administrative capacity reflected in data quality issues, and low growth potential. Growth Slow but Improving: San Marino's economy grew by an estimated 0.7% in 2024, with the services sector, particularly tourism, providing support amid weakening external demand affecting manufacturing. Fitch anticipates that European Central Bank rate cuts and lower inflation in 2025 will enhance households' real incomes. Coupled with a robust labour market, Fitch expects these factors to support private consumption and strengthen domestic demand, underpinning GDP growth of 1% for 2025. However, San Marino's small, open economy remains vulnerable to external developments, notably those in Italy. The downside risks associated with Italy's growth outlook due to US tariffs present challenges. With the anticipated recovery in the Italian and EU economies in 2026, Fitch expects San Marino's growth to rise to 1.2%. Stable FX Reserves: The Central Bank of San Marino's foreign-exchange reserves remain stable at around EUR740 million and Fitch expects them to have covered 2.8 months of current external payments at end-2024, below the peer median of 4.7 months. However, the banking sector retains strong external liquidity in the context of full euroisation, while non-resident deposits have substantially fallen since the global financial crisis, supporting a projected external liquidity ratio of around 490% for 2024. San Marino also has a temporary EUR100 million (5.3% of GDP) liquidity line with the European Central Bank, extended to 2027. Funding Needs Covered: Fitch expects the government to successfully refinance its 2027 Eurobond, which has a bullet maturity equivalent to 17% of projected GDP. It will cover its moderate 2025 and 2026 gross financing needs by relying on the domestic debt market. The authorities are also exploring options for a private placement in the Italian debt market to improve the liquidity of its government debt instruments. EU Association Agreement: Fitch believes San Marino's growth prospects could improve through deeper integration with the EU's Single Market. It has finalised an Association Agreement with the EU, which is expected to be signed by end-2025. Building on the existing customs union with the EU, the agreement will enhance integration by facilitating cross-border labour mobility, reducing business barriers, and improving regulatory cooperation. It also establishes a pathway for financial institutions to access the EU Single Market, potentially bolstering long-term growth through strengthened financial integration and aligned supervisory frameworks. ESG - Governance: San Marino has an ESG Relevance Score (RS) of '5[+]' for both Political Stability and Rights and for the Rule of Law, Institutional and Regulatory Quality and Control of Corruption. These scores reflect the high weight that the World Bank Governance Indicators (WBGI) have in its proprietary Sovereign Rating Model (SRM). San Marino has a high WBGI ranking at 88.1, reflecting its long record of stable and peaceful political transitions, well established rights for participation in the political process, strong institutional capacity, effective rule of law and a low corruption. In Fitch's view, San Marino's governance is strong overall but overstated by the WBGIs. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Structural: Intensification of banking sector vulnerabilities, for example as a result of a deterioration in asset quality or heightened liquidity pressures - Public Finances: A sustained increase in government debt, for example due to the materialisation of contingent liabilities or an increase in financing costs - Macro: A large adverse macroeconomic shock, for example triggered by a sharp economic contraction among neighbouring countries Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Structural Features: Further progress in the reduction of banking sector vulnerabilities, for example through further improvement in asset quality and reduced contingent liability risks - Public Finances: Continued reduction in public debt over the medium term Sovereign Rating Model (SRM) and Qualitative Overlay (QO) Fitch's proprietary SRM assigns San Marino a score equivalent to a rating of 'BBB' on the Long-Term Foreign-Currency (LT FC) IDR scale. Fitch's sovereign rating committee adjusted the output from the SRM to arrive at the final LT FC IDR by applying its QO, relative to SRM data and output, as follows: - Structural: -1 notch, to offset exceptionally strong WBGIs, the quality of which is limited by the restricted number of data sources (1-2 sources per indicator) and substantial margins of error. The WBGIs place San Marino's governance broadly in line with some of the highest-rated sovereigns by Fitch and does not accurately capture San Marino's institutional constraints, in Fitch's view. - Structural: -1 notch, to reflect that banking sector risks remain high due to improving but still weak asset quality from legacy NPLs (17.7% of total gross loans as of March 2025) and the absence of an effective lender of last resort. Risks remain that further state recapitalisations of the sector will be required, given large NPLs adjusted for provisions at 6.3% of GDP and junior and mezzanine tranches from the NPL securitisation that remain in the banks' bonds portfolios. Fitch's SRM is the agency's proprietary multiple regression rating model that employs 18 variables based on three-year centred averages, including one year of forecasts, to produce a score equivalent to a LT FC IDR. Fitch's QO is a forward-looking qualitative framework designed to allow for adjustment to the SRM output to assign the final rating, reflecting factors within its criteria that are not fully quantifiable and/or not fully reflected in the SRM. Country Ceiling The Country Ceiling for San Marino is 'A+', 6 notches above the LT FC IDR. This reflects very strong constraints and incentives, relative to the IDR, against capital or exchange controls being imposed that would prevent or significantly impede the private sector from converting local currency into foreign currency and transferring the proceeds to non-resident creditors to service debt payments. Fitch's Country Ceiling Model produced a starting point uplift of +3 notches above the IDR. Fitch's rating committee applied a further +3 notches qualitative adjustment to this, under the Long-Term Institutional Characteristics, reflecting San Marino's fully euroised economy. REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING Balance of payments estimates by the authorities and IMF are only available for 2017-2023. Fitch has estimated historical and latest data with reasonable confidence using national accounts data and IFS international liquidity data. The data used was deemed sufficient for Fitch's rating purposes because it expects that the margin of error related to the estimates would not be material to the rating analysis. ESG Considerations San Marino has an ESG Relevance Score of '5[+]' for Political Stability and Rights as WBGI have the highest weight in Fitch's SRM and are therefore highly relevant to the rating and a key rating driver with a high weight. As San Marino has a percentile rank above 50 for the respective Governance Indicator, this has a positive impact on the credit profile. San Marino has an ESG Relevance Score of '5[+]' for Rule of Law, Institutional & Regulatory Quality and Control of Corruption as WBGI have the highest weight in Fitch's SRM and are therefore highly relevant to the rating and are a key rating driver with a high weight. As San Marino has a percentile rank above 50 for the respective Governance Indicators, this has a positive impact on the credit profile. San Marino has an ESG Relevance Score of '4[+]' for Human Rights and Political Freedoms as the Voice and Accountability pillar of the WBGI is relevant to the rating and a rating driver. As San Marino has a percentile rank above 50 for the respective Governance Indicator, this has a positive impact on the credit profile. San Marino has an ESG Relevance Score of '4[+]' for Creditor Rights as willingness to service and repay debt is relevant to the rating and is a rating driver for San Marino, as for all sovereigns. As San Marino has a record of 20+ years without a restructuring of public debt as captured in its SRM variable, this has a positive impact on the credit profile. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Prior ----------- ------ ----- San Marino LT IDR BB+ Affirmed BB+ ST IDR B Affirmed B Country Ceiling A+ Affirmed A+ senior unsecured LT BB+ Affirmed BB+ TEAMSYSTEM SPA: Fitch Rates EUR1.2-Bil. Secured Notes 'B(EXP)' -------------------------------------------------------------- Fitch Ratings has assigned TeamSystem S.p.A.'s prospective EUR1.2 billion senior secured notes an expected rating of 'B(EXP)' with a Recovery Rating of 'RR4'. It has affirmed TeamSystem's Long-Term Issuer Default Rating (IDR) at 'B' with a Stable Outlook. Simultaneously, Fitch has downgraded its senior secured instrument rating for existing instruments to 'B', from 'B+', and revised its Recovery Rating to 'RR4', from 'RR3'. The proceeds will repay EUR300 million of floating-rate notes, fund shareholders distribution and M&A, with a portion retained as cash on the balance sheet. TeamSystem has also increased its revolving credit facility (RCF) to EUR350 million. The assignment of the final rating is contingent on the completion of the transaction and the receipt of final documents conforming to information already received. The new issue and use of proceeds will cause EBITDA leverage to peak at 7.0x in 2025, before decreasing below the downgrade threshold in 2026, driven by continued EBITDA growth. Key Rating Drivers Dividend Recapitalisation: TeamSystem's financial policy remains aggressive, with the company planning a EUR700 million dividend recapitalisation as part of its refinancing. Shareholders have historically used the company's debt capacity in full to boost distributions and to fund M&A. The company plans to hold more than EUR260 million of the bond proceeds on its balance sheet, which will support further M&A opportunities and earnout payments. Fitch expects the company to manage its financial policy in a similar manner over the medium term. Leverage Temporarily Higher on Refinancing: Fitch expects TeamSystem's Fitch-defined EBITDA leverage to rise to about 7.0x in 2025, above the rating's 6.5x downgrade sensitivity, driven by a large debt increase on its planned refinancing and dividend recapitalisation. However, Fitch anticipates the company will reduce its Fitch-defined EBITDA leverage to 6.3x in 2026 and 5.9x in 2027, supported by recurring revenue and contributions from M&A in 2024 and 1Q25, alongside international sales expansion in Turkiye and Spain. Fitch expects further deleveraging capacity to be driven by robust revenue rises, cost discipline and greater cross-selling efficiency. Successful Price Increases: TeamSystem has implemented its 'more-for-more' strategy, whereby new product offerings and functionalities drive price increases. Revenue visibility is strong, given the company's discretion over annual price adjustments and annual subscription renewals. The critical nature of Teamsystem's services and their modest cost relative to customers' overall expenses protect it from inflation-related shocks. High EBITDA Margins: TeamSystem's EBITDA margins rose to 38.6% in 2024, from 38.3% in 2023. Fitch expects margins to temporarily decrease to 37.9% in 2025, driven by the recent consolidation of lower-margin M&A targets. Its M&A strategy, while successful, has some execution risk in integrating acquisitions. Any delays in integration or extracting synergies may lead to a temporary margin dilution. The margins are likely to increase further in 2026-2028, supported by organic growth and a prudent approach to its cost base. Strong Free Cash Flow: TeamSystem's pre-dividend free cash flow (FCF) margins were above 13% in 2024, up from 6.6% in 2023, due to strong EBITDA expansion, low capex requirements and favourable working capital dynamics. Fitch expects FCF margins to fall to just under 12% in 2025, due to higher capex requirements and one-off extraordinary expenses related to integration. Fitch expects FCF margins to rise above 12% in 2026-2028, supported by strong revenue and EBITDA growth, particularly in international markets and upselling of AI solutions. Teamsystem's FCF provides a strong organic deleveraging capacity that can support its bolt on acquisition strategy. Secular Trends Supportive: Positive market trends have driven TeamSystem's double-digit organic revenue expansion. The introduction of e-signature and e-invoicing in Italy has expanded its customer base as micro-businesses and SMEs adopt financial and accounting software. Fitch expects this trend to continue in Italy, with similar growth anticipated in Spain and Turkiye, following the approval of mandatory electronic invoicing laws. Execution Risks in New Markets: The company faces operational risks due to market fragmentation in new geographies, like Spain and Turkiye, even though this expansion offers diversification beyond Italy. Fitch remains cautious about organic revenue rises in these markets due to competitive products and slower adoption rates. Increasing Revenue Visibility: TeamSystem's recurring revenue represented 86% of revenue in 2024, up from 81% in 2020. New business lines in digital finance and HR showed strong revenue rises of 22.5% and 11.5%, respectively, in 1Q25. Fitch expects robust revenue growth in 2025, driven by strong new bookings, full-year contributions from M&A, and favourable digitisation trends in Italy, Spain and Turkiye. Stable Churn: Churn has remained stable, at an average of 8%, including renegotiations, across business lines. Churn is higher among expanding microbusiness clients, but it is much lower among SMEs and professionals. Weakening customer profitability is unlikely to sharply increase churn due to Teamsystem's strong market position and the essential nature of its products and services. Peer Analysis Fitch assesses TeamSystem under its Technology Ratings Navigator framework. TeamSystem's rating reflects its high leverage and its leading market position in the Italian enterprise resource planning (ERP) software market. The critical nature of Teamsystem's product offering to its client's businesses translates into higher revenue visibility than for some peers with lower product criticality. TeamSystem's close Fitch-rated peer is Unit4 Group Holding B.V. (B/Stable). Its leading market share of around 40% is higher, but it has better geographic diversification. The former has higher EBITDA margins and is slightly ahead of Unit4 in its share of recurring revenue. Both companies have comparable leverage profiles as leveraged buyouts. Cedacri S.p.A (B/Stable) and Dedalus SpA (B-/Stable) are also active with a software-as-a-service (SaaS) model and have similar profiles to TeamSystem. These companies are exposed to favourable secular expansion trends, benefiting from strong digitisation in Italy and across Europe. Cedacri, however, operates in the Italian banking and financial institutions market and is exposed to the risk of consolidation within its customer base. Engineering Ingegneria Informatica S.p.a. (B/Stable) has greater revenue scale and lower capex requirements than TeamSystem. However, Fitch believes that enterprise resource planning (ERP) providers' diversified customer base carries lower risk than companies with a consultancy model, like Engineering and AlmavivA S.p.A (BB/Stable). Key Assumptions - Revenue to rise 13.9% in 2025, 7. 1% in 2026 and 5.9% in 2027. - Fitch-defined EBITDA margin to decrease to 37.9% in 2025, from 38.6% in 2024, before rising to 39.1% in 2026. - Capex, excluding research and development costs, at 3.8% of revenue in 2025 and between 3% and 3.3% in 2026-2028. - Research and development costs of EUR35 million-47 million a year to 2028, fully deducted from EBITDA. - M&A totaling EUR435 million in 2025 (including earnouts), EUR66 million in 2026 (including earnouts), followed by EUR50 million a year to 2028. - Annual cash interest on payment-in-kind instruments of EUR40 million-52 million, which are treated as shareholder distributions. Recovery Analysis TeamSystem would be considered a going concern in bankruptcy and would be reorganised rather than liquidated. This is due to its technological and legislative knowledge and a wide customer base for its product suite of licences and subscriptions packages. Fitch assesses the company's post-restructuring going concern EBITDA at EUR285 million on a pro-forma basis, up from EUR235 million in its previous rating assessment. The increase reflects the company's increased scope of companies following 2024 and 1Q25 M&A, strong organic growth and its updated capital structure. The post-restructuring going concern EBITDA takes into account slower expansion prospects, weakened pricing power and higher competitive intensity that would lead to a restructuring. Fitch has assumed a 10% charge for administrative claims. Fitch used an enterprise value/EBITDA multiple of 6.0x, in line with the average of its distressed multiples for business services and technology companies in the 'B' category. This is based on strong industry dynamics for TeamSystem in the Italian ERP sector, high barriers to entry and a strong market share with prospects for sustained cash flow generation. Fitch assumed TeamSystem's increased EUR350 million RCF would be fully drawn on default. Its RCF ranks super senior and ahead of its senior secured notes. The senior secured notes will increase, following the company's refinancing, to EUR2,750 million. Its increased EUR650 million holdco notes (from EUR300 million previously) are recognised as equity and excluded from its debt quantum calculation. Its analysis indicates a recovery of 'RR4' for the senior secured notes, implying an equalisation with the IDR at 'B'. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - EBITDA leverage above 6.5x on a sustained basis due to lower EBITDA margins or material debt-funded acquisitions - EBITDA interest coverage below 2.0x - FCF margin consistently below 5% - An erosion of the company's market position in the SME, micro business and cloud segments or dilution of profitability from the Spanish and Turkish markets - Decline in EBITDA margin to below 30% on a sustained basis due to excessive dilution from M&A, as well as loss of internal efficiency and pricing power Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - EBITDA leverage below 5.0x on a sustained basis with a demonstrated change in financial policy - EBITDA interest coverage sustained above 3.0x - FCF margin consistently above 10% - Continued increase in cloud-related revenue to account for over half of sales Liquidity and Debt Structure TeamSystem's liquidity was strong, with EUR160 million cash and cash equivalents at 31 March 2025, which will rise following the refinancing. Fitch forecasts cash of EUR362 million at end-2025, after M&A. TeamSystem's liquidity is also supported by its positive FCF generation and the remaining EUR255 million under it EUR300 million RCF at end-1Q25. Fitch expects the RCF balance will be repaid and that the facility will be increased to EUR350 million following the refinancing. Issuer Profile TeamSystem is an Italian-based provider of financial and accounting ERP software. 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 ----------- ------ -------- ----- TeamSystem S.p.A. LT IDR B Affirmed B senior secured LT B Downgrade RR4 B+ super senior LT B+ Affirmed RR3 B+ senior secured LT B(EXP) Expected Rating RR4 =================== L U X E M B O U R G =================== CURIUM BIDCO: Fitch Affirms 'B' LongTerm IDR, Outlook Stable ------------------------------------------------------------ Fitch Ratings has affirmed the Curium Bidco S.a.r.l.'s Long-Term Issuer Default Rating (IDR) at 'B' with a Stable Outlook. Fitch has also affirmed its senior secured term loan B (TLB) at 'B+', with a Recovery Rating of 'RR3'. The ratings remain constrained by Curium's high financial leverage, small size and limited diversification. Rating strengths are its solid positioning in the protected niche market for nuclear medicine, which offers organic growth opportunities and highly defensible revenue. The Stable Outlook reflects its expectation of steady EBITDA-driven deleveraging, alongside a shift to positive free cash flow (FCF). Fitch expects leverage to remain above 6.0x for the next two years, as the company invests in the launches of its next generation products. Leverage is higher than Fitch anticipated but remains aligned with the 'B' IDR. The company's deleveraging path will depend on the success of its product launches, which should help return EBITDA margins above 25% by 2028. Key Rating Drivers Defensive Organic Growth: Curium's revenue expanded in the mid-to-high single digits in 2024 and 1Q25, aided by solid market performance across all business lines, particularly the geographic expansion of Pylclari after its launch last year. Fitch expects similar expansion in 2025 and 2026, as the company continues to roll out its most recent launches, and supplies of products like Detectnet stabilise. Fitch anticipates in-house contributions to drive revenue rises in 2027 and 2028. This strategy has execution risks related to approval and launch of new products but should be mitigated by the acquisition of Eczacibaşı Monrol (Monrol). The latter allows Curium to access the medical isotope lutetium-177 and other isotopes that can support future products. Further, Monrol expands Curium's PET network in Asia and Europe, improving organic growth capabilities. Lower Profitability and Cash Flows: Fitch has lowered its profitability forecasts, with Fitch-defined EBITDA margins at close to 23% for 2025 and 2026. This is due to temporarily higher-than-expected R&D at 5%-7% of sales, which are fully expensed, and the ramp up of new product launches. Fitch expects the company to continue investing in production capacity, with capex of EUR90 million-100 million a year through 2028, leading to negative FCF in 2025 and neutral FCF in 2026, with some drawdown of the company's revolving credit facility (RCF). FCF improvement would depend on product launches, which should enhance EBITDA margins and lift FCF margins to the low-to-mid single digits. Inability to generate positive cash flow could put pressure on the company's ratings. Temporarily Higher Leverage: Fitch projects EBITDA leverage of 6.8x in 2025, over 1.0x higher than its previous expectations, due to the recent EUR200 million add-on to Curium's TLB, alongside drawdowns under the RCF, given slower EBITDA increases. However, leverage remains comfortably within its sensitivities for the 'B' rating. Fitch anticipates leverage to fall towards 5.5x by 2028, as profitable growth accelerates, driven by new treatments and as investments in its business contribute to earnings. Protected Niche Market Positions: Curium's strong market position in nuclear medicine is supported by its industry-leading geographical footprint and product range. Its vertical integration allows it to control the sourcing of radioactive substances to the distribution of products, underpinning a robust business model. The business model is compatible with a 'BB' rating. However, the rating is anchored in the 'B' category due to high, but sustainable, financial leverage. High Barriers to Entry: The nuclear medicine industry has high barriers to entry, as strict regulatory approvals are required from nuclear and medical agencies, as well as clearance at customs authorities for transportation. The company's vertical integration poses additional barriers to entry. Peer Analysis Larger medical devices-focused peers, such as Boston Scientific Corporation (A-/Stable) and Royal Phillips (BBB+/Stable), are not directly comparable with Curium. Both issuers benefit from large size, with annual revenue of more than EUR10 billion, and diversified product offerings, which result in EBITDA leverage of 2.0x-2.5x. Other medical devices companies, like Auris Luxembourg II S.A. (B/Stable), combine a larger scale with a more intensive R&D cycle that leads to EBITDA margins below 20%, sharply lower than Curium's, and similar leverage. Financiere Top Mendel SAS (Ceva Sante; B+/Stable) is similar to Curium with its focus on a niche business and similar scale, although better margins and lower leverage, reflected in its one notch higher IDR. Other similarly rated peers, like ADVANZ Pharma HoldCo Limited (B/Stable), have asset light business models that focus on lifecycle management of intellectual property rights of niche pharmaceutical drugs. Their FCF margins are far higher than Curium's and have lower financial leverage, of 4.0x to 5.0x. Key Assumptions Fitch's Key Assumptions Within Its Rating Case for the Issuer - Double-digit revenue growth from the Monrol acquisition and increased sales from PET products in 2025. Revenue expansion in the high-single digits in 2026-2028, as new products are launched - EBITDA margins of 23% in 2025-2026, as increased costs support the launch of new products, before gradually returning to over 25% by 2028 - Annual working capital outflow of EUR20 million-30 million - Capex around EUR100 million a year - Bolt-on acquisitions of about EUR20 million a year in 2026-2028, after higher acquisition spending in 2025 on Monrol - No dividend distributions Recovery Analysis Key Recovery Rating Assumptions Fitch´s recovery analysis assumes that Curium would be considered a going-concern operation in bankruptcy rather than liquidated. Curium's post-reorganisation, going concern EBITDA reflects a sustainable EBITDA of EUR170 million. The stress on EBITDA would most likely result from severe operational or regulatory challenges. Fitch applied a distressed EBITDA multiple of 6.0x to calculate a going concern enterprise value, which reflects strong infrastructure capabilities, leading market positions and sound FCF generation. Based on the payment waterfall, the company's EUR255 million RCF ranks equally with its EUR1.5 billion-equivalent senior secured TLBs. In its recovery analysis, Fitch assumed Curium's factoring facilities remain available in a reorganisation of the entity. After deducting 10% for administrative claims, its waterfall analysis generated a ranked recovery for the senior secured loans in the Recovery Rating 'RR3' band, indicating a 'B+' instrument rating, one notch above the IDR. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Inability for EBITDA margin to remain above 20% after the launch of new products - EBITDA leverage consistently above 7.5x - Neutral to mildly positive FCF margins, reflecting a limited organic deleveraging capacity - Loss of regulatory approval relating to the handling/processing of nuclear substances or key products in core markets (the US and the EU) Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Maintenance of a financial policy driving EBITDA leverage below 5.5x on a sustained basis - Better product and geographical diversification, reflecting successful operational integration of acquisitions - Enhanced profitability from improved scale and pricing power, with FCF margins staying well above 5% Liquidity and Debt Structure Fitch's rating case assumes satisfactory liquidity over the rating horizon to 2028, based on Fitch-defined readily available cash of EUR50 million-60 million, and EUR246 million available under its RCF as of end-March 2025. Curium has comfortable maturities to 2029 of its TLB, which offset the negative FCF generation to support its investment plan. Fitch treats EUR10 million of reported cash as restricted to account for the intra-year working capital swings. 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 Curium has an ESG Relevance Score of '4' for Waste and Hazardous Materials Management; Ecological Impacts. Production of radioactive material leads to contamination of its production sites, compelling Curium to fully decommission and decontaminate sites when they are no longer in use. In addition, the company is dependent on nuclear energy generation, as it uses byproducts whose price and availability are correlated with nuclear activity. This has a negative impact on its credit profile and is relevant to its ratings in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Curium BidCo S.a r.l. LT IDR B Affirmed B senior secured LT B+ Affirmed RR3 B+ ===================== N E T H E R L A N D S ===================== DARLING GLOBAL: Fitch Rates EUR750MM Sr. Notes Due 2032 'BB+' ------------------------------------------------------------- Fitch Ratings has assigned Darling Global Finance B.V.'s proposed EUR750 million senior notes due 2032 a 'BB+' with a Recovery Rating of 'RR4'. Proceeds from the notes, together with drawings under the new senior secured credit facilities, will be used to repay existing senior secured credit facilities and redeem the existing EUR515 million notes due 2026. Darling Ingredients, Inc.'s (Darling) 'BB+' rating reflects the company's leading market position as a globally diversified ingredient processor that has benefited from increasing demand for low-carbon fuels, which supports profitability. Fitch's forecast assumes solid demand for renewable diesel, along with favorable biofuel policy, will support structurally higher margins. Fitch projects Darling's EBITDA leverage could trend to the low-3x range in 2025 from 4.1x in 2024 through EBITDA growth, increased Diamond Green Diesel (DGD) cash distribution, and debt reduction. Medium-term EBITDA leverage could trend to around 3x beyond 2025. Key Rating Drivers Sustainable EBITDA Over USD800 Million: Fitch believes rising demand for low-carbon fuels underpins structurally higher fat prices over the cycle. The increased mix of higher-margin specialty collagen and recent acquisitions also support Darling's sustainable EBITDA of at least USD800 million. Fitch-adjusted EBITDA was USD807 million in 2024, driven by lower fat prices from weaker demand from renewable diesel production, biofuel policy uncertainty, and higher animal fat supplies. This compares to EBITDA of USD1.1 billion 2023, when food and feed segments had strong margins. Acquisitions of Valley Proteins, FASA Group in 2022, Gelnex in March 2023, and two smaller bolt-on acquisitions have materially increased run-rate EBITDA. These acquisitions will enhance profitability and provide increased diversification with revenue streams, operations, and geographic footprint. Darling's formula-based animal feed contracts transfer significant commodity risk to suppliers, although it retains some exposure. This leads to muted earnings when commodity prices, such as soy oil and soy meal, are low but have material upside when prices rise. 2025 EBITDA Expectations: Fitch projects Darling's core EBITDA to be in the upper USD800 million range for 2025, due to improved fat and collagen prices. Upside is possible if fat prices gain momentum and biofuel policy becomes clearer. Biofuel policies and tax credit eligibility are likely to limit imports of used cooking oils and renewable diesel, enhancing the value of renewable fuel credits, such as RIN prices, and boosting demand and production capacity. Increasing DGD Distribution: An improved outlook for renewable diesel and SAF margins as policy clarity emerges should support higher DGD distributions over the medium term. The completion of the SAF project at DGD3 in 4Q24 will enable an upgrade of about 50% of its 470 million-gallon capacity to SAF. Fitch believes DGD has a low-cost position due to feedstock integration, scale, and location. DGD also benefits from superior logistics, significantly greater operating experience, and better access to lower-carbon intensity feedstocks than peers. In 2024, Darling received a USD180 million cash dividend from DGD. Shifting Capital Allocation: Fitch expects Darling to shift its capital allocation policy after completing approximately USD3.0 billion in acquisitions since 2022 to enhance and diversify its global supply chain and access to low-carbon-intensity feedstocks. In 2025, Fitch expects Darling to focus on capital investments to support its base business, debt repayment, and share repurchases to offset stock-based compensation dilution. Fitch's forecast assumes capital spending in the low-USD400 million in 2025 with modest allocation for growth initiatives. Darling repurchased USD34 million shares in 2024. Leverage Trending Around 3x: LTM Leverage as of 1Q25 was 3.5x, a decline from 4.1x in 2024, on higher EBITDA and distributions from DGD and debt paydown. Fitch projects Darling's leverage could fall to the low 3.0x range in 2025, driven by similar factors, with FCF approaching USD400 million to support debt repayment. Darling has shown commitment to debt reduction following past acquisitions, including USD350 million in debt repayment during 2024. Strategic Acquisitions: Fitch views Darling's recent acquisitions as strategic, boosting feedstock capacity in the U.S., establishing a foothold in Brazil, and expanding its collagen business. Key acquisitions include Valley Protein's U.S. rendering and used cooking oil plants for USD1.2 billion in May 2022, FASA in Brazil for USD560 million in August 2022, and Gelnex, a global collagen producer, for USD1.2 billion in March 2023. Darling signed a non-binding term sheet with Tessenderlo Group NV to merge their collagen and gelatin operations into a new joint venture. The transaction is currently in preliminary stages, with expected closing in 2026. Parent-Subsidiary Linkage: There is a parent-subsidiary linkage between Darling and its subsidiaries. Fitch's analysis includes a strong parent/weak subsidiary approach with high legal and strategic incentives, including a parent guarantee from Darling. This results in an equalization of IDRs across the corporate structure. Peer Analysis Darling's 'BB+' IDR and Stable Outlook reflects its global market position as a diversified ingredient processor, benefiting from increased demand for low-carbon fuels, which supports profitability. Fitch forecasts that renewable diesel demand and favorable biofuel policies will support structurally higher margins. Fitch projects leverage could trend to low-to-mid-3x in 2025 through EBITDA growth, increased DGD cash distribution, and debt reduction. Darling's IDR is tempered by commodity volatility, regulatory changes, and FX risks. Darling has significant exposure to renewable diesel through its 50% interest in DGD, North America's largest producer. Darling maintains higher profitability compared with similar peers in Fitch's agribusiness coverage, except for Ingredion Incorporated (BBB/Stable). Darling's capital intensity is higher than agribusiness peers due to the corrosive nature of animal by-product processing. Ingredion's 'BBB' rating benefits from its global product portfolio and stable underlying business model focused on starches and sweeteners, with increasing exposure to higher-value, higher-margin, on-trend specialty ingredients. Ingredion has implemented measures to address operating pressures in its core businesses that Fitch expects should reduce earnings volatility and support more predictable long-term earnings growth. Fitch expects Ingredion to maintain good financial discipline, including consistent capital allocation policies that support leverage below 2x over the forecast period. Pilgrim's Pride Corporation's (PPC) 'BBB-/Stable' rating reflects its resilient operating performance, low net leverage, and strong liquidity position. PPC's ratings are supported by its resilient business profile as one of the world's largest chicken processors with operations in the U.S., Europe and Mexico, a diversified product portfolio and vertically integrated operations. Key Assumptions - Darling's core EBITDA increases to upper USD800 million range in 2025, and trend towards the low USD900 million on solid demand for renewable diesel, along with favorable biofuel policy that supports structurally higher margins; - Capital spending remains around USD400 million in 2025, rising to around USD500 million over the medium term; - The forecast assumes increasing dividend distributions from DGD of around USD300 million in 2025. This includes the monetization of 45Z credits earned by DGD and the remaining Blenders Tax Credits from 2024. Dividend distributions remaining in a similar range in 2026; - FCF around USD400 million in 2025 and 2026; - EBITDA leverage could trend to around lower 3.0x in 2025 on EBITDA growth and debt reduction and trending to around 3x over the medium-term due to similar factors; - Fitch assumes a base interest rate between 4.3% to 3.5% over the forecast horizon. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - EBITDA leverage sustained above 3.5x as a result of weaker-than expected core EBITDA or lack of a material dividend distribution from DGD, or capital allocation polices outside of Fitch's expectations, such as large debt-funded M&A and increased shareholder returns. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Publicly articulated financial framework or a demonstrated record of maintaining a consistent credit profile, yielding increased confidence in EBITDA leverage being sustained under 3x along with operating performance that is in line with Fitch's expectations for sustained core EBITDA of USD700 million and EBITDA after affiliates dividends (dividend distribution from DGD joint venture [JV]) above USD1.0 billion. Liquidity and Debt Structure As of March 28, 2025, Darling had ample liquidity, consisting of USD81 million in cash and availability of USD1.272 billion under the USD1.5 billion secured RCF, which had USD267 million in outstanding borrowings, USD72.7 million in ancillary facilities and USD0.7 million of issued letters. Darling is refinancing its existing USD1.5 billion RCF, USD1.6 billion term loans, and EUR515 million notes with a new USD2 billion five-year revolving facility, USD900 million six-year term loan A facility and EUR750 million seven-year notes in a leverage neutral transaction that extends maturities. The remainder of Darling's debt structure includes USD500 million senior notes due 2027 and USD1 billion senior notes due 2030. Covenants on the revolving facility require total leverage to not exceed 5.5x and interest coverage of 3.0x or greater, for which Darling has significant cushion. Terms for the revolving facility include a collateral-release mechanism upon Darling achieving an investment-grade credit rating. Issuer Profile Darling maintains a leading position as a globally diversified collector and processor of food waste streams, transforming the products into sustainable ingredients in the food, feed and fuel sectors. Darling also has a 50% interest in the DGD JV, largest producer of RD in North America. Summary of Financial Adjustments The fair value of debt is adjusted to reflect the amount payable at maturity, stock-based compensation and adjustments for associate dividends. Date of Relevant Committee 09 April 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 Darling has an ESG Relevance Score of '4' [+] for Exposure to Social Impacts. Darling's base business focuses on the collection of animal byproducts and repurposing into sustainable ingredients. Fitch expects the company should benefit from market preferences and healthy lifestyle trends toward collagen products. The company's biomass-based diesel JV is also benefiting from social and regulatory changes that are creating higher demand for renewable products and consequently increasing renewable fuel mandates for the JV. This has a positive impact on the credit profile, and is relevant to the rating in conjunction with other factors. Darling has an ESG Relevance Score of '4' [+] for Energy Management, as the company benefits from its strategic decision to invest in the biomass-based diesel industry that is expected to lead to higher stability and visibility of cash flows as a result of the legislative mandates and consumer and corporates preference for the consumption of renewable products that improve air quality. This has a positive 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 ----------- ------ -------- Darling Global Finance B.V. senior unsecured LT BB+ New Rating RR4 UNIT4 GROUP: Fitch Affirms 'B' LongTerm IDR, Outlook Stable ----------------------------------------------------------- Fitch Ratings has affirmed Unit4 Group Holding B.V.'s Long-Term Issuer Default Rating (IDR) at 'B' with a Stable Outlook. Fitch has affirmed the company's senior secured loan facilities at 'B+', with a Recovery Rating of 'RR3'. The 'B' IDR reflects Unit4's robust business model as an enterprise resource planning (ERP) software provider, with healthy revenue and profitability growth, supporting its large deleveraging capacity. Fitch expects leverage to fall to below 6x by end-2025, aligning fully with the thresholds for a 'B' rating. Unit4 benefits from stable customer relationships, with low churn rates leading to strong revenue stability, particularly in recurring revenue, which has been growing broadly in line with the broader ERP software market. Key Rating Drivers Improving Leverage: Fitch projects Unit4's EBITDA leverage to decline to below 6x at end-2025, after a spike following a EUR200 million tap debt issue in 2024. The company's deleveraging flexibility is primarily due to healthy and improving EBITDA generation, which is likely to be supported by stronger free cash flow (FCF) from 2026 after it fully repays its payment-in-kind debt. This instrument is outside the restricted group, therefore Fitch views its repayment akin to shareholder distribution. Leverage may continue falling unless the company makes more acquisitions or recapitalises. Expanding But Fragmented Market: The ERP software market is large and expanding, providing ample growth opportunities for providers. However, the market is fragmented and intensely competitive, with providers of all sizes and market positioning, ranging from full ERP suite providers to single-functionality specialists. This diversity makes market dominance less important and highlights the importance of service capabilities and a focus on customer niches. Positive Growth Outlook: Fitch expects Unit4's core service revenue to rise in the mid-to-high single digits a year, broadly in line or slightly ahead of the ERP market. Upselling and price indexation for the existing customer base should allow for at least mid-single digit revenue expansion while a stronger emphasis on finding new customers may provide more opportunities. Price indexation accounted for over 3% of 2024 recurring revenue growth. Most contracts, except for public finance customers, have price indexation clauses providing repricing optionality. Long-Lasting Customer Relationship: Unit4 benefits from typically stable and long-term customer relationships, leading to good revenue visibility. ERP software is essential for day-to-day operations and customers usually face a prohibitively high risk of operating disruption when switching their ERP provider. The company's annual customer churn is about 8%, broadly similar to other ERP providers catering to SMEs, such as TeamSystem Holding S.p.A. Positive Recurring Revenue Impact: Unit4's increasing share of recurring revenue improves revenue visibility but also leads to lower churn, which is credit positive. Management estimates that over 95% of budgeted 2025 recurring revenue was contracted at the start of the year. This contracted amount alone would allow the company to achieve close to double-digit annual revenue growth. The share of recurring revenue exceeded 80% of the total in 2024 and continues to rise. The churn on recurring revenue may be as low as 5%. Cloud Migration Helps Margins: Unit4 benefits from economies of scale on its cloud services as large cloud service providers can typically offer better terms on larger volumes, while cloud operations simplify upgrades and obviate the need to maintain multiple software product versions. The Cloud accounts for about 60% of recurring revenues and management has plans to raise this to 80%-90% in the medium-to-long term. The gross margin on cloud-based services - at 80% in 2024 - was ahead of Unit4's overall 70% and is likely to continue improving further, driving overall profitability higher. Efficiency Improvement Targets Achieved: Unit4 has broadly achieved its performance improvement targets, and the active phase of its operational restructuring is complete. Unit4 has relocated some of its operations to lower- cost jurisdictions, optimised its real estate portfolio, and greatly improved the profitability of professional support services that had been a drag on its margins. Efficiency improvement initiatives are likely to continue but on a lower scale, with likely declining exceptional and restructuring (E&R) spend. Fitch expects these expenses to stay below 10% of EBITDA. Geographic Diversification: Unit4's good geographic diversification across the Nordics, continental Europe and the UK and Ireland, with inroads into APAC and the US, leads to more resilient revenue generation than single country-focused providers. However, it also exposes Unit4 to FX risk, as its debt is denominated in euros. Positive Cash Flow: Unit4's asset-light business model with a Fitch-defined EBITDA margin above 30% and capex of less than 2% of revenue lead to strong intrinsic cash generation. FCF will benefit from declining interest rates and likely lower E&R charges. However, it faces considerably higher taxes, reflective of higher profitability but also internal reorganisation. Fitch's Global Economic Outlook expects the eurozone base interest rate to be 1.5% at end-2025 and 2026, down from 3% at end-2024. Fitch projects pre-dividend FCF margin in the mid-teens, and cash flow from operations less capex/debt ratio in the high-single digits. Peer Analysis The closest Fitch-rated peer is TeamSystem S.p.A. (B/Stable), an Italian accounting and ERP software company (about 40% market share) with recurring revenue of close to 80%, similar to Unit4. The company is strong in its home market but is less geographically diverse. It caters mainly to SMEs with a churn rate of 6%-10%, comparable to Unit4's. Dedalus SpA (B-/Stable), a pan-European healthcare software company, has a lower churn rate (in the 1% range) and more supportive industry trends, with EU wide rising healthcare digitalisation. It has less pricing flexibility, as its customers depend on public funding, and faces structurally higher R&D costs, leading to higher leverage. Key Assumptions Fitch's Key Assumptions Within Its Rating Case for the Issuer - Double-digit increase of recurring revenue in 2025, and high-single digit rises in 2026-2028 - Improving EBITDA margins to above 33% in 2025 and close to 35% by 2028 - Cash taxes to peak in 2025, and stabilising at 30% of EBITDA less interest in 2026-2028 - Capex at below 2% of revenue to 2028 - No shareholder distributions other than full payment-in-kind repayment in 2025 Recovery Analysis - The recovery analysis assumes that Unit4 would be reorganised as a going-concern in bankruptcy rather than liquidated, given its intellectual knowledge and wide customer base with a low churn rate. - Fitch estimates that post-restructuring EBITDA would be about EUR95 million, after higher competitive intensity leads to revenue losses or overspend on new products. The EBITDA estimate is about 30% lower than 2024 EBITDA. - A multiple of 6.0x is applied to the going concern EBITDA to calculate a post-reorganisation enterprise value. The multiple is in line with that of other similar software companies with a low churn subscriber base and strong pre-dividend FCF generation. - Administrative claims of 10% deducted from enterprise value to account for bankruptcy and associated costs. - First-lien secured debt for claims includes a EUR875 million senior secured term loan (including the EUR200 million tap issue in April 2024) and an equally ranking multi-currency EUR100 million revolving credit facility, which Fitch assumes to be fully drawn on default. - This results in a senior secured debt instrument rating of 'B+', or one notch above the 'B' IDR, with a Recovery Rating 'RR3'. RATING SENSITIVITIES Factors That Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - EBITDA leverage persistently above 6.5x - EBITDA interest coverage below 2.5x on a sustained basis - Failure to improve profitability and to maintain robust revenue growth from cloud services, leading to FCF margins in the low-single digits Factors That Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - EBITDA leverage below 5x on a sustained basis, accompanied by a stronger financial policy and disciplined M&A with limited additional debt - EBITDA interest coverage sustained above 3x - Maintenance of healthy operating performance, with rising cloud revenues and robust FCF margins Liquidity and Debt Structure Fitch views Unit4's liquidity as sufficient. By management's estimates, the company had EUR98 million of cash on its balance sheet at end-1Q25. This is supported by positive FCF generation and an untapped EUR100 million revolving credit facility with maturity in December 2027. The company's EUR875 million term loan B matures in June 2028. Issuer Profile Unit4 is strategically focused on providing ERP solutions for medium-sized people-centric organisations, such as non-profit and project-driven organisations and public finance entities. Summary of Financial Adjustments Capitalised R&D expenses are treated as a cash cost deducted from EBITDA. 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 ----------- ------ -------- ----- Unit4 Group Holding B.V. LT IDR B Affirmed B senior secured LT B+ Affirmed RR3 B+ =========== P O L A N D =========== MBANK SA: Fitch Assigns 'BB+(EXP)' Rating on Sub. Tier 2 Notes -------------------------------------------------------------- Fitch Ratings has assigned mBank S.A.'s (BBB/Stable/bbb) planned subordinated Tier 2 issue (ISIN: XS3090129332) an expected long-term rating of 'BB+(EXP)'. The assignment of a final rating is contingent on the receipt of final documents conforming to the information Fitch has already received. Key Rating Drivers The subordinated notes are rated two notches below mBank's Viability Rating of 'bbb', in accordance with Fitch's Bank Rating Criteria. The notes are notched down twice for loss severity as Fitch expects poor recovery prospects in the event of failure. Fitch did not apply additional notching for non-performance risk, as the notes do not have any going-concern loss absorption, such as coupon omission or deferral features. The subordinated notes have a maturity in 2035, with a call right in 2030, and constitute direct, unsecured, unconditional and subordinated obligations of mBank. The notes are intended to qualify as Tier 2 regulatory capital. For more information about mBank's other ratings see "Fitch Upgrades mBank S.A. to 'BBB'; Outlook Stable" published on 22 April 2025. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade The notes' rating would be downgraded if mBank's VR were downgraded. The notes' rating is also sensitive to a change in notching should Fitch change its assessment of loss severity or relative non-performance risk for these instruments. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade The notes' rating would be upgraded if mBank's VR were upgraded. ESG Considerations mBank has an ESG Relevance Score of '4' for Management Strategy due to a high government intervention risk in the Polish banking sector, which affects mBank's operating environment, its business profile and ability to define and execute its strategy. This has as 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 ----------- ------ mBank S.A. Subordinated LT BB+(EXP) Expected Rating =========== R U S S I A =========== BAKAI BANK: Fitch Assigns 'B-' LongTerm IDR, Outlook Stable ----------------------------------------------------------- Fitch Ratings has assigned Kyrgyzstan-based Bakai Bank OJSC (Bakai) Long-Term Issuer Default Ratings (IDRs) of 'B-' with Stable Outlooks. Fitch has assigned the bank a Viability Rating (VR) of 'b-' and a Government Support Rating (GSR) of 'no support'. Key Rating Drivers Bakai's 'B-' Long-Term IDRs are driven by the bank's intrinsic creditworthiness, as captured by its 'b-' VR. The bank's VR reflects its exposure to the volatile and structurally weak Kyrgyz economy, high risk appetite and dollarisation, and volatile loan quality. The VR also considers the bank's reasonable market shares, good profitability, plus adequate capital and liquidity buffers. Strong Growth; Structural Weaknesses: The Kyrgyz economy saw robust GDP growth of 9% annually in 2022-2024, driven by booming trade, capital inflows and investments in the construction sector. Fitch expecta growth to slow to 6.5% in 2025 due to a projected moderation in trade activity. High dependence on external trade with Russia exposes local companies to the risk of secondary sanctions, while governance deficiencies and regulatory gaps add to the structural weaknesses of the local operating environment. Notable Franchise: Bakai is the fourth-largest bank in Kyrgyzstan, with a 11% share of sector assets and 12% share of sector deposits at end-1Q25. It is privately owned and designated as a domestic systemically important bank. Bakai focuses mostly on private large corporates and SMEs (end-2024: 64% of gross loans) but has also expanded into retail lending to diversify. Rapid Loan Expansion; Currency Risk: Bakai's loan expansion was aggressive in 2022-2024, with a CAGR of 38%, outpacing the sector's 29%. Fitch expects loan growth to moderate to about 20% in 2025-2026, with a notable contribution from retail lending. Net loans represented only 34% of total assets at end-2024, while non-loan assets were mostly liquid. The bank is exposed to currency risk due to the high dollarisation of its assets and liabilities, although its open foreign-currency position was limited to 3% of equity at end-2024. Volatile Loan Quality: Bakai's Stage 3 loans ratio fell to 6.8% at end-2024, driven by high loan growth, after peaking at 9.3% at end-2023. Stage 2 exposures were low at 0.9% of gross loans, down from 2.4% a year ago. The total reserve coverage of impaired loans improved, due to a tightened provisioning policy, but remained moderate at 68% at end-2024 (end-2023: 51%). Fitch expects Bakai's loan quality to remain volatile, with the impaired loans ratio at about 7% in 2025-2026. Good Profitability: Bakai's performance is underpinned by wide margins (2024: 9.3%) and substantial non-interest income (69% of total operating income), mainly from FX trading gains. This provides a high loss-absorption capacity, with a pre-impairment profit equaling 15% of average loans in 2024 (2023: 13%), while credit losses were limited. As a result, the bank's operating profit was high at 6.7% of risk-weighted assets (RWA) in 2024 (2023: 6.3%), but Fitch expects it to moderate to 4%-4.5% in 2025-2026 due to smaller FX gains and a larger cost base. Reasonable Capital Buffer: Bakai's Fitch Core Capital (FCC) ratio rose to 19.1% at end-2024 (end-2023: 18.7%), underpinned by robust profitability and limited dividend payments. At end-1Q25, the bank's regulatory total capital ratio was 16.8% (end-2023: 15.6%), which provides an adequate buffer above its 14% regulatory threshold. Fitch expects the bank's core capital ratio to fall to about 18% by end-2026, due to loan expansion. Rapid Deposit Growth; Good Liquidity: Bakai's loans/deposits ratio improved to a low 45% at end-2024 (end-2021: 89%), due to a strong 64% CAGR in the deposit base over 2022-2024. Notable contributions came from retail demand deposits and corporate current accounts. Wholesale funding equaled a modest 7% of total liabilities at end-2024, while liquidity buffer was large and covered 60% of customer deposits. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A downgrade of Bakai's Long-Term IDRs and VR would come from asset quality deterioration translating into loss-making performance and causing the FCC ratio to fall below 10%. Liquidity shortages, arising from large deposit outflows, could also be credit negative. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade An upgrade of Bakai's Long-Term IDRs and VR would require material improvements in the Kyrgyz operating environment, with the bank maintaining a stable business model and financial profile. OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS The bank's 'B' Short-Term IDRs are the only possible option mapping to the 'B-' Long-Term IDRs. Bakai's GSR of 'no support' reflects private ownership and Fitch's view that the Kyrgyz authorities have limited financial flexibility to provide extraordinary support to the bank, given the country's limited foreign-currency reserves and the sector's high deposit dollarisation. OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES The Short-Term IDRs are sensitive to changes in the bank's Long-Term IDRs. Upside to the bank's GSR is limited unless there is a substantial improvement of sovereign financial flexibility, as well as a record of timely and sufficient capital support being provided to systemically important private banks. VR ADJUSTMENTS The earnings and profitability score of 'b' is below the 'bb' category implied score due to the following adjustment reason: earnings stability (negative). Date of Relevant Committee 02 June 2025 ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating ----------- ------ Bakai Bank OJSC LT IDR B- New Rating ST IDR B New Rating LC LT IDR B- New Rating LC ST IDR B New Rating Viability b- New Rating Government Support ns New Rating NAVOIYURAN: Fitch Assigns 'BB-' LongTerm IDR, Outlook Stable ------------------------------------------------------------ Fitch Ratings has published State Enterprise Navoiyuran's Long-Term Issuer Default Rating (IDR) of 'BB-' with a Stable Outlook. The Standalone Credit Profile (SCP) is 'bb-'. The rating is constrained by Navoiyuran's limited diversification as a single commodity producer in a niche market, exposure to uranium price volatility, moderate scale and Uzbekistan's weak operating environment. Debt is currently negligible, but Fitch expects large capex to cause EBITDA gross leverage to rise to just under 1.5x by 2028. The rating reflects the company's increased reserve life following the transfer of reserves from the state, and manageable leverage over 2025-2028. It also takes into account Navoiyuran's large presence in the global uranium mining sector and below average operating costs, which are offset by high royalties and substantial sustaining capex. Navoiyuran's IDR is driven by its SCP and is at the same level as the rating of its sole shareholder, Uzbekistan (BB-/Stable). Fitch rates the company using Fitch's Government-Related Entities (GRE) Rating criteria. Key Rating Drivers Medium-Sized Miner: Navoiyuran is the fifth largest uranium oxide producer globally with 13.5 million lb output (5,200 tons of uranium; tU) in 2024, representing 8.4% of global uranium supply. The company uses the in situ leaching (ISL) extraction method, which is more cost efficient than traditional mining. High reliance on a single commodity exposes the company to volatile uranium prices. Its EBITDA was USD626 million in 2024, which Fitch expects to moderate to USD350 million-400 million, under its mid-cycle price assumptions. Increased Reserve Life: Navoiyuran has increased its reserve life to around 13 years, based on 2P reserves at end-2024, from five years at end-2023, after all remaining ore reserves were transferred from the state to the company. Ore reserves, according to the latest JORC report, on 1 January 2025 were 63.4ktU, up from 19.5 ktU in January 2024. Fitch expects that material investments in exploration will support reserves replacement ratio at above 100%. Large Capex; Negative FCF: Navoiyuran aims to increase production to 7,100 tU by 2030, supported by considerably higher capex, with around a third allocated to exploration. Fitch expects the company to adjust its capex if prices are lower than Fitch forecasts. Large capex and continued dividend distribution will lead to negative free cash flow (FCF). Fitch expects Navoiyuran's EBITDA gross leverage to increase to slightly below 1.5x by 2028 from almost zero in 2024, based on its price assumptions. Moderating Prices, Tight Market: Fitch expects the uranium market to remain in a modest deficit over the medium term, as several junior restarts and new supply will meet rising demand, while inventory levels remain depleted. The World Nuclear Association estimates that world reactor requirements will double by 2040 from 65,650tU in 2023, which shall be covered by sizable new supplies, while UxC indicated a supply deficit of 44ktU even in a low-demand environment. Navoiyuran supplies uranium at spot prices, unlike peers such as Kazatomprom, which are focused on long-term prices. Low-Cost Position: Navoiyuran's cash costs are among the lowest in the industry due to the efficient ISL technology, high self-sufficiency in sulphuric acid required for the ISL process, and partial replacement of sulphuric acid with oxygen. Navoiyuran operates three major mining sites - Zafarabad, Uchkuduk, and Nurabad - consisting of several deposits, which supply material to the refining plant that produces uranium oxide. Alternative Export Routes: Navoiyuran has a diversified uranium revenue base with sales to Japan (56%), Canada (24%), the US (11%), India (6%), and South Korea (3%). Navoiyuran ships uranium via rail to Saint Petersburg, from which it is exported for further processing. There are no restrictions on uranium export from Russian territory, but Fitch believes sanctions, if introduced, might disrupt shipments. The main alternative is the Trans-Caspian International Transport Route through Azerbaijan and Georgia, which is used for some shipments of JSC National Atomic Company Kazatomprom (BBB/Stable). Strong Decision Making and Oversight: Fitch views decision-making and oversight under the GRE Rating criteria as 'Strong', given the 100% ownership by the state through the Ministry of Economy and Finance. Management have indicated that an IPO is planned in 2H26, though the state would maintain a majority stake. The state has tight control over the company, by monitoring its budget, investments and key performance indicators. Strong Precedents of Support: Fitch assesses precedents of support as 'Strong' even though Navoiyuran has not needed any support from the government since its inception as a separate entity in 2022. The assessment is based on the evidence of state support towards Navoiyuran's peers, such as JSC Navoi Mining and Metallurgical Company (NMMC, BB-/Stable) and JSC Almalyk Mining and Metallurgical Complex (Almalyk, BB-/Stable). Incentive to Support: Fitch assesses preservation of government policy role as 'Strong'. Fitch considers Navoiyuran a strategic GRE, taking into account its important role in the nuclear production cycle and its political importance to the state. Uranium mining is one of the key economic activities in Uzbekistan. The company was the third-largest tax contributor in 2024. It has had no major debt since its spin-off in 2022, leading to its 'Not Strong' assessment of contagion risk. SCP Drives IDR: Navoiyuran's GRE score of 20, out of a maximum of 60, means its IDR is driven by its SCP and is at the same level as the sovereign IDR of 'BB-'. Improving Corporate Governance: Navoiyuran continues to make progress in improving its corporate governance. The company prepares annual IFRS financial reports with no interim reporting yet and has completed a reserves estimation according to JORC. The supervisory board consists mostly of state representatives and has two independent members. Peer Analysis Navoiyuran's production volume of uranium oxide was 5.2ktU in 2024, compared with 12.3ktU for its direct peer, Kazatomprom (BBB/Stable). Navoiyuran's EBITDA of USD626 million in 2024 is also below Kazatomprom's USD2,336 million in the same year. However, Navoiyuran maintains very strong EBITDA margins of about 68% in 2024, versus Kazatomprom's 45%. Kazatomprom and Navoiyuran's assets are mainly located in the first quartile of the global all-in sustaining costs (AISC) curve. In 2024, Navoiyuran's AISC were at USD31/lb, slightly higher than Kazatomprom's USD28/lb (on an attributable basis). However, Navoiyuran has higher royalties at 16%, compared with Kazatomprom's 6%-9% in 2024-2026. Kazatomprom's EBITDA leverage is low at below 1x. Eramet SA (BB/Negative) mines manganese ore, mineral sands and nickel, is larger than Navoiyuran and has a low cost position of manganese mines with first and second quartile for business costs. It has higher leverage and is more exposed to weaker operating environments, such as Gabon (CCC), Senegal (not rated) and Argentina (CCC+). Navoiyuran's operations are concentrated in one country, Uzbekistan, which has a weak operating environment. Navoiyuran's liquidity is weaker than higher-rated peers'. Navoiyuran's peers in Uzbekistan are the copper and gold producer, JSC Almalyk Mining and Metallurgical Complex (IDR: BB-; SCP: b+) and gold producer, JSC Navoi Mining and Metallurgical Company (NMMC; IDR: BB-; SCP: bb+), both of which are larger. Almalyk faces pressure on its FCF due to substantial capex for its transformative project, resulting in higher leverage than NMMC and Navoiyuran. Key Assumptions - Average uranium spot prices of around USD72/lb in 2025, USD65/lb in 2026, USD60/lb in 2027 and USD50/lb in 2028 and mid-cycle - CPI in Uzbekistan of about 7% in 2025-2028 - Mid-single-digit increase in production volumes a year on average over 2025-2028 - EBITDA margins averaging above 50% in 2025-2028 - Capex of USD240 million (UZS3,300 billion) a year on average in 2025-2028 - Half of net profit is distributed as dividend - Social contributions of USD35 million (UZS470 billion) a year in 2025-2028 RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Negative sovereign rating action EBITDA gross leverage above 1.5x on a sustained basis, e.g. due to deterioration of the uranium market or higher-than-expected capex or dividends, which could be negative for the SCP but not necessarily for the IDR Unremedied liquidity issues Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Positive rating action on the sovereign A material improvement in scale, positive FCF and EBITDA gross leverage below 1x on a sustained basis and improvement in the liquidity position, which could be positive for the SCP but not necessarily for the IDR For Rating Sensitivities for Uzbekistan, see rating action 'Fitch Affirms Uzbekistan at 'BB-'; Outlook Stable', dated 23 August 2024. Liquidity and Debt Structure At end-2024, Navoiyuran's unrestricted cash totalled around USD69 million. During 2024, Navoiyuran raised a USD60 million five-year loan from a Chinese bank via National Bank of Uzbekistan, to finance capex. At end-2024, the company had drawn loan tranches totalling around USD32 million. Navoiyuran's FCF will be negative for the next four years, due to large investments, making the company reliant on external financing sources. Issuer Profile Navoiyuran is the fifth largest uranium oxide producer globally located in Uzbekistan. Date of Relevant Committee 04 June 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 State Enterprise Navoiyuran has an ESG Relevance Score of '4' for Financial Transparency due to limited record of audited financial statements and publication timeliness, which has a negative impact on the credit profile, and is relevant to the rating in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating ----------- ------ State Enterprise Navoiyuran LT IDR BB- Publish STATE BANK FOR FOREIGN ECONOMIC: Fitch Assigns 'BB-' LongTerm IDRs ------------------------------------------------------------------ Fitch Ratings has assigned State Bank for Foreign Economic Affairs of Turkmenistan (TVEB) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) of 'BB-' with Stable Outlooks. Key Rating Drivers TVEB's Long-Term IDRs are equalised with Turkmenistan's Long-Term IDRs (BB-/Stable), reflecting a moderate probability of support from Turkmenistan's authorities, as underlined in the bank's 'bb-' Government Support Rating (GSR). Its view factors in the sovereign's strong capacity to provide support to the bank, given an exceptionally strong sovereign balance sheet, very low public debt and extremely large external reserves. The bank's GSR considers TVEB's important policy role and special legal status, its full and strategic state ownership, and state supervision. Fitch does not assign a Viability Rating to TVEB, as is usual for development banks, because its operations are largely determined by its policy role. Policy Role: TVEB is the largest domestic bank by assets, accounting for about 20% of system assets at end-2023. A dedicated government decree and TVEB's charter define its policy mandate. The bank fulfils its policy role in financing strategically important, long-term investment projects in the country's key sectors, including oil and gas, chemicals, transportation and agriculture. The policy loans (end-2023: a dominant 94% of TVEB's total book) are granted to state-owned entities and guaranteed by the government. State Agent for External Debt: TVEB also serves as an agent for the government when the latter raises foreign debt to finance strategically important investments in Turkmenistan. Most of the government's external borrowings are facilitated through TVEB and booked on its balance sheet as government liabilities, underlining the bank's role as a primary conduit for foreign debt entering the country. These government liabilities accounted for a large USD2.6 billion, or 30% of the bank's total liabilities, at end-2023. Strategic State Ownership: TVEB is fully owned by the government. The bank is closely supervised by a range of high-ranking government bodies, and senior state officials are involved in all major decision-making processes at the bank. TVEB is also subject to the standard supervision by the central bank. Moderate Impairments; Ample Liquidity: Loans were a moderate 37% of assets at end-2023. Stage 3 loans were low (3% of gross loans), while Stage 2 exposures (12%) were sizeable. This is despite a large share of government-guaranteed policy loans, which may indicate borrowers' standalone vulnerability without state support. Liquidity made up 61% of assets, mainly consisting of low-risk placements with investment-grade banks and the central bank. Large State-Related Funding: TVEB is funded by highly concentrated, interest-free customer accounts (end-2023: 68% of liabilities). These are mainly placed by state-owned companies, which dominate the banking system deposits in Turkmenistan. This is in addition to the large external borrowings by the government, booked with the bank. TVEB's high reliance on state or state-related funding underpins its view that liquidity support from the state is highly likely, if needed. Low Equity Base, Slowly Growing: The bank's Fitch Core Capital (FCC) ratio was a high 48% at end-2023 but should be viewed against the zero risk weights on most of its loans, in addition to zero-to-low risk weights on its liquid assets. The equity/assets ratio was a weak 6.3%, but Fitch expects it to gradually increase. This is supported by moderate internal capital generation, given its reasonable return on equity (2023: 13%) and conservative growth. Long Foreign-Currency Position: A very large differential exists between the official exchange rate (3.5 to the US dollar since 2015) and the parallel rate, which has been broadly stable at just above 19 since mid-2022. Its forecast through 2026 assumes an unchanged official exchange rate. If there were sharp local currency depreciation, TVEB's capital would be shielded by a large open foreign-currency (FC) position against an increase in asset value, as the bank's assets are mainly denominated in FC (end-2023: 84%). Government support may further mitigate risks. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A downgrade of the sovereign ratings would trigger a downgrade of TVEB's Long-Term IDRs and GSR. A marked weakening of the bank's policy role or of its association with the sovereign could widen the rating notching between them. However, this scenario is unlikely. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade The bank's Long-Term IDRs and GSR could be upgraded following an upgrade of the sovereign ratings. Date of Relevant Committee 03 June 2025 Public Ratings with Credit Linkage to other ratings TVEB's IDRs are linked to Turkmenistan's IDRs. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating ----------- ------ State Bank for Foreign Economic Affairs of Turkmenistan LT IDR BB- New Rating ST IDR B New Rating LC LT IDR BB- New Rating LC ST IDR B New Rating Government Support bb- New Rating ========= S P A I N ========= IM BCC CAPITAL 1: Fitch Hikes Rating on Class D Notes to 'BB+sf' ---------------------------------------------------------------- Fitch Ratings has upgraded IM BCC Capital 1, FT's (IM BCC) classes B to D notes and affirmed the class A notes. Entity/Debt Rating Prior ----------- ------ ----- IM BCC Capital 1, FT Class A ES0305386007 LT AAAsf Affirmed AAAsf Class B ES0305386015 LT AAsf Upgrade A-sf Class C ES0305386023 LT Asf Upgrade BBB-sf Class D ES0305386031 LT BB+sf Upgrade B-sf Transaction Summary The transaction is a securitisation of a static portfolio of Spanish SME and self-employed loans originated by Cajamar Caja Rural, Sociedad Cooperativa de Crédito (BBB/Stable/F3). KEY RATING DRIVERS CE Build-up: The upgrades reflect the gradual increase in credit enhancement (CE) available to the notes, which is mainly driven by the reserve fund staying at the absolute floor level. CE for the class A and B notes has increased to 46.4% and 22.7% from 38.8% and 15.0%, respectively, since closing. Fitch expects CE to increase more rapidly as the notes will switch to sequential amortisation on the next payment date in July 2025, as the 10% portfolio factor trigger was breached on the April 2025 payment date. The notes are sufficiently protected by CE to absorb the projected losses commensurate with the corresponding rating cases. Robust Performance and Stable Outlook: The rating actions also reflect the broadly stable asset performance outlook. Loans in arrears between 60 and 90 days are minimal at less than 0.1% and gross cumulative defaults as a percentage of the initial portfolio balance were 1.0% as of the April 2025 reporting date. The rating actions also factor in its updated macro-economic outlook for Spain. Fitch has maintained the default rate expectations for obligors (self-employed and SME borrowers) in line with those assigned at closing, supported by the strong performance record. Industry Concentration Risk: The portfolio is exposed to industry concentration as 55% of its current balance is linked to agricultural activities, slightly higher than the 49% exposure at closing in 2018. To address this concentration risk, the portfolio analysis has increased the default correlation parameter, which implies a higher default rate expectation than diversified portfolios. The portfolio remains granular, but is becoming increasingly concentrated as the transaction deleverages. Twelve obligors represent more than 50bp of the current portfolio balance each, and the top 10 obligors account for 9.2% of current portfolio balance, compared with 7.5% at the prior review. Migration to Secured Portfolio: The portfolio composition continues to migrate towards more real estate secured loans, as unsecured loans mature earlier, as anticipated at closing. Around 72% of portfolio balance is secured by first-lien real estate assets versus 28% at closing. The recovery analysis for secured loans uses market value declines or collateral haircuts assumptions, in accordance with Fitch's SME Balance Sheet Securitisation Rating Criteria. For unsecured positions, a cap on recovery rates applies in the range between 30% and 5% at 'B' and 'AAA' rating scenarios. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - For the class A notes, a downgrade of Spain's Long-Term Issuer Default Rating (IDR) that could reduce the maximum achievable rating for Spanish structured finance transactions. This is because the class A notes are rated at the maximum achievable rating, six notches above the sovereign IDR. - Long-term asset performance deterioration, such as recoveries that are lower than its base case expectations, increased delinquencies or reduced portfolio yield, which could be driven by changes in portfolio characteristics, macroeconomic conditions, business practices or the legislative landscape. For example, a 25% reduction in recoveries could lead to downgrades of up to one notch. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - The class A notes are rated at the highest level on Fitch's scale and cannot be upgraded. - For other note classes, CE ratios increase as the transaction deleverages, able to fully compensate the credit losses and cash flow stresses commensurate with higher rating scenarios, all else being equal. 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 IM BCC Capital 1, FT Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. Prior to the transaction closing, Fitch reviewed the results of a third party assessment conducted on the asset portfolio information and concluded that there were no findings that affected the rating analysis. Prior to the transaction closing, Fitch conducted a review of a small targeted sample of the originator's origination files and found the information contained in the reviewed files to be adequately consistent with the originator's policies and practices and the other information provided to the agency about the asset portfolio. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. ESG Considerations Fitch does not provide ESG relevance scores for IM BCC Capital 1, FT. 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. =========== T U R K E Y =========== PEGASUS HAVA: Fitch Alters Outlook on BB- LongTerm IDRs to Positive ------------------------------------------------------------------- Fitch Ratings has revised the Outlook on Pegasus Hava Tasimaciligi A.S.'s (Pegasus) Long-Term Foreign- and Local-Currency Default Ratings (IDRs) to Positive from Stable and affirmed the IDRs at 'BB-'. It also affirmed its senior unsecured rating at 'BB-', with a Recovery Rating of 'RR4'. The revision of the Outlook to Positive reflects Pegasus's strong operating performance with solid profitability, increasing size and deleverage potential. Fitch would upgrade the ratings if the airline's EBITDAR net leverage trends towards its positive rating sensitivity of 3.0x in 2025, with good visibility up to 2028. The ratings incorporate the carrier's strong domestic position in Turkiye (BB-/Stable) with material expansion prospects, an industry-leading cost base with a young and fuel-efficient fleet and readily accessible hard currency liquidity. The ratings also reflect the execution risk in its growth strategy, a weak operating environment with FX and geopolitical risks and its smaller size than several peers. Key Rating Drivers Record of Strong Performance: In 2024, Pegasus delivered strong performance after raising its capacity by 15% and improving its load factor to 87.7% (2023: 84.8%). Compared with 2019, the airline increased its total capacity by around 50%, while maintaining solid load factors. Operational improvements in 2024 were partially offset by weaker ticket yields and a rise in cost per available seat kilometre (CASK). The higher costs were primarily attributable to the rise in personnel expenses, driven by high inflation in Turkiye. Overall, EBITDAR rose to EUR917 million (from EUR793 million in 2023), with a solid margin of 29.3%. Double-Digit EBITDAR Increase Expected: Fitch forecasts that the airline's EBITDAR will continue to rise, supported by new capacity, with an about 14% increase in ASKs in 2025, maintaining a load factor of 85%-86%, and broadly flat yields. Fitch expects non-fuel CASK to rise in 2025, primarily due to high inflation, which particularly affects personnel expenses, mitigated by a fall in fuel costs. As a result, Fitch anticipates EBITDAR will be slightly above EUR1 billion in 2025, rising to about EUR1.3 billion in 2028, mainly due to the increase in capacity. Pegasus's fleet was not affected by Pratt & Whitney engine issues, as its A320/A321neos use engines made by CFM International. Deleveraging Would Drive Upgrade: Fitch projects that EBITDAR net leverage will fall below 3.0x in 2025, supporting the Positive Outlook. The expected deleveraging is driven by continued EBITDAR growth and positive free cash flow generation. Fitch expects lower increases in lease debt compared to last year, as amortisation of debt related to the fleet should nearly balance fresh debt related to acquisition of new aircraft. The expected deleveraging in 2025, with a consistent net leverage below 3.0x, would lead to an upgrade. The ability to adjust capacity and control costs will be essential to maintaining the company's credit profile in case of demand weakness. Lease-Funded Fleet Expansion: Pegasus operated 118 aircraft at end-2024 with an average age of 4.5 years, most of which were A320/A321neos. The airline expects delivery in 2025-2029 of 52 new A321neos, which are more fuel-efficient and have larger capacity (by more than 50 seats) than A320neos. Additionally, it has ordered 100 new B737-10 aircraft from Boeing, for delivery between 2028 and 2034. Fitch forecasts an increase in capex to an average of around EUR500 million in 2025-2028 (2024: EUR110 million), driven by advance payments. Pegasus intends to finance these aircraft by increasing its lease debt. Weak but Improving Operating Environment: Fitch's expectations for the operating environment in Turkiye have improved, as reflected in the sovereign upgrade to 'BB-' with a Stable Outlook in September 2024, from 'B+'. Fitch expects the country's macroeconomic policy to be consistent with a significant decline in inflation (although it will remain far higher than in Western European countries) and continued but lower real appreciation of the lira. Fitch reflected this improvement by relaxing Pegasus's gross leverage sensitivities by 0.2x as well as its coverage negative sensitivity (to 1.7x from 2.0x, now based on EBITDAR rather than funds from operations). Challenges Affect Business Profile: Pegasus's ratings reflect volatility in the local economy, and substantial inflation and geopolitical risks. The airline could face greater challenges from demand volatility than other European low-cost carriers (LCC), given its dependence on Turkiye for domestic and international subsectors (excluding international transit), while other European LCCs have more options due to the European Common Aviation Area, of which Turkiye is not a member. Pegasus is smaller with a less diversified network, but its low cost base and agility have enabled rapid expansion. Manageable FX Risk Exposure: All sales on international routes, which accounted about 70% of revenue in 2024, are in hard currency, with the remainder in lira, which is similar to the cost base, mitigating exposure to FX risk. Debt is almost entirely in hard currency. As part of Pegasus's FX hedging policy, up to a quarter of domestic ticket revenue received in lira is exchanged into US dollars at spot rates. Lira fluctuations can add to demand volatility, despite well-managed FX risk due to a geographically diversified revenue stream. No Country Ceiling Constraints: Pegasus's 'BB-' Long-Term Foreign-Currency (LT FC) IDR is at the same level as Turkiye's Country Ceiling of 'BB-'. Fitch could allow the LT FC IDR to be higher than the Country Ceiling by up to two notches, given the airline's high share of hard-currency revenue and accessible hard-currency liquidity that covers external hard-currency debt service for two years and by 1.8x in 2025, in accordance with Fitch's Corporate Rating Criteria. Peer Analysis Pegasus competes directly with Turk Hava Yollari Anonim Ortakligi (Turkish Airlines; BB/Stable). Its financial profile is now more comparable with that of the latter with similar leverage forecasts. Its debt capacity in terms of gross EBITDAR leverage is slightly lower than its competitor, as Pegasus's strengths are more than offset by its smaller scale and a less-diversified network. However, for Pegasus, Fitch has a key sensitivity on EBITDAR net leverage, given the company's high cash balance and its cash management policy, which Fitch does not have for Turkish Airlines. Pegasus's unit cost base is very strong and comparable with those of leading LCCs, such as Ryanair Holdings plc (BBB+/Stable) and Wizz Air Holdings Plc (BB+/Stable). However, Pegasus is much smaller, and more exposed to a weak and volatile operating environment. Pegasus's flights are not subject to carbon-offsetting requirements under EU ETS, while most of Ryanair's and Wizz Air's flight are. Key Assumptions Fitch's Key Assumptions Within Its Rating Case for the Issuer - ASK to rise by about 14% in 2025, followed by annual, single-digit expansion between 2026 and 2028 - Load factor in the mid-80s to 2028 - About 1% increase in ticket yield (in euro terms) on average in 2025-2028 - Jet fuel price at USD102 a barrel (bbl) in 2025, USD105/bbl in 2026-2028 - Capex of about EUR2 billion in 2025-2028 - No dividends RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Fitch would revise the Outlook back to Stable, if EBITDAR net leverage remains within rating sensitivities of 3.0x-3.7x on a sustained basis Given the Positive Outlook on Pegasus's IDR, Fitch does not anticipate a downgrade. However, the following could lead to negative rating action: - EBITDAR net leverage above 3.7x or EBITDAR leverage above 4.4x (revised from 4.2x) on a sustained basis - EBITDAR fixed-charge cover below 1.7x (revised from 2.0x on a funds from operations basis) - A downward revision of Turkiye's Country Ceiling by more than two notches, especially associated with weaker operating environment and drivers affecting external tourism demand, could lead to a downgrade of the LT FC IDR Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - EBITDAR net leverage below 3.0x or total EBITDAR leverage below 3.7x (revised from 3.5x) on a sustained basis. For the LTFC IDR, this must be coupled with a high share of hard-currency revenue and readily accessible hard-currency liquidity that continue to enable rating at least one notch above Turkiye's 'BB-' Country Ceiling Liquidity and Debt Structure Pegasus's unrestricted Fitch-calculated cash position of about EUR1.4 billion (including EUR29 million of time deposits with maturities between three months and a year and EUR129 million of bonds) at end-2024 is more than sufficient to cover its short-term debt obligations (excluding leases) of EUR390 million. In addition, Fitch expects free cash flow generation in 2025-2027 to be consistently positive, which will further improve its liquidity profile. Issuer Profile Pegasus is a leading LCC in Turkiye, with a fleet size of 118 aircraft at end-2024. It served 146 destinations in 53 countries and carried 37.5 million passengers in 2024. MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Pegasus Hava Tasimaciligi A.S. LT IDR BB- Affirmed BB- LC LT IDR BB- Affirmed BB- Natl LT AAA(tur) Affirmed AAA(tur) senior unsecured LT BB- Affirmed RR4 BB- ============= U K R A I N E ============= UKRENERGO: Fitch Affirms LongTerm IDR at 'Restricted Default' ------------------------------------------------------------- Fitch Ratings has affirmed Private Joint Stock Company National Power Company Ukrenergo's Long-Term Issuer Default Rating (IDR) at 'Restricted Default' (RD). Fitch has also affirmed Ukrenergo's state-guaranteed notes' senior unsecured rating at 'C', with a Recovery Rating at 'RR5'. The company's Standalone Credit Profile (SCP) is 'rd'. The company has been in default since November 2024, when it suspended interest payments on its USD825 million notes at the behest of the Ministry of Energy. Its restructuring is part of Ukraine's (Foreign-Currency IDR of RD) larger sovereign debt restructuring. Ukrenergo has not paid the four deferred coupons on the notes due on 9 November 2022; 9 May and 11 November 2023; and 9 May 2024; and regular coupons due on 9 November 2024 and 9 May 2025. They amount to USD123.1 million deferred coupons and USD28.4 million each of the regular coupons. The default drives the 'RD' rating. Key Rating Drivers Cross Default: At end-2024, bonds with accrued unpaid coupons totalled UAH41.9 billion, accounting for 41% of Ukrenergo's gross debt. Due to the application of cross-default provisions, an additional UAH41.2 billion of long-term loans from international financial institutions (IFIs) and state-owned banks were reclassified to current liabilities at end-2024, bringing loans and borrowings in technical default or cross-default to about UAH90 billion. Until now the company has not received notice from creditors regarding the immediate payment of any debt under the due 2028 Eurobonds or loans from creditors. Upcoming Debt Restructuring: On 28 April 2025, Ukrenergo agreed terms for the restructuring of the USD825 million notes with investors representing about 40% of the outstanding. The company plans to launch a consent solicitation in June 2025 and needs to obtain the agreement of 75% of bondholders to be effective. Under the restructuring, bondholders have the option to tender for cash - up to a total of USD430 million to be raised with the support of a development finance institution - or exchange for new bonds without a guarantee. Operating Activities Distorted by War: Fitch expects electricity consumption to remain broadly stable in 2025-2026, remaining sharply below pre-war levels and weighed down by energy shortages as destroyed energy generation assets are not fully compensated by energy imports, especially in peak seasons. This will continue to limit Ukrenergo's revenue from transmission and dispatch and result in extra spending for renovation and new investments to make the system more connected and resilient. Negative EBITDA: Ukrenergo's EBITDA was negative at UAH0.5 billion in 2024, down sharply from a UAH15.9 billion profit in 2023. The decline was due primarily to an increase in accounts receivables impairments of UAH14.5 billion in 2024 (UAH3.4 billion in 2023), attributed to ageing receivables from the last resort supplier, protected consumers, distribution system operators and service providers near the front line. Rising Tariffs and Revenue: Ukrenergo's revenue rose 22%, supported by a 19% increase in transmission tariff and a 23% increase in dispatch tariffs. Other revenue rose by 30%, primarily driven by higher sales in the balancing market and interstate network capacity. However, this did not translate into raising earnings due to receivables impairments. EBITDA Stabilisation: Fitch expects the company's EBITDA to rise to UAH11 billion in 2025 (after accounting for a lower receivables impairment compared with 2024) before rising to UAH19 billion in 2027. This will be supported by expected increases in "cost plus" transmission tariffs, which rose by 30% in 2025, reflecting higher costs relating to a rising share of renewable production and increasing debt repayments. Fitch projects that the tariff will rise in line with inflation in 2026-2027. Fitch expects transmission volume increases to be muted, due to the war, and dispatch tariffs to remain stable in 2026-2027, after a 5% decline in 2025. No Bad Debts Recovery: Ukraine's tariff calculation structure does not provide for the recovery of bad debt provisions, which constitute an actual loss for the company and negatively affect its liquidity and financial result. In 2024, Ukrenergo posted UAH14.5 billion of accounts receivables impairments, far above the UAH3.4 billion of 2023. Restoration of Critical Infrastructure: Ukrenergo's top priority is to repair and keep its electricity network operational, which absorbs resources and drains liquidity. It is actively seeking grants and debt financing from IFIs for maintenance, reconstruction and development. Fitch expects capex to average UAH7 billion annually in 2025-2027, broadly in line with 2024, on top of capex directly funded by IFIs and donors. Strong Links with Ukraine: Under its Government-Related Entities (GRE) Criteria, support for Ukrenergo is 'Extremely Likely', underlined by an overall support score of 40 out of a maximum 60. However, Ukraine may not be able to provide extraordinary support, given its own weak financial position. Responsibility to Support: Fitch assesses decision-making and oversight as 'Very Strong' as Ukraine is Ukrenergo's sole shareholder, approves its strategy and business plan and tightly controls operations. The government's precedents of support are 'Very Strong', underpinned by state guarantees covering 100% of the company's debt. Incentive to Support: Fitch assesses the preservation of government policy role as 'Strong', due to Ukrenergo's operation of the national energy transmission network, which is essential during the war. Fitch sees 'Strong' contagion risk, as Ukrenergo's default could affect the funding cost of other GREs. The company is recognised by market participants as a core government entity, which taps the same pool of investors as the government for loans from IFIs and Eurobonds. Peer Analysis Ukrenergo's 'RD' Long-Term IDR means it has no comparable peers. Key Assumptions Fitch's Key Assumptions Within Its Rating Case for the Issuer: - Operations and available assets maintained at current levels, with no material changes to the war - Electricity transmission to rise on average by 1% annually in 2025-2027, but stay sharply lower than pre-war levels - Low collection of receivables with further accounts receivables impairments totalling UAH19 billion in 2025-2027 - Accumulation of payables as collections of receivables and available liquidity from banks remain limited - EBITDA rising to UAH11 billion in 2025 and further to about UAH18 billion in 2026-2027, as rises in "cost plus" tariffs and limited increases in transmission values offset low collection of receivables and receivables impairments - Capex averaging UAH7 billion annually in 2025-2027, on top of capex directly funded by IFIs and donors Recovery Analysis The recovery analysis assumes that Ukrenergo would be considered a going concern in bankruptcy and that it would be reorganised rather than liquidated. Its EBITDA estimate reflects Fitch's view of a sustainable, post-reorganisation EBITDA level on which Fitch bases the enterprise valuation. Fitch used a distressed EBITDA multiple of 4.0x to calculate post-reorganisation valuation. It captures higher-than-average business risks in Ukraine and reflects Ukrenergo's weaker business profile than peers'. Guaranteed bank loans and bonds rank equally in its recovery analysis, although they may be treated differently in actual financial distress. After the deduction of 10% for administrative claims, its waterfall analysis generated a waterfall-generated recovery computation in the'RR5' band, indicating a 'C' rating for Ukrenergo's notes. RATING SENSITIVITIES Factors That Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Inability to complete the restructuring and entering into bankruptcy filing, administration, receivership, liquidation or other formal winding-up procedure would lead to a downgrade to 'D'. Factors That Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Completion of the debt restructuring would likely lead Fitch to re-rate the company based on its new capital structure and business prospects. Liquidity and Debt Structure Ukrenegro's liquidity remains constrained, with limited access to liquidity. At end-2024, the company had UAH11.3 billion of unrestricted cash and cash equivalents against Fitch projected negative free cash flow of UAH12.5 billion. At end-March 2025 the company had committed undrawn investment grants totalling UAH17 billion and access to committed undrawn funding facilities totaling UAH17 billion, but mainly dedicated to investment projects to be implemented over the next four years, rather than for liquidity purposes. Following the default under the bonds and the application of cross-default provisions, UAH 41.2 billion of long-term loans from international financial institutions and state-owned banks was reclassified to current liabilities at end-2024, bringing loans and borrowings in technical default or cross-default to around UAH90 billion. Issuer Profile Ukrenergo is the 100% state-owned (through Ministry of Energy) sole national electricity transmission system operator in Ukraine. 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 Ukrenergo has an ESG Relevance Score of '4' for Governance Structure due to the lack of independence and effectiveness of the board of directors after the dismissal of Volodymyr Kudrytskyi, chief executive officer, in early September 2024, which has a negative impact on the credit profile and is relevant to the rating. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Private Joint Stock Company National Power Company Ukrenergo LT IDR RD Affirmed RD senior unsecured LT C Affirmed RR5 C =========================== U N I T E D K I N G D O M =========================== ARMSON ENGINEERING: FRP Advisory Named as Administrators -------------------------------------------------------- Armson Engineering Limited was placed into administration proceedings in the High Court of Justice Business and Property Courts in Newcastle upon Tyne, Court Number: CR-2025-NCL000066, and Andrew David Haslam and Shaun Hudson of FRP Advisory Trading Limited were appointed as administrators on June 10, 2025. Armson Engineering engaged in steel fabrication. Its registered office is at Unit 2 Sleekburn Business Centre, West Sleekburn, Bedlington, NE22 7DD and is in the process of being changed to Suite 5, Bulman House, Regent Centre, Gosforth, Newcastle upon Tyne, NE3 3LS Its principal trading address is at Unit 2 Sleekburn Business Centre, West Sleekburn, Bedlington, NE22 7DD The joint administrators can be reached at: Andrew David Haslam Shaun Hudson FRP Advisory Trading Limited Suite 5, 2nd Floor, Bulman House Regent Centre, Gosforth Newcastle upon Tyne, NE3 3LS For further details contact: The Joint Administrators Tel No: 0191 605 3737 Alternative contact: Sarah Dorkin E-mail: cp.newcastle@frpadvisory.com BELLIS ACQUISITION: Fitch Gives 'BB(EXP)' Rating on EUR595MM Debt ----------------------------------------------------------------- Fitch Ratings has assigned Bellis Acquisition Company Plc's new planned EUR595 million senior secured debt an expected rating of 'BB(EXP)' with a Recovery Rating of 'RR2'. The rating is in line with the company's existing senior secured debt. Final ratings are subject to completion and final documentation. The new senior secured debt will repay Bellis Finco plc's (ASDA) senior unsecured GBP500 million notes. Additionally, ASDA plans to call and repay its approximate GBP300 million 2026 maturities with cash. ASDA's 'B+' Long-Term Issuer Default Rating (IDR) captures its scale and expectation of good positive free cash flow (FCF) generation from 2025. The rating also reflects the company's ability to maintain leverage between 5.0x-6.0x from 2026, which is in line with its IDR. Key Rating Drivers Planned Transaction Leaves Long-dated Debt: ASDA plans to refinance its GBP500 million 2027 senior unsecured notes with a new senior secured EUR595 million bond and repay its approximate GBP300 million 2026 debt with cash accumulated on its balance sheet. These actions will address ASDA's immediate maturities. Following this, ASDA's GBP4,310 million debt, excluding the Walmart, Inc. (AA/Stable) instrument and ground rent debt (GBP400 million), will mostly mature between 2029 and 2031. The GBP793 million revolving credit facility (RCF) will mature in October 2028, following the refinancing of the senior unsecured notes ahead of October 2026. Revised Forecast: Fitch anticipates a material EBITDA reduction in 2025 following ASDA's strategy to pursue investment in pricing and product availabilities to tackle continued market share loss and recovering sales volumes. Fitch expects that price reductions and additional investments in staff hours will address product availability and customer experience issues, but materially reduce ASDA's EBITDA margin. However, most of the GBP100 million labour cost increases for 2025 should be covered with simplification and productivity improvements, including headquarter headcount reductions announced at end 2024. Profit Growth Execution Risk: Its forecast incorporates the targeted pricing strategy and expected benefits from completing the IT Future programme, as well as the integration of petrol stations and express stores acquired in 2023-2024. Fitch anticipates a gradual rebound in EBITDA to at least 2024's level over 2026 and 2027. However, Fitch sees execution risks due to the highly competitive UK food retail market, which features strong discounter presence and weak consumer spending power. Fitch also expects mainstream peers to continue offering promotions to slow the pace of passing cost inflation to consumers. Leverage Sensitivity Breached in 2025: Fitch forecasts EBITDAR leverage for 2025 to increase to 6.4x from 5.7x in 2024, due to anticipated profit contraction. Given the potential to regain like-for-like (LFL) sales growth through ASDA's strategy, Fitch expects EBITDAR gross leverage to return to between 5.0x and 6.0x over 2026 and 2027. This trajectory is aligned with the current rating and supports the Stable Outlook. Positive FCF; Improving from 2025: Fitch expects strong positive total FCF generation in 2025-2026, supported by continued positive working capital inflows. FCF remained suppressed in 2024 due to GBP310 million costs from the IT system separation from Walmart (Project Future). ASDA postponed the cost of transitioning large stores to the new systems to 2025 and plans to cover it though the prioritisation of capex and limited exceptional spend. Fitch expects stronger cash generation, supported by working capital initiatives, to be partly absorbed by higher interest costs, taxes and capex. As a result, Fitch forecasts the FCF margin to recover to slightly under 1% on average in 2025 to 2027. Large Business Scale: ASDA is larger and more diversified following its 2023 and 2024 acquisitions. 2024 EBITDAR around GBP1.5 billion, maps to a 'bbb' category score for scale under its Food Retail Navigator. Its core large store food retail operations are complemented by petrol filling stations, convenience food retail and foodservice offer, as well as its clothing assortment, which commands a 9% share of the UK apparel market by volume. Resilient Food Retail Demand: ASDA has a strong business model in a resilient but competitive UK food retail sector. It has a good brand and it is focused on value and investments in price. ASDA holds the number two position in online grocery sales in the UK, accounting for 17.5% of its food and clothing sales in 2024. Peer Analysis Fitch rates ASDA using its global Food Retail Navigator. The acquisition of EG Group's UK operations increased ASDA's scale, broadened its diversification and improved its market position, although it is still weaker than other large food retailers in Europe, such as Tesco PLC (BBB-/Stable) and Ahold Delhaize NV. Fitch views some broad comparability between ASDA's and Market Holdco 3 Limited's (Morrisons; B/Positive) businesses and competitive environment with operations focused in the UK. The EG business acquisition enhanced ASDA's scale and increased its diversification compared to Morrisons, giving ASDA a comparably stronger business profile. However, ASDA has experienced a LFL sales decline in a very competitive UK grocery market, while Morrisons has protected its market share over the last 12 months. Morrisons has stronger vertical integration, which supports profitability, and a slightly higher portion of freehold assets. A growing convenience channel presents execution risk for both companies. ASDA benefits from greater overall scale than Morrisons, a stronger online market share and a large fuel business that delivers stable profits and cashflows, although it generates lower margins than the rest of the business Fitch expects similar EBITDAR leverage for ASDA and Morrisons by 2026, ranging between 5x-6x. Leverage is expected to be meaningfully higher than Tesco's 3x, while more comparable with its projections for smaller scale WD FF Limited's (B/Stable) at near 5.0x . Key Assumptions - Low single digits LFL sales growth for non-fuel revenues in 2026-2027 following a 1% decline in 2025. - EBITDA margin decline in 2025 and trending back to the 2024 level by 2027 as volumes recover, cost-savings initiatives help offset cost pressures, while delivering synergies - Capex at GBP460 million in 2025, followed by an average GBP560 million a year in 2026 to 2028 - Working capital cash inflow of GBP350 million in 2025, followed by GBP50 million annually in 2026 to 2028; mainly driven by payable days improvement and return to LFL sales growth - Exceptional cash costs of around GBP80 million in 2025; reducing to GBP30 million annually thereafter - No dividends or major M&A activity over the next four years. Recovery Analysis Under its bespoke recovery analysis, higher recoveries would be realised through reorganisation as a going-concern in bankruptcy rather than liquidation. Fitch has assumed a 10% administrative claim. The going-concern EBITDA estimate of GBP825 million reflects Fitch's view of a sustainable, post-reorganisation EBITDA, on which Fitch bases the enterprise valuation (EV). The assumption also reflects corrective measures taken in the reorganisation to offset the adverse conditions that trigger its default, such as cost-cutting efforts or a material business repositioning. Fitch applies an EV multiple of 6.0x to the going-concern EBITDA to calculate a post-reorganisation EV. This is aligned with Morrisons. ASDA's GBP793 million RCF is assumed to be fully drawn on default. The RCF ranks equally with the company's GBP4 billion senior secured debt, comprising term loans, senior secured notes and private placement. However, Fitch has treated as super senior ASDA's ground rent of GBP400 million, which is secured by specific fixed assets and unavailable to cash-flow backed lenders in debt recovery. Its waterfall analysis generated a ranked recovery for the senior secured notes, term loans, RCF and private placement facility in the 'RR2' band, indicating a 'BB' instrument rating, two notches higher than the IDR. The senior unsecured debt (GBP500 million) is rated in the 'RR6' band with an instrument rating of 'B-', two notches below the IDR. The Walmart instrument is subordinated and therefore does not affect the senior secured instrument recoveries. Following planned refinancing of the senior unsecured debt with EUR595 million senior secured debt and repayment of the 2026 maturities, Fitch anticipates the senior secured notes ranked recovery to remain at 'RR2' indicating an unchanged 'BB' instrument rating. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - LFL sales decline exceeding other big competitors, inability to grow profits, failure to integrate and generate synergies from acquired businesses, and Project Future cost overruns leading to low-to-neutral FCF, and reduced deleveraging capacity - EBITDAR gross leverage above 6.0x on a sustained basis - EBITDAR fixed charge coverage below 1.7x on a sustained basis - Failure to address upcoming debt maturities 12-15 months in advance Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Continued LFL sales growth along with improvement in gross margin, successful integration of acquired businesses and delivery of synergies, plus cost savings to offset operational cost inflation, leading to growth in EBITDAR and FCF (over 1% of sales) - EBITDAR gross leverage below 5.0x on a sustained basis - EBITDAR fixed charge coverage above 2.0x on a sustained basis Liquidity and Debt Structure Liquidity is adequate, with a forecast of around GBP0.65 billion cash on balance sheet (after GBP190 million adjustment for working-capital seasonality by Fitch) and an undrawn RCF of GBP0.8 billion at end-2025. Fitch projects ASDA's cash balances to increase to 2027 due to positive FCF generation, particularly as one-off costs of Project Future ended in 2024. This would leave ASDA with deleveraging capacity, but actioning will depend on the company continuing debt reduction. ASDA's debt maturity profile will be well spread after the transaction, with a GBP166 million term loan A due in 2028 as the nearest maturity remaining. Most of the debt is represented by GBP3,648 million due between 2029 and 2031. The RCF benefits from springing maturity ahead of the senior unsecured notes if more than GBP350 million is still outstanding in October 2026. Fitch treats the original GBP500 million Walmart payment-in-kind (PIK) instrument as debt because its maturity of 2028 is before senior secured debt. Walmart accrues PIK interest and under the documentation must pay at least GBP900 million, or an estimated 10% of equity value on maturity unless ASDA is subject to an IPO beforehand, whereby Walmart would receive up to 10% of diluted equity. Issuer Profile ASDA is the third-largest supermarket chain in the UK, with around a 12.5% market share in Great Britain. It employs around 145,000 people, operates around 1,200 total stores as of January 2024 vs 623 in 2020. Summary of Financial Adjustments Fitch computes ASDA's lease liability by multiplying Fitch-defined cash lease costs by 8x, reflecting the long-term nature its rent contracts and a discount rate typical for a developed European country, such as UK. Fitch shifted from capitalising P&L-derived lease expense to cash lease payments as Fitch considers they better represent ASDA's ongoing lease burden. This change led to around 0.3x reduction in EBITDAR net leverage for fiscal 2024 . Date of Relevant Committee 22 November 2024 MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. ESG Considerations Bellis Finco plc has an ESG Relevance Score of '4' for Group Structure due to the complexity of the group structure with a number of related-party transactions. This 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 ----------- ------ -------- Bellis Acquisition Company Plc senior secured LT BB(EXP) Expected Rating RR2 BLETCHLEY PARK 2025-1: Moody's Assigns Ba1 Rating on Class E Notes ------------------------------------------------------------------ Moody's Ratings has assigned definitive ratings to Notes issued by Bletchley Park Funding 2025-1 PLC: GBP242.803M Class A Mortgage Backed Floating Rate Notes due January 2070, Definitive Rating Assigned Aaa (sf) GBP15.306M Class B Mortgage Backed Floating Rate Notes due January 2070, Definitive Rating Assigned Aa3 (sf) GBP9.044M Class C Mortgage Backed Floating Rate Notes due January 2070, Definitive Rating Assigned A2 (sf) GBP5.566M Class D Mortgage Backed Floating Rate Notes due January 2070, Definitive Rating Assigned Baa1 (sf) GBP5.565M Class E Mortgage Backed Floating Rate Notes due January 2070, Definitive Rating Assigned Ba1 (sf) GBP4.174M Class X1 Floating Rate Notes due January 2070, Definitive Rating Assigned B3 (sf) GBP2.783M Class X2 Floating Rate Notes due January 2070, Definitive Rating Assigned Caa3 (sf) Moody's have not assigned ratings to the Class J Variable Funding Note due January 2070 and the Residual Certificates. RATINGS RATIONALE The Notes are backed by a static portfolio pool of UK buy-to-let loans originated by Quantum Mortgages Limited (NR). The portfolio consists of 1,144 mortgage loans with a current balance of GBP274.7 million as of 30 April 2025 pool cut-off date. The definitive rating for the Class D notes is different than the previously assigned provisional rating as a result of higher available excess spread due to tighter pricing of the overall note margins. 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 a liquidity reserve fund sized at 1.4% of the Classes A and B notes, which will amortise to the lower of, the initial amount and 2% of the outstanding principal balance of the Class A and B notes. The liquidity reserve fund will be available to cover senior fees and costs, and Class A and B interest. Following the Class B notes redemption, all amounts standing to the credit of the liquidity reserve fund will be applied as available principal receipts. All excess amounts of the liquidity reserve will be released into the principal waterfall and provide an additional CE to Classes A to E notes in the transaction. BCMGlobal Mortgage Services Limited is the servicer and Citibank, N.A., London Branch (Aa3(cr) / P-1(cr)) is the cash manager in the transaction. In order to mitigate the operational risk, CSC Capital Markets UK Limited (not rated) will act as the back-up servicer facilitator. To ensure payment continuity over the transaction's lifetime the transaction documents incorporate estimation language whereby the cash manager can use the three most recent servicer reports to determine the cash allocation in case no servicer report is available. Additionally, there is an interest rate risk mismatch between the 99.6% of loans in the pool that are fixed rate and revert to Bank of England Base Rate (BBR) plus a margin, and the Notes which are floating rate securities with reference to compounded daily SONIA. To mitigate this mismatch there will be a fixed-floating scheduled amortisation swap provided by NatWest Markets Plc (A1(cr) / P-1(cr)). The collateral trigger is set at loss of A3(cr). Moody's determined the portfolio lifetime expected loss of 1.6% and MILAN Stressed Loss of 14.1% related to borrower receivables. The expected loss captures Moody's expectations of performance considering the current economic outlook, while the MILAN Stressed Loss captures the loss Moody's expects the portfolio to suffer in the event of a severe recession scenario. Expected loss and MILAN Stressed Loss 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 RMBS. Portfolio expected loss of 1.6%: This is in line with the UK buy-to-let RMBS sector and is based on Moody's assessments of the lifetime loss expectation for the pool taking into account: (1) the portfolio characteristics, including a weighted-average current LTV of 73.6%; (2) the collateral performance of originated loans to date; (3) benchmarking with comparable transactions in the UK BTL market; and (4) the current macroeconomic environment in the UK. MILAN Stressed Loss of 14.1%: This is higher than the UK buy-to-let RMBS sector average and follows Moody's assessments of the loan-by-loan information taking into account the following key drivers: (1) the portfolio characteristics including the weighted-average current LTV of 73.6% for the pool; (2) portfolio with 97.5% interest-only, 51.0% HMO/MUFB loans and 13.7% of top 20 borrower concentration; and (3) benchmarking with comparable transactions in the UK BTL market. The principal methodology used in these ratings was "Residential Mortgage-Backed Securitizations" published in October 2024. FACTORS THAT WOULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS: Factors that would lead to a downgrade of the ratings include: (i) increased counterparty risk leading to potential operational risk of servicing or cash management interruptions and (ii) economic conditions being worse than forecast resulting in higher arrears and losses. Factors that may cause an upgrade of the ratings of the notes include significantly better than expected performance of the pool together with an increase in credit enhancement of Notes. LF SOLUTIONS: Begbies Traynor Named as Administrators ----------------------------------------------------- LF Solutions Limited was placed into administration proceedings in the High Court of Justice Business and Property Courts in Birmingham, No CR-2025-BHM-000279, and Ninos Koumettou and Amie Helen Johnson of Begbies Traynor (Central) LLP were appointed as administrators on June 17, 2025. LF Solutions are building contractors. Its registered office is at Suite 501, Unit 2, 94a Wycliffe Road, Northampton, NN1 5JJF. The joint administrators can be reached at: Ninos Koumettou Amie Helen Johnson Begbies Traynor (Central) LLP Suite 501, Unit 2, 94A Wycliffe Road Northampton, NN1 5JF For further details, contact: Samantha George Tel No: 020 8370 7250 Email: Samantha.George@btguk.com PEPCO GROUP: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable ------------------------------------------------------------ Fitch Ratings has affirmed Pepco Group N.V's Long-Term Issuer Default Rating (IDR) at 'BB'. The Outlook is Stable. The affirmation reflects the disposal of Poundland, which eliminates the need to continue funding the loss-making business and alleviates the challenges and risks associated with managing the underperforming asset. The rating considers execution risk in maintaining a sustained strong operational performance, following a series of strategic missteps with regard to expansion in western Europe and the failure of its strategy with Poundland. The IDR continues to reflect Pepco's scale, leading market positions in central and eastern Europe (CEE). It benefits from a value-oriented positioning that aligns with favourable demand dynamics in its countries of operation, as well as geographic diversification and acceptable leverage. Fitch assumes limited refinancing risk, given its ample available liquidity, but this may change if liquidity materially reduces. Key Rating Drivers Execution Risk in Core Business: Fitch believes the new management has inherited a multitude of challenges in achieving sustained operational performance, following a number of strategic missteps by the company in the recent past. Key priorities include achieving profit growth in Pepco's core business operating under the Pepco and Dealz brands, particularly restoring LFL sales growth in its key Polish market, ensuring profitable expansion and maintaining cost discipline. Operational costs for the overall group's core business have increased year on year due to higher volumes, new stores and wage inflation in the first half of financial year ending in September 2025. Nevertheless, the remaining business, which accounted for around 62% of FY24 revenue, has returned to positive LFL sales growth in 1HFY25 and achieved improved gross profit margins. Poundland Disposal Mildly Credit Positive: The completed Poundland disposal is mildly positive on the credit profile of Pepco Group. Poundland was weighing on Pepco's credit profile by lowering overall profits, absorbing cash and reducing financial flexibility. Its disposal reduces Pepco's scale by removing EUR2 billion or a third of the group's revenue and slows its diversification into the fast-moving consumer goods sector, which is slightly less discretionary than apparel, but also attracts a lower margin. Fitch forecasts profit margins and leverage metrics to improve following the disposal, and the company's scale to remain aligned with the rating, although its EBITDAR fixed-charge coverage remains weak. Failed Strategy on Poundland: The group was unsuccessful in its strategy to transition to Pepco-sourced general merchandise and incorporate Pepco's clothing ranges into Poundland, initially aimed at extracting synergies from group sourcing. Poundland's sales worsened in 1HFY25 with a 7.3% like-for-like (LFL) decline, while its EBITDAR fell by EUR50 million to about EUR150 million in FY24 and was guided at between zero and EUR20 million for FY25. Forecast Revised Up on Disposal: Fitch forecasts Pepco's FY25 EBITDA (after rents, removing Poundland) at about EUR520 million, up from about EUR500 million in FY24 (including Poundland). Fitch now assumes mid-to-high single-digit sales growth, driven by 2% LFL growth and new store openings of about 270 in FY25 and 220 per year thereafter, alongside improving gross margins and contained operating costs. Adequate Leverage: Fitch expects EBITDAR gross leverage to sustainably decrease to about 2.0x over FY25-FY28 following the disposal of Poundland. The calculation includes IFRS16 reported liabilities, in line with its revised approach on leases. There is about a 2.0x difference against earlier calculation, where Fitch capitalised itd lease proxy using a weighted average 7.6x multiple. Only Moderately Conservative Financial Policy: Fitch estimates Pepco will operate within its guided net debt/EBITDA (pre-IFRS16) range of 0.5x-1.5x. However, Fitch does not view this as providing material protection to creditors as the guidance does not capture lease debt, which is likely to increase as Pepco expands with new leased stores. New management has clarified that it does not intend to reduce financial debt as it focuses on investments in the business, technology and the digital channel, and intends to return surplus funds to shareholders. Improving Coverage Metrics: Fitch projects improving, but still weak, coverage metrics for the rating, with EBITDAR fixed-charge coverage of slightly above 2.0x, mapping to the 'b' midpoint. This is due to a high share of leases and an expanding store network, affected by ramp-up of new stores. Fitch assesses refinancing risk on the company's EUR250 million term loan B due in April 2026 as manageable due to its strong available liquidity, reported at EUR731 million at end-1HFY25. Cash-Generative Operations, Capex-Driven FCF: Pepco has historically generated adequate operating cash flow and Fitch expects funds from operations (FFO) margins to trend towards 9% up from 6% in FY24 (including Poundland). Fitch would expect Pepco to generate positive FCF, based on its lower capex guidance. Fitch anticipates the surplus cash to be allocated to shareholder distributions in the form of dividends and via share buybacks through a recently launched EUR200 million program. Resilient Pepco Business Profile: Fitch views Pepco as a fairly resilient business benefiting from scale, leading market positions in its core CEE markets with well-known brands, a value offering, and limited fashion risk within adult wear (around 15% of sales). It has reasonably good geographic diversification across 20 markets. Peer Analysis Pepco's business is broadly comparable with that of other Fitch-rated peers in the food and non-food retail sectors. Pepco has meaningful size but it is smaller (by revenue) than its non-food retail rated peers, including Ceconomy AG (BB/Stable), the largest electronics retailer in Europe, FNAC Darty (BB+/Stable), and Kingfisher plc (BBB/Stable), the largest DIY group in the UK and Poland. These three enjoy a more established business profile and, while having partly suffered from the contraction of discretionary spending in Europe, have been benefitting from effective measures introduced to react to the more difficult trading environment. Pepco has stronger growth and higher profit margins, than Ceconomy in particular, which benefits from being a market leader with a large share of revenue online, but suffers from low margins due to price transparency in a broadly flat market. Pepco is smaller than European discounter Action, similar to B&M European Value Retail S.A. and larger than Netherlands-based Hema. Discounters are growing strongly and have good profit margins. Pepco (including Poundland) has higher EBITDAR net leverage (2.5x in FY25) than Kingfisher plc (2.0x) and Ceconomy (2.0x), following the change in its approach to leases published in its updated Corporate Ratings Criteria of December 2024. Fitch rates Pepco on a standalone basis given insulated legal ring-fencing and insulated access and control, in line with its criteria. Pepco group does not guarantee or provide security to creditors lending above Pepco, and there is no cross-default between the entities. There is an established governance framework to regulate the relationship between Pepco and entities above it, and to keep transactions in the best interests of Pepco group and at arm's length. Dividend distributions are not explicitly forbidden by debt documentation but would require board approval and be limited under debt covenants. Key Assumptions Fitch's Key Assumptions Within its Rating Case for the Issuer - Mid single-digit revenue growth averaging around 6.5% a year during FY25-FY28, driven by 2% LFL sales growth for Pepco excluding Poundland and around 270 new store openings in FY25 and 220 a year thereafter - EBITDAR margin to increase to about 19% in FY25 from 15.2% in FY24, driven by the disposal of Poundland, before stabilising through 2028 - EBITDA margin around 8% in FY25, improving towards 12% by FY28 - Working capital outflow of around EUR50 million in FY25, before increasing to EUR70 million in FY28, also due to the increased use of the supply chain finance facility (by EUR50 million a year), with half of it treated as debt - Average capex around EUR180 million a year in FY25 to FY28 - Dividends to grow in line with EBITDA - Total share buyback program of EUR200 million over FY25-FY27 - Disposal of Poundland, but Pepco remains exposed via an outstanding GBP30 million bilateral secured loan to Poundland and GBP30 million overdraft to be made available by Pepco to Poundland Recovery Analysis Fitch has applied generic approach to senior secured debt instrument ratings, which results in a one-notch uplift from the IDR, in line with its Corporates Recovery Ratings and Instrument Ratings Criteria. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - LFL sales decline, loss of market share, unsuccessful expansion or inability to manage cost inflation, leading to weaker profitability, and reduced deleveraging capacity - EBITDAR net leverage above 2.5x on a sustained basis - EBITDAR fixed-charge coverage below 2.0x on a sustained basis - Persistently negative or low visibility of FCF due to underperformance, continued accelerated expansion without yielding returns, or large shareholder distributions leading to shrinking liquidity headroom Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Successful execution of strategy in sustaining LFL sales growth and managing cost inflation while protecting profitability, leading to rising EBITDAR towards EUR1.25 billion - FFO margin trending towards 10% and positive FCF, after growth capex and dividends - EBITDAR net leverage below 1.5x on a sustained basis combined with a maintained prudent financial policy - (CFO less capex)/debt sustainably in the high teens - EBITDAR fixed charge coverage trending towards 2.5x on a sustained basis Liquidity and Debt Structure At end-March 2025, Pepco had comfortable available liquidity, comprising reported cash on balance sheet of around EUR341 million, with a EUR390 million undrawn committed revolving credit facility. The nearest maturity is its EUR250 million term loan in April 2026. Issuer Profile Pepco is a large variety discounter operating across Europe, with around 4,200 stores in 20 countries. Its largest market is Poland. External Appeal Committee Outcomes In accordance with Fitch's policies the Issuer appealed and provided additional information to Fitch that resulted in a rating action that is different than the original rating committee outcome. 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 ----------- ------ -------- ----- Peu (Tre) Limited senior secured LT BB+ Affirmed RR2 BB+ Pepco Group N.V LT IDR BB Affirmed BB Peu (Fin) PLC senior secured LT BB+ Affirmed RR2 BB+ RRE LOAN 27: Moody's Assigns (P)Ba3 Rating to EUR18.5MM D Notes --------------------------------------------------------------- Moody's Ratings announced that it has assigned the following provisional ratings to notes to be issued by RRE 27 Loan Management Designated Activity Company (the "Issuer"): EUR244,000,000 Class A-1 Senior Secured Floating Rate Notes due 2040, Assigned (P)Aaa (sf) EUR18,500,000 Class D Senior Secured Deferrable Floating Rate Notes due 2040, Assigned (P)Ba3 (sf) RATINGS RATIONALE The rationale for the rating is based on a consideration of the risks associated with the CLO's portfolio and structure as described in Moody's methodologies. The Issuer is a managed cash flow CLO. At least 95% of the portfolio must consist of senior secured obligations and up to 5% of the portfolio may consist of senior unsecured obligations, second-lien loans, mezzanine obligations and high yield bonds. The portfolio is expected to be 90% ramped as of the closing date and to comprise of predominantly corporate loans to obligors domiciled in Western Europe. The remainder of the portfolio will be acquired during the six months ramp-up period in compliance with the portfolio guidelines. Redding Ridge Asset Management (UK) LLP ("Redding Ridge") will manage the CLO. It will direct the selection, acquisition and disposition of collateral on behalf of the Issuer and may engage in trading activity, including discretionary trading, during the transaction's 4.5 year reinvestment period. Thereafter, subject to certain restrictions, purchases are permitted using principal proceeds from unscheduled principal payments and proceeds from sales of credit risk obligations, credit improved obligations and, subject to certain restrictions, workout obligations. In addition to the two classes of notes rated by us, the Issuer will issue three classes of notes, EUR1,000,000 of performance notes, EUR250,000 of preferred return notes and EUR43,230,000 of subordinated notes, which are not rated. The performance notes accrue interest in an amount equivalent to a certain proportion of the subordinated management fees and its notes' payment is pari passu with the payment of the subordinated management fee. The transaction incorporates interest and par coverage tests which, if triggered, divert interest and principal proceeds to pay down the notes in order of seniority. 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. 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. Moody's modeled the transaction using a cash flow model based on the Binomial Expansion Technique, as described in Moody's methodologies. Moody's used the following base-case modeling assumptions: Par Amount: EUR400,000,000 Diversity Score: 45 Weighted Average Rating Factor (WARF): 3100 Weighted Average Spread (WAS): 3.65% Weighted Average Coupon (WAC): 4.00% Weighted Average Recovery Rate (WARR): 44.00% Weighted Average Life (WAL): 8.24 years Moody's have addressed the potential exposure to obligors domiciled in countries with local currency ceiling (LCC) of A1 or below. As per the portfolio constraints and eligibility criteria, exposures to countries with LCC of A1 to A3 cannot exceed 10% and obligors cannot be domiciled in countries with LCC below A3. SOCIETA DI PROGETTO: DBRS Confirms BB(high) Rating on Cl. A3 Notes ------------------------------------------------------------------ DBRS Ratings GmbH changed the trend on Societa di Progetto Brebemi S.p.A.'s (Brebemi or ProjectCo) credit ratings to Positive from Stable. Morningstar DBRS also confirmed the Issuer Rating as well as the credit ratings on its EUR 307.0 million Senior Secured Loan, EUR 15.0 million Senior Secured Amortizing Floating-Rate Notes (Class A1 Notes), EUR 934.0 million Senior Secured Amortizing Fixed-Rate Notes (Class A2 Notes), and EUR 558.0 million Senior Secured Zero-Coupon Notes (Class A3 Notes) at BB (high). The recovery rating on all debt instruments is RR2. KEY CREDIT RATING CONSIDERATIONS The credit rating confirmations at existing levels, rather than an immediate upgrade, reflect Morningstar DBRS' view that the delay on approval of the current Economic and Financial Plan (PEF) has resulted in a lack of visibility in tariff rates, partly mitigated by strong cash flow generation derived from consistent traffic growth. Despite the uncertainties, Brebemi's forecast under the Morningstar DBRS base case shows a minimum debt service coverage ratio (DSCR) that is commensurate with a higher credit rating. Still, Brebemi did not obtain any tariff increase in 2025. For reference, management's expectations related to the tariff increase for this year were at around 5% followed by very similar levels for the following periods. The decision to freeze the tariff for 2025, which is being contested in tribunals, comes after a sharp increase in August 2024 (tariffs increased at around 12.1% back then) to compensate for tariff freezes observed in 2022 and 2023. On the other hand, the Italian Court of Auditors rejected the concession rebalancing and PEF approval, which was agreed in principle some months ago. These two developments are exposing the issuer to a period of prolonged uncertainties in relation to future tariff increase. Morningstar DBRS still expects tariffs to increase from 2027 onwards, given the rebalancing mechanism embedded in the PEF and recent legal actions, but there is still limited visibility as of when the PEF would be approved or by how much the tariffs might increase. Morningstar DBRS will continue to monitor the situation and possible credit rating implications, if any. Brebemi is enjoying continued traffic and revenue growth in recent years. Its traffic grew at 12.0% in 2022, 12.9% in 2023, and 4.6% in 2024. Morningstar DBRS expects Brebemi's 2025 traffic to still grow more than that of the rest of the Italian network (3% for Brebemi and lower for the rest of the network), but the ramp-up is finalizing and the gap between ProjectCo and more mature roads is eroding. The minimum DSCR from 2025 onwards is now 1.32 times (x), up from 1.25x in Morningstar DBRS' base case in August 2024 and slightly above the threshold determined by the methodology to reach investment grade. Breakeven traffic resilience has materially improved when compared with previous reviews. Given the long 10-year operating history, the potential impact derived from ramp-up risk is progressively fading away. At Morningstar DBRS' base case, it acknowledges an improvement in metrics to around 1.4x from 2026 onwards. CREDIT RATING DRIVERS -- A positive credit rating action could occur under Morningstar DBRS' base case if there is a sustained improvement in traffic volumes that confirms a sustained improvement in metrics, particularly the minimum DSCR across the forecast horizon being materially above 1.30x and a stronger breakeven on revenue in tandem with certainty over tariff setting for the current and upcoming regulatory periods. -- Although unlikely in the near term, Morningstar DBRS could take negative credit rating action if both traffic growth and tariff setting are materially worse than its expectations embedded in the base case in a consistent manner. EARNINGS OUTLOOK Management expects traffic will grow in 2025 at around 3.0%, albeit at a lower rhythm than in 2024 (around 4.6%). Also, the higher average tariff level compared with 2024, thanks to the extraordinary increase in August 2024, allows for growth in turnover and an improvement in the operating result. Based on budgeted cash flows and available liquidity, Brebemi expects to be able to cover its financial needs and make distributions to its shareholders. Into the longer term, management expects traffic to grow materially both in 2026 and 2027 and for revenue to increase at a compound annual growth rate of around 9% between 2025 and 2039, based on the P50 series of the third-party traffic study and consistent tariff increases of around 5% year over year. The operating costs are set to increase at a compound annual growth rate of 3.3% between 2025 and 2039 thanks to fixed price contracts with their operators; therefore, the management expects EBITDA to grow at 10.3% during the same period. The EBITDA margin is also likely to improve consistently to around 87% in 2035 from 74% last year. FINANCIAL OUTLOOK Management expects the December 2025 DSCR to be 1.36x and the December 2026 DSCR to be around 1.41x, a gradual improvement. The latest compliance certificate is meeting the lock-up conditions (DSCR, concession life coverage ratio, and bond life coverage ratio). We expect Brebemi to provide distributions to its shareholders during 2025. In November 2024, the main shareholder, Aleatica SAU, financed the early redemption of the Subordinated Secured Extendable Floating-Rate Notes (Junior Notes) maturing in 2029 with a residual value of EUR 132 million by a disbursement of shareholder loans for the same amount. In its base case, Morningstar DBRS takes a more conservative stance assuming no tariff increase for 2026 and using the P80 series from the third-party traffic study report. Therefore, the minimum DSCR under the Morningstar DBRS base case is at 1.32x in December 2025, and Morningstar DBRS expects the DSCR to remain below 1.40x until June 2028. CREDIT RATING RATIONALE Brebemi's credit ratings are supported by the (1) strong economic fundamentals of the service area, (2) balanced contractual and regulatory framework, (3) low service complexity and performance standard risk, and (4) experienced management team. Brebemi's credit ratings are constrained by the (1) traffic volume forecasting risk, (2) country risk, (3) regulatory risk, (4) weak revenue breakeven resiliency below the bottom of the range specified by Morningstar DBRS' methodology, and (5) reduction of or delay in receiving the termination amount and associated refinancing risk. CREDIT UPDATE PEF Status For background, Brebemi and Concessioni Autostradali Lombarde S.p.A. (Cal S.p.A. or the Grantor), after a very long process that included multiple stakeholders, agreed between June 2022 and October 2023 to a new PEF, which includes a concession extension and a clear path to increase tariffs in the current and next regulatory period. While in the process of the PEF being approved, and back in February 2024, the Administrative Court of Lazio upheld the appeals brought by Brebemi against the 2022 and 2023 tariff suspension decided by the Ministry of Infrastructure and Transport. As a result of the appeals, Brebemi obtained a material tariff increase in August 2024, which had a positive impact on financial metrics. Given the lack of tariff increase in 2025, Brebemi followed the same path as in 2024 and presented another appeal. The time required to process this appeal is highly uncertain, as it is mostly dependent on the responsiveness and cooperation between the various parties involved. Notably, in March 2025 the Italian Court of Auditors denied the registration of the CIPESS (Comitato Interministeriale per la Programmazione Economica e lo Sviluppo Sostenibile or Interministerial Committee) resolution related to the proposed update of the PEF related to the 2021-25 period. While the decision cannot be legally contested, Brebemi initiated various dialogues with the grantor of the concession, Cal S.p.A., and is still assessing several options available to define the procedure for updating the plan as provided by the concession agreement. The PEF is an important constituent of the concession agreement, which aims to safeguard ProjectCo's economic equilibrium in case of determined extraordinary events. Notes: All figures are in euros unless otherwise noted. VIDESCAPE LIMITED: TruSolv Limited Named as Administrators ---------------------------------------------------------- Videscape Limited was placed into administration proceedings in the High Court of Justice Business and Property Courts of England and Wales, Court Number: CR-2025-004011, and Shane Biddlecombe and Matthew Hoy of TruSolv Limited were appointed as administrators on June 12, 2025. Videscape Limited engaged in video distribution activities/photo sharing platform. The Company's registered office will be changed to Grove House, Meridians Cross, Ocean Village, Southampton, Hampshire, SO14 3TJ having previously been 83 High Street, Wimborne, BH21 1HS Its principal trading address is at 83 High Street, Wimborne, BH21 1HS The joint administrators can be reached at: Matthew Hoy TruSolv Limited Grove House, Meridians Cross Ocean Village Southampton SO14 3TJ For further details, contact: Carol Haines Email: help@trusolvsolutions.co.uk Tel No: 0808 196 8676 VMED O2 UK: Fitch Affirms 'BB-' IDR, Outlook Negative ----------------------------------------------------- Fitch Ratings has affirmed VMED O2 UK Limited's (VMO2) Issuer Default Rating (IDR) at 'BB-' with a Negative Outlook. The Negative Outlook reflects its expectations that VMO2's Fitch-defined EBITDA net leverage is likely to remain above 5.0x for the next two to three years and cash flow from operations (CFO) less capex and interest cover metrics will remain below their respective downgrade thresholds of 3% and 4.5x during 2025-2028. Fitch does not anticipate material deleveraging, despite expected improvements in EBITDA, due to VMO2's large funding requirements for its network-to-fibre capex by 2028, with capex peaking in 2027 in its forecasts. Rating strengths remain VMO2's well-established market position and strong operating profile in the UK telecoms market, including a leading position in UK mobile market which operates in a supportive market structure. This supports strong Fitch-defined pre-dividend free cash flow (FCF) generation. Key Rating Drivers High Leverage: Fitch-defined EBITDA net leverage for 2024 was 5.6x, which was above its expectations and exceeded its downgrade sensitivity of 5.0x. Leverage has increased above the company's financial target because of a decline in EBITDA in 2024. Fitch forecasts EBITDA gains to reduce leverage to 5.5x in 2025 and further to 5.0x by 2028. VMO2's large fixed-line capex commitments mean material organic net debt reduction is unlikely in 2025-2028. Leverage Above Financial Target: VMO2 has a company-defined EBITDA net leverage target at the upper end of 4.0x-5.0x, which is broadly in line with its rating sensitivities. Fitch had in the past taken this as a firm commitment underpinning the rating. However, meeting the commitment may take time, due to declining operating performance and considerable cash being upstreamed to the parent. VMO2 retains flexibility to manage its cash to support gradual deleveraging, which should lead to lower cash leakage during 2026-2028. NetCo Separation Plan Paused: VMO2's network (NetCo) separation plan has been paused, with joint venture partner Telefonica SA (BBB/Stable) reviewing its strategic options in the UK. Minority investment in a separated NetCo used for leverage reduction would be supportive of the financial profile, depending on the transaction structure. Gradual EBITDA Growth: Fitch forecasts marginal improvement in organic EBITDA in 2025, as price increases and growth in mobile subscriptions are mostly offset by continued pressure from declining fixed subscriptions and cost improvement. Fitch projects Fitch-defined EBITDA margin at around 38% by 2028, including the full benefits of the Daisy acquisition, higher fibre take-up and an improved market structure in mobile. The EBITDA margin fell to 34.8% in 2024 from 35.5% in 2023, due to lower service revenues, and higher costs to market nexfibre FttP. Fixed Network Investment: VMO2's target is to upgrade the bulk of its hybrid-fibre-coaxial (HFC) network to fibre-to-the-premises (FttP) by 2028. The HFC networks cover around 16.5 million premises, which equates to around 56% of UK premises. Cost of conversion averages GBP100 per premise, which is materially lower than new build, as VMO2 uses existing infrastructure. However, Fitch anticipates increasing cash capex over the next three years, as they execute their plan. Fitch forecasts capex to peak in 2027, with CFO less capex below 3% of total debt in 2025-2028, which is its downgrade sensitivity. Fixed-Line Challenges: VMO2 gained 21,000 broadband subscriptions in 2024, despite an increase in average revenue per user (ARPU), due to strong take-up within the nexfibre footprint. However, it lost 46,000 fixed line subscriptions in 1Q25. Fitch believes aggressive competition from alternative networks and build out of fibre by Openreach is affecting VMO2's HFC subscriber base, alongside cost-of-living pressures and cord-cutting at the premium end of the market. VMO2 can partially offset decline in its HFC customer base with growth from new customers on the nexfibre network. Consolidation in Mobile: Fitch expects VMO2 to acquire additional spectrum and participate in network sharing with VodafoneThree. The merger of Vodafone Group Plc's UK business with Three UK consolidates the mobile market to three operators from four. Fitch believes this will support greater investment in network quality and rational pricing, improving ARPU, churn and profitability, benefitting O2, which contributes just under 60% of VMO2's revenue. VMO2's strong mobile virtual network operator portfolio, will support EBITDA growth and offset fixed-line weaknesses. Acquisition of Daisy Supports B2B: Fitch expects the merger between Daisy and VMO2's business-to-business (B2B) operations to complete in 2H25. It will create a scaled operator, with achievable cost synergies, including the transition of customers from other networks to VMO2. VMO2's B2B business operates in a highly competitive market with falling fixed B2B revenue for the last three years, partly driven by declining voice revenues and volatile macroeconomic conditions. VMO2 has been effective at achieving synergies and Fitch anticipates further such recurring gains of over half of GBP70 million by mid-2028. Peer Analysis VMO2 has larger absolute scale than other European cable operators with strong mobile franchises, such as VodafoneZiggo Group B.V. (B+/Stable) in the Netherlands or Telenet Group Holding N.V (BB-/Stable) in Belgium. It has a stronger share of the UK mobile market than The Sunrise Holding Group (BB-/Positive) has of the Swiss mobile market. The UK mobile market is more structurally challenging than some European markets due to fibre overbuild by alternative operators and the importance of converged, content packages as a strong driver of consumer preferences. The recent merger of Vodafone Group plc's (BBB/Positive) UK business and Hutchinson 3G UK Limited (Three UK) consolidates the UK mobile market to three operators from four and supports rational market competition. The 2021 merger with O2 UK has made VMO2 a stronger competitor to incumbent BT Group plc (BBB/Stable). However, the latter benefits from wider broadband coverage, a stronger B2B presence and large wholesale operations, which would allow BT more leverage capacity at any given rating level. Key Assumptions References to Daisy reflect its financials on a pro forma basis. - Flat revenue in 2025, excluding nexfibre construction revenue and Daisy but including handset revenues; revenue CAGR, excluding nexfibre construction revenue but including Daisy pro forma from 2025, at 2.3% for 2024-2028 - Fitch-defined EBITDA margin improving to 35.7% in 2025 and trending towards 38% in 2028 - Cash capex at 22% of revenue in 2025, increasing to 24% 2027 and 22% in 2028 to fund conversion of the last-mile cable network to FttP and spectrum payments - Non-recurring restructuring and other cash costs of GBP70 million in 2025, half of which included in FCF - Cash distributions of GBP375 million in 2025 using FCF. Future distributions broadly equal to FCF Recovery Analysis Fitch rates VMO2's senior secured rating at 'BB+' in accordance with its Corporates Recovery Ratings and Instrument Ratings Criteria, under which Fitch applies a generic approach to instrument notching for 'BB' rated issuers. Fitch labels VMO2's debt as "Category 2 first lien" under its criteria, resulting in a Recovery Rating of 'RR2', with a two-notch uplift from the IDR to 'BB+'. Fitch classifies vendor financing debt as subordinated for the purpose of recovery analysis, resulting in a Recovery Rating of 'RR5', and an instrument rating of 'B+', one notch below the IDR, given the large quantity of prior-ranking debt above it. Unsecured senior debt is rated as deeply subordinated at 'B', or two notches below the IDR, with a Recovery Rating of 'RR6'. RATING SENSITIVITIES Factors That Could, Individually or Collectively, Lead to Downgrade - Fitch-defined EBITDA net leverage consistently above 5.0x - EBITDA interest cover below 4.5x on a sustained basis - Material decline in key operating and financial metrics, reflecting intensified competitive pressures or material deviation from the stated financial policy - CFO less capex consistently below 3% of total debt Factors That Could, Individually or Collectively, Lead to a Revision of Outlook to Stable - The outlook would be stabilised if the company's Fitch defined EBITDA net leverage is expected to be consistent with a BB- rating in the short term Factors That Could, Individually or Collectively, Lead to Upgrade - Fitch-defined EBITDA net leverage below 4.3x on a sustained basis - A more conservative financial policy with strong and stable FCF generation, reflecting a stable competitive and regulatory environment - CFO less capex above 7.5% of total debt for an extended period Liquidity and Debt Structure VMO2 reported a cash balance of GBP291 million within the restricted group at end-March 2025. Liquidity is supported by robust pre-dividend FCF with some flexibility over dividends and an undrawn revolving credit facility of GBP1.4 billion. This will provide VMO2 sufficient cover for short-term liabilities. Most of the company's third-party debt, except for short-term uncommitted vendor-financing debt, is long dated with maturities from 2028. VMO2's floating-rate debt is hedged with derivatives. Summary of Financial Adjustments VMO2 uses off-balance-sheet factoring facilities in its working-capital management. Fitch has not adjusted its metrics for these facilities due to the lack of disclosure and its assessment that they are not material to the rating. If this were to change, Fitch could make an adjustment in future. Fitch considers cash reported in the audited accounts at VMED O2 UK Holdings Limited, with an adjustment for operating cash needs as considered appropriate. 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 ----------- ------ -------- ----- Virgin Media SFA Finance Limited senior secured LT BB+ Affirmed RR2 BB+ Virgin Media Bristol LLC senior secured LT BB+ Affirmed RR2 BB+ Virgin Media Secured Finance Plc senior secured LT BB+ Affirmed RR2 BB+ Virgin Media Vendor Financing Notes IV Designated Activity Company structured LT B+ Affirmed RR5 B+ VMED O2 UK Limited LT IDR BB- Affirmed BB- VMED O2 UK Holdco 4 Limited senior secured LT BB+ Affirmed RR2 BB+ Virgin Media Vendor Financing Notes III Designated Activity Company structured LT B+ Affirmed RR5 B+ Virgin Media O2 Vendor Financing Notes V Designated Activity Company structured LT B+ Affirmed RR5 B+ VMED O2 UK Financing I plc senior secured LT BB+ Affirmed RR2 BB+ Virgin Media Finance PLC senior unsecured LT B Affirmed RR6 B WATKINS DRINKS: Interpath Ltd Named as Administrators ----------------------------------------------------- Watkins Drinks Limited was placed into administration proceedings In the High Court of Justice, Business and Property Courts in Leeds, Companies and Insolvency List (ChD), Court Number: CR-2025-LDS-000601, and Howard Smith and James Richard Clark of Interpath Ltd were appointed as administrators on June 17, 2025. Watkins Drinks is a manufacturer of soft drinks, production of mineral waters and other bottled waters. Its registered office is at Timsons Business Centre, Bath Road, Kettering, NN16 8NQ Its principal trading address is at Castleton Mill, Castleton Close, Leeds, LS12 2DS The joint administrators can be reached at: James Richard Clark Howard Smith Interpath Advisory Interpath Ltd 4th Floor Tailors Corner, Thirsk Row Leeds, LS1 4DP For further details contact: Tom Stoetzel Email: MightyDrinks@Interpath.com Tel No: 0191 933 4544 WOLSELEY GROUP: Fitch Assigns 'B' Final LongTerm IDR, Outlook Pos. ------------------------------------------------------------------ Fitch Ratings has assigned Wolseley Group Holdings Limited a final Long-Term Issuer Default Rating (IDR) of 'B'. The Outlook is Positive. Fitch has assigned the group's GBP350 million notes a final senior secured rating of 'B+' with a Recovery Rating of 'RR3'. The ratings reflect Wolseley's concentration on the UK and Irish market and an expected increase in leverage financial year to July 2025. Rating strengths are its solid business profile, underpinned by its market-leading positions, particularly in plumbing and heating (P&H), alongside product and customer diversification. 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 Positive Outlook reflects expected deleveraging FY26-FY28 as EBITDA margins recover with rising volumes and the implementation of cost-efficiency programmes. Key Rating Drivers Increased Debt, Expected Deleveraging: Fitch anticipates an increase in leverage in FY25 following the issue of the new senior secured notes, with part of the proceeds being used for dividend distribution. Fitch expects Wolseley's EBITDA leverage to reduce from FY26 as EBITDA margins improve and a stable capital structure, with no further issuance planned. The group has demonstrated its ability to deleverage following the acquisition by Clayton, Dubilier & Rice (CD&R), a private equity company, in 2021, maintaining low leverage during market downturns while actively pursuing bolt-on M&A. Temporarily Constrained EBITDA Margin: The group's EBITDA margin fell in FY24 due to declining volumes, product price deflation and increased labour costs. However, Wolseley has seen consistent improvements in volumes since January 2025, while EBITDA margins are benefitting from the full effects of its cost rationalisation programme, as the second phase was completed in June 2024. Current initiatives to review commercial terms and to simplify customer deal structures - allowing for optimised pricing and product ranges - are expected to further support expected EBITDA improvement in the next three years. Limited FCF Generation: Free cash flow (FCF) in FY25 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 to support business growth. Fitch expects the FCF margin to rise above 1% from FY28, supported by projected higher revenue and improving EBITDA margins. Exposure to Cyclical End-Markets: Wolseley benefits from diversified end-markets poised for cyclical recovery and structural growth, supported 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 more resilient P&H sector's renovation, maintenance and improvement market. 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) and Quimper AB, 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's business profile is weaker than those of Travis Perkins Plc (BB+/Stable), Quimper AB (B+/Stable) and Stark (B-/Stable). It is smaller, with FY24 revenue of GBP2.2 billion, below Travis Perkins' GBP4.9 billion in 2023, Quimper's GBP3.9 billion in 2023, and Stark's GBP6.6 billion in FY24 (year-end July). Wolseley has weaker geographical diversification than Stark and Travis Perkins. 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%-3.6% over the same period. Fitch forecasts the former will 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 (2025 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 to rise 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 to 1% in 2028 Working-capital outflows 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). 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 its super senior GBP185 million asset-backed loan (ABL), 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 end-March 2025, Wolseley had Fitch-adjusted readily available cash of GBP117 million and had drawn GBP115 million of the available GBP305 million ABL facility. The latter is due to mature in October 2030. Fitch forecasts negative FCF in 2025 and neutral-to-positive FCF in 2026-2028. The company's other outstanding debt is its GBP350 million notes maturing in January 2031. 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 ----------- ------ -------- ----- Wolseley Group Finco Plc senior secured LT B+ New Rating RR3 B+(EXP) Wolseley Group Holdings Limited LT IDR B New Rating B(EXP) ********* 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. 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