250707.mbx

250707.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, July 7, 2025, Vol. 26, No. 134 Headlines B E L G I U M MEUSE BIDCO: Fitch Puts BB Rating on Secured Debt on Watch Negative SARENS BESTUUR: S&P Raises ICR to 'B+' on Robust Performance F R A N C E EUTELSAT: S&P Places 'B-' ICR on Credit Pos. on Equity Injection KEREIS: Moody's Affirms 'B2' CFR, Outlook Stable PAPREC HOLDING: Fitch Rates EUR850MM Secured Green Bond 'BB+(EXP)' PAPREC HOLDING: S&P Affirms 'BB' ICR & Alters Outlook to Stable G E R M A N Y ADLER GROUP: S&P Lowers First-Lien Sr. Secured Notes Rating to 'B' DEMIRE DEUTSCHE: Moody's Withdraws 'Caa2' Corporate Family Rating HSE FINANCE: S&P Lowers LT ICR to 'D' on Court Sanctioned Order MAHLE GMBH: Moody's Rates New EUR300MM Sr. Unsecured Notes 'Ba2' MAHLE GMBH: S&P Rates EUR300MM Senior Unsecured Notes 'BB-' I R E L A N D ARBOUR CLO V: S&P Assigns B-(sf) Rating on Class F-R Notes AVOCA CLO XIV: S&P Assigns Prelim. B-(sf) Rating on F-R-R Notes BNPP AM 2018: Moody's Lowers Rating on EUR12MM Class F Notes to B3 HENLEY CLO XIV: Fitch Assigns 'B-sf' Final Rating on Class F Notes HENLEY CLO XIV: S&P Assigns B-(sf) Rating on Class F Notes MONUMENT CLO 3: Fitch Assigns 'B-sf' Final Rating on Class F Notes MONUMENT CLO 3: S&P Assigns B-(sf) Rating on Class F Notes PALMER SQUARE 2025-2: Fitch Assigns B-(EXP)sf Rating on Cl. F Notes PALMER SQUARE 2025-2: S&P Assigns Prelim. B-(sf) Rating on F Notes ST. PAUL'S VIII: Moody's Affirms B2 Rating on EUR12MM Cl. F Notes TIKEHAU CLO XI: Fitch Assigns 'B-sf' Final Rating on Cl. F-R Notes TYMON PARK CLO: Moody's Affirms B3 Rating on EUR11.2MM Cl. E Notes WILTON PARK: Fitch Assigns 'B-sf' Final Rating on Class F-R Notes WILTON PARK: S&P Assigns B-(sf) Rating on Class F-R Notes I T A L Y LA DORIA: Moody's Rates New EUR675MM Senior Secured Notes 'B1' LA DORIA: S&P Rates Proposed EUR675MM Senior Secured Notes 'B' OMNIA TECHNOLOGIES: S&P Affirms 'B' ICR, Outlook Stable L U X E M B O U R G GARFUNKELUX HOLDCO 2: Moody's Ups CFR to 'Caa2', Outlook Stable GARFUNKELUX HOLDCO 2: S&P Upgrades ICR to 'CCC+' SK INVICTUS II: Moody's Affirms 'B2' CFR, Outlook Stable N E T H E R L A N D S SIGMA HOLDCO: Fitch Rates EUR400MM Sub. Notes 'CCC+(EXP)' SIGMA HOLDCO: Moody's Rates New Secured Notes Due 2031 'Caa1' SIGMA HOLDCO: S&P Rates New EUR400MM Senior Unsecured Bonds 'CCC+' P O L A N D DL INVEST: S&P Assigns Preliminary 'B+' LT ICR, Outlook Stable R U S S I A AGROBANK: Fitch Hikes LongTerm IDRs to 'BB', Outlook Stable ALOQABANK: Fitch Hikes LongTerm IDRs to 'BB', Outlook Stable BUSINESS DEVELOPMENT: Fitch Hikes IDRs to 'BB', Outlook Stable IPOTEKA-BANK: Fitch Hikes LongTerm IDRs to 'BB', Outlook Stable JSCB KAPITALBANK: Fitch Alters Outlook on 'B' IDR to Positive MICROCREDITBANK: Fitch Hikes LongTerm IDR to 'BB', Outlook Stable XALQ BANK: Fitch Hikes LongTerm IDRs to 'BB', Outlook Stable [] Fitch Hikes LongTerm IDR on 3 Uzbekistani Utilities to 'BB' [] Fitch Hikes LongTerm IDR to 'BB' on 3 Uzbek State-Owned Banks S W E D E N POLESTAR AUTOMOTIVE: Eric Li, 11 Others Report Equity Stake S W I T Z E R L A N D HERENS MIDCO: Moody's Alters Outlook on 'B3' CFR to Negative U N I T E D K I N G D O M B&H.PT LIMITED: FRP Advisory Named as Administrators EUROSAIL 2006-2BL: Fitch Lowers Rating on Class E1c Notes to 'B-sf' FUTURE PLC: S&P Assigns 'BB+' LongTerm Issuer Credit Rating HARVEST ENERGY AVIATION: Teneo Financial Named as Administrators HARVEST ENERGY: Teneo Financial Named as Administrators KANE BIDCO: Moody's Rates New Sr. Secured Notes 'B1' KANE BIDCO: S&P Rates Proposed Senior Secured Notes 'B+' LIQUID TELECOMMUNICATIONS: Fitch Affirms 'CCC+' LongTerm IDR LUDGATE FUNDING 2007: Fitch Hikes Rating on Class E Debt to 'BB-sf' OAT HILL 3: Fitch Lowers Rating on Class F Notes to 'B-sf' OEG GLOBAL: Moody's Affirms 'B1' CFR, Outlook Remains Stable PRAX PETROLEUM: Teneo Financial Named as Administrators PRAX TREASURY: Teneo Financial Named as Administrators STATE OIL: Teneo Financial Named as Administrators - - - - - ============= B E L G I U M ============= MEUSE BIDCO: Fitch Puts BB Rating on Secured Debt on Watch Negative ------------------------------------------------------------------- Fitch Ratings has placed Meuse Finco SA's senior 'BB' secured debt, which has a Recovery Rating of 'RR2', on Rating Watch Negative (RWN). It has also affirmed Meuse Bidco SA's Long-Term Issuer Default Rating (IDR) at 'B+' with Stable Outlook. The RWN reflects its expectation of an increase in total debt outstanding pro-forma for the completion of a tap issue, which would result in weaker recovery prospects. Meuse's IDR balances its small and concentrated business with a strong position in its key market of Belgium and lower competitive pressure, supported by favourable regulation. The Stable Outlook takes into account strong organic growth of iGaming in Europe and medium-term market opportunities, such as iGaming liberalisation in France. These positives are balanced by regulatory challenges in the rest of Europe, related to fiscal pressures and player safety requirements. Fitch expects leverage to remain consistent with the company's 'B+' IDR, despite an increase in debt. Key Rating Drivers Transaction Exhausts Leverage Headroom: The tap will add around EUR94 million of debt to Meuse, which will lead to a material increase in leverage. Fitch forecasts EBITDAR leverage of 4.3x in 2025 (2024: 3.7x) and at 4.4x by 2027. This leaves little room for underperformance under the rating. Fitch assumes proceeds will be used for M&A and shareholder distributions. A looser financial policy, with additional dividend payouts, could lead to a negative rating action. Its forecast assumes no dividends from its joint venture (JV) with Estoril in Portugal from 2026. If the JV generated consistent results and distributed dividends in line with management expectations, leverage would improve by 0.2x-0.3x, to levels comfortably within the rating sensitivities. Regulatory Challenges in Core Markets: New player safety regulations in Belgium (58% of 2024 revenues) and Netherlands (9%) implemented throughout 2023-2024, and additional fiscal pressure, have led to market declines in both countries. Gaming1, the company's business unit, has navigated these challenges efficiently, by maintaining neutral revenue growth in 2024 and enhancing its profitability. Fitch anticipates the adverse regulation and additional fiscal pressure to continue in western Europe and therefore flat revenue in 2025, followed by low single-digit growth on a consolidated basis. Strong Profitability and Cash Flow: Fitch expects Meuse to maintain its strong EBITDAR margins above 25%. The fairly low capex intensity of its business and moderate leverage should help Meuse consistently generate positive pre-dividend free cash flow (FCF) margins in the mid-to-high single digits. Niche Positioning, Small Scale: Meuse generates most of its revenues from small regulated markets, such as Belgium, the Netherlands and Switzerland, with particularly high concentration on Belgium. Its recently revised strategy to prioritise development in western European markets will likely result in high geographic concentration. This will negatively affect long-term growth, but Fitch sees a lower risk of adverse regulations or unanticipated fiscal pressure in these markets, compared with developing markets that have little regulation and 'dotcom' markets. Belgian Regulation Supports Market Position: Fitch continues to view the Belgian gaming regulatory environment as stable and supportive of Meuse's business profile. Limited availability and linkage of online licences to land-based casinos act as strong barriers to entry for potential competitors, and a history of stable regulation since 2011 provides visibility over operational cash flows over the medium term. Continued European Market Consolidation: The European gaming market continues to consolidate through M&A, with operational synergies and economies of scale helping many large operators secure or improve their local positions. Expertise and experience in domestic markets support local leaders, including Meuse, but the larger scale of international operators results in substantially higher customer acquisition capacity. This is more relevant to more commoditised products like sports betting, but can also make competition more challenging in iGaming, especially in less regulated markets. Fitch expects the company to remain disciplined in its M&A ambitions. Product Offering Focused on Gaming: Meuse has the lowest exposure among Fitch-rated peers in EMEA, to sports betting (around 10% of gross gaming revenue). Gaming faces lower margin volatility than sports betting, especially for smaller operators, as payouts are not dependent on external factors such as sports results. However, gaming tends to be more exposed to regulatory risks, so Fitch expects it to grow more slowly over the long term. In its view, gaming and sports betting are both showing resilience to economic slowdown, with low spending impact on gaming from financial crises due to a lower share in discretionary consumer expenses. Peer Analysis Meuse has much smaller scale than higher-rated peers, such as BetClic Everest Group (BB-/Stable) and Allwyn International AG (BB-/Positive). This, combined with weaker leverage than BetClic's, results in a one-notch difference between the ratings. Allwyn's business profile is materially stronger than Meuse's, with larger scale and better geographical diversification. This is moderately balanced by a higher complexity in Allwyn's corporate structure. Meuse has stronger profitability and FCF margins than evoke plc (B+/Negative), despite its smaller size. This translates into materially stronger leverage metrics with a greater deleveraging capacity. The combination of a weaker business profile and a stronger financial profile result in similar IDRs for Meuse and evoke. Key Assumptions - Net gaming revenue CAGR of 2.2% for 2024-2028, primarily driven by organic online growth - EBITDAR margin at 26.6% for 2025-2028 - Neutral working capital for 2025-2028 - Annual capex at EUR20 million in 2025-2028 - Dividend of EUR7 million received from Estoril in 2025; no further dividend received from JVs over the forecast horizon - Non-recurring cash of EUR140 million being upstreamed to equity holders in 2025 - No further dividends distributed over the forecast horizon Recovery Analysis The recovery analysis assumed that Meuse would be reorganised as a going concern (GC) in bankruptcy rather than liquidated. Fitch has assumed a 10% administrative claim. The GC EBITDA estimate of EUR55 million reflects Fitch's view of a sustainable, post-reorganisation EBITDA level on which Fitch bases the enterprise valuation. Fitch applied a distressed multiple of 5.5x EBITDA to the GC EBITDA. The multiple reflects positive industry dynamics, including modest growth prospects, high barriers to entry and a conducive but evolving regulatory environment. The multiple gives credit to Meuse's significant inherent intangible value for brand awareness in a regulated and rather captive market. Fitch also added around EUR23 million of additional value from JVs that Fitch assumed will be divested in financial distress, to calculate a post-reorganisation enterprise valuation. In accordance with Fitch's criteria, Fitch assumed Meuse's EUR80 million revolving credit facility (RCF) is fully drawn on default. Its EUR306 million senior secured loan ranks pari passu with the RCF. Its EUR15 million of operating company debt is super-senior in the debt waterfall. Its principal waterfall analysis, after deducting 10% for administrative claims, generated a ranked recovery in the 'RR2' band, indicating a 'BB' instrument rating for its term loan B (TLB). The TLB will be increased to EUR400 million from EUR306 million following transaction completion, while the RCF will increase to EUR100 million from EUR80 million. These higher debt levels will translate into a lower ranked recovery of 'RR3', and likely lead to a downgrade of the increased and extended TLB by one notch. RATING SENSITIVITIES Factors That Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Adverse regulatory changes leading to material deterioration in revenue or operating profits - FCF margin in the low single digits as a result of operating underperformance, considerable increases in capex or sizeable cash being distributed to shareholders or to the B2B business, which is outside the restricted group - EBITDAR leverage above 4.5x - EBITDAR fixed charge coverage below 3.0x Factors That Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Continued growth with EBITDAR approaching EUR200 million, through increased geographical diversification into new regulated markets - FCF margin maintained in the medium-to-high single digits - EBITDAR leverage consistently below 3.5x - EBITDAR fixed charge coverage maintained above 3.5x Liquidity and Debt Structure Meuse's cash flow balance was a comfortable EUR76 million at end-2024, after Fitch's adjustments of EUR20 million of cash for operational purposes. Additional financial flexibility stems from an undrawn RCF of EUR80 million and sustained positive FCF margins that Fitch forecasts to stay in the mid-to-high single digits. Meuse will have no maturity before 2030 after the transaction, while the RCF will be increase to EUR100 million, increasing liquidity. Issuer Profile Meuse is an omnichannel gaming and sports-betting operator with a leading position in Belgium (60% of GGR), and a presence in France, Switzerland, Portugal, the Netherlands and Spain. Summary of Financial Adjustments Fitch computes Meuse's lease liability by multiplying Fitch-defined cash lease costs by 8x, reflecting the long-term nature of rent contracts for casino owners and a discount rate typical for a developed European country, such as Belgium. 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 Meuse has an ESG Relevance Score of '4' for Customer Welfare - Fair Messaging, Privacy & Data Security due to increasing regulatory scrutiny of the sector, greater awareness around the social implications of gaming addiction and an increasing focus on responsible gaming, which has a negative impact on the credit profile, and is relevant to the rating[s] in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Meuse Finco SA senior secured LT BB Rating Watch On RR2 BB Meuse Bidco SA LT IDR B+ Affirmed B+ SARENS BESTUUR: S&P Raises ICR to 'B+' on Robust Performance ------------------------------------------------------------ S&P Global Ratings raised its long-term issuer credit rating on Belgium-headquartered Sarens Bestuur N.V. (Sarens) to 'B+' from 'B' and its issue rating on the group's senior unsecured notes to 'BB-' from 'B+'. S&P said, "The positive outlook reflects our view that Sarens' performance will remain robust, on the back of supportive infrastructure and civil engineering markets, with adjusted debt to EBITDA well below 4.5x in 2025-2026, and positive FOCF improving materially in 2026 after the completion of its growth capex." Sarens continues to demonstrate a solid performance, supported by its ongoing diversification toward petrochemicals, civil and wind power, additional manpower-services, and favorable infrastructure and civil engineering markets. S&P said, "As a result, we expect Sarens can maintain S&P Global Ratings-adjusted leverage below 4.5x (on a gross basis) over 2025-2026; Sarens has also refinanced its revolving credit and lease facilities, resulting in an improved liquidity and debt maturity profile, and we forecast free operating cash flow (FOCF) to remain positive and improve over that period. "The upgrade and positive outlook reflect our view that Sarens' S&P Global Ratings-adjusted debt to EBITDA will stay below 4.5x in 2025 and 2026. Sarens deleveraged to 4.4x in 2024 from 4.7x in 2023 and 5.4x in 2022 on a S&P Global Ratings-adjusted basis, which is a gross leverage metric. At year-end 2024, Sarens' net leverage was also below 4.0x. This was attributed to the increase in EBITDA alongside debt repayments, which resulted in a decrease in gross debt. For 2025-2026, we forecast S&P Global Ratings-adjusted debt to EBITDA to remain broadly stable and lower than 4.5x, well below the 5.0x threshold for the 'B+' rating. "We expect Sarens to continue to perform strongly in 2025, despite the prevailing economic conditions. In 2024, the group reported solid financial results, supported by a robust order backlog and continued strategic shift toward diversified projects and a rental revenue base, particularly in expanding markets such as offshore wind and nuclear power projects. As a result, revenue increased to EUR856 million in 2024, up 7% compared to 2023. Absolute EBITDA continued to rise slightly, driven by controlled purchases and staff costs; however, EBITDA margins remained relatively stable, averaging 18% in 2023-2024, due to increased subcontracting activities and the start-up costs associated with additional man-powered services. The positive trend continued in the first quarter of 2025, with revenue growth of about 4%, while profitability remained stable. This year, we anticipate a slight revenue increase of 1.0%-4.0%. We also expect underlying EBITDA margin to remain broadly stable, while the S&P Global Ratings-adjusted EBITDA margin should increase to about 19% considering increased use of operational leases." The company is committed to pursuing its diversification across geographies and segments, including petrochemical maintenance, civil works, and wind power installations, which should contribute to a higher turnover. The company has successfully refinanced its revolving credit and lease facilities, resulting in a stronger liquidity and debt maturity profile. At the beginning of May, Sarens entered a new financing consisting of two separate syndicated loan agreements for a five-year period: one syndicated lease with commitments for EUR317 million and one syndicated revolving credit facility (RCF) and term loan (bullet) for EUR235.5 million. The proceeds from the bullet term loan have been used to repay a portion of Sarens' unsecured notes, whose outstanding amount reduced to about EUR100 million. S&P views this refinancing as credit positive, since the company has enhanced its debt maturity profile without incurring any additional interest expenses. The next major financial debt maturity is due in 2027, related to the outstanding amount of the unsecured notes. The upgrade also reflects Saren's management's conservative approach toward leverage and its willingness to maintain a solid capital structure. Financial deleveraging has been a key focus of Sarens' management through operational growth and efficiencies. Sarens is 100% owned by the Sarens family. S&P said, "We note that Sarens has not distributed any dividends for the past 10 years, and we understand it does not plan to distribute any in the foreseeable future. We expect free cash flows will be mainly used to reduce net leverage rather than paying shareholder remuneration." S&P said, "We forecast that Sarens will continue to display positive FOCF of over EUR40 million (before leases payments) on average in 2025-2026, albeit slightly lower than peers'. The company has consistently delivered positive FOCF over the past five years, and we now anticipate FOCF of over EUR25 million in 2025. However, Sarens' FOCF generation remains limited compared to that of peers due to high capital expenditure (capex) for replacing mobile cranes and facilitating growth in its wind and renewable energy sectors. Sarens remains committed to maintaining net capex of EUR50 million per year, along with an additional EUR30 million of capex for higher-capacity cranes to support growth in its wind and renewable energy (including nuclear) business. As a result, we assume capex of about EUR75 million for 2025. In our view, the limited FOCF is a rating constraint for the moment. However, we expect FOCF and FOCF to debt to improve in 2026 as the company completes its growth capex, which further supports our positive outlook. "The positive outlook reflects our view that Sarens' performance will remain robust, on the back of supportive infrastructure and civil engineering markets, with adjusted debt to EBITDA well below 4.5x in 2025-2026, and positive FOCF improving materially in 2026 after the completion of its growth capex." S&P could revise the outlook to stable if: -- Sarens' performance deteriorates such that its adjusted leverage rises above 4.5x; -- Its FOCF become neutral to negative; or -- Its liquidity weakens. S&P could raise its ratings if Sarens: -- Maintains an adjusted debt to EBITDA below 4.5x; -- Generates solid FOCF, leading to FOCF to debt of over 5%; and -- Maintains financial policies that support a stronger rating. =========== F R A N C E =========== EUTELSAT: S&P Places 'B-' ICR on Credit Pos. on Equity Injection ---------------------------------------------------------------- S&P Global Ratings placed its 'B-' issuer credit rating on French satellite operator Eutelsat, and the 'B' issue rating on debt issued by Eutelsat S.A. on CreditWatch with positive implications, as well as the 'B-' issue rating on debt issued by Eutelsat Communications. The CreditWatch positive placement reflects S&P's view that it would raise the ratings by one notch upon the transaction's close. The transaction further demonstrates Eutelsat's strategic value to France and the EU. The company's LEO constellation is becoming increasingly important, particularly for highly sensitive military and government communications. This is evidenced in the current Ukraine and Russian war, where LEO services have provided vital communications lifeline for Ukraine. The LEO market is dominated by Starlink and the company is tightly controlled by Elon Musk. EU governments, amid the growing awareness of sovereignty and security, have therefore turned to Eutelsat, the only other LEO service provider, to strengthen their positions in this new field. As a result, Eutelsat was chosen to be the LEO partner of the IRIS2, EU's EUR10.6 billion program on LEO and medium Earth orbit to boost its satellite-based connectivity. In addition to the funding, the company also benefits from a more favorable position compared with Starlink in government contracts in the EU. The company just signed a framework agreement with France's Ministry of the Armed Forces valued up to EUR1 billion, and its increasing presence in Ukraine is funded by the German government. On the other hand, the Italian government's negotiations with Starlink, worth EUR1.6 billion, have come to a standstill, with Eutelsat being a possible alternative. S&P said, "We would likely treat Eutelsat as government-related entity (GRE) after the transaction closes. However, we don't expect any direct rating uplift from the company's GRE status, given our view that the company will continue to operate as an independent business, the company's strategic values to France and EU are yet to be fully realized, and a financial stress of Eutelsat will not have a systemic impact on France's economy or defense capabilities." The announced equity injection will ease the company's short-term liquidity pressure. The company has significantly scaled back its capital spending (capex) program in the past two fiscal years (ended June 30) compared with its original plan following the merger with OneWeb. Nevertheless, the elevated capex and working capital to support its LEO constellation, and higher financing costs, led to significant cash outflow in fiscal 2024 and 2025. S&P thinks the fresh equity injection, together with increased ownership by the French state, through State Participations Agency, will be sufficient to fund its upsized capex in fiscal 2026 and improve its ability to refinance the upcoming maturing debts in fiscal 2027, easing the short-term liquidity pressure. Further funding will be needed to support the company's long-term success. The company estimated total capex and leases of about EUR4 billion until 2029, of which EUR2 billion on the replacing and extension of the company's first-generation constellation. S&P said, "As a result, we think the equity injection alone will not be sufficient and the company will need to secure additional funding for the EUR4 billion capex program. Furthermore, we think the company could still face some operational challenges considering the competitive market environment, its weak track record, and sustained negative cash flow." The company's GEO business is under increased pressure. S&P said, "We forecast the revenue and EBITDA margin of Eutelsat S.A., the company's GEO business, will be on a faster declining path, compared with our previous expectation that the segment's connectivity growth would, to a certain extent, offset the video decline. We think the GEO connectivity segment will face a cannibalizing effect from LEO, which will lead to a steady decline of the business, despite Eutelsat's strategy to offer customers combined LEO and GEO connectivity." The company wrote off EUR535 million of its GEO assets, due to lower expectations of future cash flows. That said, the company's credit quality still benefits from its good cash flow generation and tight restrictions on upstreaming cash to fund the loss-making OneWeb. S&P said, "We expect to resolve the CreditWatch placements when the announced equity injection completes by the end of 2025. "At that time, we will likely raise our issuer credit rating on Eutelsat by one notch to 'B'. We expect to raise our issue-level rating on Eutelsat Communications S.A. debt by one notch to 'B', and on Eutelsat S.A. debt by one notch to 'B+'. "However, this will depend on how we view the company's operational performance, cash flow, and capital structure post-transaction." KEREIS: Moody's Affirms 'B2' CFR, Outlook Stable ------------------------------------------------ Moody's Ratings has affirmed the B2 Corporate Family Rating and the B2-PD Probability of Default Rating of Kereis. Concurrently, Moody's have assigned B2 ratings to the EUR1,130 million Senior Unsecured Bank Credit Facility (senior unsecured 1st Lien Term Loan B), and to the EUR175 million Senior Secured Bank Credit Facility (senior secured Revolving Credit Facility) issued by KI Knight France BidCo SAS, and Moody's have withdrawn the ratings of the previous revolving credit facility and term loan B1 issued by Kereis and Kereis Holding. The outlook on Kereis remains stable. Moody's have assigned a stable outlook to KI Knight France BidCo. The outlook for Kereis Holding has been withdrawn. Kereis is the leading brokerage firm for credit protection insurance in France, with a 25% market share in the French loan insurance segment, although the group continues to diversify in other segments of insurance brokerage. Since 2020, Kereis was held by Bridgepoint, a pan-European private equity investor. On May 28th 2025, Advent, a private equity firm with an expertise in financial services, has entered into an exclusive agreement to acquire the large majority of Kereis' shares. RATINGS RATIONALE The action prompted by the shareholding change, and Advent becoming the majority shareholder for the group, alongside management which will retain 2% of the shares. Moody's believes this new shareholding structure will not trigger any change in Kereis' strategy going forward, and that the investment horizon of Advent (i.e. 4 to 7 years for similar companies) will allow both timely support if needed, and a smooth execution of the continued diversification put in place by the group during the last years. As part of financing the acquisition by Advent, Kereis is also refinancing and increasing its first lien term loan with an increased amount of EUR1,130 million (vs. EUR965 million previously), due in 2032. At the same time, the company is also increasing its revolving credit facility (RCF) from EUR105 million to EUR175 million. Both facilities will be issued by the new BidCo, KI Knight France BidCo SAS. The B2 rating on the first lien senior unsecured Term loan, and the B2 rating on the senior secured first lien revolver due in 2031 by KI Knight France BidCo, reflect Moody's views of the probability of default of Kereis, along with Moody's Loss Given Default (LGD) assessment of the debt obligations and the absence of strong covenants. The affirmation of Kereis' B2 CFR reflects the resilience in group's profits and cash flow generation in 2024, the increasing business and geographic diversification in line with the group's strategy, and the stabilization of the French housing market which still accounts for about 45% of Kereis' revenues. In 2024, Kereis reported a stable EBITDA at EUR164 million in spite of a difficult French housing loan market, partly thanks to a stabilization during the last quarter. Revenues slightly increased compared to 2023 at EUR408 million (+3%), reflecting expansion in wholesale brokerage and SME activities. EBITDA margin remained close to 40%. Kereis' performance in the last years also benefitted from legislation changes such as the Lemoine law, allowing to switch loan insurer more easily which boosted renegotiations, and by increasing diversification. The company's niche in the French loan and credit insurance brokerage market (which contributed to approximately 46% of the group's revenues in 2024, a steadily decreasing share) is complemented by its diversification into protection and health insurance sectors, covering worker protection, retirement, and individual health products. Additionally, Kereis has expanded its operations beyond France, with significant activities in Germany, Spain, Italy, and Belgium, but also Portugal. Cash flows also remained strong, with a conversion ratio of over 85%, and a target cash position of over EUR100 million through the cycle (Q1 2025: EUR112 million). Kereis' ratings are also supported by its very strong EBITDA margin (around 45% on average in the last five years). Nonetheless, Kereis remains of limited size compared to its global peers, reporting EUR408 million in gross revenues for FY 2024. The group's leverage ratio has also increased recently, primarily due to the tap issuance at YE 2024, and Moody's expects it will continue to slightly increase following the refinancing of the term loan, although remaining below or at the downgrade trigger level. Going forward, Moody's expects that the company will continue its M&A activities, funded by cash or the expanded credit facility. ESG CONSIDERATIONS The assignment of the new rating to KI Knight France BidCo SAS also takes into account the effectiveness of the governance within the group, as part of Moody's assessments of environmental, social and governance (ESG) considerations. Kereis faces high governance risks, given the credit impact of high financial leverage, and the majority ownership by a private equity group. These risks, however, are partly offset by the strong management credibility and track record, strong organizational structure, and timely compliance and reporting. OUTLOOK The stable outlook reflects Moody's views that Kereis aims at further improving its business profile by continuing to increase diversification and gaining in size, while maintaining a financial leverage at or below the current level, in the 6.0-7.0x range, and posting EBITDA margins in the 40%-45% range in the next 12-18 months. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Factors that could lead to an upgrade of Kereis' ratings include: (i) a decrease in the financial leverage, as evidenced by an adjusted debt-to-EBITDA ratio maintained below 5.5x on a sustained basis, or (ii) a material increase in Kereis' size and/or business and geographic diversification, without materially affecting profitability, in particular EBITDA margin. Conversely, a negative rating action on the ratings could occur if (i) adjusted debt-to-EBITDA ratio were to increase sustainably above 7x, or (ii) the EBITDA margin were to contract below 30% on a sustained basis, or (iii) the liquidity profile were to deteriorate, as evidenced by a decreased to nil FCF-to-debt ratio. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Insurance Brokers and Service Companies published in February 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. PAPREC HOLDING: Fitch Rates EUR850MM Secured Green Bond 'BB+(EXP)' ------------------------------------------------------------------ Fitch Ratings has assigned Paprec Holding SA's proposed green EUR850 million senior secured green bond, to be split in two tranches, an expected rating of 'BB+(EXP)' with a Recovery Rating of 'RR3'. The pricing, final tenor and tranche structure are subject to market conditions. The proposed five- and seven-year issue is rated one notch above Paprec's 'BB' Issuer Default Rating (IDR) and aligned with that of outstanding senior secured notes. The draft terms largely reflect those of the existing notes. The proceeds of the new issue will finance the par redemption ofEUR300 million and EUR500 million senior secured notes maturing in 2027 and 2029, respectively; the remainder, depending on final issue terms, will meet transaction costs, improve the company's liquidity and help fund its expansion. The final rating is subject to the receipt of final terms and documentation confirming information received. Key Rating Drivers Senior Secured Rating: The proposed notes' 'BB+(EXP)' rating is aligned with that of the existing 2028 EUR450 million (EUR422 million outstanding following a partial buy-back), 2027 EUR300 million and 2029 EUR500 million senior secured. Bondholders will benefit from collateral on securities, pledged bank accounts and intercompany receivables of Paprec's subsidiaries on a first priority basis. The notes will rank equally with the 2028 notes and a super senior revolving credit facility agreement. The group and guarantors generate about 60% of group EBITDA, which is lower than similar transactions (usually about 80% of consolidated EBITDA), but similar with the 2023 bond issue. Limited Impact on Credit Metrics: Fitch expects the proposed issue to be largely neutral to EBITDA net leverage. However, EBITDA interest coverage should improve to an average 6.0x for 2025-2029, from 4.4x in 2024, based on expected lower interest costs compared with the refinanced 6.5% and 7.5% senior secured bonds issued in 2023. Solid EBITDA Performance: The company's Fitch-calculated EBITDA increased 17% to EUR313 million in 2024, supported by strong growth in waste services, the sale of recycled materials and effective cost management. The group maintained an EBITDA margin of 16%, demonstrating its ability to pass on cost increases to customers and leverage its pricing power. Renewal rates remain high, at over 98% for private clients. Trading remained strong in 1Q25, with double-digit EBITDA growth and stable margins. Negative FCF, High Leverage: Paprec's EBITDA net leverage (pro forma for acquisitions) was 3.7x at end-2024, below its loosened negative sensitivity of 3.9x for the 'BB' rating. High investments and increasing dividend distributions translate into negative free cash flow (FCF), despite strong EBITDA increase. For 2025, Fitch remains cautious on margins and additional acquisitions, which may result in slower deleveraging than management forecasts, towards 3.5x (about 3.0x for management). Commitment to Financial Policy Key: Fitch expects the company to show a strong commitment to maintaining net debt/EBITDA (as reported by the group) within 2.5x-3.5x, which is consistent with the 'BB' rating. Fitch expects leverage to retain moderate headroom against its negative sensitivity, remaining close to 3.5x. Fitch would expect equity support should any large M&A threaten to undermine the financial policy and breach the leverage negative rating sensitivity. Revised Sensitivities: Fitch has relaxed Paprec's debt capacity sensitivities for the 'BB' rating, increasing them by 0.4x, to 3.2x-3.9x. This reflects its increasing diversification in fee-based waste services, its reduced reliance on raw recycled materials sales that are exposed to market-driven prices (although mitigated by indexation clauses in all contracts), and the group's ability to maintain stable margins through effective contractual structures and pricing power. The company demonstrated margin resilience during the pandemic, the energy crisis and the inflationary period of 2022-2023, maintaining its performance, despite the economic downturn and commodity price volatility. Active M&A Strategy: Paprec plans to continue its selective external expansion strategy by acquiring small- to medium-sized, family-owned and regional waste management businesses offering synergies and easy integration. Fitch expects Paprec to comply with its committed leverage target as it pursues acquisitions. Its rating case includes M&A of an average EUR50 million a year between 2025 and 2028, with returns based on a 6.0x EBITDA multiple, in line with that of recent acquisitions. One-Off Cash Outflows Impact: Paprec is subject to one-off cash outflows due to an exceptional surtax rate approved in France for 2024 and 2025, increasing its effective tax rate to 36% from 25%. The group has also reached a judicial agreement with the French National Financial Prosecutor over historical allegations. The company will pay EUR12.7 million in fines and forfeitures over 2024-2026, resolving the allegations without implying any admission of liability or guilt by Paprec, according to the company. It is able to absorb these temporary additional outflows. Peer Analysis Seche Environnement S.A. (BB/Stable) and Derichebourg S.A. (BB+/Stable) are Paprec's closest peers and are medium-sized waste management companies operating primarily in France. The former specialises in hazardous waste management, which is subject to strict technical requirements with higher barriers to entry and pricing power than Paprec's lower-margin non-hazardous waste business. Paprec's recycling activities have higher business risk, due to exposure to primary commodity prices and demand for manufactured goods, for which it is a price taker. Seche's credit profile is marginally stronger than Paprec's, given its value and margin-added service offering, and its higher weight of fee-based revenues. Derichebourg is a pure recycling specialist with a strong presence in the metal (ferrous and non-ferrous) recycling business in France and Spain. Paprec and Derichebourg operate a dense network of collection and processing sites, with the former benefiting from a more diversified waste mix, service offering and indexation clauses. Derichebourg has a stronger presence outside France and its higher rating largely reflects its more conservative financial policy and lower leverage. Luna III S.a.r.l. (BB/Stable) and FCC Servicios Medio Ambiente Holding, S.A. (BBB/Stable), Spanish waste management companies, operate under long-term concession contracts with municipalities and are largely shielded from price risk, in contrast to Paprec's exposure to merchant risk. Luna and FCC benefit from low exposure to private industrial and commercial customers and higher geographical diversification. The stronger business profiles of Luna and FCC support their higher debt capacities than Paprec's. Key Assumptions Its Key Assumptions Within its Rating Case for the Issuer - Volumes of waste processed 2% CAGR for 2025-2028 - Volumes of raw materials recycled 1.5% CAGR between 2025 and 2028 - Raw material prices to gradually decline to about EUR170/tonne by 2028, from EUR200/tonne in 2025 - Prices for waste services CAGR 2% for 2025-2028 - Average EBITDA (excluding IFRS16) margin of 11% for 2025-2028 - Capex of EUR900 million between 2025 and 2028 - Bolt-on acquisitions of about EUR50 million a year (equity value) for 2025-2028, at a 6x enterprise value/EBITDA multiple - Dividends paid rising to EUR55 million in 2028, from EUR30 million in 2025 - New proposed EUR850 billion senior secured notes in 2025 RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - EBITDA net leverage above 3.9x, for example, due to deviations in financial policy to fund additional capex, acquisitions and dividends - EBITDA interest coverage below 3.5x and consistently negative FCF - Increasing margin volatility due to changes to the structure of contracts, especially regarding indexation to raw material prices Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - EBITDA net leverage consistently below 3.2x, supported by a consistent public financial policy and adequate visibility over the group's long-term growth strategy - EBITDA interest coverage above 4.5x - Improved profitability, reflected in a sustained EBITDA margin above 12% - Positive FCF Liquidity and Debt Structure At end-2024, Paprec had EUR197 million of readily available cash (including EUR10 million of marketable securities) and a revolving credit facility of EUR360 million maturing in August 2027, which is fully undrawn. This is against its forecast of negative FCF of about EUR70 million and EUR114 million of short-term debt liabilities in 2025. In July 2024, the company issued an additional EUR200 million tranche of senior secured notes due 2029. It has no major debt repayments before 2027. Fitch expects the proposed notes to improve liquidity, depending on the amount raised in excess of the refinancing of its EUR300 million and EUR500 million bonds, and on the final size of the issue and to be gradually reinvested. Its revolving credit facility will be increased to at least EUR400 million and its maturity extended to 2028, from 2027, with an automatic extension set at three months prior to the shorter maturity of the two proposed green bonds. Issuer Profile Paprec is a majority family-owned waste recycling company in France. It has 369 waste sorting, processing and recycling sites, operates 28 energy-from-waste plants and 20 landfills in France. It recycled about 17 million tonnes of waste in 2024. Date of Relevant Committee 17 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 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 ----------- ------ -------- Paprec Holding SA senior secured LT BB+(EXP) Expected Rating RR3 PAPREC HOLDING: S&P Affirms 'BB' ICR & Alters Outlook to Stable --------------------------------------------------------------- S&P Global Ratings revised its outlook on Paprec Holding to stable from negative, affirmed its 'BB' ratings on the company and its outstanding debt, and assigned its 'BB' rating to the proposed EUR850 million senior secured notes; thee recovery rating of '3' is unchanged, indicating its expectation of meaningful recovery prospects (rounded estimate: 55%) in the event of a payment default. The stable outlook indicates S&P's expectation that 20% revenue growth in 2025 and S&P Global Ratings-adjusted EBITDA margins improving to about 16% will drive S&P Global Ratings-adjusted debt to EBITDA to about 3.7x and funds from operations (FFO) to debt toward 20%, with further deleveraging expected in 2026, consistent with the company's prudent approach to mergers and acquisitions (M&A). S&P said, "We anticipate Paprec will achieve solid operating performance in 2025 with 20% revenue growth and EBITDA margin improvements. Paprec reported strong revenue and EBITDA growth of about 15% in 2024, with resilient EBITDA margins, thanks to the group's ability to pass through cost increases to its customers. In 2025, we expect Paprec will increase revenue by another 20% backed by strong commercial activity that has resulted in a EUR12 billion order backlog as of March 31, 2025, along with the full year consolidation of businesses acquired in 2024." Paprec's organic growth prospects are underpinned by a continued rise in waste recycling, market share gains in Spain, and investment-driven business development in waste-to-energy in France. S&P Global Ratings-adjusted EBITDA margins will likely improve by about 50 basis points to 16% in 2025. Continued cost passthrough, a gradual rampup of new contracts, and strict cost control will support margin expansion. In the first quarter of 2025, Paprec's volumes increased by 10.1% and its revenue expanded by 15.3%, which support our full-year projections. Paprec' resilient performance underpins our projected stronger credit metrics, which alongside its increased scale and business diversification over recent years provide greater headroom under the 'BB' rating. S&P said, "We project the company's S&P Global Ratings-adjusted EBITDA will improve to 3.7x from 4.3x in 2024, and its FFO to debt will strengthen to about 20% from 17.3% in 2024. We assess that these credit metrics will comfortably support the 'BB' rating over the next two years. We acknowledge that Paprec's revenue base has significantly increased over recent years and the group has become more diversified across various waste streams and waste services, such as through the expansion of waste-to-energy activities, from its historical focus on paper and nonhazardous industrial waste recycling. Furthermore, Paprec's track record of revenue and EBITDA growth reflects the robustness and resilience of its business model, even in challenging market conditions. Long-term contracts (seven years on average) and high customer retention rates (higher than 98% for private customers) underpin this stability. The share of sales of raw materials from recycling, which is more exposed to volatility of market prices, has decreased over the years to about 25% of total revenue. In addition, Paprec benefits from an extensive network of processing and recycling sites, which creates barriers to entry. Yet, in our view, Paprec's business risk profile remains somewhat below that of its closest peers, Seche Environnement (BB/Stable/--) and Luna 2.5 Sarl (Urbaser: BB-/Stable/--). Seche Environnement's solid position in hazardous waste, in a market that benefits from strong barriers to entry, and very stable profitability over the years, support our stronger view of its business relative to Paprec. We also consider that Urbaser, which benefits from long-term concession contracts and greater geographic diversification, has a more solid business risk profile overall." The proposed bond issuance and refinancing will result in interest cost savings and therefore contribute to improved free cash flow. Paprec intends to use the proceeds of the proposed EUR850 million senior secured notes to redeem the EUR300 million senior secured notes due 2027 and EUR500 million senior secured notes due 2029, and for general corporate purposes. Excluding transaction and bond redemption costs, in 2025, S&P expects a strong increase in its adjusted free operating cash flow (FOCF) figure for Paprec to about EUR180 million, driven by EBITDA growth and reduced interest costs, although FOCF would be only slightly positive after lease capital expenditure (capex). The proposed transaction also improves Paprec's debt maturity and liquidity profiles by increasing the duration of its debt and adding cash to the balance sheet, depending on the final size of the bond issuance. It may also provide Paprec with additional flexibility to pursue its M&A strategy in the coming years. This strategy is expected to remain selective and consistent with the company's stated financial policy, which allows releveraging of up to 3.5x on a company reported basis, which corresponds to 4.0x-4.5x on an S&P Global Ratings-adjusted basis. S&P said, "The stable outlook indicates our expectation that 20% revenue growth in 2025 and S&P Global Ratings-adjusted EBITDA margins improving to about 16% will drive S&P Global Ratings-adjusted debt to EBITDA to about 3.7x and FFO to debt toward 20%, with further deleveraging expected in 2026, consistent with the company's prudent approach to M&A. "We could lower the rating if S&P Global Ratings-adjusted debt to EBITDA increased, exceeding 4.5x, and FFO to debt fell below 16%, both on a sustained basis. This could happen if Paprec faces unexpected problems with its international expansion or makes operational missteps in France. It could also follow a severe economic contraction in Europe that depressed volumes and prices, especially for industrial clients." S&P could also lower its rating if Paprec: -- Attempts significant debt-funded acquisitions; or -- Undertakes material shareholder distributions that significantly increase its leverage. S&P said, "We could raise the rating if Paprec's adjusted leverage decreased below 3.5x and FFO to debt improved and stayed above 25%--both sustainably. This would likely result from a continuously strong operating performance, good execution and ramp-up of new contracts, and continued renewals of existing contracts. We would also expect the company to adopt a more conservative financial policy that supports these credit metrics through the investment and acquisition cycles. "We could raise the ratings if Paprec successfully continues its revenue and international expansion and activity diversification, or achieves higher EBITDA margins, which would translate into stronger FOCF." ============= G E R M A N Y ============= ADLER GROUP: S&P Lowers First-Lien Sr. Secured Notes Rating to 'B' ------------------------------------------------------------------ S&P Global Ratings lowered to 'B' from 'B+' its issue rating on Adler's first-lien senior secured notes, and to 'CCC' From 'CCC+' its issue ratings on the group's 1.5-lien senior secured notes and on the 2026 bond. This is because S&P revised down the recovery ratings on the first-lien debt to '2' from '1' and on the 1.5-lien notes to '6' from '5'. The 'CCC' issue rating and '6' recovery rating on the group's third-lien secured bond remain unchanged. On June 27, 2025, Adler Real Estate, a wholly owned subsidiary of Adler Group S.A., settled its cash tender offer to repurchase its outstanding EUR300 million secured notes due April 27, 2026. These notes will be repaid in cash through a tap of the group's first-lien notes. A total of EUR285.2 million was tendered--representing 95% of the nominal amount outstanding--leaving a EUR14.8 million stub at Adler Real Estate. As a result of this transaction, the group's first-lien notes increase to approximately EUR1.3 billion from EUR1.0 billion. Although the transaction does not increase the total amount of debt, the changes in the waterfall lead to weaker recovery prospects for the debtholders of these instruments, prompting the rating action. S&P views Adler's 1.5-lien notes, which it classifies as second lien, and Adler Real Estate's 2026 bond as pari passu, ranking behind the group's first-lien bond. The '6' recovery rating on the group's third-lien secured bond continues to reflect the very low recovery prospects in an event of default (close to 0%). Supportively, the transaction should enable the group to address almost all of its debt maturities until the end of 2026, further improving its short-term liquidity. All in all, the issuer credit rating is not affected by this cash tender offer. Issue Ratings--Recovery Analysis Key analytical factors -- The group's EUR1.3 billion first-lien senior secured bond, increased from EUR1.1 billion before the cash tender offer, and issued by Adler Financing, due in December 2028, is rated 'B' with a recovery rating of '2', based on S&P's expectation of substantial recovery (70%-90%; rounded estimate: 80%) in the event of a default. -- Adler Financing's second-lien secured 2029 bond of EUR716 million (reported by Adler as 1.5 lien) and Adler RE's nominal stub of EUR14.8 million 2026 bond are rated 'CCC' with recovery ratings of '6', based on our expectations of negligible recovery (close to 0%) in the event of a default. -- The rating on Adler Group's third-lien secured bond (reported by Adler as second lien) of nominal EUR700 million, held by Titanium 2L Bondco S.a.r.l., due 2030, remains at 'CCC' with a recovery rating of '6', reflecting our expectations of very low recovery (close to 0%). -- S&P performed its recovery analysis on a consolidated group level, including Adler Real Estate and Consus Real Estate AG. -- In S&P's hypothetical default scenario, it anticipates that a severe macroeconomic downturn in Germany will depress the market and exacerbate competitive pressures. S&P values the group as a going concern. -- S&P's stressed valuation figure comprises the stressed value of the company's property portfolio and real estate inventory from development projects. -- Adler reported a gross asset value of EUR3.5 billion of standing assets and about EUR1.0 billion of development assets on March 31, 2025. -- S&P estimates the group's asset values in a distressed situation and apply different haircuts to standing assets, development projects, and inventories, which is consistent with industry peers that it rates. The gross enterprise value (EV) of about to EUR2.8 billion is after applying its haircuts in a distressed situation. -- S&P applies a 5% administrative fee on the gross EV to reach to net enterprise value. Simulated default assumptions -- Year of default: 2027 -- Jurisdiction: Germany Simplified waterfall -- Gross EV at emergence: EUR2.8 billion -- Net EV at emergence after administrative costs: EUR2.6 billion -- Total priority claims at Adler Group: EUR1.2 billion -- Total net EV available to first-lien debt: EUR1.4 billion -- First-lien debt claims: EUR1.8 billion -- Recovery expectation for first lien lenders: 70%-90% (rounded 80%) -- Net EV available to second-lien debt: EUR0 million -- Second-lien debt claims: EUR960 billion -- Recovery expectation: 0% -- Net EV available to third-lien priority debt: EUR0 million -- Third-lien priority debt claims: EUR817 million -- Recovery expectation: 0% *All debt amounts include six months of prepetition interest DEMIRE DEUTSCHE: Moody's Withdraws 'Caa2' Corporate Family Rating ----------------------------------------------------------------- Moody's Ratings has withdrawn DEMIRE Deutsche Mittelstand Real Estate AG's ratings, including its Caa2 long-term corporate family rating and Caa2 senior unsecured rating. The outlook prior to the withdrawal was stable. RATINGS RATIONALE Moody's have decided to withdraw the rating(s) following a review of the issuer's request to withdraw its rating(s). COMPANY PROFILE Headquartered in Langen, Germany, DEMIRE Deutsche Mittelstand Real Estate AG (DEMIRE) is a publicly listed commercial real estate company with a focus on offices and retail assets in secondary locations across Germany. The company's portfolio has 49 single properties and an aggregate portfolio value of around EUR1 billion. HSE FINANCE: S&P Lowers LT ICR to 'D' on Court Sanctioned Order --------------------------------------------------------------- S&P Global Ratings lowered its long-term issuer credit rating on German TV home shopping broadcaster, HSE Finance S.a.r.l. (HSE) to 'D' (default) from 'CCC' and its issue rating on the EUR630 million senior secured notes to 'D' (default). S&P's '4' recovery rating on the senior secured notes is unchanged. S&P said, "At the same time, we assigned our preliminary 'B-' issue-level rating and preliminary '2' recovery rating to the group's new EUR340 million senior secured notes. The '2' recovery rating indicates our expectation for substantial (70%-90%; rounded estimate: 70%) recovery, due to the instrument ranking senior to the new EUR192 million PIK notes, albeit below the prior-ranking trade receivables factoring and the super-senior EUR35 million revolving credit facility (RCF), expected to be extended with the existing lenders until April 2029." HSE has received a court order sanctioning a scheme of arrangement. This includes the exchange of its EUR630 million senior secured notes due in October 2026 for new EUR340 million Euribor +6.00% cash interest notes due in October 2029 to be issued by its fully owned subsidiary, HSE Investment and EUR192 million payment-in-kind (PIK) notes due in April 2030 to be issued by parent, HSE Finance. The downgrade follows receipt of the court sanctioned order for the tender and exchange offer on June 11, 2024, reflecting that S&P Global Ratings sees the transaction as distressed. HSE has received the court approval of its U.K. scheme of arrangement proposing to exchange its EUR630 million senior secured notes due in October 2026 into new EUR340 million senior secured OpCo notes due in October 2029 and EUR192 million HoldCo PIK notes due in April 2030. The remaining EUR98 million in debt out of the previous EUR630 million notes is to be converted to equity with pro forma equity ownership as follows: Providence Equity Partners (48%), bondholders (37%), and management (15%, unchanged). S&P said, "We expect to review our issuer credit rating on HSE in the coming days, once the transaction and new debt issuance are completed. Our review will focus on our forward-looking view of HSE's creditworthiness, which includes the company's operating performance, capital structure, liquidity, and our forecast of its credit metrics. "On emergence, we think the capital structure will remain unsustainable over the long term, exacerbated by the HoldCo notes ' PIK interest, even though liquidity will be adequate and short-term refinancing risk resolved. We assume only modest revenue growth over our 2025-2027 forecast period, as most of HSE's assortment is discretionary, and geographically the business is concentrated in Germany, Austria and Switzerland. In our opinion, its adjusted leverage, including HoldCo PIK will remain high, its ability to service the substantial fixed cash charges will stay vulnerable and dependent on favorable business, financial, and economic conditions, and further leverage reduction will be constrained by the HolcoCo notes' PIK interest accrual. "We assigned our preliminary 'B-' issue-level rating and preliminary '2' recovery rating to the company's new EUR340 million senior secured notes due 2029. The '2' recovery rating indicates our expectation of substantial (70%-90%; rounded estimate: 70%) recovery because the instrument ranks senior to the new EUR192 million PIK notes, albeit below the prior-ranking claims of super-senior EUR35 million RCF and factoring. "The final ratings will depend on our receipt and satisfactory review of all final transaction documentation, including legal opinions. Accordingly, the preliminary ratings should not be construed as evidence of final ratings. If S&P Global Ratings does not receive final documentation within a reasonable time frame, or if final documentation departs from materials reviewed, S&P Global Ratings reserves the right to withdraw or revise its ratings." MAHLE GMBH: Moody's Rates New EUR300MM Sr. Unsecured Notes 'Ba2' ---------------------------------------------------------------- Moody's Ratings said that it expects to assign a Ba2 instrument rating to MAHLE GmbH's ("MAHLE" or "group") proposed EUR300 million backed senior unsecured notes due 2032. The group intends to use the proceeds of the new issuance for general corporate purposes and to cover upcoming debt maturities. The expected Ba2 instrument rating on the proposed backed senior unsecured notes would be in line with MAHLE's Ba2 long-term corporate family rating (CFR) and with the Ba2 instrument rating on its existing EUR500 million 6.5% guaranteed senior unsecured notes due 2031, which Moody's expects will have largely the same terms and conditions. The outlook is negative. The transaction will improve MAHLE's debt maturity profile as the new backed senior unsecured notes will mature in 2032, four years after its outstanding EUR750 million senior unsecured notes due 2028 and one year after its EUR500 million guaranteed senior unsecured notes due 2031. However, Moody's expects MAHLE's financing costs to slightly increase post the transaction, assuming a higher interest rate on the new notes compared to other outstanding debt of the group. MAHLE's capital structure consists mainly of senior unsecured notes, as well as project-based funding and other bank facilities. The expected Ba2 instrument rating on the proposed new backed senior unsecured notes reflects their senior ranking in Moody's loss given default (LGD) assessment, together with the group's existing EUR500 million guaranteed senior unsecured notes, project based funding provided by the European Investment Bank, and EUR1.2 billion revolving credit facility (RCF, maturing in 2028), with all of these instruments benefitting from guarantees provided by material operating subsidiaries. Moody's also rank first various other bank loans, trade payables and pensions at operating entities. These liabilities rank ahead of the group's non-guaranteed senior unsecured notes, Schuldscheindarlehen and other bank debt at holding entities. Given the structural subordination of the senior unsecured, non-guaranteed notes, their instrument rating remains unaffected at Ba3, one notch below the CFR. Headquartered in Stuttgart, Germany, MAHLE is one of the top 30 global automotive parts suppliers. MAHLE's business segments are Powertrain and Charging (33% of 2024 sales), Thermal and Fluid Systems (55%) and Lifecycle and Mobility (11%) In 2024, the group generated revenues of around EUR11.7 billion and company-defined EBIT of EUR423 million (3.6% margin). MAHLE, which employed almost 68,000 employees and produced in 135 locations worldwide in 2024, is owned by the MAHLE Foundation. The company owns a 61% stake in MAHLE Metal Leve S.A., which is publicly listed in Brazil. MAHLE GMBH: S&P Rates EUR300MM Senior Unsecured Notes 'BB-' ----------------------------------------------------------- S&P Global Ratings assigned its 'BB-' issue-level rating and '3' recovery rating to auto parts manufacturer Mahle GmbH's privately placed EUR300 million senior unsecured notes due 2032. The '3' recovery rating indicates its expectation of meaningful recovery (50%-70%; rounded estimate: 55%) in the event of a default. S&P views the transaction as leverage neutral because the company intends to use the proceeds for general corporate purpose and to repay existing debt. Some of Mahle's debt is guaranteed by certain subsidiaries, which together account for about 54% of Mahle's total EBITDA (including recently acceded guarantor Mahle Behr GmbH & Co. KG). The guaranteed debt comprises: -- The new notes, -- Mahle's existing EUR500 million unsecured notes due 2031, -- Its EUR1.2 billion revolving credit facility (RCF), and -- A EUR265 million European Investment Bank (EIB) loan. All rank pari passu. In S&P's view, they have stronger recovery prospects than the unguaranteed debt, which consists of: -- The EUR750 million unsecured notes due 2028, and -- About EUR212 million of unsecured promissory notes. Issue Ratings--Recovery Analysis Key analytical factors -- S&P rates Mahle's new EUR300 million senior unsecured notes due 2032, existing EUR500 million senior unsecured notes due 2031, and its EUR1.2 billion RCF at 'BB-' (the same level as our issuer credit rating). -- The recovery rating of '3' on these notes and the RCF indicates that S&P anticipates meaningful recovery (50%-70%; rounded estimate: 55%) in the event of a default. -- The notes, the RCF, and the EIB loan are unsecured and benefit from guarantees from certain subsidiaries. The existing EUR750 million unsecured notes due 2028 and about EUR212 million promissory notes do not benefit from the same guarantees. -- In S&P's hypothetical default scenario, it envisages a cyclical downturn in the auto sector and that more intense competition would prevent Mahle from adjusting its cost structure or passing through higher costs for labor, energy, and other items, leading to a material deterioration in its EBITDA and cash flow. -- S&P values Mahle as a going concern, given its leading market positions in its key segments and broad automotive component portfolio. Simulated default assumptions -- Year of default: 2029 -- Enterprise value multiple: 5.0x -- Jurisdiction: Germany Simplified waterfall -- Emergence EBITDA: EUR500 million (minimum capital expenditure at 2% of historical three-year average sales; cyclicality adjustment of 10%, standard for the auto sector; and minus 5% operational adjustment) -- Gross recovery value: EUR2.5 billion -- Net recovery value for waterfall after 5% administration expenses and accounting for pension claims: EUR1.97 billion -- Estimated priority claims (factoring lines and debt at subsidiary level): EUR514 million -- Net value available to all unsecured debt after priority claims: EUR1.46 billion (of which EUR1.24 billion is available to guaranteed unsecured debt) -- Guaranteed senior unsecured debt claims: EUR2.08 billion --Recovery expectations: 50%-70% (rounded estimate: 55%) Note: All debt amounts include six months of prepetition interest and the RCF is assumed 85% drawn at default. ============= I R E L A N D ============= ARBOUR CLO V: S&P Assigns B-(sf) Rating on Class F-R Notes ---------------------------------------------------------- S&P Global Ratings assigned credit ratings to Arbour CLO V DAC's class A-R, B-R, C-R, D-R, E-R, and F-R notes. At closing, the issuer also issued unrated subordinated notes. Under the transaction documents, the rated notes will pay quarterly interest unless a frequency switch event occurs. Following this, the notes will switch to semiannual payment. This transaction has 1.95 years non-call period and the portfolio's reinvestment period will end approximately 4.95 years after closing. The ratings reflect S&P's assessment of: -- The diversified collateral pool, which primarily comprises broadly syndicated speculative-grade senior secured term loans and bonds governed by collateral quality tests. -- The credit enhancement provided through the subordination of cash flows and excess spread. -- The collateral manager's experienced team, which can affect the performance of the rated notes through collateral selection, ongoing portfolio management, and trading. -- The transaction's legal structure, which is bankruptcy remote. -- The transaction's counterparty risks, which are in line with S&P's counterparty rating framework. Portfolio benchmarks S&P Global Ratings weighted-average rating factor 2,866.14 Default rate dispersion 475.07 Weighted-average life (years) 4.13 Obligor diversity measure 135.47 Industry diversity measure 21.22 Regional diversity measure 1.26 Transaction key metrics Total par amount (mil. EUR) 400.00 Defaulted assets (mil. EUR) 7.159 Number of performing obligors 158 Portfolio weighted-average rating derived from S&P's CDO evaluator B 'CCC' category rated assets (%) 2.63 'AAA' target portfolio weighted-average recovery (%) 36.47 Target weighted-average spread (net of floors, %) 3.79 Target weighted-average coupon (%) 3.30 Rating rationale S&P said, "Our ratings reflect our assessment of the collateral portfolio's credit quality, which has a weighted-average rating of 'B'. The portfolio is well-diversified, primarily comprising broadly syndicated speculative-grade senior secured term loans and senior secured bonds. Therefore, we conducted our credit and cash flow analysis by applying our criteria for corporate cash flow CDOs. "In our cash flow analysis, we modeled the EUR395.71 million target par amount, which reflects the lower of the recovery or market value of a senior secured loans issued by Altice France S.A., currently rated 'D' and also senior secured loans issued by Praesidiad Ltd, which is reported as defaulted in the trustee report. The target weighted-average spread of 3.79%, the target weighted-average coupon of 3.30%, and the target weighted-average recovery rates. We applied various cash flow stress scenarios, using four different default patterns, in conjunction with different interest rate stress scenarios for each liability rating category. "The transaction's documented counterparty replacement and remedy mechanisms adequately mitigate its exposure to counterparty risk under our counterparty criteria. "Following the application of our structured finance sovereign risk criteria, the transaction's exposure to country risk is limited at the assigned ratings, as the exposure to individual sovereigns does not exceed the diversification thresholds outlined in our criteria. "The transaction's legal structure is bankruptcy remote, in line with our legal criteria. "Our credit and cash flow analysis indicates that the available credit enhancement for the class B-R to E-R notes could withstand stresses commensurate with higher ratings than those we have assigned. However, as the CLO is still in its reinvestment phase, during which the transaction's credit risk profile could deteriorate, we capped our assigned ratings on these notes. The class A-R notes can withstand stresses commensurate with the assigned ratings. "For the class F-R notes, our credit and cash flow analysis indicate that the available credit enhancement could withstand stresses commensurate with a lower rating. However, we have applied our 'CCC' rating criteria, resulting in a 'B- (sf)' rating on this class of notes. The ratings uplift for the class F-R notes reflects several key factors, including: The class F-R notes' available credit enhancement, which is in the same range as that of other CLOs we have rated and that have recently been issued in Europe. The portfolio's average credit quality, which is similar to other recent CLOs. S&P said, "Our model generated break-even default rate at the 'B-' rating level of 26.27% (for a portfolio with a weighted-average life of 4.95 years), versus if we were to consider a long-term sustainable default rate of 3.1% for 4.95 years, which would result in a target default rate of 15.35%. "We do not believe that there is a one-in-two chance of this note defaulting. "We do not envision this tranche defaulting in the next 12-18 months. "Following this analysis, we consider that the available credit enhancement for the class F-R notes is commensurate with the assigned 'B- (sf)' rating. "In addition to our standard analysis, to provide an indication of how rising pressures among speculative-grade corporates could affect our ratings on European CLO transactions, we have also included the sensitivity of the ratings on the class A-R to E-R notes based on four hypothetical scenarios. "As our ratings analysis makes additional considerations before assigning ratings in the 'CCC' category, and we would assign a 'B-' rating if the criteria for assigning a 'CCC' category rating are not met, we have not included the above scenario analysis results for the class F-R notes." Environmental, social, and governance S&P said, "We regard the transaction's exposure to environmental, social, and governance (ESG) credit factors in the transaction as being broadly in line with our benchmark for the sector. Primarily due to the diversity of the assets within CLOs, the exposure to environmental credit factors is viewed as below average, and governance credit factors are average. For this transaction, the documents prohibit assets from being related to certain activities. Accordingly, since the exclusion of assets from these industries does not result in material differences between the transaction and our ESG benchmark for the sector, no specific adjustments have been made in our rating analysis to account for any ESG-related risks or opportunities." Ratings list Amount Credit Class Rating* (mil. EUR) enhancement (%) Interest rate§ A-R AAA (sf) 244.00 39.00 Three/six-month EURIBOR plus 1.40% B-R AA (sf) 46.00 27.50 Three/six-month EURIBOR plus 2.00% C-R A (sf) 23.00 21.75 Three/six-month EURIBOR plus 2.45% D-R BBB- (sf) 29.00 14.50 Three/six-month EURIBOR plus 3.35% E-R BB- (sf) 18.00 10.00 Three/six-month EURIBOR plus 5.80% F-R B- (sf) 14.00 6.50 Three/six-month EURIBOR plus 8.41% Sub. Notes NR 60.30 N/A N/A *S&P's ratings on the class A-R, and B-R notes address timely interest and ultimate principal payments. Our ratings on the class C-R, D-R, E-R, and F-R notes address ultimate interest and principal payments. §The payment frequency switches to semiannual and the index switches to six-month EURIBOR when a frequency switch event occurs. EURIBOR--Euro Interbank Offered Rate. NR--Not rated. N/A--Not applicable. AVOCA CLO XIV: S&P Assigns Prelim. B-(sf) Rating on F-R-R Notes --------------------------------------------------------------- S&P Global Ratings assigned its preliminary credit ratings to Avoca CLO XIV DAC's class A loan and class X-R, A-R-R, B-R-R, C-R-R, D-R-R, E-R-R, and F-R-R notes. At closing, the issuer had unrated subordinated notes outstanding from the existing transaction. The preliminary ratings assigned to Avoca CLO XIV's reset loan and notes reflect S&P's assessment of: -- The diversified collateral pool, which primarily comprises broadly syndicated speculative-grade senior secured term loans and bonds that are governed by collateral quality tests. -- The credit enhancement provided through the subordination of cash flows, excess spread, and overcollateralization. -- The collateral manager's experienced team, which can affect the performance of the rated loan and notes through collateral selection, ongoing portfolio management, and trading. -- The transaction's legal structure, which S&P expects to be bankruptcy remote. -- The transaction's counterparty risks, which S&P expects to be in line with its counterparty rating framework. Portfolio benchmarks S&P Global Ratings' weighted-average rating factor 2,860.68 Default rate dispersion 473.44 Weighted-average life (years) 4.07 Weighted-average life (years) extended to cover the length of the reinvestment period 4.53 Obligor diversity measure 178.78 Industry diversity measure 22.70 Regional diversity measure 1.22 Transaction key metrics Portfolio weighted-average rating derived from S&P's CDO evaluator B 'CCC' category rated assets (%) 1.96 Target 'AAA' weighted-average recovery (%) 37.04 Target weighted-average spread (net of floors; %) 3.70 Target weighted-average coupon (%) 4.17 Rationale Under the transaction documents, the rated loan and notes will pay quarterly interest unless a frequency switch event occurs. Following this, the loan and notes will switch to semiannual payments. The portfolio's reinvestment period will end approximately 4.5 years after closing. S&P said, "At closing, we expect the portfolio to be well-diversified, primarily comprising broadly syndicated speculative-grade senior-secured term loans and senior-secured bonds. Therefore, we have conducted our credit and cash flow analysis by applying our criteria for corporate cash flow CDOs. "In our cash flow analysis, we modeled a target par of EUR400 million. Additionally, we modeled the target weighted-average spread (3.70%), the covenanted weighted-average coupon (4.50%), and the target weighted-average recovery rates calculated in line with our CLO criteria for all rating levels. We applied various cash flow stress scenarios, using four different default patterns, in conjunction with different interest rate stress scenarios for each liability rating category. "Until the end of the reinvestment period on Jan. 15, 2030, the collateral manager may substitute assets in the portfolio as long as our CDO Monitor test is maintained or improved in relation to the initial ratings on the loan and notes. This test looks at the total amount of losses that the transaction can sustain--as established by the initial cash flows for each rating--and compares that with the current portfolio's default potential plus par losses to date. As a result, until the end of the reinvestment period, the collateral manager may through trading deteriorate the transaction's current risk profile, if the initial ratings are maintained. "Under our structured finance sovereign risk criteria, the transaction's exposure to country risk is sufficiently mitigated at the assigned preliminary ratings. "At closing, we expect that the transaction's documented counterparty replacement and remedy mechanisms will adequately mitigate its exposure to counterparty risk under our counterparty criteria. "We expect the transaction's legal structure and framework to be bankruptcy remote, in line with our legal criteria. "The CLO will be managed by KKR Credit Advisors (Ireland) Unlimited Co., and the maximum potential rating on the liabilities is 'AAA' under our operational risk criteria. "Following our analysis of the credit, cash flow, counterparty, operational, and legal risks, we believe the preliminary ratings are commensurate with the available credit enhancement for the class A loan and class X-R to F-R-R notes. Our credit and cash flow analysis indicates that the available credit enhancement for the class B-1-R-R to E-R-R notes could withstand stresses commensurate with higher ratings than those assigned. However, as the CLO will be in its reinvestment phase starting from closing--during which the transaction's credit risk profile could deteriorate--we have capped our preliminary ratings on the loan and notes. "Given our analysis of the credit, cash flow, counterparty, operational, and legal risks, we believe our preliminary ratings are commensurate with the available credit enhancement for all the rated classes of loan and notes. "In addition to our standard analysis, to indicate how rising pressures among speculative-grade corporates could affect our preliminary ratings on European CLO transactions, we also included the sensitivity of the ratings on the class A loan and class X-R to E-R-R notes based on four hypothetical scenarios. "As our ratings analysis makes additional considerations before assigning ratings in the 'CCC' category, and we would assign a 'B-' rating if the criteria for assigning a 'CCC' category rating are not met, we have not included the above scenario analysis results for the class F-R-R notes." Environmental, social, and governance S&P said, "We regard the transaction's exposure to environmental, social, and governance (ESG) credit factors as broadly in line with our benchmark for the sector. Primarily due to the diversity of the assets within CLOs, the exposure to environmental and social credit factors is viewed as below average, while governance credit factors are average. For this transaction, the documents prohibit or limit certain assets from being related to certain activities. Accordingly, since the exclusion of assets from these activities does not result in material differences between the transaction and our ESG benchmark for the sector, no specific adjustments have been made in our rating analysis to account for any ESG-related risks or opportunities." Avoca CLO XIV is a European cash flow CLO securitization of a revolving pool, comprising mainly euro-denominated leveraged loans and bonds. The transaction is a broadly syndicated CLO that will be managed by KKR Credit Advisors (Ireland) Unlimited Co. Ratings list Prelim Prelim amount Credit Class rating* (mil. EUR) Interest rate§ enhancement (%) X-R AAA (sf) 3.25 Three/six-month EURIBOR N/A plus 0.90% A-R-R AAA (sf) 118.00 Three/six-month EURIBOR 38.00 plus 1.38% A Loan AAA (sf) 130.00 Three/six-month EURIBOR 38.00 plus 1.38% B-1-R-R AA (sf) 30.00 Three/six-month EURIBOR 28.00 plus 1.75% B-2-R-R AA (sf) 10.00 4.70% 28.00 C-R-R A (sf) 26.00 Three/six-month EURIBOR 21.50 plus 2.30% D-R-R BBB- (sf) 28.50 Three/six-month EURIBOR 14.38 plus 3.30% E-R-R BB- (sf) 17.50 Three/six-month EURIBOR 10.00 plus 5.75% F-R-R B- (sf) 12.25 Three/six-month EURIBOR 6.94 plus 8.22% Sub. NR 54.10 N/A N/A *The preliminary ratings assigned to the class A loan and class X-R, A-R-R, B-1-R-R, and B-2-R-R notes address timely interest and ultimate principal payments. The preliminary ratings assigned to the class C-R-R, D-R-R, E-R-R, and F-R-R notes address ultimate interest and principal payments. §The payment frequency switches to semiannual and the index switches to six-month EURIBOR when a frequency switch event occurs. EURIBOR--Euro Interbank Offered Rate. NR--Not rated. N/A--Not applicable. BNPP AM 2018: Moody's Lowers Rating on EUR12MM Class F Notes to B3 ------------------------------------------------------------------ Moody's Ratings has downgraded the rating on the following notes issued by BNPP AM EURO CLO 2018 DAC: EUR12,000,000 Class F Senior Secured Deferrable Floating Rate Notes due 2031, Downgraded to B3 (sf); previously on Aug 3, 2022 Affirmed B2 (sf) Moody's have also affirmed the ratings on the following notes: EUR248,000,000 (Current outstanding amount EUR247,609,149) Class A-R Senior Secured Floating Rate Notes due 2031, Affirmed Aaa (sf); previously on Aug 3, 2022 Affirmed Aaa (sf) EUR36,500,000 Class B-R Senior Secured Floating Rate Notes due 2031, Affirmed Aa1 (sf); previously on Aug 3, 2022 Upgraded to Aa1 (sf) EUR29,500,000 Class C-R Senior Secured Deferrable Floating Rate Notes due 2031, Affirmed A1 (sf); previously on Aug 3, 2022 Upgraded to A1 (sf) EUR24,250,000 Class D-R Senior Secured Deferrable Floating Rate Notes due 2031, Affirmed Baa2 (sf); previously on Aug 3, 2022 Upgraded to Baa2 (sf) EUR21,750,000 Class E Senior Secured Deferrable Floating Rate Notes due 2031, Affirmed Ba2 (sf); previously on Aug 3, 2022 Affirmed Ba2 (sf) BNPP AM EURO CLO 2018 DAC, issued in September 2018 and refinanced in March 2021, is a collateralised loan obligation (CLO) backed by a portfolio of mostly high-yield senior secured European loans. The portfolio is managed by BNP PARIBAS ASSET MANAGEMENT France SAS. The transaction's reinvestment period ended in October 2022. RATINGS RATIONALE The rating downgrade on the Class F notes is primarily a result of the deterioration in over-collateralisation ratios and par loss observed in the underlying CLO portfolio since the last review in September 2024. The affirmations on the ratings on the Class A-R, Class B-R, Class C-R, Class D-R and Class E 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 over-collateralisation ratios of the rated notes have deteriorated since the last review in September 2024. 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 137.66%, 124.71%, 115.76%, 108.76% and 105.24% compared to August 2024[2] levels of 138.37%, 125.36%, 116.37%, 109.33% and 105.81%, respectively. 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: EUR387.3m Defaulted Securities: EUR8.4m Diversity Score: 52 Weighted Average Rating Factor (WARF): 3108 Weighted Average Life (WAL): 3.39 years Weighted Average Spread (WAS) (before accounting for Euribor/reference rate floors: 3.71% Weighted Average Coupon (WAC): 4.08% Weighted Average Recovery Rate (WARR): 44.96% Par haircut in OC tests and interest diversion test: 0% The default probability derives from the credit quality of the collateral pool and Moody's expectations of the remaining life of the collateral pool. The estimated average recovery rate on future defaults is based primarily on the seniority of the assets in the collateral pool. In each case, historical and market performance and a collateral manager's latitude to trade collateral are also relevant factors. Moody's incorporates these default and recovery characteristics of the collateral pool into Moody's cash flow model analysis, subjecting them to stresses as a function of the target rating of each CLO liability it is analysing. Methodology Underlying the Rating Action: The principal methodology used in these ratings was "Moody's Global Approach to Rating Collateralized Loan Obligations" published in May 2024. Counterparty Exposure: The rating action took into consideration the notes' exposure to relevant counterparties, such as account bank, using the methodology "Structured Finance Counterparty Risks" published in May 2025. Moody's concluded the ratings of the notes are not constrained by these risks. Factors that would lead to an upgrade or downgrade of the ratings: The rated notes' performance is subject to uncertainty. The notes' performance is sensitive to the performance of the underlying portfolio, which in turn depends on economic and credit conditions that may change. The collateral manager's investment decisions and management of the transaction will also affect the notes' performance. Additional uncertainty about performance is due to the following: -- 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 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. -- Long-dated assets: The presence of assets that mature beyond the CLO's legal maturity date exposes the deal to liquidation risk on those assets. Moody's assumes that, at transaction maturity, the liquidation value of such an asset will depend on the nature of the asset as well as the extent to which the asset's maturity lags that of the liabilities. Liquidation values higher than Moody's expectations would have a positive impact on the notes' ratings. In addition to the quantitative factors that Moody's explicitly modelled, qualitative factors are part of the rating committee's considerations. These qualitative factors include the structural protections in the transaction, its recent performance given the market environment, the legal environment, specific documentation features, the collateral manager's track record and the potential for selection bias in the portfolio. All information available to rating committees, including macroeconomic forecasts, input from Moody's other analytical groups, market factors, and judgments regarding the nature and severity of credit stress on the transactions, can influence the final rating decision. HENLEY CLO XIV: Fitch Assigns 'B-sf' Final Rating on Class F Notes ------------------------------------------------------------------ Fitch Ratings has assigned Henley CLO XIV DAC final ratings. Entity/Debt Rating ----------- ------ Henley CLO XIV DAC A XS3068561466 LT AAAsf New Rating B XS3068561623 LT AAsf New Rating C XS3068562357 LT Asf New Rating D XS3068562514 LT BBB-sf New Rating E XS3068562944 LT BB-sf New Rating F XS3068563082 LT B-sf New Rating Subordinated Notes XS3068563165 LT NRsf New Rating Transaction Summary Henley CLO XIV DAC is a securitisation of mainly senior secured obligations (at least 90%) with a component of senior unsecured, mezzanine, second-lien loans, first-lien last-out loans and high-yield bonds. Net proceeds from the notes were used to fund a portfolio with a target par of EUR400 million. The portfolio is actively managed by Napier Park CMV LLC. The transaction has a 4.5-year reinvestment period and an eight-year weighted average life (WAL) test. KEY RATING DRIVERS Average Portfolio Credit Quality (Neutral): Fitch assesses the average credit quality of obligors at 'B'/'B-'. The Fitch weighted average rating factor (WARF) of the current portfolio is 25.1. High Recovery Expectations (Positive): At least 90% of the portfolio comprises senior secured obligations. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. The Fitch weighted average recovery rate (WARR) of the current portfolio is 60%. Diversified Portfolio (Positive): The transaction includes four matrices, two of which are effective at closing. These correspond to a top-10 obligor concentration limit at 18%, two fixed-rate asset limits of 5% and 12.5%, and an eight-year WAL test. The other two matrices correspond to the same obligor and fixed-rate asset limits, and a seven-year WAL. The forward matrices can be selected by the manager any time from 12 months after closing if WAL step-up does not happen or from 18 months after closing if WAL step-up occurs, provided the aggregate collateral balance (including defaulted obligations at Fitch collateral value) is above the reinvestment target par balance. The transaction also has various other portfolio concentration limits, including a maximum exposure to the three largest Fitch-defined industries at 40%. These covenants ensure the asset portfolio will not be exposed to excessive concentration. WAL Step-Up Feature (Neutral): The transaction can extend the WAL by six months on or after six months after closing. The WAL extension is subject to conditions including satisfying the Fitch collateral-quality tests, and the aggregate collateral balance (including defaulted obligations at Fitch collateral value) being at least equal to the reinvestment target par balance. Portfolio Management (Neutral): The transaction has a 4.5-year reinvestment period, which is governed by 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 Fitch modelled in the transaction's stressed portfolio and matrices analysis is 12 months less than the WAL covenant. This is to account for the strict reinvestment conditions envisaged by the transaction after its reinvestment period. These include passing both the coverage tests and the Fitch 'CCC' maximum limit, 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 A 25% increase of the mean default rate (RDR) and a 25% decrease of the RRR across all ratings of the current portfolio would have no impact on the class A notes and would lead to a downgrade of two notches each for the class B and C notes, one notch each for the class D and E notes and to below 'B-sf' for the class F notes. 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 defaults and portfolio deterioration. Due to the better metrics and shorter life of the current portfolio than the Fitch-stressed portfolio, the class B, D, E and F notes each have a rating cushion of two notches, the class C notes have a cushion of one notch, and the class A notes do not have any rating cushion as they are already at the highest achievable rating. Should the cushion between the current portfolio and the Fitch-stressed portfolio be eroded either due to manager trading or negative portfolio credit migration, a 25% increase of the mean RDR and a 25% decrease of the RRR across all ratings of the Fitch-stressed portfolio would lead to downgrades of three notches each for the class A, B, D and E notes, four notches for the class C notes and to below 'B-sf' for the class F notes. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade A 25% reduction of the RDR and a 25% increase in the RRR across all ratings of the Fitch-stressed portfolio would lead to upgrades of up to four notches for the rated 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, except for the 'AAAsf' notes, may result from a stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread available to cover losses in the remaining portfolio. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY 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 Henley CLO XIV 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. HENLEY CLO XIV: S&P Assigns B-(sf) Rating on Class F Notes ---------------------------------------------------------- S&P Global Ratings assigned credit ratings to Henley CLO XIV DAC's class A to F European cash flow CLO notes. At closing, the issuer also issued unrated subordinated notes. Under the transaction documents, the rated notes pay quarterly interest unless a frequency switch event occurs. Following this, the notes will permanently switch to semiannual payments. The portfolio's reinvestment period will end approximately 4.5 years after closing, while the non-call period will end approximately 1.5 years after closing. The ratings reflect S&P's assessment of: -- The diversified collateral pool, which primarily comprises broadly syndicated speculative-grade senior secured term loans and bonds that are governed by collateral quality tests. -- The credit enhancement provided through the subordination of cash flows, excess spread, and overcollateralization. -- The collateral manager's experienced team, which can affect the performance of the rated notes through collateral selection, ongoing portfolio management, and trading. -- The transaction's legal structure, which is bankruptcy remote. -- The transaction's counterparty risks, which is in line with S&P's counterparty rating framework. Portfolio benchmarks S&P Global Ratings' weighted-average rating factor 2,885.76 Default rate dispersion 348.85 Weighted-average life (years) 5.19 Obligor diversity measure 131.03 Industry diversity measure 20.71 Regional diversity measure 1.13 Transaction key metrics Portfolio weighted-average rating derived from S&P's CDO evaluator B 'CCC' category rated assets (%) 0.50 Actual 'AAA' weighted-average recovery (%) 36.08 Actual weighted-average spread (net of floors; %) 4.04 Actual weighted-average coupon (%) 5.81 S&P said, "Our ratings reflect our assessment of the collateral portfolio's credit quality, which has a weighted-average rating of 'B'. We understand that the portfolio is well-diversified, primarily comprising broadly syndicated speculative-grade senior secured term loans and senior secured bonds. Therefore, we have conducted our credit and cash flow analysis by applying our criteria for corporate cash flow CDOs. "In our cash flow analysis, we used the EUR400 million target par amount, the covenanted weighted-average spread (3.85%), the covenanted weighted-average coupon (5.50%), and the target portfolio weighted-average recovery (WAR) rates for all rated notes. We applied various cash flow stress scenarios, using four different default patterns, in conjunction with different interest rate stress scenarios for each liability rating category. "Until the end of the reinvestment period on Dec. 30, 2029, the collateral manager may substitute assets in the portfolio for so long as our CDO Monitor test is maintained or improved in relation to the initial ratings on the notes. This test looks at the total amount of losses that the transaction can sustain as established by the initial cash flows for each rating and compares that with the current portfolio's default potential plus par losses to date. As a result, until the end of the reinvestment period, the collateral manager may through trading deteriorate the transaction's current risk profile, if the initial ratings are maintained. "Under our structured finance sovereign risk criteria, the transaction's exposure to country risk is sufficiently mitigated at the assigned ratings. "The transaction's documented counterparty replacement and remedy mechanisms adequately mitigate its exposure to counterparty risk under our current counterparty criteria. "The transaction's legal structure and framework is bankruptcy remote. The issuer is a special-purpose entity that meets our criteria for bankruptcy remoteness. "Our credit and cash flow analysis show that the class B, C, D, and E notes benefit from break-even default rate and scenario default rate cushions that we would typically consider to be in line with higher ratings than those assigned. However, as the CLO is still in its reinvestment phase, during which the transaction's credit risk profile could deteriorate, we have capped our ratings on the notes. The class A notes can withstand stresses commensurate with the assigned ratings. "For the class F notes, our credit and cash flow analysis indicates that the available credit enhancement could withstand stresses commensurate with a lower rating. However, we have applied our 'CCC' rating criteria, resulting in a 'B- (sf)' rating on this class of notes.” The ratings uplift for the class F notes reflects several key factors, including: -- The class F notes' available credit enhancement, which is in the same range as that of other CLOs we have rated and that have recently been issued in Europe. -- The portfolio's average credit quality, which is similar to other recent CLOs. -- S&P's model generated break-even default rate at the 'B-' rating level of 27.91% (for a portfolio with a weighted-average life of 5.19 years), versus if we were to consider a long-term sustainable default rate of 3.1% for 5.19 years, which would result in a target default rate of 16.089%. -- S&P does not believe that there is a one-in-two chance of this note defaulting. -- S&P does not envision this tranche defaulting in the next 12-18 months. Following this analysis, we consider that the available credit enhancement for the class F notes is commensurate with the assigned 'B- (sf)' rating. S&P said, "Following our analysis of the credit, cash flow, counterparty, operational, and legal risks, we believe our ratings are commensurate with the available credit enhancement for the class A to F notes. "In addition to our standard analysis, to indicate how rising pressures among speculative-grade corporates could affect our ratings on European CLO transactions, we have also included the sensitivity of the ratings on the class A to E notes based on four hypothetical scenarios. "As our ratings analysis makes additional considerations before assigning ratings in the 'CCC' category--and we would assign a 'B-' rating if the criteria for assigning a 'CCC' category rating are not met--we have not included the above scenario analysis results for the class F notes." Environmental, social, and governance S&P said, "We regard the exposure to environmental, social, and governance (ESG) credit factors in the transaction as being broadly in line with our benchmark for the sector. Primarily due to the diversity of the assets within CLOs, the exposure to environmental credit factors is viewed as below average, social credit factors are below average, and governance credit factors are average. "For this transaction, the documents prohibit assets from being related to certain activities. Since the exclusion of assets from these industries does not result in material differences between the transaction and our ESG benchmark for the sector, no specific adjustments have been made in our rating analysis to account for any ESG-related risks or opportunities." Ratings Amount Credit Class Rating* (mil. EUR) enhancement (%) Interest rate§ A AAA (sf) 244.00 39.00 Three/six-month EURIBOR plus 1.33% B AA (sf) 44.00 28.00 Three/six-month EURIBOR plus 1.80% C A (sf) 28.00 21.00 Three/six-month EURIBOR plus 2.15% D BBB- (sf) 28.00 14.00 Three/six-month EURIBOR plus 3.00% E BB- (sf) 17.00 9.75 Three/six-month EURIBOR plus 5.50% F B- (sf) 13.00 6.50 Three/six-month EURIBOR plus 8.33% Sub. Notes NR 30.30 N/A N/A *The ratings assigned to the class A and B notes address timely interest and ultimate principal payments. The ratings assigned to the class C, D, E, and F notes address ultimate interest and principal payments. §The payment frequency switches to semiannual and the index switches to six-month EURIBOR when a frequency switch event occurs. EURIBOR--Euro Interbank Offered Rate. NR--Not rated. N/A--Not applicable. MONUMENT CLO 3: Fitch Assigns 'B-sf' Final Rating on Class F Notes ------------------------------------------------------------------ Fitch Ratings has assigned Monument CLO 3 DAC final ratings. Entity/Debt Rating ----------- ------ Monument CLO 3 DAC A XS3085110909 LT AAAsf New Rating B XS3085111113 LT AAsf New Rating C XS3085111543 LT Asf New Rating D-1 XS3085111899 LT BBB-sf New Rating D-2 XS3087805548 LT BBB-sf New Rating E XS3085112194 LT BB-sf New Rating F XS3085112350 LT B-sf New Rating Subordinated Notes XS3085112517 LT NRsf New Rating Transaction Summary Monument CLO 3 DAC is a securitisation of mainly senior secured obligations (at least 90%) with a component of senior unsecured, mezzanine, second lien loans and high-yield bonds. Note proceeds have been used to fund a portfolio with a target par of EUR400 million. The portfolio is actively managed by Serone Capital Loan Management Limited. The CLO has a 4.5-year reinvestment period and an 8.5-year weighted average life (WAL) test. KEY RATING DRIVERS Average Portfolio Credit Quality (Neutral): Fitch assesses the average credit quality of obligors at 'B'. The Fitch weighted average rating factor of the identified portfolio is 23.7. High Recovery Expectations (Positive): At least 90% of the portfolio comprises senior secured obligations. The recovery prospects for these assets are more favourable than for second lien, unsecured and mezzanine assets. The Fitch weighted average recovery rate of the identified portfolio is 61.7%. Diversified Portfolio (Positive): The transaction includes six Fitch matrices: two are effective at closing, corresponding to an 8.5-year WAL; two forward matrices are effective one year after closing, corresponding to a 7.5-year WAL; and another two forward matrices are effective 18 months after closing, corresponding to a seven-year WAL. Each matrix set corresponds to two different fixed-rate asset limits, at 7.5% and 12.5%. Switching to the forward matrices is subject to the reinvestment target par condition and a rating agency confirmation. The transaction also includes various concentration limits, including a top 10 obligor concentration limit at 20% and a maximum exposure to the three-largest Fitch-defined industries in the portfolio at 40%. These covenants ensure the asset portfolio will not be exposed to excessive concentration. Portfolio Management (Neutral): The 4.5-year reinvestment period is governed by reinvestment criteria similar to those for other European transactions. Its analysis is based on a stressed-case portfolio with the aim of testing the robustness of the deal structure against its covenants and portfolio guidelines. Cash Flow Modelling (Positive): The WAL for Fitch-stressed portfolio and matrices analysis is 12 months less than the WAL covenant. This is to account for the strict reinvestment conditions envisaged by the transaction after the reinvestment period. These include the satisfaction of the coverage tests and Fitch 'CCC' limit, together with a consistently decreasing WAL covenant. Fitch believes these conditions would reduce the effective risk horizon of the portfolio in stress periods. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A 25% increase of the mean default rate (RDR) and a 25% decrease of the recovery rate (RRR) across all ratings of the identified portfolio would lead to a downgrade of one notch each for the class D-1, D-2 and E notes, two notches for the class B and C note, to below 'B-sf' for the class F notes and have no impact on the class A notes. Downgrades, which are based on the identified portfolio, may occur if the loss expectation is larger than initially assumed, due to unexpectedly high levels of default and portfolio deterioration. The class B and C notes have a rating cushion of one notch and the class D-1 to F notes a cushion of two notches, due to the better metrics and shorter life of the identified portfolio than the Fitch-stressed portfolio. The class A notes have no cushion. Should the cushion between the identified portfolio and the Fitch-stressed portfolio be eroded, 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 up to four notches for the class A to D-2 notes and to below 'B-sf' for the class E and F notes. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade A 25% reduction of the mean RDR and a 25% increase in the RRR across all ratings of the Fitch-stressed portfolio would lead to upgrades of up to three notches for the 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 deal's remaining life. 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 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 Monument CLO 3 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. MONUMENT CLO 3: S&P Assigns B-(sf) Rating on Class F Notes ---------------------------------------------------------- S&P Global Ratings assigned its credit ratings to Monument CLO 3 DAC's class A, B, C, D-1, D-2, E, and F European cash flow CLO notes. At closing, the issuer also issued unrated subordinated notes. Under the transaction documents, the rated notes will pay quarterly interest unless a frequency switch event occurs. Following this, the notes will permanently switch to semiannual payments. The portfolio's reinvestment period will end approximately 4.5 years after closing, while the non-call period will end approximately 1.5 years after closing. The ratings reflect S&P's assessment of: -- The diversified collateral pool, which primarily comprises broadly syndicated speculative-grade senior secured term loans and bonds that are governed by collateral quality tests. -- The credit enhancement provided through the subordination of cash flows, excess spread, and overcollateralization. -- The collateral manager's experienced team, which can affect the performance of the rated notes through collateral selection, ongoing portfolio management, and trading. -- The transaction's legal structure, which is bankruptcy remote. -- The transaction's counterparty risks, which are in line with S&P's counterparty rating framework. Portfolio benchmarks S&P weighted-average rating factor 2,652.07 Default rate dispersion 536.48 Weighted-average life (years) 5.30 Obligor diversity measure 93.69 Industry diversity measure 17.88 Regional diversity measure 1.14 Transaction key metrics Portfolio weighted-average rating derived from S&P's CDO evaluator B 'CCC' category rated assets (%) 1.50 Target 'AAA' weighted-average recovery (%) 37.52 Target weighted-average spread (net of floors; %) 3.82 Target weighted-average coupon (%) 5.70 S&P said, "Our ratings reflect our assessment of the collateral portfolio's credit quality, which has a weighted-average rating of 'B'. The portfolio is well-diversified, primarily comprising broadly syndicated speculative-grade senior secured term loans and senior secured bonds. Therefore, we conducted our credit and cash flow analysis by applying our criteria for corporate cash flow CDOs. "In our cash flow analysis, we used the EUR400 million target par amount, the covenanted weighted-average spread (3.70%), the covenanted weighted-average coupon (5.00%), and the target portfolio weighted-average recovery rates for all classes of notes. We applied various cash flow stress scenarios, using four different default patterns, in conjunction with different interest rate stress scenarios for each liability rating category. "Until the end of the reinvestment period on Dec. 30, 2029, the collateral manager may substitute assets in the portfolio for as long as our CDO Monitor test is maintained or improved in relation to the initial ratings on the notes and loan. This test looks at the total amount of losses that the transaction can sustain as established by the initial cash flows for each rating and compares that with the current portfolio's default potential plus par losses to date. As a result, until the end of the reinvestment period, the collateral manager may through trading deteriorate the transaction's current risk profile, if the initial ratings are maintained. "Following the application of our structured finance sovereign risk criteria, the transaction's exposure to country risk is sufficiently mitigated at the assigned ratings. "The transaction's documented counterparty replacement and remedy mechanisms adequately mitigate its exposure to counterparty risk under our current counterparty criteria. "The transaction's legal structure and framework is bankruptcy remote. The issuer is a special-purpose entity that meets our criteria for bankruptcy remoteness. "Our credit and cash flow analysis show that the class B, C, D-1, D-2, and E notes benefit from break-even default rate and scenario default rate cushions that we would typically consider to be in line with higher ratings than those assigned. However, as the CLO is still in its reinvestment phase, during which the transaction's credit risk profile could deteriorate, we have capped our ratings on the notes and loan." The class A notes can withstand stresses commensurate with the assigned ratings. S&P said, "For the class F notes, our credit and cash flow analysis indicate that the available credit enhancement could withstand stresses commensurate with a lower rating. "However, we have applied our 'CCC' rating criteria, resulting in a 'B- (sf)' rating on this class of notes." The ratings uplift for the class F notes reflects several key factors, including: -- The class F notes' available credit enhancement, which is in the same range as that of other CLOs S&P has rated and that have recently been issued in Europe. -- The portfolio's average credit quality, which is similar to other recent CLOs. -- S&P's model generated break-even default rate at the 'B-' rating level of 25.86% (for a portfolio with a weighted-average life of 5.30 years), versus if it was to consider a long-term sustainable default rate of 3.1% for 5.30 years, which would result in a target default rate of 16.42%. -- S&P does not believe that there is a one-in-two chance of this tranche defaulting. -- S&P does not envision this tranche defaulting in the next 12-18 months. S&P aaid, "Following this analysis, we consider that the available credit enhancement for the class F notes is commensurate with the assigned 'B- (sf)' rating. "Following our analysis of the credit, cash flow, counterparty, operational, and legal risks, we believe our ratings are commensurate with the available credit enhancement for the class A to F notes. "In addition to our standard analysis, to indicate how rising pressures among speculative-grade corporates could affect our ratings on European CLO transactions, we have also included the sensitivity of the ratings on the class A to E notes based on four hypothetical scenarios. Environmental, social, and governance S&P said, "We regard the exposure to environmental, social, and governance (ESG) credit factors in the transaction as being broadly in line with our benchmark for the sector. "Primarily due to the diversity of the assets within CLOs, the exposure to environmental and social credit factors is viewed as below average, while governance credit factors are average. For this transaction, the documents prohibit or limit assets from being related to certain industries. Since the exclusion of assets from these industries does not result in material differences between the transaction and our ESG benchmark for the sector, no specific adjustments have been made in our rating analysis to account for any ESG-related risks or opportunities." Monument CLO 3 is a European cash flow CLO securitization of a portfolio of primarily senior secured leveraged loans and bonds. It is managed by Serone Capital Loan Management Ltd. and Serone Capital Management LLP. Ratings Amount Credit Class Rating* (mil. EUR) enhancement (%) Interest rate§ A AAA (sf) 242.00 39.50 Three/six-month EURIBOR plus 1.38% B AA (sf) 50.00 27.00 Three/six-month EURIBOR plus 1.90% C A (sf) 22.00 21.50 Three/six-month EURIBOR plus 2.40% D-1 BBB- (sf) 26.00 15.00 Three/six-month EURIBOR plus 3.35% D-2 BBB- (sf) 5.40 13.65 Three/six-month EURIBOR plus 4.50% E BB- (sf) 16.60 9.50 Three/six-month EURIBOR plus 5.90% F B- (sf) 12.00 6.50 Three/six-month EURIBOR plus 8.41% Sub. Notes NR 32.80 N/A N/A *The ratings assigned to the class A, and B notes address timely interest and ultimate principal payments. The ratings assigned to the class C, D-1, D-2, E, and F notes address ultimate interest and principal payments. §The payment frequency switches to semiannual and the index switches to six-month EURIBOR when a frequency switch event occurs. EURIBOR--Euro Interbank Offered Rate. NR--Not rated. N/A--Not applicable. PALMER SQUARE 2025-2: Fitch Assigns B-(EXP)sf Rating on Cl. F Notes ------------------------------------------------------------------- Fitch Ratings has assigned Palmer Square European CLO 2025-2 DAC expected ratings. The assignment of final ratings is contingent on the receipt of final documents conforming to information already reviewed. Entity/Debt Rating ----------- ------ Palmer Square European CLO 2025-2 DAC Class A LT AAA(EXP)sf Expected Rating Class B1 LT AA(EXP)sf Expected Rating Class B2 (fxd) 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 Palmer Square European CLO 2025-2 DAC is a securitisation of mainly senior secured obligations (at least 90%) with a component of senior unsecured, mezzanine, second-lien loans and high-yield bonds. Note proceeds will be used to fund a portfolio with a target par of EUR400 million. The portfolio will be actively managed by Palmer Square Europe Capital Management LLC. The CLO will have a 4.5-year reinvestment period and a 7.5-year weighted average life (WAL) test at closing. KEY RATING DRIVERS Average Portfolio Credit Quality (Neutral): Fitch places the average credit quality of obligors at 'B'. The Fitch weighted average rating factor of the identified portfolio is 23.9. High Recovery Expectations (Positive): At least 90% of the portfolio will comprise senior secured obligations. Fitch views the recovery prospects for these assets as more favourable than for second-lien, unsecured and mezzanine assets. The Fitch weighted average recovery rate of the identified portfolio is 62.2%. Diversified Asset Portfolio (Positive): The transaction will include two matrices at closing with fixed-rate limits of 5% and 10%. . It also includes various concentration limits, including the maximum exposure to the three largest Fitch-defined industries in the portfolio at 40%. These covenants ensure the asset portfolio will not be exposed to excessive concentration. Portfolio Management (Neutral): The transaction will have a 4.5-year reinvestment period, which is governed by reinvestment criteria that are similar to those of other European transactions. Fitch's analysis is based on a stressed-case portfolio with the aim of testing the robustness of the transaction structure against its covenants and portfolio guidelines. Cash Flow Modelling (Positive): The WAL used for the Fitch-stressed portfolio analysis was reduced by 12 months. This is to account for the strict reinvestment conditions envisaged after the reinvestment period. These include passing the coverage tests and the Fitch 'CCC' maximum limit after reinvestment and a WAL covenant that progressively steps down over time after the end of the reinvestment period. In Fitch's opinion, these conditions would reduce the effective risk horizon of the portfolio during the stress period. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A 25% increase of the mean default rate (RDR) across all ratings and a 25% decrease of the recovery rate (RRR) across all ratings of the identified portfolio would have no impact on the class A to C notes and lead to one-notch downgrades for the class D and E notes, and to below 'B-sf' for the class F notes. Based on the actual portfolio, downgrades may occur if the loss expectation is larger than initially assumed, due to unexpectedly high levels of default and portfolio deterioration. Due to the better metrics and shorter life of the identified portfolio, the class B to F notes display rating cushions of two notches. Should the cushion between the identified portfolio and the stress portfolio be eroded either due to manager trading or negative portfolio credit migration, a 25% increase of the mean RDR across all ratings and a 25% decrease of the RRR across all ratings of the stressed portfolio would lead to downgrades of up to four notches for the class A to D notes and to below 'B-sf' for the class E and F notes. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade A 25% reduction of the mean RDR across all ratings and a 25% increase in the RRR across all ratings of Fitch's stress portfolio would lead to upgrades of up to two notches for the notes, except for the 'AAAsf' rated notes, which are at the highest level on Fitch's scale and cannot be upgraded. During the reinvestment period, based on Fitch's stress portfolio, upgrades may occur on better-than-expected portfolio credit quality and a shorter remaining WAL test, leading to the ability of the notes to withstand larger than expected losses for the remaining life of the transaction. After the end of the reinvestment period, upgrades may occur in case of stable portfolio credit quality and deleveraging, leading to higher credit enhancement and excess spread available to cover for losses on the remaining portfolio. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Palmer Square European CLO 2025-2 DAC 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 Palmer Square European CLO 2025-2 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. PALMER SQUARE 2025-2: S&P Assigns Prelim. B-(sf) Rating on F Notes ------------------------------------------------------------------ S&P Global Ratings assigned its preliminary credit ratings to Palmer Square European CLO 2025-2 DAC's class A, B-1, B-2, C, D, E, and F notes. At closing, the issuer will also issue unrated subordinated notes. Under the transaction documents, the rated notes will pay quarterly interest unless a frequency switch event occurs. Following this, the notes will permanently switch to semiannual payments. The portfolio's reinvestment period will end approximately 4.5 years after closing, while the noncall period will end 1.5 years after closing. The preliminary ratings reflect S&P's assessment of: -- The diversified collateral pool, which primarily comprises broadly syndicated speculative-grade senior secured term loans and bonds that are governed by collateral quality tests. -- The credit enhancement provided through the subordination of cash flows, excess spread, and overcollateralization. -- The collateral manager's experienced team, which can affect the performance of the rated notes through collateral selection, ongoing portfolio management, and trading. -- The transaction's legal structure, which S&P expects to be bankruptcy remote. -- The transaction's counterparty risks, which S&P expects to be in line with its counterparty rating framework. Portfolio benchmarks S&P Global Ratings' weighted-average rating factor 2704.62 Default rate dispersion 554.60 Weighted-average life (years) 4.47 Weighted-average life (years) extended to cover the length of the reinvestment period 4.50 Obligor diversity measure 160.98 Industry diversity measure 22.35 Regional diversity measure 1.31 Transaction key metrics Portfolio weighted-average rating derived from S&P's CDO evaluator B 'CCC' category rated assets (%) 0.75 Actual 'AAA' weighted-average recovery (%) 36.39 Actual weighted-average spread (net of floors; %) 3.65 S&P said, "Our preliminary ratings reflect our assessment of the collateral portfolio's credit quality, which has a weighted-average rating of 'B'. "We expect the portfolio to be well-diversified on the closing date, primarily comprising broadly syndicated speculative-grade senior secured term loans and senior secured bonds. Therefore, we have conducted our credit and cash flow analysis by applying our criteria for corporate cash flow CDOs. "In our cash flow analysis, we used the EUR400 million target par amount, the covenanted weighted-average spread (3.50%), the covenanted weighted-average coupon (2.70%), and the covenanted portfolio weighted-average recovery rates. We applied various cash flow stress scenarios, using four different default patterns, in conjunction with different interest rate stress scenarios for each liability rating category. "Under our structured finance sovereign risk criteria, we expect the transaction's exposure to country risk to be sufficiently mitigated at the assigned preliminary ratings. "At closing, we expect the transaction's documented counterparty replacement and remedy mechanisms to adequately mitigate its exposure to counterparty risk under our current counterparty criteria. "We expect the transaction's legal structure and framework to be bankruptcy remote in line with our legal criteria. "Our credit and cash flow analysis show that the class B-1, B-2, C, D, and E notes could withstand stresses commensurate with higher preliminary ratings than those assigned. However, as the CLO will be in its reinvestment phase starting from the effective date, during which the transaction's credit risk profile could deteriorate, we have capped our preliminary ratings assigned to these classes of notes. The class A and F notes can withstand stresses commensurate with the assigned preliminary ratings. "Following our analysis of the credit, cash flow, counterparty, operational, and legal risks, we believe our preliminary ratings are commensurate with the available credit enhancement for the class A to F notes. "In addition to our standard analysis, we have also included the sensitivity of the preliminary ratings on the class A to E notes based on four hypothetical scenarios. "As our preliminary ratings analysis makes additional considerations before assigning preliminary ratings in the 'CCC' category--and we would assign a 'B-' rating if the criteria for assigning a 'CCC' category rating are not met--we have not included the above scenario analysis results for the class F notes." Palmer Square European CLO 2025-2 DAC is a European cash flow CLO securitization of a revolving pool, comprising euro-denominated senior secured loans and bonds issued by speculative-grade borrowers. Palmer Square Europe Capital Management LLC will manage the transaction. Environmental, social, and governance S&P said, "We regard the exposure to environmental, social, and governance (ESG) credit factors in the transaction as being broadly in line with our benchmark for the sector. Primarily due to the diversity of the assets within CLOs, the exposure to environmental credit factors is viewed as below average, social credit factors are below average, and governance credit factors are average. For this transaction, the documents prohibit assets from being related to certain activities. Accordingly, since the exclusion of assets from these activities does not result in material differences between the transaction and our ESG benchmark for the sector, no specific adjustments have been made in our rating analysis to account for any ESG-related risks or opportunities." Ratings Prelim Prelim amount Credit Class rating* (mil. EUR) enhancement (%) Interest rate§ A AAA (sf) 248.00 38.00 Three/six-month EURIBOR plus 1.35% B-1 AA (sf) 37.30 26.80 Three/six-month EURIBOR plus 1.80% B-2 AA (sf) 7.50 26.80 4.60% C A (sf) 23.20 21.00 Three/six-month EURIBOR plus 2.20% D BBB- (sf) 28.00 14.00 Three/six-month EURIBOR plus 3.10% E BB- (sf) 17.20 9.70 Three/six-month EURIBOR plus 5.40% F B- (sf) 12.80 6.50 Three/six-month EURIBOR plus 8.17% Sub. Notes NR 32.90 N/A N/A *The preliminary ratings assigned to the class A, B-1, and B-2 notes address timely interest and ultimate principal payments. The preliminary ratings assigned to the class C, D, E, and F notes address ultimate interest and principal payments. §The payment frequency switches to semiannual and the index switches to six-month EURIBOR when a frequency switch event occurs. EURIBOR--Euro Interbank Offered Rate. NR--Not rated. N/A--Not applicable. ST. PAUL'S VIII: Moody's Affirms B2 Rating on EUR12MM Cl. F Notes ----------------------------------------------------------------- Moody's Ratings has upgraded the ratings on the following notes issued by St. Paul's CLO VIII DAC: EUR23,000,000 Class C Senior Secured Deferrable Floating Rate Notes due 2030, Upgraded to Aa1 (sf); previously on Sep 16, 2024 Upgraded to Aa3 (sf) EUR21,000,000 Class D Senior Secured Deferrable Floating Rate Notes due 2030, Upgraded to A2 (sf); previously on Sep 16, 2024 Upgraded to Baa1 (sf) Moody's have also affirmed the ratings on the following notes: EUR244,000,000 (Current outstanding amount EUR113,047,644) Class A Senior Secured Floating Rate Notes due 2030, Affirmed Aaa (sf); previously on Sep 16, 2024 Affirmed Aaa (sf) EUR27,000,000 Class B-1 Senior Secured Floating Rate Notes due 2030, Affirmed Aaa (sf); previously on Sep 16, 2024 Upgraded to Aaa (sf) EUR20,000,000 Class B-2 Senior Secured Fixed Rate Notes due 2030, Affirmed Aaa (sf); previously on Sep 16, 2024 Upgraded to Aaa (sf) EUR25,000,000 Class E Senior Secured Deferrable Floating Rate Notes due 2030, Affirmed Ba2 (sf); previously on Sep 16, 2024 Affirmed Ba2 (sf) EUR12,000,000 Class F Senior Secured Deferrable Floating Rate Notes due 2030, Affirmed B2 (sf); previously on Sep 16, 2024 Affirmed B2 (sf) St. Paul's CLO VIII DAC, issued in December 2017, is a collateralised loan obligation (CLO) backed by a portfolio of mostly high-yield senior secured European loans. The portfolio is managed by Intermediate Capital Managers Limited. The transaction's reinvestment period ended in January 2022. RATINGS RATIONALE The rating upgrades on the Class C and Class D notes are primarily a result of the deleveraging of the senior notes following amortisation of the underlying portfolio since the last rating action in September 2024. The affirmations on the ratings on the Class A, Class B-1, Class B-2, 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 A notes have paid down by approximately EUR73.7m (30.2% of original balance) since the last rating action in September 2024 and by EUR131.0m (53.7%) since closing. As a result of the deleveraging, over-collateralisation (OC) has increased for Class A/B, Class C, Class D and Class E. According to the trustee report dated May 2025[1] the Class A/B, Class C, Class D and Class E OC ratios are reported at 159.6%, 139.5%, 125.2% and 111.5% compared to August 2024[2] levels of 143.3%, 130.4%, 120.6% and 110.6%, 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. Key model inputs: 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 its published methodology and could differ from the trustee's reported numbers. In its base case, Moody's used the following assumptions: Performing par and principal proceeds balance: EUR254.2m Defaulted Securities: EUR15.6m Diversity Score: 36 Weighted Average Rating Factor (WARF): 3318 Weighted Average Life (WAL): 3.33 years Weighted Average Spread (WAS) (before accounting for reference rate floors): 3.94% Weighted Average Coupon (WAC): 4.74% Weighted Average Recovery Rate (WARR): 44.03% Par haircut in OC tests and interest diversion test: 1.95% 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 its 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. Recoveries higher than Moody's expectations would have a positive impact on the notes' ratings. -- Long-dated assets: The presence of assets that mature beyond the CLO's legal maturity date exposes the deal to liquidation risk on those assets. Moody's assumes that, at transaction maturity, the liquidation value of such an asset will depend on the nature of the asset as well as the extent to which the asset's maturity lags that of the liabilities. Liquidation values higher than Moody's expectations would have a positive impact on the notes' ratings. In addition to the quantitative factors that Moody's explicitly modelled, qualitative factors are part of the rating committee's considerations. These qualitative factors include the structural protections in the transaction, its recent performance given the market environment, the legal environment, specific documentation features, the collateral manager's track record and the potential for selection bias in the portfolio. All information available to rating committees, including macroeconomic forecasts, input from Moody's other analytical groups, market factors, and judgments regarding the nature and severity of credit stress on the transactions, can influence the final rating decision. TIKEHAU CLO XI: Fitch Assigns 'B-sf' Final Rating on Cl. F-R Notes ------------------------------------------------------------------ Fitch Ratings has assigned Tikehau CLO XI DAC reset notes final ratings. Entity/Debt Rating Prior ----------- ------ ----- Tikehau CLO XI DAC A XS2672302937 LT PIFsf Paid In Full AAAsf A-R XS3091040306 LT AAAsf New Rating B-1 XS2672303075 LT PIFsf Paid In Full AAsf B-2 XS2672303232 LT PIFsf Paid In Full AAsf B-R XS3091040561 LT AAsf New Rating C XS2672303406 LT PIFsf Paid In Full Asf C-R XS3091040728 LT Asf New Rating D XS2672303661 LT PIFsf Paid In Full BBB-sf D-R XS3091041296 LT BBB-sf New Rating E XS2672303828 LT PIFsf Paid In Full BB-sf E-R XS3091041452 LT BB-sf New Rating F XS2672304123 LT PIFsf Paid In Full B-sf F-R XS3091041619 LT B-sf New Rating Transaction Summary Tikehau CLO 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. Note proceeds from the reset notes and additional subordinated notes have been used to redeem the existing notes (except the subordinated notes) and fund the portfolio with a target par of EUR400 million. The portfolio is actively managed by Tikehau Capital Europe Limited. The collateralised loan obligation (CLO) has 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 24.5. High Recovery Expectations (Positive): At least 90% of the portfolio will comprise of 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 (WARR) of the identified portfolio is 60.5%. Diversified Asset Portfolio (Positive): The transaction includes four Fitch matrices. Two are effective at closing, corresponding to a 7.5-year WAL. Two forward matrices are effective 12 months after closing, corresponding to a 6.5-year WAL. All matrices are based on a top-10 obligor concentration limit of 20% and each matrix set corresponds to two different fixed-rate asset limits at 5% and 10%. Switching to the forward matrices is subject to the reinvestment par condition (with defaulted assets at Fitch collateral value) being satisfied. The transaction also includes various other concentration limits, including a maximum exposure to the three largest Fitch-defined industries in the portfolio at 40%. These covenants ensure the asset portfolio will not be exposed to excessive concentration. WAL Step-Up Feature (Neutral): The transaction can extend the WAL by one year on the step-up date, which can be one year after closing at the earliest. The WAL extension is subject to conditions including the satisfaction of all tests and the aggregate collateral balance (defaults at Fitch collateral value) being no less than the reinvestment target par amount. Portfolio Management (Neutral): The transaction has a 4.5-year reinvestment period, which is governed by reinvestment criteria similar to those of other European transactions. Fitch's analysis is based on a stressed-case portfolio with the aim of testing the robustness of the transaction structure against its covenants and portfolio guidelines. Cash Flow Modelling (Positive): The WAL used for the Fitch-stressed portfolio analysis was reduced by 12 months for the closing matrices and by six months for the forward matrices. This is to account for the strict reinvestment conditions envisaged after the reinvestment period. These include passing the coverage tests and the Fitch 'CCC' maximum limit after reinvestment and a WAL covenant that progressively steps down over time after the end of the reinvestment period. Fitch believes these conditions would reduce the effective risk horizon of the portfolio during stress periods; however, Fitch would not shorten the modelled risk horizon to under six years according to its CLO criteria. Therefore the forward matrices only reflect a six-month reduction in WAL. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A 25% increase of the mean default rate (RDR) and a 25% decrease of the recovery rate (RRR) across all ratings of the identified portfolio would have no impact on class A notes but would lead to downgrades of one notch each for the class C, D and E notes, and to below 'B-sf' for class F notes. Downgrades, which are based on the identified portfolio, may occur if the loss expectation is larger than initially assumed, due to unexpectedly high levels of default and portfolio deterioration. The class B notes have a rating cushion of three notches and the class C to F notes each have a cushion of two notches, 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 up to three notches for the class B to E notes, and to below 'B-sf' for the class F notes. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade A 25% reduction of the mean RDR and a 25% increase in the RRR across all ratings of the Fitch-stressed portfolio would lead to upgrades of up to four notches for the rated 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 to cover losses in the transaction. 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 Tikehau CLO XI 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. TYMON PARK CLO: Moody's Affirms B3 Rating on EUR11.2MM Cl. E Notes ------------------------------------------------------------------ Moody's Ratings has upgraded the ratings on the following notes issued by Tymon Park CLO DAC: EUR28,800,000 Class A-2A Senior Secured Floating Rate Notes due 2034, Upgraded to Aa1 (sf); previously on Aug 19, 2021 Definitive Rating Assigned Aa2 (sf) EUR10,000,000 Class A-2B Senior Secured Fixed Rate Notes due 2034, Upgraded to Aa1 (sf); previously on Aug 19, 2021 Definitive Rating Assigned Aa2 (sf) EUR23,200,000 Class B Senior Secured Deferrable Floating Rate Notes due 2034, Upgraded to A1 (sf); previously on Aug 19, 2021 Definitive Rating Assigned A2 (sf) Moody's have also affirmed the ratings on the following notes: EUR248,000,000 Class A-1 Senior Secured Floating Rate Notes due 2034, Affirmed Aaa (sf); previously on Aug 19, 2021 Definitive Rating Assigned Aaa (sf) EUR28,000,000 Class C Senior Secured Deferrable Floating Rate Notes due 2034, Affirmed Baa3 (sf); previously on Aug 19, 2021 Definitive Rating Assigned Baa3 (sf) EUR20,800,000 Class D Senior Secured Deferrable Floating Rate Notes due 2034, Affirmed Ba3 (sf); previously on Aug 19, 2021 Definitive Rating Assigned Ba3 (sf) EUR11,200,000 Class E Senior Secured Deferrable Floating Rate Notes due 2034, Affirmed B3 (sf); previously on Aug 19, 2021 Definitive Rating Assigned B3 (sf) Tymon Park CLO DAC, issued in December 2015 and refinanced in January 2018 and in August 2021, is a collateralised loan obligation (CLO) backed by a portfolio of mostly high-yield senior secured European loans. The portfolio is managed by Blackstone Ireland Limited. The transaction's reinvestment period will end in August 2025. RATINGS RATIONALE The rating upgrades on the Class A-2A, Class A-2B and Class B notes are primarily a result of the benefit of the shorter period of time remaining before the end of the reinvestment period in August 2025. The affirmations on the ratings on the Class A-1, Class C, Class D and Class E 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. In light of reinvestment restrictions during the amortisation period, and therefore the limited ability to effect significant changes to the current collateral pool, Moody's analysed the deal assuming a higher likelihood that the collateral pool characteristics would maintain an adequate buffer relative to certain covenant requirements. 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 methodologies 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: EUR396.74m Defaulted Securities: EUR3.51m Diversity Score: 60 Weighted Average Rating Factor (WARF): 2947 Weighted Average Life (WAL): 4.35 years Weighted Average Spread (WAS) (before accounting for Euribor floors): 3.70% Weighted Average Coupon (WAC): 3.45% Weighted Average Recovery Rate (WARR): 44.17% Par haircut in OC tests and interest diversion test: 0% The default probability derives from the credit quality of the collateral pool and Moody's expectations of the remaining life of the collateral pool. The estimated average recovery rate on future defaults is based primarily on the seniority of the assets in the collateral pool. In each case, historical and market performance and a collateral manager's latitude to trade collateral are also relevant factors. Moody's incorporates these default and recovery characteristics of the collateral pool into Moody's cash flow model analysis, subjecting them to stresses as a function of the target rating of each CLO liability it is analysing. Methodology Underlying the Rating Action: The principal methodology used in these ratings was "Moody's Global Approach to Rating Collateralized Loan Obligations" published in May 2024. Counterparty Exposure: The rating action took into consideration the notes' exposure to relevant counterparties, such as account bank, using the methodology "Structured Finance Counterparty Risks" published in May 2025. Moody's concluded the ratings of the notes are not constrained by these risks. Factors that would lead to an upgrade or downgrade of the ratings: The rated notes' performance is subject to uncertainty. The notes' performance is sensitive to the performance of the underlying portfolio, which in turn depends on economic and credit conditions that may change. The collateral manager's investment decisions and management of the transaction will also affect the notes' performance. Additional uncertainty about performance is due to the following: -- Portfolio amortisation: Once reaching the end of the reinvestment period in August 2025, 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. -- Weighted average life: The notes' ratings are sensitive to the weighted average life assumption of the portfolio, which could lengthen as a result of the manager's decision to reinvest in new issue loans or other loans with longer maturities, or participate in amend-to-extend offerings. The effect on the ratings of extending the portfolio's weighted average life can be positive or negative depending on the notes' seniority. -- 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. WILTON PARK: Fitch Assigns 'B-sf' Final Rating on Class F-R Notes ----------------------------------------------------------------- Fitch Ratings has assigned Wilton Park CLO DAC reset final ratings. Entity/Debt Rating Prior ----------- ------ ----- Wilton Park CLO DAC Class A XS2698482432 LT PIFsf Paid In Full AAAsf Class A-R XS3076292088 LT AAAsf New Rating AAA(EXP)sf Class B-1 XS2698484214 LT PIFsf Paid In Full AAsf Class B-2 XS2698484644 LT PIFsf Paid In Full AAsf Class B1-R XS3076292245 LT AAsf New Rating AA(EXP)sf Class B2-R XS3076292591 LT AAsf New Rating AA(EXP)sf Class C XS2698485294 LT PIFsf Paid In Full Asf Class C-R XS3076292831 LT Asf New Rating A(EXP)sf Class D XS2698485534 LT PIFsf Paid In Full BBB-sf Class D-R XS3076293052 LT BBB-sf New Rating BBB-(EXP)sf Class E XS2698486003 LT PIFsf Paid In Full BB-sf Class E-R XS3076293219 LT BB-sf New Rating BB-(EXP)sf Class F XS2698486268 LT PIFsf Paid In Full B-sf Class F-R XS3076293482 LT B-sf New Rating B-(EXP)sf Transaction Summary Wilton Park CLO DAC (reset) is a securitisation of mainly senior secured obligations (at least 96%) with a component of senior unsecured, mezzanine, second-lien loans and high-yield bonds. Note proceeds from the issue were used to redeem the existing rated notes and to purchase a portfolio with a target par of EUR400 million. The portfolio is actively managed by Blackstone Ireland Limited. The collateralised loan obligation (CLO) has a 4.5-year reinvestment period and a 7.5-year weighted-average life (WAL) test. KEY RATING DRIVERS Average Portfolio Credit Quality (Neutral): Fitch assesses the average credit quality of obligors at 'B'/'B-'. The Fitch weighted-average rating factor (WARF) of the identified portfolio is 24.7. High Recovery Expectations (Positive): At least 96% of the portfolio comprises senior secured obligations. The recovery prospects for these assets are more favourable than for second-lien, unsecured and mezzanine assets. The Fitch weighted-average recovery rate (WARR) of the identified portfolio is 61.2%. WAL Step-Up Feature (Neutral): The transaction can extend the WAL by 12 months on the step-up date, which is a year after closing. The WAL extension is subject to conditions, including passing the collateral quality and coverage tests and the adjusted collateral principal amount being at least equal to the reinvestment target par balance. Diversified Portfolio (Positive): The transaction includes one matrix set at closing and one forward matrix set effective from six months after closing (18 months if WAL is stepped up), provided the collateral principal amount (defaults at Fitch-calculated collateral value) is at least equal to the reinvestment target par balance, among other conditions. Each matrix set comprises fixed-rate asset limits of 5% and 12.5%. The closing matrix set corresponds to a 7.5-year WAL test covenant, whereas the forward matrix set corresponds to a seven-year WAL test covenant. The transaction includes various concentration limits, including a maximum exposure to the three largest Fitch-defined industries in the portfolio at 40% and a top 10 obligor concentration limit of 20%. These covenants are intended to ensure the asset portfolio will not be exposed to excessive concentration. Portfolio Management (Neutral): The transaction has a reinvestment period of about 4.5 years and includes reinvestment criteria similar to those of other European transactions. Its analysis is based on a Fitch-stressed portfolio with the aim of testing the robustness of the deal structure against its covenants and portfolio guidelines. Cash Flow Modelling (Positive): The WAL used for the Fitch-stressed portfolio is 12 months shorter than the WAL covenant to account for structural and reinvestment conditions after the reinvestment period, including passing the over-collateralisation and Fitch 'CCC' limitation tests, and a WAL covenant that gradually steps down over time. In Fitch's opinion, these conditions reduce the effective risk horizon of the portfolio during stress periods. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade A 25% increase of the mean default rate (RDR) and a 25% decrease of the recovery rate (RRR) across all ratings of the identified portfolio would have no impact on the class A notes and would lead to downgrades of one notch each for the class B1-R to E-R notes, while the class F-R notes would be rated below 'B-sf'. Downgrades, which are based on the identified portfolio, may occur if the loss expectation is larger than initially assumed, due to unexpectedly high levels of default and portfolio deterioration. The class B-R, D-R, E-R and F-R notes each have a rating cushion of two notches and the class C-R 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 up to four notches for the notes. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade A 25% reduction of the mean RDR and a 25% increase in the RRR across all ratings of the Fitch-stressed portfolio would lead to upgrades of up to four notches each for the notes, except for the 'AAAsf' rated 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 Wilton Park CLO DAC. In cases where Fitch does not provide ESG relevance scores in connection with the credit rating of a transaction, programme, instrument or issuer, Fitch will disclose any ESG factor that is a key rating driver in the key rating drivers section of the relevant rating action commentary. WILTON PARK: S&P Assigns B-(sf) Rating on Class F-R Notes --------------------------------------------------------- S&P Global Ratings assigned its credit ratings to Wilton Park CLO DAC's A-R, B-1-R, B-2-R, C-R, D-R, E-R, and F-R notes. At closing, the issuer has unrated Z-1, Z-2, and subordinated notes outstanding from the existing transaction. This transaction is a reset of the already existing transaction that closed in November 2023. The issuance proceeds of the refinancing notes were used to redeem the refinanced notes (the original transaction's class A, B-1, B-2, C, D, E, and F notes) and the ratings on the original notes have been withdrawn The reinvestment period will be approximately 4.55 years, while the non-call period will be 1.55 years after closing. Under the transaction documents, the rated notes will pay quarterly interest unless there is a frequency switch event. Following this, the notes will switch to semiannual payment. The ratings assigned to the notes reflect S&P's assessment of: -- The diversified collateral pool, which primarily comprises broadly syndicated speculative-grade senior secured term loans and bonds that are governed by collateral quality tests. -- The credit enhancement provided through the subordination of cash flows, excess spread, and overcollateralization. -- The collateral manager's experienced team, which can affect the performance of the rated notes through collateral selection, ongoing portfolio management, and trading. -- The transaction's legal structure, which is bankruptcy remote. -- The transaction's counterparty risks, which is in line with S&P's counterparty rating framework. Portfolio benchmarks S&P Global Ratings weighted-average rating factor 2,825.74 Default rate dispersion 525.68 Weighted-average life (years) 4.39 Weighted-average life (years) extended to cover the length of the reinvestment period 4.54 Obligor diversity measure 170.17 Industry diversity measure 20.48 Regional diversity measure 1.24 Transaction key metrics Total par amount (mil. EUR) 401.60 Defaulted assets (mil. EUR) 0.00 Number of performing obligors 227 Portfolio weighted-average rating derived from S&P's CDO evaluator B 'CCC' category rated assets (%) 2.23 Target 'AAA' weighted-average recovery (%) 36.09 Target weighted-average spread (net of floors; %) 3.56 Target weighted-average coupon (%) 3.59 S&P said, "Our ratings reflect our assessment of the collateral portfolio's credit quality, which has a weighted-average rating of 'B'. "The portfolio is well-diversified, primarily comprising broadly syndicated speculative-grade senior secured term loans and senior secured bonds. Therefore, we conducted our credit and cash flow analysis by applying our criteria for corporate cash flow CDOs." The transaction includes an amortizing reinvestment target par amount, which is a predetermined reduction in the value of the transaction's target par amount unrelated to the principal payments on the notes. This may allow for the principal proceeds to be characterized as interest proceeds when the collateral par exceeds this amount, subject to a limit, and affect the reinvestment criteria, among others. This feature allows some excess par to be released to equity during benign times, which may lead to a reduction in the amount of losses that the transaction can sustain during an economic downturn. Hence, in S&P's cash flow analysis, it assumed a starting collateral size of less than target par (i.e., the EUR400 million target par minus the EUR4.5 million maximum reinvestment target par adjustment amount). S&P said, "In our cash flow analysis, we also modeled the covenanted weighted-average spread of 3.56%, the covenanted weighted-average coupon of 3.59%, and the target weighted-average recovery rates at each rating level. We applied various cash flow stress scenarios, using four different default patterns, in conjunction with different interest rate stress scenarios for each liability rating category. The transaction's documented counterparty replacement and remedy mechanisms adequately mitigate its exposure to counterparty risk under our current counterparty criteria. S&P said, "Under our structured finance sovereign risk criteria, the transaction's exposure to country risk is sufficiently mitigated at the assigned ratings. "The transaction's legal structure and framework is bankruptcy remote, in line with our legal criteria. "Our credit and cash flow analysis indicates that the available credit enhancement for the class B-1-R, B-2-R, and C-R notes could withstand stresses commensurate with higher ratings than those assigned. However, as the CLO will be in its reinvestment phase starting from the effective date, during which the transaction's credit risk profile could deteriorate, we have capped our ratings assigned to the notes." The class A-R, D-R, and E-R notes can withstand stresses commensurate with the assigned ratings. S&P said, "For the class F-R notes, our credit and cash flow analysis indicate that the available credit enhancement could withstand stresses commensurate with a lower rating. "However, we have applied our 'CCC' rating criteria, resulting in a 'B- (sf)' rating on this class of notes." The ratings uplift for the class F-R notes reflects several key factors, including: -- The class F-R notes' available credit enhancement, which is in the same range as that of other CLOs we have rated and that have recently been issued in Europe. -- The portfolio's average credit quality, which is similar to other recent CLOs. -- S&P's model generated break-even default rate at the 'B-' rating level of 23.52% (for a portfolio with a weighted-average life of 4.55 years), versus if we were to consider a long-term sustainable default rate of 3.1% for 4.55 years, which would result in a target default rate of 14.105%. -- S&P does not believe that there is a one-in-two chance of this tranche defaulting. -- S&P does not envision this tranche defaulting in the next 12-18 months. S&P said, "Following this analysis, we consider that the available credit enhancement for the class F notes is commensurate with the assigned 'B- (sf)' rating. "Following our analysis of the credit, cash flow, counterparty, operational, and legal risks, we believe that our ratings are commensurate with the available credit enhancement for the class A-R, B-1-R, B-2-R, C-R, D-R, E-R, and F-R notes. "In addition to our standard analysis, we have also included the sensitivity of the ratings on the class A-R to E-R notes, based on four hypothetical scenarios. "As our ratings analysis makes additional considerations before assigning ratings in the 'CCC' category, and we would assign a 'B-' rating if the criteria for assigning a 'CCC' category rating are not met, we have not included the above scenario analysis results for the class F-R notes." Environmental, social, and governance S&P regards the exposure to environmental, social, and governance (ESG) credit factors in the transaction as being broadly in line with its benchmark for the sector. Primarily due to the diversity of the assets within CLOs, the exposure to environmental credit factors is viewed as below average, social credit factors are below average, and governance credit factors are average. For this transaction, the documents prohibit assets from being related to certain activities. S&P said, "Accordingly, since the exclusion of assets from these industries does not result in material differences between the transaction and our ESG benchmark for the sector, no specific adjustments have been made in our rating analysis to account for any ESG-related risks or opportunities." Wilton Park CLO is a European cash flow CLO securitization of a revolving pool, comprising euro-denominated senior secured loans and bonds issued mainly by speculative-grade borrowers. Blackstone Ireland Ltd. manages the transaction. Ratings list Amount Credit Class Rating* (mil. EUR) enhancement (%) Interest rate A-R AAA (sf) 244.00 39.00 Three/six-month EURIBOR plus 1.45% B-1-R AA (sf) 35.50 27.63 Three/six-month EURIBOR plus 2.05% B-2-R AA (sf) 10.00 27.63 4.90% C-R A (sf) 24.00 21.63 Three/six-month EURIBOR plus 2.60% D-R BBB- (sf) 28.50 14.50 Three/six-month EURIBOR plus 3.35% E-R BB- (sf) 17.50 10.13 Three/six-month EURIBOR plus 5.70% F-R B- (sf) 12.50 7.00 Three/six-month EURIBOR plus 8.40% Z-1 NR 37.60 N/A N/A Z-2 NR 37.60 N/A N/A Sub notes NR 37.60 N/A N/A *The ratings assigned to the class A-R, B-1-R, and B-2-R notes address timely interest and ultimate principal payments. The ratings assigned to the class C-R, D-R, E-R, and F-R notes address ultimate interest and principal payments. The payment frequency switches to semiannual and the index switches to six-month EURIBOR when a frequency switch event occurs. EURIBOR--Euro Interbank Offered Rate. NR--Not rated. N/A--Not applicable. ========= I T A L Y ========= LA DORIA: Moody's Rates New EUR675MM Senior Secured Notes 'B1' -------------------------------------------------------------- Moody's Ratings has assigned a B1 instrument rating to La Doria S.p.A.'s (La Doria or the company) proposed new EUR675 million backed senior secured notes due 2030. The company's existing ratings, including the B1 long-term corporate family rating, the B1-PD probability of default rating (PDR), and the B1 ratings for its existing EUR650 million backed senior secured notes due 2029, are unaffected. The stable outlook also remains unaffected. Moody's expects to withdraw the B1 rating on the existing backed senior secured notes upon completion of the refinancing. The proposed transaction will refinance the company's existing backed senior secured debt, fund cash on balance sheet for general corporate purposes and fund-related transaction fees and expenses. Although the refinancing transaction slightly increases the debt burden, Moody's expects La Doria's Moody's-adjusted leverage, pro forma for recent acquisitions, will continue to hover around 4.5x over the next 12 to 18 months. This leverage level is at the high end of the rating category, leaving limited room for any potential underperformance. However, this risk is offset by a good liquidity profile and expected positive free cash flow, with interest coverage remaining comfortably at above 3x. RATINGS RATIONALE The proposed backed senior secured notes due 2030 are rated at the same level as the company's B1 corporate family rating (CFR), reflecting their presence as the largest debt instrument in the capital structure as well as the existence of a super-senior revolving credit facility (RCF). As part of the refinancing, the company is planning to increase the size of the existing super-senior RCF to EUR122.5 million and extend its maturity to 2030. La Doria's ratings continue to reflect the company's leading market position in select private-label product categories; relatively good operating margins, particularly considering its private-label business; flexible cost structure, pass-through capabilities and hedging strategy; and good liquidity and projected positive free cash flow (FCF). Concurrently, the rating is constrained by the company's degree of geographical concentration, with sales mainly in the UK, despite exposures to other countries; substantial client concentration; and still some event risk associated with potential acquisitions and their integration. Over the past year, since the initial rating, the company has focused on inorganic growth, completing four bolt-on acquisitions with a combination of debt and cash on hand. This includes the recent agreement to acquire Pasta Lensi, an Italian manufacturer specializing in gluten-free and legume-based pasta, and FEGER, which produces and distributes tomatoes, legumes, ready-made sauces, and canned goods, while also managing food specialties labeling and storage. La Doria's operating performance has improved significantly in recent years, supported by strong revenue growth driven mainly by increased volume, an improved product mix, and ongoing operating efficiencies. However, in the first three months of 2025, the underlying operating performance came under pressure due to lower revenues in a deflationary environment, coupled with slightly negative volume/mix effect, and higher personnel cost. Nevertheless, this has been more than compensated by positive contributions from newly acquired businesses. Going forward, Moody's anticipates still some earnings pressure on the underlying business, but overall profitability supported by M&A contribution. Consequently, Moody's projects the company will achieve a Moody's-adjusted EBITDA of EUR174 million in 2025 (pro forma for the 12-month contribution of recently completed acquisitions), leading to some improvements in financial metrics with Moody's-adjusted leverage hovering at around 4.5x over the next 12-18 months. In terms of financial policy, Moody's do not expect La Doria to pursue any significant incremental debt-funded acquisitions. Moody's anticipates management will now focus on pursuing organic growth, integrating the acquired businesses and achieving targeted synergies and cost savings. The B1 rating and stable outlook incorporate Moody's expectations that in case of any potential future acquisitions, the company will continue to pursue a prudent approach, with credit metrics consistent with the current rating category. LIQUIDITY Moody's expects La Doria to have good liquidity, supported by an expected cash balance of EUR78 million post-closing of the transaction, and access to an upsized super senior revolving credit facility (SSRCF) up to EUR122.5 million, which is likely to remain undrawn. Moody's also expects the company to generate consistently positive Moody's-adjusted FCF of around EUR40 million in 2025 and more than EUR60 million thereafter. There are no significant debt maturities until 2030, when the EUR675 million backed senior secured notes are due. STRUCTURAL CONSIDERATIONS La Doria's probability of default rating of B1-PD incorporates the use of a 50% family recovery rate assumption. The B1 rating of the backed senior secured floating-rate notes due in 2030 and issued by La Doria S.p.A. is in line with the CFR. The SSRCF ranks at the top of Moody's Loss Given Default (LGD) waterfall, followed by the EUR675 million backed senior secured notes and trade payables. The size of the RCF is not significant enough to warrant a notching of the bonds below the CFR according to Moody's LGD waterfall. The RCF and the backed senior secured notes share the same collateral package, consisting of shares in all significant operating subsidiaries of the group, representing at least 98% of consolidated EBITDA. RATIONALE FOR STABLE OUTLOOK The stable outlook reflects Moody's expectations that La Doria's credit metrics will remain resilient, with its Moody's-adjusted gross leverage hovering around 4.5x in the next 12-18 months, supported by increasing FCF generation. The stable outlook also assumes that the company will not embark on any significant debt-funded acquisitions or further shareholders distributions and will maintain at least adequate liquidity. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING Upward rating momentum could develop if La Doria continues to successfully execute its strategy and deliver organic sales and EBITDA growth, supporting a reduction in leverage and business diversification. Quantitatively, this would translate into Moody's-adjusted gross leverage remaining below 3.5x, Moody's-adjusted FCF/debt in high-single-digit percentages, and Moody's-adjusted EBITA/interest expense remaining above 2.75x, on a sustained basis. It also requires maintaining a prudent financial policy and good liquidity. The rating could come under pressure if La Doria's operating performance weakens with a substantial decline in its EBITDA margin. Quantitatively, this would translate into Moody's-adjusted gross leverage sustaining above 4.5x, Moody's-adjusted FCF/debt moving into low-single-digit percentages, or Moody's-adjusted EBITA/interest expense declining below 2.25x, for a prolonged period. In addition, Moody's could downgrade the rating if the company's financial policy becomes more aggressive and liquidity deteriorates. PRINCIPAL METHODOLOGY The principal methodology used in this rating was Consumer Packaged Goods published in June 2022. COMPANY PROFILE Headquartered in Angri, Italy, La Doria S.p.A. is the leading European producer and distributor of shelf-stable private label products. The company's key products include tomato-based products, ready-made sauces, canned pulses, juices and fruit drinks. To a lesser extent, it also offers other complementary products such as dried pasta, canned tuna and salmon, and other related products, which are manufactured by third-party producers and distributed through its logistic distribution platform in the UK. In the 12 months to March 31, 2025, the company generated EUR1.5 billion revenues and company-adjusted EBITDA of EUR177 million (pro forma for the 12-month contribution of recently completed acquisitions) and is majority owned by the private equity firm Investindustrial since 2022. LA DORIA: S&P Rates Proposed EUR675MM Senior Secured Notes 'B' -------------------------------------------------------------- S&P Global Ratings assigned its 'B' issue rating and '3' recovery rating to the proposed EUR675 million senior secured notes that Italy-based private label food manufacturer La Doria SpA plans to issue. The '3' recovery rating indicates its expectation of meaningful recovery prospects (50%-70%; rounded estimate: 55%) in the event of a default. La Doria will use the proceeds to refinance its outstanding EUR650 million senior secured floating rate notes due 2029. La Doria will also keep some of the proceeds as cash on the balance sheet, covering fees and amounts paid in connection with the recent acquisition of Pasta Lensi, an Italy-based pasta manufacturer specializing in gluten-free, legume-based, and specialty pastas. Cash on balance sheet will further fund the acquisition of Fege, Italy-based food manufacturer specializing in producing and commercializing tomatoes, legumes, ready-made sauces, and canned fruit, and labelling and storage of food specialties. In 2024, Fege reported an EBITDA of about EUR12 million. S&P expects the acquisition to close in September 2025 for an enterprise value of about EUR89 million. As part of the proposed transaction, La Doria will increase the size of its super senior revolving credit facility (RCF) by up to EUR10 million, to EUR122.5 million from EUR112.5 million. S&P expects the RCF will remain undrawn at the transaction's closing and throughout our forecast horizon. S&P said, "Our 'B' long-term issuer credit rating and stable outlook on La Doria are unchanged. We think that the recent acquisitions are in line with the group's strategy of diversifying its product lines, expanding into the pasta business, while reinforcing its position in the tomatoes, legumes, and ready-made sauces product lines. We anticipate that the group's reported revenue will increase to about 9% year on year in 2025, as we factor in the full-year contribution of the acquisitions in 2025. This is in addition to the acquisitions closed in 2024, such as Clas, a ready-to-use pesto sauce manufacturer the group acquired in September 2024; and Pastificio di Martino's private label business unit, acquired in October 2024. "We expect the current deflationary environment for tomatoes and legumes, stemming from high volumes and strong price competition from branded companies, to weigh on the group's profitability. However, we think that La Doria will be able to absorb the negative impact through a successful pass-through of cost inflation and the integration of acquired companies. Although we anticipate some nonrecurring costs and expenses related the recent acquisitions, these would not materially affect La Doria's adjusted EBITDA margin, which we forecast at about 12% in 2025, in line with our previous expectations. "Finally, we think that the higher debt amount in the capital structure will not materially affect La Doria's adjusted debt to EBITDA, which we expect to come in at about 4.5x in 2025, from 4.9x in 2024 broadly in line with our previous expectations. Our current rating on La Doria includes our view of the moderate execution and integration risks of the recent acquisitions, operating in various segments and Italian regions. Under its credit metrics, La Doria has some flexibility to pursue additional mergers and acquisitions, as it is acting as a market consolidator." Key Metrics La Doria SpA--Forecast summary Period ending --Dec. 31-- (Mil. EUR) 2023a 2024a 2025f 2026f Revenue 1,243 1,304 1,417 1,522 EBITDA 146 152 172 187 Capital expenditure 27 27 23 23 (capex) Reported Free 71 32 61 75 operating cash flow (FOCF) Dividends 2 127 2 2 Debt (reported) 349 670 690 690 Plus: Lease liabilities debt 3 8 9 9 Plus: Pension and other postretirement debt 2 5 5 5 Plus: Others (factoring and put options on 110 70 70 70 minority stakes) Debt 464 753 774 774 Adjusted ratios Annual revenue growth (%)20.8 4.9 8.7 7.4 EBITDA margin (%) 11.8 11.7 12.1 12.3 Debt/EBITDA (x) 3.2 4.9 4.5 4.1 EBITDA interest coverage (x) 4.5 2.7 3.5 4 FOCF/debt (%) 12.4 4.4 8.1 9.9 a--Actual. f--Forecast. Issue Ratings--Recovery Analysis Key analytical factors -- S&P said, "We rate La Doria's proposed EUR675 million senior secured floating rate notes due December 2030 'B', in line with the long-term issuer credit rating. The recovery rating is '3', reflecting our expectation of meaningful recovery prospects (rounded estimate: 55%) in the event of default." -- The recovery rating is constrained by the substantial amount of prior-ranking liabilities (primarily the proposed EUR122.5 million super senior RCF, upsized by up to EUR10 million and the EUR156 million factoring facilities). -- S&P's valuation of the business as a going concern and material guarantor coverage tested at 80% of consolidated EBITDA support recovery prospects. -- S&P said, "In our hypothetical default scenario, we assume a loss of major customers or a rise in competition leading to market share losses, or an inability to effectively pass through costs. We view the business as a going concern given its position as a market leader in private-label food and beverage manufacturing in the U.K. and Italy." Simulated default assumptions -- Year of default: 2028 -- Jurisdiction: Italy -- Emergence EBITDA: About EUR106 million -- EBITDA multiple: 6.0x, in line with standard sector assumption Simplified waterfall -- Gross enterprise value: Approximately EUR634 million -- Net recovery value for waterfall after administrative expenses (5%): EUR602 million -- Priority claims: About EUR210 million [1] -- Senior secured debt claims: EUR700 million [2] --Recovery expectations: 50%-70% (rounded to 55%) -- Recovery rating: '3' [1] RCF assumed to be 85% drawn at default and factoring lines used at 60% at time of default. [2] All debt amounts include six months of prepetition interest. OMNIA TECHNOLOGIES: S&P Affirms 'B' ICR, Outlook Stable ------------------------------------------------------- S&P Global Ratings affirmed its 'B' ratings on Italy-based beverage bottling and processing machine manufacturer Omnia Technologies SpA (Omnia) and its senior secured notes, including the currently proposed add-on. The recovery rating on the notes is '4', indicating average recovery (rounded estimate: 45%) prospects in the event of payment default. S&P said, "The stable outlook indicates that we expect Omnia to quickly integrate its acquisitions, enabling it to realize meaningful synergies. We forecast that adjusted EBITDA margins will exceed 12% from 2025. We also expect our adjusted debt-to-EBITDA ratio to be around 6.0x in 2025, and well below this level thereafter. The stable outlook incorporates our forecast that FOCF will consistently be positive from 2025 and that our adjusted funds from operations (FFO) interest coverage ratio for Omnia will remain comfortably above 2.0x." Omnia plans to issue a EUR100 million fully fungible tap to the EUR500 million senior secured floating rate notes due 2031. The proceeds will be used to repay the EUR45 million of drawn super senior revolving credit facility (RCF) and EUR34 million of other indebtedness, add about EUR17 million to cash on the balance sheet, and pay estimated transaction fees of EUR5 million. S&P said, "Pro forma the transaction and assuming some bolt-on acquisitions in 2025, which under our base case will contribute EUR5 million EBITDA, we anticipate an S&P Global Ratings adjusted debt to EBITDA of 6.5x in 2025 and 5.8x in 2028 (about 6.2x in 2025 and 5.8x in 2026 previously). Thereby showing reduced rating leeway under our current rating positioning. We also expect free operating cash flow (FOCF) will turn positive this year at about EUR5 million-EUR10 million and reach about EUR30 million in 2026. "We anticipate that the modest increase in debt will be broadly credit neutral, however the company's current rating leeway is limited. Pro forma the transaction, Omnia's capital structure will consist solely of the upsized EUR600 million senior secured notes resulting in a moderate debt increase compared to our former publication. From a leverage standpoint, the increase in debt is only partly mitigated by the company's expected adjusted EBITDA in 2025 of EUR101 million. This should result in S&P Global Ratings-adjusted EBITDA of 6.5x in 2025 and 5.8x in 2026 (compared to 6.2x and 5.8x we were previously expecting). However, the higher level of debt makes the deleveraging path even more dependent on successful business integration and the realization of synergies, limiting the company's ability to absorb potential delays or setbacks in achieving these synergies without risking a negative impact on the 'B' rating. "We forecast Omnia's revenues to reach EUR793 million in 2025, achieving a critical size in a fragmented industry. Omnia's pro forma revenue for the last 12 months increased to EUR740 million as of March 31, 2025, from EUR725 million for the fiscal year 2024 (ended Dec. 31). This growth was primarily driven by increased volumes supported by favorable order intake and growth in the after-sales business, from which Omnia generated about 26% of its revenue. For 2025 and 2026, we anticipate organic growth of about 3%-3.5% annually driven by investment in innovation and automation by large players in the beverage industry, cross-selling opportunities, and aftermarket activities, thanks to approximately 30,000 installed units. In addition, we assume that bolt on acquisitions will contribute about EUR40 million pro forma sales in 2025. However, in our view, growth will be tempered by Omnia's significant exposure to the wine segment, which represented 29% of the 12-month revenues as of March 31, 2025. We consider the wine market to be the most exposed to downside risk, driven by the global decline in wine consumption, the potential impact of climate change on certain vineyards, and, more recently, the threat of U.S. tariffs. Italy-based wine producers, whose largest export market is the U.S., could face a period of heightened uncertainty should demand from the U.S. market significantly decline amid an escalation in trade tariffs. That said, the company's exposure to the broader beverage spectrum and other geographies should help offset softness in wine-related demand. "We anticipate that Omnia's EBITDA will increase to about EUR101 million in 2025 before improving to about EUR112 million in 2026. The company's S&P Global Ratings adjusted EBITDA reached EUR62 million in 2024 (including 12 months of contributions from the 2024 acquisitions), however significantly hindered by one-off cost that we calculate at EUR35 million. We estimate that one-off costs will decrease significantly this year to EUR15 million, mainly due to lower M&A and nonrecurring consultancy costs. We expect the company to generate synergies of EUR10 million in 2025 and benefit from incremental contribution from already identified M&A that we anticipate will close by the end of 2025--which we estimate at EUR5 million and that we did not previously expect. Leverage will thus continue to be dependent on synergy realization and related nonrecurring cost. Therefore, if synergy realization takes longer than expected due to unanticipated setbacks, EBITDA could take a hit, which would ultimately delay deleveraging. However, Omnia's recent history indicates that it can successfully integrate businesses. Since the entry of Investindustrial in 2020, the company has acquired 25 companies and realized approximately EUR38 million in revenue and cost-saving synergies. We also understand all companies acquired before 2024 have been fully integrated, and that the company is progressing well in its path of integrating companies acquired within the last 18 months. As a result of a step up in absolute EBITDA, we anticipate the S&P Global ratings-adjusted EBITDA margin to improve to about 12.7% in 2025 (from 8.5% in 2024) and 13.8% in 2026. "We expect FOCF to turn positive in 2025 at about EUR5 million-EUR10 million and reach about EUR30 million or above from 2026 onward. We forecast that Omnia's FOCF will reach approximately EUR7 million in 2025, increasing to at least EUR30 million annually from 2026. We consider that 2024 reported FOCF is not representative because of large M&A and transactions through the year. We think that the significant increase in EBITDA, along with the new consolidation perimeter, will be the primary drivers of FOCF turning positive. We expect that capital expenditures (capex) could remain at about EUR20 million in 2025, reflecting the company's ambitious growth and synergy realization plan. "Our rating on Omnia is constrained by the group's private equity ownership. Although we forecast that adjusted debt to EBITDA should significantly improve to below 6.0x from 2026, we also consider that the group is owned by a financial sponsor. As such, we cannot rule out potential incremental debt, given the company's demonstrated appetite for further consolidation through mergers and acquisitions. We expect the company will pursue bolt-on acquisitions, and that in 2025 we estimate it could spend approximately EUR40 million on new M&A, in addition to EUR29 million for deferred consideration repayments. A more aggressive than anticipated financial policy, reflected in a further increase in debt or in a higher tolerance for leverage, would put downward pressure on our rating. "The stable outlook indicates that we expect Omnia to quickly integrate its acquisitions, enabling it to realize meaningful synergies. We forecast that adjusted EBITDA margins will exceed 12% from 2025. Furthermore, we expect our adjusted debt-to-EBITDA ratio to be around 6.0x in 2025, and well below this level thereafter. The stable outlook also incorporates our forecast that FOCF will consistently be positive from 2025 and that our adjusted FFO interest coverage ratio for Omnia will remain comfortably above 2.0x." S&P could lower the rating if Omnia's debt to EBITDA is materially weaker than the forecast above, because: -- Demand is weaker than expected; -- The company fails to generate synergies from its acquisitions; or -- Omnia unexpectedly increases debt by a material amount to fund acquisitions or pay dividend distributions. S&P could also lower the rating if: -- FOCF remains negative in 2025, with little prospect of recovery; or -- FFO cash interest coverage is below 2.0x. S&P could raise the rating if: -- Omnia improves its revenue base and end-market exposure, while also improving its current margin profile reaching a level comfortably in the mid-teens under any market conditions; -- Debt to EBITDA improves and remains consistently below 5.0x, supported by a commensurate financial policy; and -- FOCF generation improves, such that FOCF to debt is sustainably above 5%. =================== L U X E M B O U R G =================== GARFUNKELUX HOLDCO 2: Moody's Ups CFR to 'Caa2', Outlook Stable --------------------------------------------------------------- Moody's Ratings has upgraded Garfunkelux Holdco 2 S.A.'s (Garfunkelux) corporate family rating to Caa2 from Caa3 and affirmed Garfunkelux Holdco 3 S.A.'s senior secured debt ratings of Caa3. Concurrently, Moody's assigned Caa3 ratings to the new EUR968 million senior secured notes due in 2028 and EUR467 million floating rate senior secured notes due in 2029 issued by Garfunkelux Holdco 3 S.A. The issuer outlooks changed to stable from negative. The rating action is triggered by Garfunkelux announcing on 25 June 2025[1] to have completed its debt restructuring. The transaction involved the firm exchanging GBP1.6 billion of senior secured notes equivalent for GBP1.2 billion equivalent of new notes and EUR250 million of new holding company payment in kind (PIK) notes due in 2029 as well as repaying a portion of outstanding notes. Garfunkelux also issued EUR250 million of new money notes due in 2028, which will rank senior to the new senior secured notes and can be used for purchasing new notes. Subsequent to the action, Moody's will withdraw the Caa3 ratings for Garfunkelux Holdo 3 S.A.'s existing senior secured notes and the senior secured foreign currency ratings following their delisting. RATINGS RATIONALE The upgrade of Garfunkelux's CFR to Caa2 mainly reflects the strengthening of its liquidity and funding profile, following the successful refinancing and a maturity extension by around 3 years of the company's notes and its revolving credit facility (RCF) to 2028 and 2029. However, Moody's considers that the restructuring has led to a loss for bondholders and Moody's classify the recapitalisation as a distressed exchange default. Following the debt restructuring, Moody's expects the company's leverage ratio, which Moody's calculates as 6.3x as of March 2025 including the new money notes, will improve but remain elevated at 6.0x based on trailing twelve months EBITDA as bondholders will receive EUR250 million of holding company PIK bonds which will be issued outside of the rated entity. Moody's expects leverage to be lowered further if the company uses the new money notes of EUR250 million to reduce the amount of senior secured debt outstanding. The Caa2 CFR does still reflect significant constraints on the company's credit profile from weak profitability, cash flows and tangible equity deficit. Moody's expects the company's leverage and interest coverage and profitability to remain challenged by higher funding costs and by the need to continue investing in portfolio acquisitions to grow its cash generation. In addition, the company has also undertaken several off balance sheet asset sales, which reduce the amount of cash flow generative assets it has, thereby weighing on future profitability. The assigned Caa3 senior secured debt ratings of Garfunkelux Holdco 3 S.A.'s newly issued notes reflect the Caa2 positioning of the CFR and the priorities of claims in the company's liability structure. As part of the debt restructuring the senior secured debt notes now rank lower and face higher loss severity than previously as the EUR250 million of new money notes rank above senior secured debt classes but junior to super senior debt classes such as the RCF. The affirmation of the senior secured ratings of Garfunkelux Holdco 3 S.A.'s existing bonds at Caa3 prior to their delisting remains based on an expected loss approach, reflecting the anticipated loss experience to bondholders in the context of the overall debt restructuring. OUTLOOK The outlook is stable, reflecting Moody's expectations that the company's credit fundamentals will remain challenged over the next 12 to 18 months and commensurate with a Caa2 CFR. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Garfunkelux's CFR could be upgraded if the company's financial performance shows substantially strong improvement, as evidenced by consistently positive earnings and improved cash flows, and if its Debt/EBITDA leverage is reduced substantially. The senior secured debt ratings could be upgraded because of 1) an upgrade of Garfunkelux's CFR or 2) changes to the liability structure that would increase the amount of debt considered junior to the notes. Garfunkelux's CFR could be downgraded if its financial performance materially weakens and the firm's profitability, cash flow and interest coverage deteriorate. The senior secured debt ratings could be downgraded due to 1) a downgrade of Garfunkelux's CFR or 2) changes to the liability structure that would increase the amount of debt considered senior to the notes or reduce the amount of debt considered junior to the notes. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Finance Companies published in July 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. GARFUNKELUX HOLDCO 2: S&P Upgrades ICR to 'CCC+' ------------------------------------------------ S&P Global has raised to 'CCC+' from 'D' its issuer credit rating on Garfunkelux Holdco 2 S.A. (Lowell) and assigned 'CCC+' issue rating to the company's new senior secured notes. S&P said, "The stable outlook indicates that we do not expect Lowell to need to make significant debt repayments over the next 12 months. Therefore, we anticipate that it will maintain adequate liquidity and will generate substantial cash flow from its collections and the sale of assets to service its debt." Although the recent debt restructuring enabled Lowell to reduce its debt by almost GBP200 million and extend its debt maturity profile by roughly three years, its financial leverage is still high. S&P said, "Over the next three years, we expect Lowell's shrinking asset base to weigh on its EBITDA, and thus its leverage will remain very high, despite the planned debt repayments. In our view, Lowell will depend on favorable economic and market conditions to refinance the debt due within three years without a new distressed exchange." The completed restructuring enabled Lowell to improve its debt maturity profile and reduce liquidity risks. Lowell has completed the exchange of its senior secured notes for: -- EUR1.43 billion (about GBP1.22 billion) of new senior secured notes issued by Garfunkelux Holdco 3 S.A., split into notes maturing in November 2028 that pay a fixed rate of 9.5% and notes maturing in May 2029 that pay a floating rate (based on EURIBOR plus 7.446%). -- EUR292 million (about GBP250 million) of new notes due in May 2030 and pay a payment-in-kind (PIK) coupon of 10.48%. These new notes issued by a new holding company Garfunkelux Holdco 4 S.A. and are structurally subordinated to the EUR1.43 billion of senior secured notes issued by Garfunkelux Holdco 3. -- GBP165 million of cash paid down at par on the day the transaction takes effect. As a result of the restructuring, Lowell has not only extended its debt maturity by roughly three years, but also will have liquidity of more than GBP200 million, including GBP184 million from the new money notes (after a GBP30 million repayment to the lenders of the revolving credit facility [RCF]). S&P views the new money notes as leverage neutral because the proceeds are to be held in escrow and could be used to repay the new senior secured notes over next 12 months. Lowell's leverage remains high after the restructuring. S&P estimates that the group's net debt was close to GBP2.47 billion, immediately after the recapitalization. Its S&P Global Ratings-adjusted EBITDA ratio remained close to 10.5x. Gross debt, after the restructuring, includes: -- EUR1.434 trillion (about GBP1.226 trillion) of new senior secured notes; -- GBP342 million of RCF and term loans; -- EUR250 million (about GBP214 million) of new money notes; -- EUR292 million (about GBP250 million) of PIK notes issued by the new holding company; -- GBP655 million of securitized loans; and -- GBP74 million of lease liabilities and defined benefit obligations. S&P said, "We include the EUR292 million of PIK notes issued by the new holding company in Lowell's gross debt. This is because we consider the new holding company, Garfunkelux Holdco 4 S.A., to be integral to the group's new perimeter, and that repayment of these notes will ultimately depend on cash flows generated by the operating company. That said, the new notes are PIK, which alleviates the pressure on the operating company's liquidity created by the need to service this debt. "In calculating Lowell's gross debt, we exclude about GBP107 million of co-investor debt. We also net the gross debt with the GBP184 million of cash held at escrow (the remaining proceeds of the new money notes). "Adjusted leverage remains elevated because Lowell's gross debt is high and because its adjusted EBITDA is declining. The group intends to continue to sell assets as part of its balance sheet velocity programs, and we anticipate that new investments will be insufficient to maintain a smaller asset base. "There is a significant difference between Lowell's own reported leverage and that adjusted by S&P Global Ratings. This is because, when calculating adjusted EBITDA, we exclude the proceeds received from asset sales and we add back only 50% of portfolio amortization to the reported EBITDA. "Despite lower short-term financial risks, Lowell is highly dependent on favorable market conditions to reduce its leverage and refinance its debt over the long term. Despite lower short-term financial risks, we forecast that adjusted EBITDA to debt will still be 10x-11x at the end of 2027. We anticipate that further asset sales will bring in GBP100 million-GBP150 million a year, and that Lowell will use the proceeds to reduce debt. However, EBITDA will also decline, because Lowell's expected remaining collections will also be lower. "We regard the potential repayment of operating company debt from the GBP184 million held in escrow for this purpose as leverage neutral--we already net the group's debt against the money held at escrow. Therefore, we consider that Lowell's capital structure after its recapitalization may not be sustainable in the long term unless there is a substantial improvement in the company's performance. "The group will have to repay at least GBP400 million of operating company debt, in the form of the RCF and senior secured notes, by May 31, 2028. In our view, refinancing its public debt within three years without triggering a new distressed exchange represents a significant challenge for the group. That said, we anticipate that Lowell will remain a significant market player, with a particularly strong position in the U.K., even though its asset base will likely shrink further. "The stable outlook indicates that we do not expect Lowell will need to make significant debt repayments over the next 12 months. Therefore, we anticipate that it will maintain adequate liquidity and will generate sufficient cash flow from its collections to service its debt. "We could lower the rating within the next 12 months if Lowell faces a significant liquidity constraint; for example, if collections are much lower than expected and the company's servicing revenue declines so much that its ability to repay debt is constrained. "We consider an upgrade over the next 12 months to be unlikely." SK INVICTUS II: Moody's Affirms 'B2' CFR, Outlook Stable -------------------------------------------------------- Moody's Ratings affirmed SK Invictus Intermediate II S.a.r.l.'s (renamed to Perimeter Holdings, LLC and dba Perimeter Solutions, Inc.) B2 Corporate Family Rating and B2-PD Probability of Default Rating. Moody's also affirmed the B2 rating on its senior secured notes due 2029 and the Speculative Grade Liquidity Rating (SGL) is maintained at SGL-2. The outlook is stable. RATINGS RATIONALE The rating affirmation reflects Perimeter Solutions' strong recent performance and strengthened financial profile, counterbalanced by volatile earnings due to unpredictable wildfire seasons and company's aggressive financial policy prioritizing business acquisitions and shareholder returns. Perimeter Solutions generated better than expected results in 2024, with total revenue and Moody's adjusted EBITDA of $561 million and $261 million, up by more than 70% and 150% from prior year respectively. Fire Safety segment contributed majority of the earnings increase driven by rising wildfire severity and execution of its value creation strategy across business operations and value-based pricing, while the Specialty Products segment also recorded solid improvements with the end of destocking from key customers during the year. Perimeter Solutions' leverage as measured by Moody's adjusted debt/EBITDA improved to 2.7x, down sharply from more than 7.0x in 2023. While the company's financial profile benefited from strong 2024 results, Moody's do not expect the credit metrics will be maintained at current level because of the volatile nature of wildfires and company's growth oriented financial policy. Management expects that changes to its Fire Safety contracts should reduce earnings volatility going forward. However, given the variability of sales and earnings in past wildfire seasons, Moody's needs more time to see the actual impact on credit metrics, which have been extremely volatile over the past few years. Assuming a milder wildfire season in North America in 2025, Perimeter Solutions' adjusted debt/EBITDA could rise to 3.0x-3.5x by Moody's estimates. At the same time, the credit metrics will be highly sensitive toward company spendings on business acquisitions and shareholder returns. Perimeter Solutions is actively looking for acquisition opportunities. The company just spent a total of $43 million to acquire an unrelated business focusing on printed circuit boards in Q4 2024 and Q1 2025. It also had about $100 million share buyback capacity remaining at end 2024. Moody's expects the company's leverage will rise toward 4.0x-5.0x range as it deploys free cash flows and adds incremental leverage to support business investments, acquisitions, and shareholder distributions. Perimeter Solutions' credit profile reflects its strong market positions in both Fire Safety and Specialty Products segments. Perimeter Solutions is the main supplier of fire retardants to the US government and a leading supplier to key state and municipal fire agencies, as well as Canadian provinces and Australia. In the Specialty products segment, Perimeter Solutions benefits from an industry which has a limited number of suppliers and the company's position as the only supplier with operations in both North America and Europe. Both segments have high barriers to entry including extensive qualification requirements and require highly specialized formulations, which increase customers' switching costs and lead to long-term customer relationships. Perimeter Solutions also benefits from strong margins and an asset-light business model that contributes to its ability to generate substantial free cash flow during a normalized operating environment. Perimeter Solutions' credit profile is constrained by its small size and limited product diversity, with a substantial portion of earnings attributed to the Fire Safety segment, which is difficult to predict due to the nature of wildfires. Further tempering Moody's credit view is the large amount of debt on the balance sheet relative to the size of the asset base and company revenues. The credit profile also considers the potential increase in leverage due to acquisitions and investments, which is a concern given the volatility of the Fire Safety business. Moody's believes that expansion into new and unrelated business lines presents elevated business risk unless done at a slow pace relative to free cash flow generation. Perimeter Solutions has a good liquidity profile (SGL-2) with cash on the balance sheet of roughly $200 million at March 31, 2025, expectations for positive free cash flow generation, and an unrated $100 million revolving credit facility, with no outstanding borrowings as of March 31, 2025. The credit agreement for the revolving credit facility contains a springing first lien net leverage ratio covenant that is triggered if revolver borrowings exceed 35% of utilization. Moody's don't expect that the covenant will be triggered over the next 12 months. The debt capital is comprised of an unrated $100 million first lien senior secured revolving credit facility and $675 million 5% senior secured notes due 2029. The B2 rating on the senior secured notes, in line with the B2 CFR, reflects a first lien position on substantially all assets with no loss absorption from junior debt in the capital structure. The stable outlook reflects Moody's expectations that Perimeter Solutions' financial leverage will rise but remain appropriate for its ratings as the company utilizes free cash flows and leverage capacity to pursue business growth and shareholder distributions over the next 12-18 months. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Moody's could upgrade the ratings if the company continues to increase business scale and diversity, reduces earnings volatility, and refrains from any large debt-funded acquisitions or shareholder distributions. Credit metrics that may support upgrade include annual EBITDA above $150 million and adjusted leverage below 4.5x in weak wildfire season, and free cash flow-to-debt sustained above 10%. Moody's would likely consider a downgrade if there are some large debt-financed acquisitions or shareholders distributions that lead to material deterioration of financial profile. Credit metrics indicative of downward pressure include adjusted leverage is sustained above 5.5x, free cash flow remains negative for an extended period, or available liquidity falls below $60 million. ESG CONSIDERATIONS Environmental, social, and governance factors are important factors influencing Perimeter Solutions' credit quality, but not driver of the actions. Perimeter Solutions' Credit Impact Score of (CIS-4) indicates that the rating is lower than it would have been if ESG risk exposures did not exist. The company's CIS reflects its governance risks, which includes a financial strategy that has maintained a significant amount of debt in the capital structure and a capital allocation plan focused on M&A and share repurchases. It also reflects its environmental risk exposure with its dependence on and potential impacts on water and natural capital in its production process and services. Perimeter Solutions, Inc. is a specialty chemical producer operating in two segments: Fire Safety and Specialty Products. The Fire Safety business involves formulating and manufacturing fire safety chemicals, including Phos-Chek(R) fire retardants, Class A and B foams, and water enhancing gels for wildland, military, industrial, and municipal fires. The Specialty Products business includes the production of phosphorus pentasulfide mainly used in lubricant additives as well as the newly acquired PCB production and services. Perimeter Solutions had revenue of $561 million in 2024. The principal methodology used in these ratings was Chemicals published in October 2023. Perimeter Solutions' B2 rating is two notches below the scorecard-indicated outcome based on its financials at the end 2024. The difference reflects the unusually strong earnings in 2024 and Moody's expectations that the company's credit metrics will moderate from this level due to volatilities of wildfire season and debt-funded spendings on business acquisitions. ===================== N E T H E R L A N D S ===================== SIGMA HOLDCO: Fitch Rates EUR400MM Sub. Notes 'CCC+(EXP)' --------------------------------------------------------- Fitch Ratings has assigned Sigma Holdco BV's planned EUR400 million 5.75-year senior subordinated notes an expected 'CCC+(EXP)' rating with a Recovery Rating of 'RR6'. The final rating is subject to the transaction completion and final documentation conforming to information already received. The senior notes, to be issued by the parent of the Flora group, will be structurally and contractually subordinated to the group's senior secured indebtedness. The notes' security package mirrors that of the current unsecured notes, mainly consisting of the shares in Flora Food Group B.V. held by Sigma Holdco. The proceeds of the notes will be used for general corporate purposes, including refinancing EUR300 million equivalent senior subordinated notes due in 2026. The rating applies only to the specific instrument. Sigma Holdco's IDR and its debt ratings, alongside the rated debt at Flora Food Management BV and Flora Food Management US Corp, are unaffected by this action. Key Rating Drivers See Rating Action Commentary (RAC) dated 6 June 2025: 'Fitch Affirms Flora Food Group at 'B'; Outlook Stable'. Peer Analysis Key Assumptions Recovery Analysis The recovery analysis assumed that Flora Food Group would remain a going concern in restructuring and that it would be reorganised rather than liquidated in bankruptcy. Fitch assumed a 10% administrative claim in the recovery analysis. Fitch estimated a sustainable, post-reorganisation EBITDA of EUR560 million, on which Fitch bases the enterprise value. Fitch also assumed a distressed multiple of 6.0x, reflecting Flora Food Group's large size, leading market position and high inherent profitability compared with sector peers'. Fitch assumed its EUR700 million revolving credit facility would be fully drawn in a restructuring. Its waterfall analysis generated a ranked recovery for the planned subordinated notes creditors in the 'RR6' band, indicating a 'CCC+(EXP)' debt rating, two notches below the IDR based on current metrics and assumptions. RATING SENSITIVITIES Liquidity and Debt Structure Issuer Profile Flora Food Group is the world's largest multi-category plant-based food producer, including spreads and butter operating in more than 100 countries. 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 Flora Foods Group has an ESG Relevance Score of '4' for Exposure to Social Impacts due to a deterioration in its revenue performance from consumer concerns in some markets about the healthiness of its products, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery ----------- ------ -------- Sigma Holdco BV Subordinated LT CCC+(EXP) Expected Rating RR6 SIGMA HOLDCO: Moody's Rates New Secured Notes Due 2031 'Caa1' ------------------------------------------------------------- Moody's Ratings has assigned Caa1 rating to the proposed new senior secured notes due 2031 to be issued by Sigma Holdco BV (the company), the parent company of Flora Food Management B.V. (previously known as Upfield B.V.), a global manufacturer of plant butters and spreads, plant creams, liquids, and plant cheeses. Sigma Holdco BV's B2 long-term corporate family rating (CFR) and the B2-PD probability of default rating (PDR), together with the B2 backed senior secured ratings at its subsidiary Flora Food Management B.V. are unaffected. The outlook on both entities is also unaffected and is stable. The rating action reflects Sigma Holdco's planned issuance of EUR400 million backed senior secured global notes, the proceeds of which will be principally used to refinance the remaining outstanding of its backed senior unsecured notes of EUR301 million equivalent issued by Sigma Holdco BV and for general corporate purposes. "The Caa1 rating on the new proposed backed senior secured global notes reflects the contractual and structural subordination of the notes to the term loans, the RCF and the senior secured notes sitting at Flora Food Management B.V." said Paolo Leschiutta, a Moody's Ratings Senior Vice President and lead analyst for Sigma Holdco BV. RATINGS RATIONALE The company's CFR of B2 reflects its good operating performance since 2023, despite challenging macroeconomic conditions and the significant pass-through of high raw material costs to customers in the first half of 2023, which resulted in only modest volume attrition. Up to March 2025, the company has demonstrated a good ability to retain most of the price increases and to contain volume attrition. Although revenues in 2024 and early 2025 were slightly down, largely due to higher promotion activity and some volume pressure, the company reported EBITDA remain steady thanks to lower commodity prices, the achievement of some value creation savings, and lower one-off costs. Stronger earnings are resulting in improved cash generation, which, however, is offset by higher interest costs since the company's refinancing over the last two years. Moody's notes that the company's financial leverage and interest cover remain weak for the rating, although these are partially compensated by the strong business profile. In this contest the planned senior bond issue will further extend the debt maturities of the company, with no debt due before 2028, and result in lower cost of debt which should result in better interest cover and cash generation. The company's Moody's-adjusted financial leverage was 7.2x as of March 2025, and its EBITA interest cover at 1.2x, which remain weak for the rating category. Moody's expects some, albeit marginal, improvements in both ratios during 2025 driven by ongoing good performance and free cash flow generation, which should allow for some leverage reduction. The rating remains supported by the company's strong business profile, highlighted by its significant scale, strong portfolio of brands, leading global market positions with extensive geographical diversification, and good growth potential offered by product innovation and expansion into adjacent plant-food categories like cheese. The rating is also supported by the company's positive free cash flow generation. Moody's also notes the progress the company has made in recent years in rejuvenating its product offering from traditional plant spreads to plant creams and plant cheeses, focusing on innovation and on products that are experiencing rapid growth in key markets like the US and the UK. LIQUIDITY The company's liquidity is good, with cash on balance sheet of EUR218 million as of March 2025, full availability under its EUR700 million RCF as of March, as utilization under the facility were repaid in 2024, and Moody's expectations of positive FCF. The company maintains a comfortable covenant capacity, with net senior secured leverage at 5.9x as of March 2025, against a maximum level of 8.5x. With the proposed transaction the company has completed the refinancing of its backed senior unsecured notes that were due in May 2026. Following the repayment of this, the bulk of the company's capital will be due in 2028 and part in 2029, EUR1.12 billion of senior secured notes. STRUCTURAL CONSIDERATIONS The B2-PD probability of default rating, in line with the B2 CFR, reflects a 50% corporate family recovery assumption applicable for mixed bank/bond debt structures. The B2 ratings of the backed senior secured term loans, the backed senior secured RCF and the backed senior secured notes reflect the first-lien nature of these facilities with no structural subordination because of the guarantee structure and the fact that these instruments represent most of the debt of the group. However, the security package only covers significant assets in the UK and the US, and share pledges, intercompany receivables and some bank accounts in other jurisdictions. The Caa1 rating on the new proposed backed senior secured global notes reflects the contractual and structural subordination of the notes to the term loans, the RCF and the senior secured notes sitting at Flora Food Management B.V. RATIONALE FOR STABLE OUTLOOK The stable outlook reflects Moody's expectations that the company will sustain its good operating performance and free cash flow generation which will allow for modest debt reduction, such that its Moody's-adjusted debt/EBITDA will decline below 7x over the next 12-18 months and its Moody's-adjusted EBITA interest coverage ratio improves towards 1.5x. The stable outlook also assumes that the company will successfully address its upcoming debt maturities with the proposed transaction. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING Moody's could upgrade the rating if the company demonstrates solid top-line growth with improving profitability, leading to significant positive FCF generation and a reduction in leverage (Moody's-adjusted gross debt/EBITDA) towards 6.5x, both on a sustained basis. Before an upgrade, the company will need to reach and maintain a Moody's-adjusted EBITA interest cover above 2.0x. Moody's could downgrade the rating if the company fails to maintain the current level of earnings, leading to negative FCF over the next 12-18 months, which would weaken liquidity, as illustrated by reduced availability under its revolving credit facility (RCF) or a significant deterioration in covenant capacity. Quantitatively, Moody's can downgrade the rating if the company's leverage, on a Moody's-adjusted gross debt/EBITDA basis, remains above 7.5x; its Moody's-adjusted EBITA interest coverage ratio remains below 1.5x; or it fails to address its maturities in a timely manner. PRINCIPAL METHODOLOGY The principal methodology used in this rating was Consumer Packaged Goods published in June 2022. The company's CFR of B2 is two notches below the scorecard-indicated outcome of Ba3, based on LTM ratios as of March 2025. The differential between the scorecard and the actual rating overweighs the high leverage, the weak interest coverage and the company's need to demonstrate a sustained recovery in profitability and cash generation. COMPANY PROFILE Flora Food Management B.V, formerly known as Upfield B.V., is global leader in plant-based foods, operating in four categories of plant butters and spreads, plant creams, liquids and plant cheeses, with most of its revenue coming from the sale of plant spreads. In 2024, the company reported revenue of EUR3.1 billion and company-normalised EBITDA of EUR861 million. During the twelve months to March 2025, the company reported EUR3.1 billion of revenues and normalised EBITDA of EUR844 million. The company operates largely in retail (89% of revenue) and partially in food service. Flora Food is geographically diversified across both developed and emerging markets, with no significant concentration in any one market. Its largest markets are the US, Germany, the UK and the Netherlands. Flora Food is controlled by funds managed and advised by Kohlberg Kravis Roberts & Co. Inc. (KKR). SIGMA HOLDCO: S&P Rates New EUR400MM Senior Unsecured Bonds 'CCC+' ------------------------------------------------------------------ S&P Global Ratings assigned its 'CCC+' issue rating to the EUR400 million proposed senior unsecured bonds to be issued by Sigma Holdco B.V. (B/Stable), the ultimate parent of Flora Food Group, a global producer of plant-based spreads, butter, cheese, and creams. S&P's recovery rating on the new subordinated debt is '6', with indicative recovery prospects of 0%, reflecting the subordinated nature of the notes. The new debt will rank pari-passu with the existing senior unsecured notes (rated 'CCC+'), which will be repaid in full with the proceeds from the new bonds in the amount of approximately EUR300 million. The remaining amount will sit as cash on the balance sheet for general corporate purposes. S&P said, "We estimate that the transaction will be roughly neutral to Flora Food's credit metrics, given the relatively small size and the expected use of proceeds. Under our base case, we continue to see the group gradually deleveraging, with S&P Global Ratings-adjusted debt to EBITDA around 7.0x in 2025 and 6.5x in 2026, and healthy generation of free operating cash flow." =========== P O L A N D =========== DL INVEST: S&P Assigns Preliminary 'B+' LT ICR, Outlook Stable -------------------------------------------------------------- S&P Global Ratings assigned its preliminary 'B+' long-term issuer credit rating to Poland-based DL Invest Group PM S.A. (DL Invest) and its preliminary 'B+' rating to its proposed senior unsecured bond. The recovery rating is '3' (75%). The stable outlook reflects S&P's view that the group's EBITDA and cash flow generation will significantly increase over the next 12 months, mainly thanks to the full-year rental contribution from recent asset acquisitions and solid demand for its assets. DL Invest owns and operates a relatively small property portfolio of about EUR861 million (Polish zloty [PLN] 3.7 billion, as of Dec. 31, 2024), and intends to increase this to about EUR1.4 billion-EUR1.5 billion by year-end 2026 (about EUR1.0 billion as of June 2025) through asset acquisitions and project developments. The company's portfolio mainly comprises high-quality logistic assets (85% of property portfolio value as of Dec. 31, 2024), with the remainder spread across mixed-use (10%) and retail assets (5%), all in the Polish market. DL Invest's business risk assessment is constrained by its relatively small portfolio and limited geographic diversity (concentrated in Poland). The company owns and manages 40 assets (19 logistics assets, eight mixed-use assets, and 13 retail assets), valued at about EUR861 million (PLN3.7 billion), with 896,000 square meters of gross leasable area (GLA) as of Dec. 31, 2024. Its growth strategy mainly includes project developments and planned sizable acquisitions totaling about EUR350 million-EUR400 million over the next 12-18 months. S&P therefore expects DL Invest's portfolio to expand to close to EUR1.4 billion-EUR1.5 billion by year-end 2026, (about EUR1.0 billion as of June 2025). DL Invest is geographically concentrated solely in Poland and a significant portion of this exposure is in south Poland. The top 10 tenants contribute about 52% of the total annual rental income as of Dec. 31, 2024, and its largest tenant, Inditex, accounts for roughly 20% of rental income across multiple leases, followed by Stokrotka (4.1%) and InPost (3.0%). Overall, the company serves nearly 400 tenants, primarily multinational companies operating across various industries and exporting beyond Central and Eastern Europe. The portfolio also exhibits some segment diversity, and S&P views positively DL Invest's exposure to the industrial and logistics sectors, which benefit from sustained demand for warehousing and distribution space. DL Invest's portfolio benefits from its high-quality assets, solid operating performance, and long weighted-average lease maturity. Most of the properties are green certified and newly built, with 85% of the buildings developed within the past five years and 15% built between the past six and 10 years. They are mainly located in key logistics corridors and city centers. The company has demonstrated a strong occupancy rate of 98% in its logistics segment over the past year, surpassing some rated logistics real estate companies and the Polish market's average vacancy rate of about 7.0%-9.0%. Additionally, its cash collection rate has aligned with the industry of about 99% of invoiced revenue. S&P understands the rent for the company's assets aligns with market averages. For logistics assets, the average rent is about EUR4.9 per square meter (sqm) per month, which is consistent with the Katowice market average of approximately EUR4-EUR5 sqm per month. In the mixed-use and retail segment, the average rent is EUR12, falling within the market range of EUR8-EUR15. The average lease maturity of about 5.5 years (6.7 years logistics, 3.5 years mixed use, and 3.9 years retail) is also in line with peers such as CTP N.V. (6.4 years, BBB-/Stable/--). DL Invest has moderate exposure to development activities and capital expenditure (capex) needs of approximately 13%-15% of its total portfolio annually, mostly related to the development or extension of assets over the next two years. S&P said, "However, we understand that the company policy is to pre-lease at least 70% of its development projects before the start of construction and reaching close to 100% space leased before delivery, which limits leasing risks at project deliveries. We understand that the level of pre-leasing as of the first quarter of 2025, before the start of the development project, was 100%." S&P said, "Our rating on DL Invest is constrained by its relatively high leverage, mainly driven by the proposed bond issuance, supporting its growth ambitions. The company's financial policy targets a maximum net LTV of 50% (temporarily reaching 55% during acquisitions), which translates into S&P Global Ratings-adjusted debt to debt plus equity of about 60%-61%, as per our 2024 calculations. However, we understand that the company will likely exceed this ratio over the next 12-18 months following its capex and acquisition pipeline. We have incorporated Emira's minority equity investment (issued at DL Invest Group S.A. Luxembourg) as debt in our analysis despite International Financial Reporting Standards treatment as 100% and we understand that the Emira equity investment issued two levels above the current bond issuer level. This investment was made in the form of preference shares and linked loan notes, with close to EUR100 million invested at a 7.2% annual dividend. Notably, the instrument has no maturity, and DL Group views Emira as a long-term strategic partner. However, the documentation indicates that Emira could exercise a redemption option after five (with an option to extend for additional one year) years for EUR175 million. For our adjusted numbers, we have included this equity investment as debt and the related dividend as interest. We understand that the Emira investment is fully subordinated to current and proposed outstanding debt issued at the DL Invest level and does not require mandatory payments. "We forecast debt to debt plus equity to increase to about 65%-66% (70% including the Emira stake at the consolidated group level) from 56.1% and the debt-to-EBITDA ratio improve to 13x-14x (14x-15x including the group level) from 14.9x as of Dec. 31, 2024. We anticipate that the company will finance its growth plans through a mix of debt and cash flow generation and that the portfolio will benefit from some positive asset revaluations. We also expect DL Invest's interest coverage to improve to about 1.4x-1.5x from 1.2x as of Dec. 31, 2024 (1.3x-1.4x, including the group level) in the next 12-18 months, thanks to the EBITDA contribution in 2025-2026 from recent acquisitions and development deliveries. "We understand that the proposed EUR350 million senior unsecured bond would be used for about EUR230 million of short-term debt repayments and about EUR120 million for asset acquisitions and capex. We anticipate that pro forma a successful bond issuance, the company's average debt maturity will be around 4.6 years (up from below 3.0 years as of Dec. 31, 2024). We also anticipate the company will improve its hedging or fixed-rate debt exposure to 80% post bond issuance from 61% currently. The company's EBITDA and absolute cash flow base would remain relatively small as we forecast it to reach about EUR43 million-EUR45 million by end of 2025, allowing limited absorption of any unforeseen events. "Our rating assessment incorporates a one-notch uplift, reflecting the company's expanding size in the short term, and solid market position in Poland. Our positive comparable rating analysis modifier leads us to apply a one-notch uplift to our 'b' anchor (the starting point in assigning an issuer credit rating) which derive the outcome of the 'B+' rating. This mainly reflects the company's business risk profile, which we view as better than other peers with a comparable rating assessment. Although our business risk profile assessment remains constrained by the relatively small portfolio size and high geographic concentration risk, we still believe DL Invest compares more favorably with peers positioned in the same business risk profile or 'b' category. We view positively the company's moderate segment diversity, and our expectations that the overall portfolio will expand to EUR1.4 billion-EUR1.5 billion over the next 12-18 months. "We view DL Invest as a core subsidiary of DL Group, and integral to its strategy, and we therefore link DL Invest to the group's creditworthiness. Given DL Group's 100% ownership and full consolidation of DL Invest's financial accounts, we believe DL Group is unlikely to sell the company. DL Group's flexible dividend policy, which envisions no dividend from DL Invest during its growth plan, further supports our view that the group will provide support to DL Invest under foreseeable circumstances. We also note that DL Invest's decision-making process is heavily influenced by DL Group, with all decisions jointly approved by the management and shared board. Since our view of DL Group's credit quality is broadly similar, we see no rating differential between the two entities. "The final ratings will depend on our receipt and satisfactory review of all final transaction documentation of the proposed senior unsecured notes. Accordingly, the preliminary ratings should not be construed as evidence of a final rating. If S&P Global Ratings does not receive final documentation within a reasonable timeframe, or if final documentation departs from materials reviewed, we reserve the right to withdraw or revise our ratings. Potential changes include but are not limited to: The utilization of bond proceeds; maturity, size, and conditions of the bonds; financial and other covenants; and security and ranking of the bonds. "The stable outlook reflecting our view that the group's EBITDA and cash flow generation will significantly increase over the next 12 months, mainly thanks to full-year rental contribution from recent asset acquisitions and solid demand for its assets, resulting in S&P Global Ratings-adjusted EBITDA interest coverage of 1.3x-1.5x, debt to EBITDA at about 13x-15x, and debt to debt plus equity of close to 65% (70% including the stake held by Emira Property Fund Ltd. at the parent level as debt)." S&P could lower the ratings if: -- DL Invest fails to maintain an S&P Global Ratings-adjusted ratio of debt to debt plus equity of close to 65% (or close to 70% including our adjustment of the Emira stake as debt); -- Debt to EBITDA deviates materially from S&P's base case; or -- EBITDA interest coverage decreases to well below 1.3x. This could happen if the company's operations were to deteriorate--for example, as a result of higher vacancy or delays to the delivery of its development assets--significantly affecting its rental income and cash flow. S&P may also lower the rating if DL Invest's liquidity deteriorates, or covenant headroom tightens. S&P would raise the ratings if DL Invest's: -- Debt to debt plus equity decreases to below 65% (well below 70% including the Emira stake as debt); -- EBITDA interest coverage stays above 1.3x; -- Debt to EBITDA decreases below 13x; and -- Liquidity remains adequate, with sufficient headroom under its financial covenants. S&P could also raise its rating on DL Invest if its size and scale expands beyond its current base case, in line with higher rated peers. =========== R U S S I A =========== AGROBANK: Fitch Hikes LongTerm IDRs to 'BB', Outlook Stable ----------------------------------------------------------- Fitch Ratings has upgraded Joint-Stock Commercial Bank Agrobank's (Agro) Long-Term (LT) Foreign- and Local-Currency Issuer Default Ratings (IDRs) to 'BB' from 'BB-', and Government Support Rating (GSR) to 'bb' from 'bb-'. The Outlooks are Stable. Fitch has affirmed the bank's Viability Rating (VR) at 'b-'. The upgrade of the bank's LT IDRs follows the upgrade of the sovereign ratings of the Republic of Uzbekistan on 26 June 2025 (see "Fitch Upgrades Uzbekistan to 'BB'; Outlook Stable") and reflects its view of the Uzbek authorities' improved ability to support Agro. Key Rating Drivers Agro's LT IDRs are equalised with Uzbekistan's, reflecting Fitch's view of a moderate probability of government support, as captured by the bank's 'bb' GSR. The Stable Outlooks on the ratings reflect those on the sovereign. The bank's 'b-' VR reflects its exposure to the local operating environment, material asset-quality risks, weak profitability and limited liquidity. Policy Role: The Uzbek authorities have a high propensity to support Agro, in Fitch's view, given the bank's strategic state ownership, its status as the government's agent bank for state-subsidised lending to the agricultural sector, the low cost of potential support relative to the sovereign's international reserves, and the state's support record. Improving Operating Environment: The operating environment for Uzbek banks has materially strengthened over the past two to three years, and Fitch expects further improvements, particularly in addressing structural risks and enhancing the quality of regulation and governance. This, alongside a robust economy, should support business growth and translate into stronger earnings and capital generation, making banks' credit profiles more resilient. Therefore, Fitch has revised the outlook on the operating environment score to positive from stable. Top-Three Bank: Agrobank is the third-largest bank in Uzbekistan, accounting for 11% of sector assets and 12% of sector loans at end-1Q25. It has also actively developed a commercial corporate and SME franchise in recent years alongside its policy role. High-Risk Policy Lending: Underwriting standards at the bank are largely determined by the government, with subsidised lending, which Fitch views as higher risk, accounting for around 46% of gross loans at end-1Q25 by local GAAP. FX-adjusted loan growth was 14% on average over 2023-2024, which was broadly in line with that of the sector (13%). Additional risk stems from its considerable foreign-currency lending (29% of gross loans at end-1Q25), although its exposure is below the sector average (42%). Material Asset-Quality Risks: Impaired loans accounted for 6% of gross loans at end-2024, slightly up from 5% at end-2023, and were only 0.5x covered by total reserves. The Stage 2 loans ratio was a high 19% at end-2024, although down from 21% at end-2023. Fitch expects the impaired loans ratio to continue gradually increasing in 2025 and 2026 on loan seasoning, but to remain below 10% in its base case. Sizeable Loan Impairment Charges: Agro's net interest margin remained broadly stable at 7% in 2024 due to a slightly higher share of retail lending with higher yield. However, moderate pre-impairment profit (2024: 3.4% of average gross loans) was almost fully consumed by loan impairment charges (LICs; 3.1%). Fitch expects LICs will continue to weigh on the bank's performance, resulting in weak operating profit at around 0.5% of risk-weighted assets in 2025-2026 (2024: 0.2%). Regular State Capital Injections: Agro has received around UZS7.5 trillion in capital from the state since 2020 (including UZS1.7 trillion in 2024-1Q25) to finance its subsidised lending growth and maintain acceptable capitalisation. The regulatory Tier 1 (end-1Q25: 14.7%) and total capital (15.7%) ratios were adequately above the statutory minimums. Fitch Core Capital ratio decreased to 15% at end-2024 (end-2023: 16.3%) due to growth pressures, and Fitch expects it to decline further to below 14% in 2026, in the absence of large capital injections. Large State Funding, Limited Liquidity: State-related funding made up 38% of Agro's total liabilities at end-1Q25 (local GAAP), complemented by wholesale debt (42%; mainly long-term credit lines from international financial institutions and foreign banks) and non-state deposits (18%). Liquid assets were a limited 9% of total assets at end-1Q25, covering around 61% of non-state deposits. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Agro's GSR and IDRs would be downgraded if Uzbekistan's sovereign IDRs were downgraded. Fitch could also downgrade the bank's IDRs and notch them off the sovereign ratings if it views that the government's propensity to support the bank has reduced, for example, due to a weakening of the bank's policy role or delays in capital support. The VR could be downgraded on a material deterioration in asset quality resulting in large credit losses, and triggering a breach of minimum statutory capital requirements, if not promptly offset by new equity injections from the state. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Agro's GSR and IDRs would be upgraded if the sovereign ratings were upgraded, provided the sovereign's propensity to support the bank remains strong. An upgrade of the VR would require a sustained record of improved asset quality and profitability, alongside stable capitalisation. A strengthening of the operating environment for domestic banks would also be positive for the rating, along with other factors. OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS Agro's ex-government support (xgs) ratings exclude assumptions of extraordinary government support. The LT Foreign- and Local-Currency IDRs (xgs) of 'B-(xgs)' are equalised with the bank's VR. The Short-Term (ST) Foreign- and Local-Currency IDRs (xgs) of 'B(xgs)' are mapped to the bank's LT Foreign- and Local-Currency IDRs (xgs), respectively. Agro's senior unsecured debt ratings are aligned with the bank's Long-Term IDRs and Long-Term IDRs (xgs), respectively. OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES Any action on the xgs ratings will mirror changes to Agro's VR. The debt ratings are sensitive to changes to Agro's LT IDRs and Long-Term IDRs (xgs), respectively. The ST IDRs (xgs) are sensitive to changes to the LT IDRs (xgs). Public Ratings with Credit Linkage to other ratings Agro's IDRs are linked to Uzbekistan's IDRs. ESG Considerations Agro has an ESG Relevance Score of '4' for Governance Structure as the state of Uzbekistan is highly involved in the banks at board level and in the business. The factor has a negative impact on the bank's credit profile and is relevant for the ratings in conjunction with other factors. The bank's ESG Relevance Score for Financial Transparency has been revised to '3' from '4' given Fitch's view of improved timeliness of financial disclosures. As a result of revision, this factor is now considered to have a minimal credit impact on the entity. In addition, the bank has an ESG Relevance Score of '3' for Exposure to Environmental Impacts and Exposure to Social Impacts (a deviation from the sector guidance of '2' for comparable banks), given its focus on subsidised lending to the agricultural sector. This has only a minimal credit impact on the entity and minimal relevance for the ratings. 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 ----------- ------ ----- Joint-Stock Commercial Bank Agrobank LT IDR BB Upgrade BB- ST IDR B Affirmed B LC LT IDR BB Upgrade BB- LC ST IDR B Affirmed B Viability b- Affirmed b- Gov't. Support bb Upgrade bb- LT IDR (xgs) B-(xgs) New Rating ST IDR (xgs) B(xgs) New Rating LC LT IDR (xgs) B-(xgs) New Rating LC ST IDR (xgs) B(xgs) New Rating senior unsecured LT BB Upgrade BB- senior unsecured LT (xgs) B-(xgs) New Rating ALOQABANK: Fitch Hikes LongTerm IDRs to 'BB', Outlook Stable ------------------------------------------------------------ Fitch Ratings has upgraded Joint-Stock Commercial Aloqabank's Long-Term (LT) Foreign- and Local-Currency Issuer Default Ratings (IDRs) to 'BB' from 'BB-' and Government Support Rating (GSR) to 'bb' from 'bb-'. The Outlooks are Stable. Fitch has also affirmed the bank's Viability Rating (VR) at 'b'. The upgrade of the bank's Long-Term IDRs follows a similar action on the sovereign rating of the Republic of Uzbekistan on June 26, 2025 and reflects its view of the Uzbek authorities' improved ability to support Aloqa. Key Rating Drivers Aloqa's LT IDRs are equalised with Uzbekistan's sovereign IDRs, reflecting Fitch's view of a moderate probability of government support, as captured by the bank's 'bb' GSR. The bank's 'b' VR primarily reflects its limited franchise in the concentrated Uzbek banking sector, sizeable asset-quality risks, weak profitability and moderate capitalisation. Support Considerations: Its view on state support reflects Aloqa's majority state ownership, a solid record of capital and funding support from the state, and its new policy role as the government's agent bank for subsidised development lending to young entrepreneurs. Fitch also considers a low cost of potential support relative to the sovereign's international reserves. Improving Operating Environment: The operating environment for Uzbek banks has materially strengthened over the past two to three years, and Fitch expects further improvements, particularly in addressing structural risks and enhancing the quality of regulation and governance. This, alongside a robust economy, should support business growth and translate into stronger earnings and capital generation, making banks' credit profiles more resilient. Therefore, Fitch has revised the outlook on the operating environment score to positive from stable. Small State Bank, Corporate Focus: Aloqa was 11th among 36 banks in Uzbekistan at end-1Q25, accounting for 3% of sector assets and loans, and 5% of deposits. The bank mostly targets corporate lending, although it has recently taken steps to diversify into SME and retail lending. Concentrated Loan Book, Above-Sector Growth: The bank's corporate focus results in high single-name concentrations, with the top 20 borrowers representing 1.3x of Fitch Core Capital (FCC) at end-2024. Credit risk also stems from recent rapid lending growth, with gross loans up by 26% in 2024, double the sector's average. Rising Asset Quality Risks: The bank's impaired (Stage 3) loans ratio increased to 7.5% at end-2024 (end-2023: 6.1%) on loan seasoning, with the most notable deterioration in higher-risk car lending. Problem loans were only 0.4x reserved at end-2024, reflecting the bank's reliance on hard collateral. Further migrations from Stage 2 (end-2024: 12%) to Stage 3 loans are likely, and Fitch forecasts the impaired loans will reach 10% of gross loans in 2025-2026. Weak Operating Performance: Aloqa's net profit in 2024 was primarily driven by one-off gains, while it reported operating profit of -0.5% of risk-weighted assets (RWAs), down from 1.4% in 2023. The fall was driven by tighter margins, low operating efficiency and a higher cost of risk. Fitch expects these issues to persist into 2025-2026, and forecast operating profitability to be marginally above zero. Moderate Capitalisation, New Capital Injections: The bank's FCC ratio equalled 13% at end-2024, down by 100bp from end-2023 on rapid RWA growth. Aloqa relies on state capital contributions to support its capital ratios due to weak internal capital generation. Fitch expects the FCC ratio to remain below 15% by end-2026, despite likely further material capital support to facilitate new policy lending. Mostly Deposit Funding, Adequate Liquidity: Aloqa is primarily funded by customer accounts (67% of total non-equity funding at end-2024). Its largest customers are mostly state-related entities, mitigating risks from high deposit concentration. The share of wholesale debt is limited (about 30% at end-2024). The bank's liquid assets (21% of total assets at end-2024) covered 0.4x of customer deposits. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Aloqa's IDRs and GSR would be downgraded if Uzbekistan's sovereign IDRs were downgraded. Fitch could also downgrade the bank's IDRs and GSR and notch them off the sovereign ratings if it believes that the government's propensity to support the bank has reduced, for example due to delays in capital support, or a weakening of the policy role. The VR could be downgraded if the bank's FCC ratio drops below 12%, for example due to a sharp deterioration in asset quality resulting in loss-making performance on a sustained basis, or due to higher lending growth, unless it is offset by timely and sufficient state capital support. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade The IDRs and GSR would be upgraded if Uzbekistan's sovereign IDRs were upgraded, provided the sovereign's propensity to support the bank remains strong. An upgrade of the VR would require material improvements in the bank's risk profile and asset quality, driving substantially stronger profitability and capitalisation. A strengthening of the operating environment for domestic banks would also be positive for the rating, alongside the above-mentioned factors. OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS Aloqa's ex-government support (xgs) ratings exclude assumptions of extraordinary government support. The LT Foreign- and Local-Currency IDRs (xgs) of 'B(xgs)' are equalised with the bank's VR. The Short-Term (ST) Foreign- and Local-Currency IDRs (xgs) of 'B(xgs)' are mapped to the bank's LT Foreign- and Local-Currency IDRs (xgs), respectively. OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES The bank's LT IDRs (xgs) are sensitive to changes in its VR. The ST IDRs (xgs) are sensitive to changes in Aloqa's Long-Term IDRs (xgs). Public Ratings with Credit Linkage to other ratings Aloqa's LT IDRs are directly linked to Uzbekistan's IDRs. ESG Considerations Aloqa has an ESG Relevance Score of '4' for Governance Structure as the state of Uzbekistan is highly involved in the banks at board level and in the business. This factor has a negative impact on the bank's credit profile and is relevant to the ratings in conjunction with other factors. Aloqa's ESG Relevance Score for Financial Transparency has been revised to '3' from '4' given Fitch's view of improved quality and timeliness of the bank's financial reporting. This means the factor now has minimal credit impact on the entity. 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 ----------- ------ ----- Joint-Stock Commercial Aloqabank LT IDR BB Upgrade BB- ST IDR B Affirmed B LC LT IDR BB Upgrade BB- LC ST IDR B Affirmed B Viability b Affirmed b Government Support bb Upgrade bb- LT IDR (xgs) B(xgs) Affirmed B(xgs) ST IDR (xgs) B(xgs) Affirmed B(xgs) LC LT IDR (xgs) B(xgs) Affirmed B(xgs) LC ST IDR (xgs) B(xgs) Affirmed B(xgs) BUSINESS DEVELOPMENT: Fitch Hikes IDRs to 'BB', Outlook Stable -------------------------------------------------------------- Fitch Ratings has upgraded Uzbekistan-based Joint-Stock Commercial Bank Business Development Bank's (BDB) Long-Term (LT) Foreign- and Local-Currency Issuer Default Ratings (IDRs) and Government Support Rating (GSR) to 'bb' from 'bb-'. The Outlooks are Stable. Fitch has also affirmed the bank's Viability Rating (VR) at 'ccc+'. The rating action on the bank's LT IDRs follows the upgrade of Uzbekistan's sovereign ratings on 26 June 2025 (see "Fitch Upgrades Uzbekistan to 'BB'; Outlook Stable"), and reflects its view of the Uzbek authorities' improved ability to support BDB. Key Rating Drivers BDB's LT IDRs are equalised with Uzbekistan's to reflect a moderate probability of government support, as captured by the bank's 'bb' GSR. Its 'ccc+' VR reflects weak asset quality, a record of loss-making performance and limited capital buffer. Policy Role: BDB's GSR reflects its state ownership, policy mandate as the main operator of subsidised SME lending in Uzbekistan, the low cost of potential support relative to the sovereign's international reserves, and the state's support record. Improving Operating Environment: The operating environment for Uzbek banks has materially strengthened over the past two to three years, and Fitch expects further improvements, particularly in addressing structural risks and enhancing the quality of regulation and governance. This, alongside a robust economy, should support business growth and translate into stronger earnings and capital generation, making banks' credit profiles more resilient. Therefore, Fitch has revised the outlook on the operating environment score to positive from stable. Modest Franchise: BDB is a medium-sized bank (4% of sector assets as of 1 June 2025) with a strong legacy mortgage franchise (end-1Q25: 15% of sector mortgage loans). It is actively developing its commercial lending to SMEs and retail businesses, but Fitch expects the portion of subsidised loans (end-1Q25: 24% of gross loans) to remain large in the medium term, given its policy role. High-risk SME Lending: Fitch assesses BDB's corporate and SME book (end-1Q25: 48% of gross loans) as higher risk, given its exposure to vulnerable industries, deficiencies in underwriting standards, and high dollarisation. The bank's loan expansion reached 11% in 2024, despite large write-offs, and was broadly in line with the sector average of 13%. Fitch expects loan growth to accelerate to over 20% in 2025-2026, supported by state capital injections. Support Partly Offsets Asset-Quality Risks: BDB's Stage 3 loans ratio rose to 23% at end-2024 (end-2023: 20%) due to ongoing deterioration in corporate and SME loan quality, despite state capital support enabling additional provisioning and substantial write-offs (2024: 3.6% of average loans). Fitch expects loan performance to remain weak, although BDB's Stage 3 ratio is likely to decline to around 20% by end-2025, supported by strong loan growth and further, but smaller, write-offs. Impairment Charges Cause Losses: BDB has been loss-making over 2022-2023, and recorded a net loss of UZS1.4 trillion in 2024 (-65% of average equity). This was driven by weak performance of corporate and SME loans leading to large credit losses. Fitch expects BDB to return to a modest profitability in 2025-2026, although it will remain sensitive to provisioning needs. Limited Capital Buffer: BDB's Fitch Core Capital (FCC) ratio rose to 8.7% at end-2024 (end-2023: 5.7%), despite large losses in 2024. This was underpinned by state contributions to common equity (11% of end-2024 risk-weighted assets), including through the partial conversion of subordinated debt. Fitch expects BDB's capitalisation to be under pressure from loan growth and high encumbrance from unreserved Stage 3 loans (end-2024: 45%) in 2025-2026. State-Related Funding, Moderate Liquidity: BDB's reliance on state-related funding rose to 65% of total liabilities at end-1Q25 (end-2023: 42%), after it attracted cheap long-term loans and subordinated debt from state authorities. Market borrowings (mostly long-term loans from foreign financial institutions and short-term interbank deposits) made up another 17% of total liabilities. Liquid assets (end-1Q25: 14% of total assets) fully covered external wholesale repayments due within the next 12 months. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade BDB's GSR and IDRs would be downgraded if Uzbekistan's sovereign ratings were downgraded. Fitch could also downgrade the bank's IDRs and notch them further down from the sovereign ratings if it considers that the government's propensity to support the bank has reduced. This could be due to a weakening of the bank's policy role, delays in capital support, or support being insufficient to decisively deal with the bank's asset-quality risks. Fitch could also downgrade the bank's GSR and IDRs if the Uzbek authorities sell their majority stake in BDB to a lower-rated or unrated strategic investor, although Fitch considers the bank's privatisation unlikely in the near term. The VR could be downgraded if asset-quality deterioration continues, resulting in substantial losses that would erode BDB's capital ratios below statutory minimums, unless these losses are adequately offset by new equity injections in a timely manner. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade BDB's GSR and IDRs would be upgraded if Uzbekistan's sovereign ratings were upgraded. An upgrade would also require an extended record of state capital support to allow sufficient workout of the bank's unreserved impaired assets. Upside for BDB's VR is limited by the asset-quality risks unless the government continues to provide sufficient capital support and the bank's unreserved impaired loans remains consistently below 0.3x FCC. Profitable performance on a sustained basis and higher capitalisation could also be positive for the rating. OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS BDB's ex-government support (xgs) ratings exclude assumptions of extraordinary government support. The LT Foreign- and Local-Currency IDRs (xgs) of 'CCC+(xgs)' are equalised with the bank's VR. The Short-Term (ST) Foreign- and Local-Currency IDRs (xgs) of 'C(xgs)' are mapped to the bank's LT Foreign- and Local-Currency IDRs (xgs), respectively. OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES The bank's LT IDRs (xgs) are sensitive to changes in its VR. The ST IDRs (xgs) are sensitive to changes in BDB's LT IDRs (xgs). Public Ratings with Credit Linkage to other ratings BDB's LT IDRs are linked to Uzbekistan's LT IDRs. ESG Considerations BDB has ESG Relevance Score of '4' for Governance Structure as the state of Uzbekistan is highly involved in the bank at board level and in the business. This factor has a negative impact on the bank's credit profile and is relevant to the ratings in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Prior ----------- ------ ----- Joint-Stock Commercial Bank Business Development Bank LT IDR BB Upgrade BB- ST IDR B Affirmed B LC LT IDR BB Upgrade BB- LC ST IDR B Affirmed B Viability ccc+ Affirmed ccc+ Government Support bb Upgrade bb- LT IDR (xgs) CCC+(xgs) New Rating WD ST IDR (xgs) C(xgs) New Rating WD LC LT IDR (xgs) CCC+(xgs) New Rating WD LC ST IDR (xgs) C(xgs) New Rating WD IPOTEKA-BANK: Fitch Hikes LongTerm IDRs to 'BB', Outlook Stable --------------------------------------------------------------- Fitch Ratings has upgraded Joint-Stock Commercial Mortgage Bank Ipoteka-Bank's Long-Term (LT) Foreign- and Local-Currency Issuer Default Ratings (IDRs) to 'BB' from 'BB-', with Stable Outlooks, and Shareholder Support Rating (SSR) to 'bb' from 'bb-'. The bank's Viability Rating is unaffected by this rating action. The upgrade of the bank's LT IDRs follows the upgrade of Uzbekistan's sovereign rating and its Country Ceiling to 'BB' from 'BB-' on 26 June 2025 (see 'Fitch Upgrades Uzbekistan to 'BB'; Outlook Stable'). Key Rating Drivers Ipoteka's LT IDRs are based on potential support from the parent bank, OTP Bank Plc, as captured by the 'bb' SSR. This view considers OTP's majority ownership and inclusion of Ipoteka in OTP's resolution group, high reputational risks for the parent from a subsidiary's default, and the low cost of support for the parent. The bank's SSR and LT IDRs remain constrained by Uzbekistan's 'BB' Country Ceiling, reflecting potential transfer and convertibility restrictions, and the risk that the subsidiary may not be able to benefit from parent support to service its own foreign-currency obligations. The Stable Outlooks on the bank's LT IDRs mirror those on Uzbekistan's sovereign ratings. Fitch has affirmed Ipoteka's Short-Term Foreign- and Local-Currency IDRs at 'B', which is the only possible option for LT IDRs in the 'BB' rating category. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Ipoteka's SSR and LT IDRs could be downgraded following a downward revision of Uzbekistan's Country Ceiling or if Fitch's assessment of OTP's ability or propensity to provide support to the subsidiary substantially weakens. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Ipoteka's SSR and LT IDRs could be upgraded if Uzbekistan's Country Ceiling was revised up, provided Fitch's view that the ability or propensity of OTP to provide support to the subsidiary remains the same or improves. OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS Ipoteka's senior unsecured debt rating is in line with the bank's 'BB' LT Foreign-Currency IDR. OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES Ipoteka's senior unsecured debt rating is sensitive to changes in its LT Foreign-Currency IDR. Public Ratings with Credit Linkage to other ratings Ipoteka's IDRs are driven by potential support from OTP. ESG Considerations The highest level of ESG credit relevance is a score of '3', which 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 ----------- ------ ----- Joint-Stock Commercial Mortgage Bank Ipoteka-Bank LT IDR BB Upgrade BB- ST IDR B Affirmed B LC LT IDR BB Upgrade BB- LC ST IDR B Affirmed B Shareholder Support bb Upgrade bb- senior unsecured LT BB Upgrade BB- JSCB KAPITALBANK: Fitch Alters Outlook on 'B' IDR to Positive ------------------------------------------------------------- Fitch Ratings has revised JSCB Kapitalbank's (Kapital) Outlooks to Positive from Stable, while affirming its Long-Term Foreign-Currency and Local-Currency Issuer Default Ratings (IDRs) at 'B'. Fitch has also affirmed the bank's Viability Rating (VR) at 'b'. The revision of the Outlooks to Positive reflects its expectations that favourable economic conditions in Uzbekistan will persist and result in sustained strengthening of Kapital's business profile, its robust internal capital generation, and funding and liquidity. Key Rating Drivers Kapital's IDRs are driven by its standalone profile, as reflected in the 'b' VR. The ratings factor in the positive outlook on the banks' operating environment in Uzbekistan, and Kapital's robust profitability and reasonable liquidity coverage. Fitch also factors in Kapital's evolving business model, high appetite for growth, and large single-sector lending concentration, which lead to a heightened risk profile and weigh on the bank's asset-quality metrics. Improving Operating Environment: The operating environment for Uzbek banks has materially strengthened over the past two to three years, and Fitch expects further improvements, particularly in addressing structural risks and enhancing the quality of regulation and governance. This, alongside a robust economy, should support business growth and translate into stronger earnings and capital generation, making banks' credit profiles more resilient. Therefore, Fitch has revised the outlook on the operating environment score to positive from stable. Evolving Business Model, Sector Concentrations: Kapital had a moderate 6% share in system loans at end-May 2025. It has been highly profitable over the past four years, supported by a rapid expansion in car finance in 2021-2023. The bank significantly slowed origination in this sub-sector but aggressively shifted towards SMEs and secured consumer lending in 2024. Auto-backed loans still dominate the portfolio (end-1Q25: more than 40% of total loans). The bank's rapidly evolving business mix has not affected profitability but has increased asset-quality risks. Aggressive Growth, High Dollarisation: Kapital doubled SME lending and significantly grew its exposure to secured consumer loans in 2024, albeit from a low base. Fitch views expansion into SMEs in Uzbekistan as higher risk due to its mainly foreign-currency (FC) nature. The share of FC loans increased to 38% at end-1Q25 (end-2023: 27%), which is close to the market average (42%). Kapital's risk profile is supported by the focus on secured lending but is undermined by single-sector concentration and aggressive growth, which Fitch expects to moderate in 2025-2026. Loan Deterioration After High Growth: Impaired loans ratio markedly increased to 4.5% at end-2024 (end-2023: 1.7%), and Fitch believes asset-quality deterioration will continue in 2025-2026. This is due to the seasoning of auto-backed loans issued during the previous years of rapid growth. Fitch expects credit costs to moderately increase but risks are mitigated by the granular nature of problem exposures, their denomination in local currency, and liquid collateral. Strong Operating Performance: Wide margins and strong lending growth primarily supported Kapital's robust operating profit at 5% of risk-weighted assets (RWAs) ratio in 2024 (2022-2023: 6%). Return on equity was a strong 37% in 2024 (2022-2023: 50%). Fitch expects operating profit to moderate to below 5% of RWAs in 2025-2026 but remain strong, despite an anticipated moderate increase in the cost of risk. Average Capitalisation, Increase Expected: Kapital's Fitch Core Capital (FCC) ratio was a moderate 12% at end-2024. Fitch expects the ratio to strengthen in the next two years, as internal capital generation outpaces loan growth. Reasonable Liquidity, Stable Deposits: Kapital's gross loans/deposits ratio was an adequate 87% at end-2024, which is considerably below many peers' (market average: around 170%). Customer account balances were stable in 2023 and 2024 after four-fold growth in 2021-2022, although from a low base, while risks are also mitigated by reasonable liquidity. Liquid assets covered a healthy 35% of customer accounts at end-2024, while wholesale debt repayments scheduled for the next 12 months were limited. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Fitch would likely revise the Outlook on Kapital's IDRs to Stable if there were no material improvements in the operating environment for Uzbek banks, or if there were a persistent decline in the bank's FCC ratio sharply below 12%, driven by weaker internal capital generation and aggressive growth. The ratings could be downgraded if the bank's capital buffer reduces close to regulatory minimums on a sustained basis, for example due to a sharp deterioration in the bank's asset quality resulting in losses, or higher lending growth. Deterioration of liquidity buffers, for example as a result of material customer account outflows, would also weigh on the VR. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade An upgrade of Kapital's ratings would require an improvement in Fitch's assessment of the local operating environment, alongside stable financial metrics. Kapital's Government Support Rating (GSR) of 'No Support' reflects the absence of a record of reliable support from Uzbekistan's authorities for privately owned banks, and the lack of a clearly articulated framework for state support of systemically important banks (D-SIBs), particularly those that are privately owned. This is despite the strong sovereign financial flexibility, regular capital support from the government for state-owned banks, especially policy institutions, and Kapital's moderate systemic importance, with a moderate 6% share of system loans at end-May 2025. An upgrade of the GSR would be contingent on a positive change in the sovereign's propensity to support D-SIBs, and Kapital in particular. This would require an introduction of clearly articulated legislation on government support of D-SIBs, or a strong and predictable record of timely capital support by the authorities for D-SIBs. VR ADJUSTMENTS The earnings and profitability score of 'b+' is below the 'bb' category implied score because of the following adjustment reason: historical and future metrics (negative). ESG Considerations Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This 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 of the materiality and relevance of ESG factors in the rating outcome. Entity/Debt Rating Prior ----------- ------ ----- JSCB Kapitalbank LT IDR B Affirmed B ST IDR B Affirmed B LC LT IDR B Affirmed B LC ST IDR B Affirmed B Viability b Affirmed b Government Support ns Affirmed ns MICROCREDITBANK: Fitch Hikes LongTerm IDR to 'BB', Outlook Stable ----------------------------------------------------------------- Fitch Ratings has upgraded Uzbekistan-based Microcreditbank's (MCB) Long-Term (LT) Foreign- and Local-Currency Issuer Default Ratings (IDRs) to 'BB' from 'BB-' and its Government Support Rating (GSR) to 'bb' from 'bb-'. The Outlook is Stable. Fitch has also downgraded the bank's Viability Rating (VR) to 'ccc+' from 'b-'. The upgrade of the bank's LT IDRs follows the upgrade of Uzbekistan's sovereign rating on 26 June 2025 (see "Fitch Upgrades Uzbekistan to 'BB'; Outlook Stable" on www.fitchratings.com) and reflects its view of the Uzbek authorities' improved ability to support MCB . The downgrade of MCB's VR reflects continued pressures from weak asset quality, resulting in loss-making performance over the past two years, alongside considerable capital encumbrance. Key Rating Drivers MCB's LT IDRs are equalised with Uzbekistan's LT IDRs to reflect Fitch's view of a moderate probability of government support, as expressed by its GSR of 'bb'. The bank's VR reflects its small franchise, weak asset quality, loss-making performance, significant capital encumbrance, and considerable reliance on wholesale borrowings. Policy Role: Fitch believes the Uzbek authorities would have a high propensity to support MCB, given its state ownership, special status as the agent bank for subsidised social lending, the low cost of potential support relative to the sovereign's international reserves, and the state's support record. Improving Operating Environment: The operating environment for Uzbek banks has materially strengthened over the past few years, and Fitch expects further improvements, particularly in addressing structural risks and enhancing the quality of regulation and governance. This, alongside a robust economy, should support business growth and translate into stronger earnings and capital generation, making banks' credit profiles more resilient. Therefore, Fitch has revised the outlook on the operating environment score to positive from stable. Narrow Franchise: MCB is a small bank in the concentrated Uzbek banking system, making up 3% of sector assets and loans as of 1 June 2025. MCB provides state-subsidised SME and retail loans (end-1Q25: 35% of gross loans), but is also developing its commercial lending business. Vulnerable Risk Profile: MCB is exposed to substantial credit risks stemming from both commercial and subsidised lending, as underscored by its high impaired loan formation ratio (2024: 6.3%; 2023: 4.8%). This, alongside deficiencies in risk management framework and high loan growth in the last four years (23% CAGR), weighs on MCB's risk profile. Loan dollarisation was a notable 23% at end-1Q25, but below the sector's 42%. Weak Loan Quality: Impaired loans remained significant at 14.4% of gross loans at end-2024 (end-2023: 15.6%), despite large write-offs (4.4% of average loans) and rapid loan growth in 2024. This high impairment was due to ongoing loan quality deterioration. Stage 2 loans added another 25% of gross loans (end-2023: 25%) to the impaired loan ratio. The total reserve coverage of impaired exposures remained a modest 42% at end-2024 (end-2023: 44%). Fitch expects the impaired loans ratio to remain high in 2025-2026, which may force MCB to create additional provisions. Loss-Making Performance: MCB's large cost base and material credit losses have led to negative financial results since 2023. The bank reported a net loss of UZS961 billion, equivalent to -25% of average equity in 2024 (2023: -13%). Fitch expects MCB's profitability to remain vulnerable in 2025-2026, due to its structurally weak business model. State-Supported Capitalisation: The bank's Fitch Core Capital (FCC) ratio fell to 15.2% at end-2024 (end-2023: 17.6%) due to its loss-making performance and 33% risk-weighted assets growth. MCB receives regular capital contributions from the government (UZS6.5 trillion since 2019) to support its policy lending. Capital encumbrance by unreserved impaired loans was a notable 39% at end-2024 (end-2023: 38%). MCB will continue to rely on capital support from the state, due to expected weak profitability. Material External Funding: MCB's market borrowings were considerable at 39% of total liabilities at end-1Q25. These were mostly long-term loans from international financial institutions, while the portion of interbank deposits was reduced to 5% of total liabilities (end-2023: 13%). Cheap state funding equalled another 33%. MCB's liquidity buffer was limited to 10% of total assets at end-1Q25, but fully covered short-term external debt repayments. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade MCB's IDRs and GSR would be downgraded if Uzbekistan's sovereign ratings were downgraded. Fitch could also downgrade the bank's IDRs and GSR and notch them off the sovereign ratings if it views that the government propensity to support the bank has reduced. This could be due to a weakening of the bank's policy role or delays in capital support, or support being insufficient to decisively address the bank's asset-quality risks. The VR could be downgraded if asset-quality deterioration continues, resulting in substantial losses that would erode MCB's capital ratios to below statutory minimums, unless they are adequately offset by timely equity injections. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade MCB's IDRs and GSR would be upgraded if the sovereign ratings were upgraded. An upgrade would also require an extended record of state capital support to allow a sufficient workout of the bank's unreserved impaired assets. Upside for the bank's VR is limited by MCB's substantial asset-quality risks, unless the government continues to provide adequate capital support, leading to a sustained decrease in unreserved impaired loans below 30% of FCC. Profitable performance and stronger asset quality metrics would also be required for a VR upgrade. OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS The bank's ex-government support (xgs) ratings exclude assumptions of extraordinary government support. The LT Foreign- and Local-Currency IDRs (xgs) of 'CCC+(xgs)' are equalised with the bank's VR. The Short-Term (ST) Foreign- and Local-Currency IDRs (xgs) of 'C(xgs)' are mapped to the bank's LT Foreign- and Local-Currency IDRs (xgs), respectively. OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES The bank's LT IDRs (xgs) are sensitive to changes in its VR. The ST IDRs (xgs) are sensitive to changes in MCB's LT IDRs (xgs). Public Ratings with Credit Linkage to other ratings MCB's LT IDRs are linked to Uzbekistan's LT IDRs. ESG Considerations MCB has ESG Relevance Score of '4' for Governance Structure as the state of Uzbekistan is highly involved in the bank at board level and in the business. It has an ESG Relevance Score of '4' for Financial Transparency, due to a lack of timeliness and quality of financial reporting. These factors have a negative impact on the bank's credit profile, in combination with other factors. The bank also has ESG Relevance Score of '3' for 'Human Rights, Community Relations, Access and Affordability' (a deviation from the sector guidance for an ESG Relevance Score of '2' for comparable banks), given the bank's focus on social lending to lower-income citizens to decrease poverty and promote entrepreneurship. 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 ----------- ------ ----- Microcreditbank LT IDR BB Upgrade BB- ST IDR B Affirmed B LC LT IDR BB Upgrade BB- LC ST IDR B Affirmed B Viability ccc+ Downgrade b- Gov't Support bb Upgrade bb- LT IDR (xgs) CCC+(xgs) New Rating ST IDR (xgs) C(xgs) New Rating LC LT IDR (xgs) CCC+(xgs) New Rating LC ST IDR (xgs) C(xgs) New Rating XALQ BANK: Fitch Hikes LongTerm IDRs to 'BB', Outlook Stable ------------------------------------------------------------ Fitch Ratings has upgraded Joint Stock Commercial Xalq Bank of the Republic of Uzbekistan's Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) to 'BB' from 'BB-', with Stable Outlooks and Government Support Rating (GSR) to 'bb' from 'bb-'. Fitch has affirmed the bank's Viability Rating (VR) at 'b-'. The upgrade of the Long-Term IDRs follows the upgrade of the sovereign rating of the Republic of Uzbekistan on 26 June 2025 (see "Fitch Upgrades Uzbekistan to 'BB'; Outlook Stable") and reflects the agency's view of the improved ability of the Uzbek authorities to support Xalq. Key Rating Drivers Xalq's Long-Term IDRs are equalised with Uzbekistan's sovereign IDRs, reflecting Fitch's view of a moderate probability of government support, as captured by the bank's 'bb' GSR. Xalq's VR of 'b-' reflects the bank's asset-quality risks, captured by a still-high impaired loans ratio and modest albeit improving profitability. Its policy role as a social lending agent will continue to weigh on Xalq's VR in the near term. Policy Role: The Uzbek authorities would have a high propensity to support Xalq, in Fitch's view, given its strategic state ownership, status as the government's agent bank for subsidised social lending and pension distribution, the low cost of potential support relative to sovereign international reserves, and the authorities' support record. Improving Operating Environment: The operating environment for Uzbek banks has materially strengthened in recent years, and Fitch expects further improvements, particularly in addressing structural risks and enhancing the quality of regulation and governance. This, alongside a robust economy, should support business growth and translate into stronger earnings and capital generation, making banks' credit profiles more resilient. Fitch has therefore revised the outlook on the operating environment score to positive from stable. Medium-Sized Bank, Policy Lending: Xalq is Uzbekistan's seventh-largest bank, making up around 6% of sector assets and loans at end-1Q25. It is one of several state-owned banks responsible for subsidised lending under government development programmes, with a focus on family entrepreneurship loans in Uzbekistan's rural areas. Xalq is the only bank in Uzbekistan involved in the distribution of state pensions. Low Dollarisation, Notable Growth: Xalq's involvement in government-directed subsidised development lending has led to substantial asset-quality risks. However, loan dollarisation (8% at end-1Q25 by local GAAP) is below the sector average (42%), and the shift towards a higher share of commercial lending supports loan quality. Loan growth of 21% in 2024 was above the sector average (13%), supported by new capital. However, in 3M25 the loan book reduced by 6% (annualised) due to contraction of the non-retail and subsidised retail loan books. Still High Impairment, Well Reserved: Impaired (Stage 3) loans decreased notably to 14% of gross loans at end-2024 (end-2023: 22%) due to write-offs and transfers from Stage 3, and were 1.1x covered by reserves. Concentrations were modest, as the 25 largest groups of borrowers made up around 12% of the loan book. Fitch expects the impaired loans ratio to decline to below 10% over 2025-2026, helped by write-offs. Asset quality under local GAAP also improved, with the problem loans ratio at 4.2% at end-1Q25 (end-2023: 7.6%). Improved Performance: Operating profit improved to a moderate 1.9% of risk-weighted assets (RWAs) in 2024 (2023: 1.6%), after net losses in 2020-2022. This was driven by a decrease in loan impairment charges (LICs; 2024: 1.4% of average gross loans; 2022: 7.8%) following balance-sheet clean-up in 2023-2024. Pre-impairment profit at 5% of average gross loans in 2023-2024 provides a moderate buffer to absorb losses. Fitch expects operating profitability to recover slightly to above 2% of RWAs in 2025-2026, on stabilisation of LICs. Capital Build-Up: Xalq's Fitch Core Capital ratio almost doubled to 17.5% at end-2024 (end-2023: 9%) following a large capital injection in 2024 (equal to 5.2% of end-2023 RWAs). The new planned capital contributions, equal to 4.6% of end-2024 RWAs (partly received in 1Q25), will further improve the Fitch Core Capital ratio close to 21% by end-2025, alongside moderate loan growth. At end-1Q25 the regulatory Tier 1 (20%) and total capital ratios (21%) were comfortably above their regulatory minimums (10% and 13%, respectively). Stable Funding, Good Liquidity: State-related funds (end-1Q25: 47% of total liabilities; local GAAP) and non-state deposits (40%, mostly mandatory pension saving accounts) dominate funding, while wholesale borrowings are moderate (8%). The bank's liquidity cushion (25% of total assets) covered a large 78% of non-state customer accounts. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Xalq's GSR and IDRs would be downgraded if Uzbekistan's sovereign IDRs were downgraded. Fitch could also downgrade the bank's IDRs and notch them off the sovereign ratings if it views that the government's propensity to support the bank has reduced, for example due to a weakening of the bank's policy role or delays in capital support. The bank's VR could be downgraded if asset-quality deterioration resulted in substantial losses, leading to a material capital shortfall, unless adequately replenished by timely new equity injections. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Xalq's GSR and IDRs would be upgraded if the sovereign ratings were upgraded, provided the sovereign's propensity to support the bank remains strong. An upgrade of the VR would require an extended record of profitable performance alongside the improved asset quality and stable risk profile. A strengthening of the operating environment for domestic banks would also be credit positive, along with other factors. OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS Xalq`s ex-government support (xgs) ratings exclude assumptions of extraordinary government support. The Long-Term Foreign- and Local-Currency IDRs (xgs) of 'B-(xgs)' are equalised with the bank's VR. The Short-Term Foreign- and Local-Currency IDRs (xgs) of 'B(xgs)' are mapped to the bank's Long-Term Foreign- and Local-Currency IDRs (xgs), respectively. OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES Any actions on the xgs ratings will mirror changes to Xalq's VR. Public Ratings with Credit Linkage to other ratings Xalq's IDRs are linked to Uzbekistan's IDRs. ESG Considerations Xalq has an ESG Relevance Score of '4' for Governance Structure as the state of Uzbekistan is highly involved in the banks at board level and in the business. The factor has a negative impact on the bank's credit profile and is relevant for the ratings in conjunction with other factors. Fitch has revised the bank's ESG Relevance Score for Financial Transparency to '3' from '4' given its view of improved timeliness of financial disclosures. Fitch now considers this factor to have a minimal credit impact on the entity. The bank has an ESG Relevance Score of '3' for Human Rights, Community Relations, Access & Affordability (a deviation from the sector guidance of '2' for comparable banks), given its focus on social lending to lower-income citizens to decrease poverty and promote entrepreneurship. This has only a minimal credit impact on the entity and minimal relevance for the ratings. 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 ----------- ------ ----- Joint Stock Commercial Xalq Bank of the Republic of Uzbekistan LT IDR BB Upgrade BB- ST IDR B Affirmed B LC LT IDR BB Upgrade BB- LC ST IDR B Affirmed B Viability b- Affirmed b- Gov't Support bb Upgrade bb- LT IDR (xgs) B-(xgs) New Rating ST IDR (xgs) B(xgs) New Rating LC LT IDR (xgs) B-(xgs) New Rating LC ST IDR (xgs) B(xgs) New Rating [] Fitch Hikes LongTerm IDR on 3 Uzbekistani Utilities to 'BB' -------------------------------------------------------------- Fitch Ratings has upgraded three Uzbekistani utilities' Long-Term Foreign-Currency Issuer Default Ratings (IDRs) to 'BB' from 'BB-'. The Outlooks are Stable. The rating actions follow the upgrade of Uzbekistan's Long-Term Foreign-Currency IDR on June 26, 2025. The ratings of Regional Electrical Power Networks JSC (Standalone Credit Profile (SCP): ccc), Thermal Power Plants Joint Stock Company (SCP: ccc) and Uzbekhydroenergo JSC (SCP: b+) are equalised with those of their parent, Uzbekistan, reflecting that almost all of their debt is secured by government guarantees or provided by the state. Fitch expects this to remain the case for the foreseeable future. RATING SENSITIVITIES Regional Electrical Power Networks JSC Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - A sovereign downgrade - Guaranteed debt falling below 75% of total debt, which would lead to a downgrade assuming unchanged SCP and government links Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - A sovereign upgrade, assuming the government continues guaranteeing over 75% of total debt - A more transparent and predictable operating and regulatory framework (including implementation of multi-year tariffs), alongside a stronger financial profile (funds from operations (FFO) gross leverage below 7x on a sustained basis) and improved liquidity, which could be positive for the SCP Thermal Power Plants Joint Stock Company Factors That Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - A sovereign downgrade - Guaranteed debt falling below 75% of total debt, which would lead to a downgrade assuming unchanged SCP and government links Factors That Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - A sovereign upgrade, assuming the government continues guaranteeing over 75% of total debt - Stronger cash collections, better visibility on strategy, a more transparent and predictable operating and regulatory framework (including implementation of multi-year tariffs), alongside a stronger financial profile (FFO gross leverage below 7.5x on a sustained basis), which could be positive for the SCP Uzbekhydroenergo JSC Factors That Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - A sovereign downgrade - Guaranteed debt falling below 75% of total debt, which would lead to a downgrade assuming unchanged SCP and government links - Operational underperformance, ambitious capex programme, material trade receivables build-up or dividends resulting in a deterioration in the financial profile (FFO gross leverage exceeding 4.0x on a sustained basis), which could be negative for the SCP Factors That Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - A sovereign upgrade, assuming the government continues guaranteeing over 75% of total debt - A more transparent and predictable operating and regulatory framework (including implementation of multi-year tariffs), alongside a stronger financial profile (FFO gross leverage below 2.5x on a sustained basis), which could be positive for the SCP 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 Regional Electrical Power Networks JSC has an ESG Relevance Score of '4' for Financial Transparency due to delays in the publication of IFRS accounts, compared with international best practice. The lack of transparency limits its ability to assess the company's financial condition, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. Thermal Power Plants Joint Stock Company has an ESG Relevance Score of '4' for Financial Transparency due to delays in the publication of IFRS accounts, compared with international best practice. The lack of transparency limits its ability to assess the company's financial condition, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. Uzbekhydroenergo JSC has an ESG Relevance Score of '4' for Financial Transparency due to delays in the publication of IFRS accounts, compared with international best practice. The lack of transparency limits its ability to assess the company's financial condition, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Prior ----------- ------ ----- Thermal Power Plants Joint Stock Company LT IDR BB Upgrade BB- Uzbekhydroenergo JSC LT IDR BB Upgrade BB- Regional Electrical Power Networks JSC LT IDR BB Upgrade BB- [] Fitch Hikes LongTerm IDR to 'BB' on 3 Uzbek State-Owned Banks ---------------------------------------------------------------- Fitch Ratings has upgraded three Uzbekistan-based state-owned banks' Long-Term (LT) Foreign- and Local-Currency Issuer Default Ratings (IDRs) to 'BB' from 'BB-' and their Government Support Ratings (GSRs) to 'bb' from 'bb-'. The Outlooks are Stable. The banks are JSC National Bank for Foreign Economic Activity of the Republic of Uzbekistan (NBU), Uzbek Industrial and Construction Bank Joint-Stock Commercial Bank (UICB), and Joint-Stock Company Asakabank (Asaka). The banks' Viability Ratings (VRs) are unaffected by this rating action. The upgrade of the banks' ratings is driven by the upgrade of the sovereign ratings of the Republic of Uzbekistan on 26 June 2026 (see "Fitch Upgrades Uzbekistan to 'BB'; Outlook Stable), and reflects Fitch's view of an improved ability of the Uzbek authorities to provide support to domestic state-owned banks. Key Rating Drivers The LT IDRs of the three banks are equalised with the sovereign ratings of Uzbekistan, reflecting Fitch's view of a moderate probability of government support, as captured by their 'bb' GSRs. The Stable Outlooks on the banks' IDRs mirror those on the sovereign. Its assessment of support for NBU considers its majority state ownership, high systemic importance, an important policy role as the key lender to strategic industries, and the low cost of support relative to the sovereign's international reserves. Fitch continues to equalise UICB's and Asaka's GSRs and LT IDRs with the sovereign's at this rating level, despite the government's plans to sell their controlling stakes in the banks to foreign strategic investors by end-2025. This view is primarily underpinned by these banks' majority state ownership, moderate systemic importance and the low cost of potential support. Fitch believes the planned privatisation of UICB and Asaka is likely to be significantly delayed by the ongoing transformation of their business models and persistent legacy structural issues. In its view, the government will continue to provide these banks with sufficient extraordinary capital or funding support if needed and ensure that they remain adequately capitalised until their eventual sales. The senior unsecured debt ratings of NBU and UICB have been upgraded to 'BB', in line with their Long-Term Foreign-Currency IDRs. The Short-Term (ST) IDRs have been affirmed at 'B', which is the only possible option for LT IDRs in the 'BB' rating category. Rating Sensitivities Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade The GSRs and LT IDRs of NBU, UICB, and Asaka would be downgraded if Uzbekistan's sovereign ratings were downgraded. NBU's ratings could also be downgraded if Fitch takes the view that the Uzbek authorities' ability or propensity to support the bank has weakened. The ratings of UICB and Asaka could also be downgraded if these banks are sold to a strategic investor with a lower rating than the sovereign, or one without a rating. However, in this instance, Fitch would likely factor in potential government support for both banks at one notch below the sovereign ratings, provided they retain their systemic importance. The banks' ST IDRs are sensitive to a multi-notch downgrade of their respective LT IDRs. NBU and UICB's senior unsecured LT debt ratings would be downgraded on a similar action on their respective LT IDRs. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade The GSR and LT IDRs of NBU will be upgraded following a similar action on the sovereign ratings of Uzbekistan. A positive action on the sovereign rating would not necessarily result in a similar action on the GSRs and LT IDRs of UICB and Asaka, unless their privatisation is cancelled, and they remain under long-term strategic state ownership. NBU and UICB's senior unsecured LT debt ratings would be upgraded if their respective LT IDRs were upgraded. Public Ratings with Credit Linkage to other ratings The GSRs and LT IDRs of NBU, UICB and Asaka are directly linked to Uzbekistan's sovereign ratings. ESG Considerations NBU and Asaka have ESG Relevance Scores of '4' for Governance Structure as Uzbekistan's authorities are highly involved in the banks at board level and in their business and strategy development, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. Asaka also has a ESG Relevance Score of '4' for Financial Transparency, reflecting delays in IFRS accounts publications, which are prepared only on an annual basis. This has a moderately negative impact on the bank's credit profile and is relevant to the ratings in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Prior ----------- ------ ----- Uzbek Industrial and Construction Bank Joint-Stock Commercial Bank LT IDR BB Upgrade BB- ST IDR B Affirmed B LC LT IDR BB Upgrade BB- LC ST IDR B Affirmed B Government Support bb Upgrade bb- senior unsecured LT BB Upgrade BB- JSC National Bank for Foreign Economic Activity of the Republic of Uzbekistan LT IDR BB Upgrade BB- ST IDR B Affirmed B LC LT IDR BB Upgrade BB- LC ST IDR B Affirmed B Government Support bb Upgrade bb- senior unsecured LT BB Upgrade BB- Joint-Stock Company Asakabank LT IDR BB Upgrade BB- ST IDR B Affirmed B LC LT IDR BB Upgrade BB- LC ST IDR B Affirmed B Government Support bb Upgrade bb- =========== S W E D E N =========== POLESTAR AUTOMOTIVE: Eric Li, 11 Others Report Equity Stake ----------------------------------------------------------- Eric Li, Volvo Car Corporation, PSD Investment Limited, PSD Capital Limited, Snita Holding B.V., Volvo Car AB, Geely Sweden Holdings AB, Shanghai Geely Zhaoyuan International Investment Co., Ltd, Beijing Geely Wanyuan International Investment Co., Ltd, Beijing Geely Kaisheng International Investment Co., Ltd, Zhejiang Geely Holding Group Company Limited, and Geely Sweden Automotive Investment B.V., disclosed in a Schedule 13D/A (Amendment No. 6) filed with the U.S. Securities and Exchange Commission that as of June 16, 2025, they beneficially own varying amounts of Polestar Automotive Holding UK PLC's Class A American Depositary Shares and Class A Ordinary Shares, with the following holdings: * Eric Li: 1,725,045,301 Class A Shares (81.4% of the class) * PSD Investment Limited & PSD Capital Limited: 828,013,737 Class A Shares (39.1%) * Geely Sweden Holdings AB / Shanghai Geely Zhaoyuan / Beijing Geely Wanyuan / Beijing Geely Kaisheng / Zhejiang Geely Holding Group: Each reports beneficial ownership of 897,031,564 Class A Shares (42.3%) * Geely Sweden Automotive Investment B.V.: 502,156,334 Class A Shares (23.7%) * Volvo Car Corporation / Snita Holding B.V. / Volvo Car AB: 380,322,995 Class A Shares (17.9%) These percentages are based on a total of 2,069,399,389 Class A Shares and 49,892,575 Class B Shares outstanding as of May 31, 2025. Zhejiang Geely may be reached through: Zhejiang Geely Holding Group 1760 Jiangling Road, Binjiang District Hangzhou, F4, 310051 Tel: +86 (571) 2809 8282 A full-text copy of Eric Li's SEC report is available at: https://tinyurl.com/4uepsw8h About Polestar Automotive Polestar (Nasdaq: PSNY) is the Swedish electric performance car brand with a focus on uncompromised design and innovation, and the ambition to accelerate the change towards a sustainable future. Headquartered in Gothenburg, Sweden, its cars are available in 27 markets globally across North America, Europe and Asia Pacific. Gothenburg, Sweden-based Deloitte AB, the Company's auditor since 2021, issued a "going concern" qualification in its report dated May 9, 2025, attached to the Company's Annual Report on Form 10-K for the year ended December 31, 2024, citing that the Company requires additional financing to support operating and development activities that raise substantial doubt about its ability to continue as a going concern. As of Dec. 31, 2024, the Company had $4.1 billion in total assets, $7.4 billion in total liabilities, and a total deficit of $3.3 billion. ===================== S W I T Z E R L A N D ===================== HERENS MIDCO: Moody's Alters Outlook on 'B3' CFR to Negative ------------------------------------------------------------ Moody's Ratings has affirmed the B3 long-term corporate family rating and B3-PD probability of default rating of Herens Midco S.a.r.l. (Arxada), the parent company of Arxada AG. Concurrently, Moody's affirmed the Caa2 rating of Herens Midco S.a.r.l.'s EUR460 million senior unsecured global notes as well as the B2 ratings of Herens HoldCo S.a.r.l.'s USD350 million guaranteed senior secured global notes due 2028, EUR1,104.4 million and USD1,430 million senior secured term loan B due 2028 and the EUR430 million senior secured revolving credit facility (RCF) due 2028. The outlook on both entities has been changed to negative from stable. The rating action reflects: -- Arxada's microbial control solutions' resilient performance through the cycle -- Challenging trading conditions due to the ripple effects of President Donald Trump's tariff policies and heightened geopolitical risks, prompting us to lower Moody's forecasts for Arxada's 2025 earnings performance -- The company's very high leverage and Moody's forecasts for cash burn in 2025 of around CHF30 million RATINGS RATIONALE Moody's expects trading conditions for some of Arxada's end markets will soften in 2025 as shifting US trade policies, international responses to policies and heighted geopolitical risks create uncertainty. Moody's have made a downward revision to Moody's revenue growth forecasts in Moody's base case for 2025 to a mid-single digit percentage. Positively revenue growth will be supported by contractual sales of its wood protection products from its newly operational plant in Georgia and strong commercial execution in the professional hygiene markets. Arxada has indicated it will maintain company reported EBITDA margins of 18%-19% in 2025 in constant currency, reflecting pricing initiatives, fixed cost discipline, and the effective execution of cost savings programmes. It has also indicated that it intends to deploy additional self-help strategies across 2025 to somewhat offset potentially softening trading conditions. Moody's forecast Moody's-adjusted EBITDA of around CHF380 million in Moody's base case, after adding back CHF22 million of transformation and restructuring costs. Arxada is highly leveraged, positioning Arxada weakly for its rating category. Moody's project Arxada's Moody's-adjusted gross leverage (debt/EBITDA) of around 9x for the 12 months to December 31, 2025 and around 8.2x for 2026, as the company has indicated it will start to benefit from positive revenue contribution from its custom development and manufacturing deliveries. Overall, in Moody's base case Moody's expects the company to burn cash in 2025 with Moody's-adjusted negative free cash flow of around CHF30 million. The company has indicated it will maintain use of around 50% of its CHF200 million factoring facility. Moody's expects drawings under the RCF will slightly increase. LIQUIDITY Arxada's liquidity is adequate but continues to weaken. At the end of Q1 2025, the company reported a cash position of CHF87 million, which Moody's considers slightly more than the minimum cash required to operate the business. Arxada reported availability of around CHF146 million under its EUR430 million revolving credit facility (RCF). It indicated that it will maintain sufficient capacity under the springing covenant to fully access the remaining undrawn RCF. Arxada's only maturing debt before January 2028 is the 1% annual amortisation of its term loan B dollar tranche paid quarterly. STRUCTURAL CONSIDERATIONS The B2 rating on the guaranteed senior secured global notes and senior secured bank credit facilities, which comprise the USD350 million notes, the USD1,430 million Term Loan B, the EUR1,104.4 million Term Loan B and the EUR430 million senior secured RCF issued by Herens HoldCo S.a.r.l.— one notch above the CFR — reflects the EUR460 million senior unsecured notes issued by Herens Midco S.a.r.l., rated Caa2 and USD111 million senior unsecured notes ranking below the senior secured debt instruments in the capital structure. The senior secured debt instruments are guaranteed by a substantial number of subsidiaries of the group and secured on a first-priority basis by a significant amount of assets owned by the group. The guarantees from operating entities represent more than 80% of groupwide EBITDA. The Caa2 rating on the EUR460 million senior unsecured notes — two notches below the CFR — reflects the substantial amount of secured debt in the structure, as well as the senior subordinated nature of the guarantees by the same group of subsidiaries that guarantee the secured term loan on a first-priority basis. RATING OUTLOOK The negative outlook reflects Moody's expectations that challenging trading conditions will hurt Arxada's operating performance across 2025, reducing Moody's projected growth rate in Moody's-adjusted EBITDA and increasing the size of the projected cash burn to around CHF30 million. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS It is unlikely positive pressure on the rating will develop over the next 18 months given the company's stretched capital structure and the lack of visibility for a material improvement in macro-economic conditions in 2025. Downward pressure on the rating would emerge if: -- The company fails to demonstrate a recovery in revenue and EBITDA growth rates to at least mid-single digit percentage during 2025 -- There is a deterioration in the company's liquidity profile -- There is a lack of visibility for a meaningful reduction on cash burn in 2026 -- Moody's-adjusted gross leverage remains above 8.0x -- Moody's-adjusted EBITDA interest coverage or remains below 1.5x. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Chemicals published in October 2023. Arxada's B3 rating is two notches below the scorecard-indicated outcome of B1. The difference reflects among other factors, the company's stretched capital structure and the limited visibility for revenue growth across 2026, underpinning deleveraging. COMPANY PROFILE Headquartered in Switzerland, Arxada AG is a leading global specialty chemicals business serving five core end markets; human health and nutrition, home and personal care, paints and coatings, wood protection and industrials. The company has an intellectual property portfolio of more than 150 active patent families. Arxada has a global manufacturing footprint with 24 sites across more than 100 countries and 14 research and development centres. In the last twelve months, that ended March 31, 2025, the company generated sales of around CHF1,955 million. =========================== U N I T E D K I N G D O M =========================== B&H.PT LIMITED: FRP Advisory Named as Administrators ---------------------------------------------------- B&H.PT. Limited was placed into administration proceedings in the High Court of Justice Business and Property Courts in Leeds, Insolvency and Companies List, Court Number: CR-2025-000638, and Simon Farr and Richard Goodall of FRP Advisory Trading Limited were appointed as administrators on June 30, 2025. B&H.PT. Limited is a manufacturer of of tools. Its registered office is at 1 Marsden Street, C/O A2e Industries Limited, Manchester, England, M2 1HW to be changed to C/o FRP Advisory Trading Limited, 4th Floor Abbey House, 32 Booth Street, Manchester, M2 4AB Its principal trading address is at Kenwood Road, Unit 6, Reddish, Greater Manchester, SK5 6PH The joint administrators can be reached at: Simon Farr Richard Goodall FRP Advisory Trading Limited 4th Floor, Abbey House 32 Booth Street Manchester M2 4AB For further information, contact: The Joint Administrators Tel No: 0161 833 3344 Alternative contact: Ben Smith Email: cp.manchester@frpadvisory.com EUROSAIL 2006-2BL: Fitch Lowers Rating on Class E1c Notes to 'B-sf' ------------------------------------------------------------------- Fitch Ratings has downgraded Eurosail 2006-2BL PLC's (ES06-2) class D1a, D1c and E1c notes and Eurosail 2006-4NP Plc's (ES06-4) class D1a and D1c notes. The other notes have been affirmed. All tranches have been removed from Under Criteria Observation. Entity/Debt Rating Prior ----------- ------ ----- Eurosail 2006-2BL PLC Class B1a 298805AG7 LT AAAsf Affirmed AAAsf Class B1b 298805AH5 LT AAAsf Affirmed AAAsf Class C1a 298805AK8 LT AAAsf Affirmed AAAsf Class C1c 298805AM4 LT AAAsf Affirmed AAAsf Class D1a 298805AN2 LT AAsf Downgrade AAAsf Class D1c 298805AQ5 LT AAsf Downgrade AAAsf Class E1c XS0266258317 LT B-sf Downgrade BBB+sf Class F1c XS0266260560 LT CCCsf Affirmed CCCsf Eurosail 2006-4NP Plc Class B1a 29880JAG7 LT AAAsf Affirmed AAAsf Class C1a 29880JAK8 LT AAAsf Affirmed AAAsf Class C1c 29880JAM4 LT AAAsf Affirmed AAAsf Class D1a 29880JAN2 LT AA-sf Downgrade AA+sf Class D1c 29880JAQ5 LT AA-sf Downgrade AA+sf Class E1c 027421601 LT CCCsf Affirmed CCCsf Transaction Summary The transactions comprise non-conforming UK mortgage loans originated by Southern Pacific Mortgage Limited and Preferred Mortgages Limited, formerly wholly owned subsidiaries of Lehman Brothers. KEY RATING DRIVERS UK RMBS Rating Criteria Updated: The rating actions reflect Fitch's updated UK RMBS Rating Criteria (see " Fitch Ratings Updates UK RMBS Rating Criteria" dated 23 May 2025). Key changes include updated representative pool weighted average foreclosure frequencies (WAFFs), changes to sector selection, revised recovery rate (RR) assumptions and changes to cash flow assumptions. The most significant revision was to the non-confirming sector representative 'Bsf' WAFF. Newly introduced borrower-level recovery rate caps are applied to underperforming seasoned collateral. Dynamic default distributions and high prepayment rate assumptions are now applied rather than static assumptions previously. Late Stage Arrears: In line with the updated criteria, Fitch's analysis assumes that loans more than 12 months in arrears are defaulted loans for the purposes of its asset and cash flow modelling. For ES06-2 this represents 12.1% of the total portfolio and 8.3% for ES06-4. Deteriorating Asset Performance: The proportion of loans in arrears for both transactions has increased since the last review. For ES06-2, arrears above three months have increased to 27.5% from 25.1% at the previous review (June 2024 cut off) and for ES06-4 to 22.3% from 18.8% (March 2024 cut off). For ES06-2 the number of loans in arrears has marginally decreased and for ES06-4 it has marginally increased. As the portfolio factor for both transactions is low (around 10%), a material roll rate to late arrears and reduction in the outstanding portfolio balance will result in higher projected defaults at the next review. Transaction Adjustment: Fitch has applied its non-conforming assumptions and an owner-occupied transaction adjustment of 1.0x and buy-to-let (BTL) transaction adjustment of 1.5x for both transactions. This is due to the historical performance of loans with arrears greater than three months being weaker than Fitch's non-conforming index for both transactions (materially weaker for ES06-2). BTL Recovery Rate Cap: The transactions have reported losses that exceed the losses expected based on the indexed value of the properties in the pool. Fitch has therefore applied borrower-level RR caps to the BTL loans in both transactions in line with those applied to non-conforming loans, where the RR cap is 85% at 'Bsf' and 65% at 'AAAsf'. Increasing Credit Enhancement: The transactions will amortise sequentially, following the irreversible breach of performance condition triggers (the aggregate balance of 90+ day arrears has exceeded the trigger level in both transactions). In ES06-4, the portfolio factor has fallen below 10% (currently at 9.67%) and in ES06-02 it is 10.89%, very close to the sequential allocation trigger (10%). Senior Fees Declining: Fixed transaction fees are gradually declining after spikes in recent years, primarily due to the transition of both transactions from LIBOR to SONIA and for ES06-4, the change of transaction account bank (TAB) and guaranteed investment contract (GIC) provider to HSBC Bank plc from Danske Bank A/S. For ES06-2, fixed fees have notably decreased. Fitch expects fees in ES06-4 to stabilise, once all costs related to the TAB and GIC change have been debited. Fitch anticipates that fees will continue to decline in line with stabilised averages. However, if high fees persist, Fitch could revise its fixed fee assumptions for the transaction analysis, which could negatively impact the junior notes. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade The transactions' performance may be affected by adverse changes in market conditions and the economic environment. Weakening economic performance is strongly correlated to increasing levels of delinquencies and defaults and could reduce the credit enhancement available to the notes. Fitch conducted sensitivity analyses by stressing each transaction's base case WAFF and WARR assumptions, and by examining the rating implications for all notes. A 15% increase in the WAFF and a 15% decrease in the WARR could lead to downgrades of five notches for ES06-2's class D1a and D1c notes and one notch for the class E1c notes and five notches for ES06-4's class D1a and D1c notes. There is no impact on any other notes. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Stable to improved asset performance driven by stable delinquencies and defaults would lead to increasing credit enhancement and potential upgrades. Fitch tested an additional rating sensitivity scenario by applying a decrease in the WAFF of 15% and an increase in the WARR of 15%. The results indicate upgrades of three notches for ES06-2's class D1a and D1c notes and four notches for the class E1c notes, and three notches for ES06-4's class D1a and D1c notes and two notches for the class E1c notes. All other notes are at their maximum achievable rating. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pools and the transactions. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. Fitch did not undertake a review of the information provided about the underlying asset pools ahead of the transaction's initial closing. The subsequent performance of the transactions over the years is consistent with the agency's expectations given the operating environment and Fitch is therefore satisfied that the asset pool information relied upon for its initial rating analysis was adequately reliable. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. ESG Considerations Eurosail 2006-2BL PLC has an ESG Relevance Score of '4' for Customer Welfare - Fair Messaging, Privacy & Data Security due to {DESCRIPTION OF ISSUE/RATIONALE}, which has a negative impact on the credit profile, and is relevant to the rating[s] in conjunction with other factors. Eurosail 2006-2BL PLC has an ESG Relevance Score of '4' for Human Rights, Community Relations, Access & Affordability due to {DESCRIPTION OF ISSUE/RATIONALE}, which has a negative impact on the credit profile, and is relevant to the rating[s] in conjunction with other factors. Eurosail 2006-4NP Plc has an ESG Relevance Score of '4' for Customer Welfare - Fair Messaging, Privacy & Data Security due to {DESCRIPTION OF ISSUE/RATIONALE}, which has a negative impact on the credit profile, and is relevant to the rating[s] in conjunction with other factors. Eurosail 2006-4NP Plc has an ESG Relevance Score of '4' for Human Rights, Community Relations, Access & Affordability due to {DESCRIPTION OF ISSUE/RATIONALE}, 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. FUTURE PLC: S&P Assigns 'BB+' LongTerm Issuer Credit Rating ----------------------------------------------------------- S&P Global Ratings assigned its 'BB+' long-term issuer credit rating to UK-based specialist media, digital, and print content publishing company Future PLC and its 'BB+' issue rating to its GBP300 million proposed senior notes. The recovery rating of the proposed notes is '3', reflecting meaningful recovery (50%-70%; rounded estimate: 65%) in the event of default. S&P said, "The stable outlook reflects our view that Future will maintain a relatively stable S&P Global Ratings-adjusted EBITDA margin, despite some decline in revenue over the next 12 months due to macro and industry headwinds. We expect the company will return to growth from fiscal 2026, allowing it to maintain its S&P Global Ratings-adjusted leverage well within the 1.5x-2.0x range." Future PLC plans to refinance its GBP256 million loan and repay GBP35 million of debt drawings under the company's revolving credit facility (RCF) with proceeds from new senior notes of GBP300 million. The company will extend its debt maturity by about three years to 2030. S&P regards the transaction as broadly leverage neutral. S&P said, "We expect Future's revenue to decline by 6% in fiscal 2025 (ending Sept. 30, 2025) due to declining digital advertising driven by estimated lower economic growth, and the ongoing structural decline of print magazines. We, however, expect the company to resume growth in fiscal 2026, as we forecast a pickup in digital advertising and a recovery in Future's price comparison business following a rebound in economic growth. "We anticipate that the company will maintain solid free operating cash flow (FOCF) generation. In combination with its conservative financial policy, this should translate into S&P Global Ratings-adjusted leverage not exceeding 2.0x in fiscal 2025 and 2026." The rating reflects Future's modest leverage, solid profitability, and strong brand portfolio, partly offset by its relatively small scale in a competitive market and its exposure to cyclical advertising revenue. Our 'BB+' rating reflects our estimate of Future's modest leverage of about 1.6x in fiscal 2025 and 2026, and its solid free cash flow generation, which provides flexibility for mergers and acquisitions (M&A) and deleveraging. Our rating reflects the company's relatively small scale of operations in a highly competitive and fragmented market, its exposure to cyclical advertising revenue, and the secular decline in the print industry. S&P said, "That said, we consider that Future is differentiated from peers through its strong portfolio of market-leading brands, its diverse revenue and earnings streams, and its technologies, which allow it to efficiently monetize content. We also take a positive view of Future's access to first-party customer data, which shields it from the risks of changing privacy requirements." Future operates in a cyclical and competitive industry. As a publisher of digital and print media content, Future is exposed to a highly competitive and fragmented industry that requires consistent investment in content, technology, and attracting customers. While its top brands have market leading positions, Future reaches smaller and more niche audiences than larger competitors, including tech giants Facebook and Google. S&P said, "We also think that, over the medium term, it could face increasing competition from a growing number of smaller digital marketing and e-commerce players. As the technological landscape keeps evolving, we believe AI could help Future bring its content onto new platforms such as ChatGPT." At the same time, AI might pose risks to Future and other digital publishers over the longer term as AI platforms aggregate online content and possibly reduce traffic on Future's websites. In addition, the rising popularity of content consumption via video and audio applications could pose a long-term risk to demand--especially among younger audiences--for the company's content, which is predominantly text-based. In addition, Future's business is exposed to digital advertising revenue, which accounted for 23% of its revenue in the first half of fiscal 2025. This makes its performance more volatile due to the cyclical nature of advertising, as advertisers can easily reduce spending in periods of subdued economic growth and lower consumer and business confidence or re-allocate spending to competitors offering a more compelling alternative. S&P said, "In our view, this is partly offset by Future's ability to monetize content through several revenue streams such as advertising, affiliate links, price comparison, and magazine subscriptions. We expect that, in the near term, Future will maintain its strong audiences and benefit from increasing consumption of digital content, e-commerce, and the ongoing shift from offline to digital customer acquisition." S&P said, "We expect the company's revenue will decline in fiscal 2025 due to anticipated economic headwinds, but rebound from fiscal 2026. We forecast that a subdued economic growth environment in 2025, along with lower consumer and business confidence, will translate into Future's top line declining by about 6% in fiscal 2025. The main drivers will be lower digital advertising, a decline in business-to-business (B2B) operations, which include newsletters and lead generation, and the secular decline of print magazines. We also expect that the performance of the Go.Compare business will be softer due to fewer customers seeking to switch insurance providers following a peak in fiscal 2024. This should be partly counterbalanced by the e-commerce business, which we expect to remain resilient. From fiscal 2026, we expect annual organic revenue growth of about 1%-3%, as global business confidence recovers and economic growth conditions improve. In addition, we believe that the company's investment in editorial and sales headcount could pay off by contributing to topline improvement. Revenue from print magazines will likely continue to decline by about 5%-10% per year over the medium term, reflecting the secular decline, although this is somewhat counterbalanced by continued demand for some premium titles." Future's lower growth profile compared with peers could raise concerns about the strength and resilience of its business. Future's operating profile was weaker than some of its peers in fiscal years 2023 and 2024, when the company's revenue declined by 4% and 0.1%, respectively. Additionally, its S&P Global Ratings-adjusted EBITDA margin decreased to 27% in 2024 from 33% in 2023. In contrast, US-based digital media company Dotdash Meredith Inc.'s (BB-/Stable/--) S&P Global Ratings-adjusted EBITDA margin is trending the other way, increasing toward 21% from 19% over the same period. Dotdash has a similar business model as Future, but predominantly operates in the U.S. If Future continues to lack revenue growth, this could raise concerns about its ability to sustain profitability, which would depend on topline stabilization and an increase in earnings in absolute terms. A failure to return to growth will likely lead us to reassess the company's business strength compared with its more successful peers. S&P said, "We expect profitability margins to remain broadly stable in fiscal 2025-2026 and compare well with those of rated peers. In our view, Future will maintain its S&P Global Ratings-adjusted EBITDA margin of just below 27% in fiscal 2025, broadly in line with the 2024 level. This reflects the company's two-year investment program in editorial, sales and technology headcount, which we expect will cost about GBP10 million in fiscal 2025. In addition, the company's profitability benefits from a large proportion of variable costs, which allows Future to adapt its cost base during downturns. From fiscal 2027, the S&P Global Ratings-adjusted EBITDA margin could recover to above 27% as the investment program ends and because organic revenue growth and the increasing proportional contribution from the higher-margin media businesses (in B2C, B2B, and Go.Compare) should offset weaker performance in magazines. Future's S&P Global Ratings-adjusted EBITDA margin compares well with its publishing peers. Only Ziff Davis Inc.'s (BB/Stable/--) margins are expected to be somewhat higher at 28%, while we project that DotDash Meredith's profitability will be lower than Future's at 21%-22% in 2025-2026, and Red Ventures' EBITDA margins will likely remain below 20% in the same period. "We forecast that Future's FOCF generation will remain robust, translating into FOCF to debt of above 30%. The company has a sound EBITDA margin, despite our expectation of a revenue decline in fiscal 2025 and a moderate recovery in fiscal 2026. Coupled with its capital-light business model with modest working capital and capital expenditure (capex) needs, this translates into solid positive FOCF generation. We forecast the company will generate FOCF of GBP108 million in fiscal 2025, which is slightly lower than in fiscal 2024 due to refinancing costs and higher cash taxes from prior liabilities, and GBP140 million in fiscal 2026. Solid FOCF generation should give Future the flexibility to fund share buybacks and acquisitions while maintaining modest leverage. "We view the proposed debt refinancing as broadly leverage-neutral and expect Future will maintain modest leverage in line with its conservative financial policy. The proposed GBP300 million debt issuance will only marginally increase Future's debt. The company will use the proceeds to repay the existing GBP256 million loan, fully replenish its RCF (GBP35 million was drawn before the transaction), and pay transaction fees. We therefore expect the company will maintain S&P Global Ratings-adjusted debt to EBITDA of about 1.6x over the medium term, only exceeding this range to accommodate larger acquisitions. Future's financial policy targets minimum net debt to EBITDA of 1.0x on a company-adjusted basis--equivalent to about 1.5x on an S&P Global Ratings-adjusted basis--and the group has recently performed at the lower end of this guidance. We consider this a conservative target compared with rated peers. We expect leverage will increase marginally in fiscal 2025, reflecting slightly weaker S&P Global Ratings-adjusted EBITDA. Our assumption includes about GBP25 million for small bolt-on acquisitions and GBP69 million for share buybacks. "The stable outlook reflects our view that Future's S&P Global Ratings-adjusted EBITDA margin will remain relatively stable at 27%, despite some decline in revenue over the next 12 months due to macro and industry headwinds, before returning to growth from fiscal 2026. The outlook also assumes the company will generate sufficient discretionary cash flow and maintain its S&P Global Ratings-adjusted leverage in the 1.5x-2.0x range." S&P could lower the rating over the next 12 months if: -- The company is unable to deliver organic revenue and EBITDA growth in line with our base case due to a pronounced slowdown in advertising revenue growth or advertisers shifting their budgets to social media and other platforms; -- The company faces challenges while integrating acquisitions, leading to weaker profitability and credit metrics; or -- Its financial policy becomes more aggressive than we currently expect, with sizable debt-funded acquisitions or shareholder remuneration leading to S&P Global Ratings-adjusted leverage increasing to more than 2.0x. In S&P's view, an upgrade is unlikely in the near term. Over the longer term, we could raise the rating if Future gains significantly larger scale and business diversification, while continuing to grow organically, and maintains profitability above that of its peers. An upgrade would also require the group to maintain its conservative financial policy and modest leverage. HARVEST ENERGY AVIATION: Teneo Financial Named as Administrators ---------------------------------------------------------------- Harvest Energy Aviation Ltd was placed into administration proceedings in the High Court of Justice Business and Property Courts of England and Wales, Court Number: CR-2025-004414, and Clare Boardman, Paul James Meadows and Christopher Hirst of Teneo Financial Advisory Limited were appointed as administrators on June 30, 2025. Harvest Energy engaged in the wholesale of petroleum and petroleum products. Its registered office is c/o Teneo Financial Advisory Limited, The Colmore Building, 20 Colmore Circus Queensway, Birmingham, B4 6AT Its principal trading address is at Harvest House Horizon Business Village, 1 Brooklands Road, Weybridge, KT13 0TJ The joint administrators can be reached at: Paul James Meadows Clare Boardman Christopher Hirst Teneo Financial Advisory Limited The Colmore Building 20 Colmore Circus Queensway Birmingham, B4 6AT For further details, contact: The Joint Administrators Tel No: praxcreditors@teneo.com Alternative contact: Jack Crutchley HARVEST ENERGY: Teneo Financial Named as Administrators ------------------------------------------------------- Harvest Energy Limited was placed into administration proceedings in the High Court of Justice Business and Property Courts of England and Wales, Court Number: CR-2025-004413, and Paul James Meadows, Clare Boardman and Christopher Hirst of Teneo Financial Advisory Limited were appointed as administrators on June 30, 2025. Harvest Energy engaged in the wholesale of petroleum and petroleum products. Its registered office is c/o Teneo Financial Advisory Limited, The Colmore Building, 20 Colmore Circus Queensway, Birmingham, B4 6AT It principal trading address is at Harvest House Horizon Business Village, 1 Brooklands Road, Weybridge, KT13 0TJ The joint administrators can be reached at: Paul James Meadows Clare Boardman Christopher Hirst Teneo Financial Advisory Limited The Colmore Building 20 Colmore Circus Queensway Birmingham, B4 6AT For further details, contact: The Joint Administrators Email: praxcreditors@teneo.com KANE BIDCO: Moody's Rates New Sr. Secured Notes 'B1' ---------------------------------------------------- Moody's Ratings has affirmed the B1 corporate family rating and B1-PD probability of default rating of Kane Bidco Limited (Kane Bidco), as well as the senior secured debt ratings of B1. Moody's have also assigned B1 ratings to Kane Bidco's proposed pound sterling and euro senior secured notes. The outlook on the entity remains stable. The issuer is an intermediate holding company of True Potential Group Limited (True Potential), a UK-domiciled vertically integrated wealth manager. Net proceeds from the issuance will be used to refinance the company's existing GBP400 million and EUR360 million senior secured notes. The assigned rating of the new notes is subject to review of final documentation and contingent on there being no material changes to the terms and conditions as advised to Moody's. RATINGS RATIONALE Kane Bidco's B1 CFR reflects True Potential's growing presence in the wealth platform and advisory space, its strong assets under management (AUM) resilience and the group's strong profitability. These strengths are offset by its relatively small, but growing, scale, very limited geographic diversification as all assets are sourced in the UK and relatively high gross financial leverage as calculated by us. The group has recently been engaged with the FCA in a review of its historical approach to onboarding new clients which resulted in the booking of a GBP96 million redress provision for affected customers. The stable outlook reflects Moody's expectations that actions taken to remediate the historical approach to onboarding new clients will substantially reduce the risk of further similar provisions and that the group will continue to grow profitability while maintaining sufficient liquidity. The group also booked a goodwill impairment of GBP222 million in 2024. Moody's have considered the provision and impairment as exceptional items in Moody's calculations of Moody's debt to EBITDA. True Potential has demonstrated consistent growth in a difficult economic environment, leading to improved market share in its chosen retail advised segment. This growth has been supported by ongoing investment in the recruitment of financial advisers. Moody's notes that growth in AUM has slowed, due in part to changes to the adviser onboarding process implemented in 2024. Moody's expects growth in net flows to resume once remedial actions conclude. Despite challenges, the group has maintained a record of net inflows in every quarter, supporting strong AUM retention and replacement metrics. While net revenue reached GBP346 million in 2024, an increase of 24% compared to 2023, True Potential still has a modest scale compared to more diversified asset managers. True Potential's vertically integrated model combines an in-house platform and a strong and growing advice proposition, which allows the group to earn fees across the value chain, including investment management fees, wealth management advice, platform fees and adviser services. Moody's expects profitability to remain a credit strength. The group's EBITDA margins, as measured by us, are strong, and Moody's expects further improvement as growth supports margin expansion. Pre-tax income in 2024 was affected by provision bookings and goodwill impairments, which Moody's considers to be exceptional. EBITDA expansion is aiding the group's deleveraging. However, recent additional borrowing to fund growth, provide liquidity for customer redress, and strengthen regulatory capital means this has been slower than Moody's expected, and leverage remains an offsetting factor in Moody's credit assessment. The group's leverage was 4.6x at year-end 2024, consistent with a B-rated company. Moody's expects that True Potential will steadily reduce leverage by growing its EBITDA base. Financial strategy and risk management are key considerations in Moody's assessments of governance under Moody's General Principles for Assessing Environmental, Social and Governance Risks methodology. In light of slower deleveraging than Moody's had expected and recent regulatory engagement surrounding its historical approach to onboarding new clients, which True Potential have responded to by taking remedial actions, Moody's have revised Moody's assessments of Kane Bidco's governance to an Issuer Profile Score of negative (G-4) from moderate (G-3) and the Credit Impact Score to CIS-4 from CIS-3. -- RATINGS The group's proposed senior secured notes are rated at the same level as its CFR, reflecting the relatively low level of super senior obligations (the group's revolving credit facility), their pari passu ranking with the group's other senior secured debt, and minimal operating company obligations. -- OUTLOOK The stable outlook reflects Moody's expectations that True Potential will continue to improve its market position and scale while maintaining healthy profitability metrics, gradually reducing leverage. Moody's stable outlook assumes that the group's business model will not be subject to further regulatory engagement following remediation expected to conclude in 2025. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The following factors could lead to an upgrade of the ratings: (1) Debt-to-EBITDA reducing to consistently below 4x; (2) Increasing scale, as measured by net revenue, to above $400 million; and (3) Pre-tax income margins rising above 10% on a consistent basis. Conversely, the following factors could lead to a downgrade of the rating: (1) Debt-to-EBITDA above 5.5x for a sustained period; (2) Significant drop in profitability with pre-tax income margins consistently below 5%; and (3) Material deterioration of AUM resilience metrics. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Asset Managers published in May 2024. Kane Bidco Limited's "Standalone Credit Profile" score of B1 is set two notches below its "Standalone Credit Profile Before Qualitative Notching Factors" score of Ba2 to reflect the group's small scale, limited diversification, and relatively high financial leverage. KANE BIDCO: S&P Rates Proposed Senior Secured Notes 'B+' -------------------------------------------------------- S&P Global Ratings assigned its 'B+' issue ratings to Kane Bidco Ltd.'s proposed 350 million euro-denominated senior secured notes due 2032 and 400 million pound sterling-denominated senior unsecured notes due 2031. S&P understands Kane will use the proceeds to refinance its senior secured notes of GBP700 million, and view the transaction as leverage neutral. S&P said, "The rating on the proposed senior secured notes is on par with our 'B+' long-term issuer credit rating on Kane Bidco Ltd, reflecting a '4' recovery rating with our expectation of average recovery (30%-50%; rounded estimate 30%) prospects in the event of default." Issue Ratings--Recovery Analysis Key analytical factors -- The company's capital structure consists of a GBP120 million super senior revolving credit facility (RCF), extending to October 2029; GBP700 million of senior secured notes maturing in 2030; GBP450 million in a private loan that ranks pari passu with the senior secured notes; and a GBP30.2 million on-demand shareholder loan. -- S&P's hypothetical default scenario envisages a default in 2029. -- S&O has valued the company on a going-concern basis using a 5x emergence EBITDA multiple. -- S&P assumes that 85% of the RCF will be drawn at the point of default. Simulated default assumptions -- Year of default: 2029 -- EBITDA at emergence: GBP99.8 million (38% of 2024 adjusted EBITDA) -- EBITDA multiple: 5x Simplified waterfall -- Net enterprise value (after 5% administrative costs): GBP474 million -- Secured first-lien debt: GBP105 million -- Total value available for senior creditors: GBP369 million -- Secured second-lien debt: GBP1.19 billion --Recovery expectations: (30%-50%; rounded estimate: 30%) LIQUID TELECOMMUNICATIONS: Fitch Affirms 'CCC+' LongTerm IDR ------------------------------------------------------------ Fitch Ratings has affirmed Liquid Telecommunications Holdings Limited's Long-Term Issuer Default Rating (IDR) at 'CCC+' The Recovery Rating remains 'RR4'. The rating reflects Liquid Telecom's heightened refinancing risk, alongside its weak liquidity and cash generation. In its view, the group is reliant on external financing -such as fresh equity- and asset monetisation and improved operating conditions to avoid a debt restructuring. Fitch believes Liquid Telecom's corrective actions, which include reduced discretionary capex, better working-capital management and operating efficiencies, and external funding, could enable a refinancing at par. However, this is subject to execution risks as details of such refinancing are not yet available. Failure to refinance in a timely manner could increase the prospects of a debt restructuring and likely drive further negative rating action. Key Rating Drivers Refinancing Processes Under Way: Liquid Telecom has arranged refinancing for its ZAR3.3 billion (USD220 million) term loan due March 2026 with a USD150 million equivalent multi-tenor facility. The latter can be increased by USD70 million once additional equity of USD150 million is received. Liquid Telecom is seeking the additional USD150 million through a second equity tranche and an asset sale outside the group, which Fitch believes is at an advanced stage. Fitch expects receipts of the remaining consideration of USD25 million from the sale of Africa Data Centre (ADC), alongside these efforts, to reduce the outstanding US dollar bond to no more than USD450 million. Fitch believes the group has made gradual progress in its refinancing efforts. However, refinancing risk remains high given the group's substantial debt maturities and volatile credit conditions. The window for completion is narrow and likely to occur at premium rates. Mixed Operating Performance: South Africa, which is Liquid Telecom's core market, reported strong growth in FY25 (year-end February), with its network division increasing 13% and C2 by 10%, supported by a more stable FX environment. Revenue from the rest of Africa fell 3%, due to material FX depreciation in Zambia and other regions, and political conflict in the Democratic Republic of Congo; however, conditions in Zambia improved in 1Q25. The group's rest of world division had sharp declines due to the non-recurrence of some indefeasible rights-of-use contracts. Fitch-defined EBITDA margin fell to 26% in FYE25 (23% excluding Zimbabwe) from 28% in FY24, reflecting revenue pressures and higher lease expenses. Despite this, consolidated Fitch-defined free cash flow (FCF) was neutral, an improvement from the FY24 outflow. This was driven by materially lower working-capital outflows and reduced capex. However, FCF remained slightly negative when excluding Zimbabwe. Fitch forecasts broadly neutral FCF in FY26-FY28 but expect it to be slightly negative excluding Zimbabwe. Liquidity Headroom Challenged: Liquid Telecom had USD86 million (USD69 million excluding Zimbabwe) cash on its balance sheet at FYE25, following a USD25 million draw on its revolving credit facility (RCF), and was supplemented by USD45 million of cash inflows from shareholders. Part of the inflows was used to repay the RCF and restore some headroom. Fitch believes Liquid Telecom has sufficient cash generation to cover interest and non-discretionary costs, but liquidity may be strained by any unforeseen major shocks, and the group is unable to repay outstanding debt without refinancing. Material Execution Risks: Liquid Telecom's new capital structure will depend on receiving additional external funding of up to USD150 million, achieving lower leverage after refinancing and generating sustainable positive operating cash flow (excluding Zimbabwe and after FX impact) to service higher interest costs on new debt. Failure to achieve these, or any delays, will significantly raise the prospect of a debt restructuring as maturities approach. However, Liquid Telecom's local-currency operating performance has shown underlying growth, and the group retains the capacity to manage discretionary capex. Diversified, Operating Environment Risks: Liquid Telecom derives most of its revenues in jurisdictions with a weak operating environment. Benefits from diversification and an integrated regional network are offset by regulatory, political and macroeconomic risks. The main region, South Africa, has a Country Ceiling of 'BB' and Fitch applies this to Liquid Telecom as EBITDA generated from South Africa is sufficient to cover foreign-currency debt service, based on its estimates. Moderate Leverage: Fitch estimates the group's Fitch-defined EBITDA net leverage, excluding Zimbabwe, at 5.8x at FYE25. The consolidated metric was 4.1x. Leverage has a lesser impact on the rating at this level given the greater focus on liquidity and refinancing needs, even though its leverage thresholds for Liquid Telecom are tighter than for peers operating in developed markets. The group has the potential to organically deleverage to levels commensurate with a higher rating. Fitch estimates leverage could fall to 3.2x on a consolidated basis and 4.6x (excluding Zimbabwe), based on FYE25 pro-forma Fitch-defined metrics, if the group achieves the refinancing as planned. Business Model Strengths: Liquid Telecom has a solid proprietary fibre infrastructure footprint spanning sub-Saharan Africa and is a key contributor in cross-border inter-operator telecommunications connectivity. It benefits from recurring revenues of around 90% and churn of less than 1%. Fitch expects growth in enterprise solutions to provide the group with the ability to sell value-added services, support revenue diversification and generate customer loyalty by offering a full suite of services. The Cloudmania franchise enables access to regions where the group has limited or no infrastructure footprint. Peer Analysis Liquid Telecom's exposure to emerging markets and higher transfer and convertibility risks are key differentiating factors from sector peers, affecting its leverage and liquidity. Its business profile has some similarities with those of telecoms network companies that primarily specialise in the provision of telecoms infrastructure and cross-border/large-distance connectivity for other operators and large enterprises, such as Zayo Group, LLC. Fitch also benchmarks Liquid Telecom's ratings against other African telecoms infrastructure providers and integrated operators. Local peers include integrated operators such as the regional operations of Airtel Africa plc and Vodacom Group Limited, subsidiaries of multinational telecoms operators Bharti Airtel Limited (BBB-/Stable) and Vodafone Group plc (BBB/Positive), and South African telecoms group MTN Group Limited. All three benefit from extensive scale and service line and geographical diversification, but also have greater exposure to direct consumer services. They also comprise some of the largest customers for Liquid Telecom's backbone network and international voice services, despite them being peers in enterprise services. Another peer, Axian Telecom Holding and Management Plc (B+/Stable), would have tighter leverage thresholds, reflecting its presence in weaker operating environments, exposure to material FX risks and a greater focus on direct consumer services. Broader peers, such as Helios Towers Plc (BB-/Stable) and IHS Holding Limited (B+/Stable), benefit from higher debt capacity due to lower business risk given the infrastructure nature of their business and weaker competition. Key Assumptions All assumptions are based on consolidated numbers including Zimbabwe unless otherwise specified. - Revenue growth in FYE25 of 1% and FYE26 of around 8% and, on a deconsolidated basis (excluding Zimbabwe), of 10% for both years, followed by low-to-mid single-digit growth in FY27-FY28, driven by recovery in FY26 and normalisation thereafter but alongside constrained growth in network, cloud and cyber security services due to declining revenues in the voice segment and currency depreciation - 3% appreciation of the US dollar/rand exchange rate in FY26 and 1-2% depreciation in FY27-FY28 - Fitch-defined EBITDA margin of around 26% and, excluding Zimbabwe, 24%, in FYE25, followed by a rise to around 28% by FY28, supported by cost savings - Cash extracted from Zimbabwe of USD36 million in FY26-FY28 and included in deconsolidated credit metrics - Capex of around USD65 million in FY26 and capex at 9% of sales in FY27-FY28 - ADC divestment proceeds of USD25 million to be received in FY26 - Equity injection from shareholders into the restricted group of at least USD30 million in FY26 and rand term loan of USD150 million equivalent refinanced Recovery Analysis Key Recovery Rating Assumptions The recovery analysis assumed that Liquid Telecom would be considered a going concern (GC) in bankruptcy. Fitch would expect a default to come from factors such as higher competitive intensity, loss of key contracts or adverse regulatory or political actions. Liquid Telecom may be acquired by a larger company that will absorb its fibre network, exit certain business lines or cut back its presence in certain less favourable geographies, reducing scale. Fitch estimated that post-restructuring EBITDA, excluding Zimbabwe, would be around USD125 million. Fitch applied a multiple of 4.5x to the GC EBITDA to calculate a post-reorganisation enterprise valuation. The recovery analysis included a USD620 million senior secured bond, around USD133 million equivalent of outstanding rand-denominated debt, USD1.7 million of local bank facilities and a fully drawn USD60 million RCF - all assumed to be equally ranking. Its waterfall analysis generated a ranked recovery in the 'RR3' band after deducting 10% for administrative claims to account for bankruptcy and associated costs. However, according to its Country-Specific Treatment of Recovery Ratings Rating Criteria, the instrument rating is capped at 'RR4' due to jurisdictional factors, given the African exposure. RATING SENSITIVITIES Factors That Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Lack of progress in refinancing of debt at par, leading to an expectation of a near-term distressed debt exchange or increasing likelihood of a default, bankruptcy or forced restructuring - Ineffective implementation of management actions to improve operating performance, resulting in accelerating negative FCF and a weakly funded liquidity position Factors That Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Timely completion of debt refinancing outside of a distressed debt exchange (as defined by Fitch) - Materially improved liquidity headroom generated organically or through asset monetisations or additional shareholder support. - Neutral to positive FCF margin both on a deconsolidated and consolidated basis, supported by management actions to improve operating performance - EBITDA interest cover above 2.5x Liquidity and Debt Structure Liquid Telecom had USD68 million of unrestricted cash (Fitch treats USD17 million of cash in Zimbabwe as restricted) at FYE25, including USD25 million drawn on its USD60 million RCF. The group improved its cash generation in FYE25 with materially lower working capital outflow and capex relative to FY24, but liquidity remains challenged. A further equity injection of USD150 million is required as a condition for the planned refinancing. The equity injection and ADC divestment proceeds are also essential to supporting deleveraging and liquidity in the near term. Fitch forecasts neutral to negative FCF due to high interest costs. Liquid Telecom's rand term loan matures in March 2026, and is followed by its USD620 million bond in September 2026. Issuer Profile Liquid Telecom is a sub-Saharan African telecoms operator with a fibre network of over 100,000 km. It generates most of its revenues from services to other operators and large enterprises. Summary of Financial Adjustments Cash held in Zimbabwe is treated as restricted. Sources of Information Fitch used the Corporate Rating Master Criteria effective from December 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 ----------- ------ -------- ----- Liquid Telecommunications Financing plc senior secured LT CCC+ Affirmed RR4 CCC+ Liquid Telecommunications South Africa Proprietary Limited senior secured LT CCC+ Affirmed RR4 CCC+ Liquid Telecommunications Holdings Limited LT IDR CCC+ Affirmed CCC+ LUDGATE FUNDING 2007: Fitch Hikes Rating on Class E Debt to 'BB-sf' ------------------------------------------------------------------- Fitch Ratings has upgraded five tranches of Ludgate Funding Plc Series 2006 FF1 (LF 2006), seven tranches of Ludgate Funding Plc Series 2007 FF1 (LF 2007) and four tranches of Ludgate Funding Plc's Series 2008-W1 (LF 2008) and affirmed the others. All tranches have been removed from Under Criteria Observation. Entity/Debt Rating Prior ----------- ------ ----- Ludgate Funding Plc's Series 2008-W1 Class A1 XS0354148511 LT AAAsf Affirmed AAAsf Class A2b XS0353589947 LT AAAsf Affirmed AAAsf Class Bb XS0353591927 LT AAAsf Upgrade AA+sf Class Cb XS0353594863 LT AA+sf Upgrade AA-sf Class D XS0353596215 LT AA-sf Upgrade Asf Class E XS0353684698 LT A+sf Upgrade BBB+sf Ludgate Funding Plc Series 2006 FF1 Class A2a XS0274267862 LT AAAsf Affirmed AAAsf Class A2b XS0274271203 LT AAAsf Affirmed AAAsf Class Ba XS0274268241 LT AAAsf Upgrade AA+sf Class Bb XS0274271898 LT AAAsf Upgrade AA+sf Class C XS0274272359 LT AAAsf Upgrade AA-sf Class D XS0274272862 LT Asf Upgrade BBB+sf Class E XS0274269645 LT BB+sf Upgrade BBsf Ludgate Funding Plc Series 2007 FF1 Class A2a XS0304503534 LT AAAsf Affirmed AAAsf Class A2b XS0304504003 LT AAAsf Affirmed AAAsf Class Bb XS0304508681 LT AA+sf Upgrade A+sf Class Cb XS0304509739 LT A+sf Upgrade BBB+sf Class Da XS0304510158 LT BBBsf Upgrade BB+sf Class Db XS0304512105 LT BBBsf Upgrade BB+sf Class E XS0304515546 LT BB-sf Upgrade B-sf Class Ma XS0304504698 LT AAAsf Upgrade AA+sf Class Mb XS0304505232 LT AAAsf Upgrade AA+sf Transaction Summary The transactions are secured by loans originated by Wave Lending Limited (formerly Freedom Funding Limited) and purchased by Merrill Lynch International Bank Limited. The loans are buy-to-let and non-conforming owner-occupied and secured against properties located in England and Wales. KEY RATING DRIVERS UK RMBS Rating Criteria Updated: The rating actions reflect its updated UK RMBS Rating Criteria (see "Fitch Ratings Updates UK RMBS Rating Criteria" dated 23 May 2025). Changes include updated representative pool weighted average foreclosure frequencies (WAFFs), changes to sector selection, revised recovery rate assumptions and changes to cash flow assumptions. The most significant revision was to the non-confirming sector representative 'Bsf' WAFF. Fitch now applies borrower-level recovery rate caps to underperforming seasoned collateral. Fitch also applies dynamic default distributions and high prepayment rate assumptions rather than static assumptions. Performance Above Average: The transactions' performance has deteriorated due to the cost of living crisis, but arrears remain significantly below the non-conforming sector average. Arrears above one month have been relatively stable at 11.2%, 13.2% and 17.4% for LF 2006, LF 2007 and LF 2008, respectively, compared with 10.3%, 11.3% and 17.4% 12 months ago, far below peer transactions and the non-conforming sector average of 25% (26% at last review). However, arrears above three months at April 2025 increased to 8.0%, 10.6% and 14.1% for LF 2006, LF2007 and LF 2008, respectively, from 7.3%, 8.0% and 13.7% a year ago and compared with the non-conforming sector average of 18.9% (17.9% at last review). Transaction Adjustment: Fitch has applied its non-conforming assumptions and an owner-occupied transaction adjustment of 0.5x for LF 2006 and 0.75x for LF 2007 and LF 2008 and BTL transaction adjustment of 1.0x for all three transactions. This is because the transactions' historical performance of loans greater than three months in arrears or more has been better than Fitch's non-conforming index. BTL Recovery Rate Cap: The transaction has reported losses above its expectations based on the indexed value of the properties in the pool. Fitch has therefore applied borrower-level recovery rate (RR) caps to the BTL loans in the transaction in line with those applied to non-conforming loans, where the recovery rate cap is 85% at 'Bsf' and 65% at 'AAAsf'. Ratings Below MIR: Borrowers rolling to later stage arrears may result in higher WAFF at future reviews. Fitch also observes that the notes' model-implied ratings (MIR) are sensitive to the notes' amortisation schedule as they alternate between pro-rata and sequential pay due to reversible trigger breaches. Consequently, the ratings on LF 2006's class D and E notes are one notch lower than the MIR, LF 2007's class Bb to E notes are one to two notches lower than the MIR, and LF 2008's class C and D notes are one and two notches lower than the MIR, respectively. Excessive Counterparty Exposure: The reserve fund provides more than 50% of class E credit enhancement in LF 2008. As per Fitch's criteria, these notes are exposed to excessive counterparty risk. The ratings of the transaction's most junior tranche are constrained by the transaction account bank's Long-Term Issuer Default Rating (Barclays Bank plc; A+/Stable) at 'A+sf'. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade Declines in recoveries could result in lower net proceeds, which may make certain notes susceptible to negative rating action depending on the extent of the decline in recoveries. Fitch conducts sensitivity analyses by stressing both a transaction's base-case FF and RR assumptions and examining the rating implications on all classes of issued notes. For example, a 15% WAFF increase and 15% WARR decrease would result in downgrades of up to two notches for the class E notes in LF 2007 and LF 2008, and more than five notches in LF 2006. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Stable to improved asset performance driven by stable delinquencies and defaults would lead to increasing credit enhancement and, potentially, upgrades. Fitch found that a decrease in the WAFF of 15% and an increase in the WARR of 15% would lead to upgrades of up to six notches for the mezzanine and junior notes of the transactions. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pools and the transactions. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. Fitch did not undertake a review of the information provided about the underlying asset pools ahead of the transactions' initial closing. The subsequent performance of the transactions over the years is consistent with the agency's expectations given the operating environment and Fitch is therefore satisfied that the asset pool information relied upon for its initial rating analysis was adequately reliable. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. ESG Considerations Ludgate 06, 07 and 08 each has an ESG Relevance Score of '4' for customer welfare - fair messaging, privacy & data security due to a material concentration of interest-only loans, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. Ludgate 06, 07 and 08 each has an ESG Relevance Score of '4' for human rights, community relations, access & affordability due to mortgage pools with limited affordability checks and self-certified income, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. OAT HILL 3: Fitch Lowers Rating on Class F Notes to 'B-sf' ---------------------------------------------------------- Fitch Ratings has downgraded Oat Hill No.3 PLC's (OH3) class D, E and F notes and affirmed the others. All tranches have been removed from Under Criteria Observation. Entity/Debt Rating Prior ----------- ------ ----- Oat Hill No.3 PLC A XS2639038384 LT AAAsf Affirmed AAAsf B XS2639039192 LT AA+sf Affirmed AA+sf C XS2639039275 LT A+sf Affirmed A+sf Class A Loan LT AAAsf Affirmed AAAsf D XS2639039606 LT BBBsf Downgrade BBB+sf E XS2639065601 LT BBsf Downgrade BB+sf F XS2639066088 LT B-sf Downgrade B+sf Transaction Summary OH3 is a securitisation of buy-to-let and owner-occupied residential mortgage assets originated by Capital Home Loans Limited and secured against properties in the UK. The assets were securitised in Oat Hill No.2 plc and in Oat Hill No.1 plc. KEY RATING DRIVERS UK RMBS Rating Criteria Updated: The rating actions reflect Fitch's updated UK RMBS Rating Criteria (see " Fitch Ratings Updates UK RMBS Rating Criteria" dated 23 May 2025). Key changes include updated representative pool weighted average foreclosure frequencies (WAFF), changes to sector selection, revised recovery rate assumptions and changes to cash flow assumptions. The most significant revision was to the non-confirming sector representative 'Bsf' WAFF. Fitch has applied newly introduced borrower-level recovery rate caps to underperforming seasoned collateral. Fitch now also applies dynamic default distributions and high prepayment rate assumptions rather than the static assumptions applied previously. Transaction Adjustment: The pool comprises owner-occupied (OO) and buy-to-let (BTL) loans. Fitch applied its non-conforming loan assumption to the OO sub-pool, along with a transaction adjustment of 1.0x. Fitch analysed the BTL loans using its BTL-specific assumptions, applying a higher transaction adjustment of 1.5x. The higher adjustment for the BTL sub-pool reflects the transaction's historical performance, where the proportion of loans in arrears by more than three months has consistently underperformed Fitch's non-conforming index. BTL Recovery Rate Cap: The transaction's reported losses exceed those expected based on the indexed value of the properties in the pool. Fitch has therefore applied borrower-level recovery rate (RR) caps to the BTL loans in the transaction in line with those applied to non-conforming loans, where the RR cap is 85% at 'Bsf' and 65% at 'AAAsf'. The downgrade of the class D, E and F notes reflects increased losses resulting from the application of the RR caps. The class A , B and C notes withstood the RR cap stress, as reflected in their affirmation. Arrears Stabilisation: One-month plus and three-month plus arrears were 8.7% and 6.5%, respectively, at the May 2025 payment date (9.2% and 6.4% as of the May 2024 interest payment date). The number and amount of loans in arrears have decreased in the last 12 months, suggesting a stabilisation in arrears build-up. Despite a decline in the total number of loans in arrears, the risk of migration to late-stage arrears remains a significant rating driver. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade The transaction's performance may be affected by adverse changes in market conditions and the economic environment. Weakening economic performance is strongly correlated to increasing delinquencies and defaults that could reduce credit enhancement available to the notes. In addition, unexpected declines in recoveries could result in lower net proceeds, which may make certain notes susceptible to negative rating action, depending on the extent of the decline in recoveries. Fitch found that a 15% increase in the WAFF and 15% decrease of the WARR would imply the following: Class A: 'AAAsf' Class B: 'AA-sf' Class C: 'BBB+sf' Class D: 'B+sf' Class E: 'CCCsf' Class F: Below 'CCCsf' Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade Stable to improved asset performance driven by stable delinquencies and defaults would lead to increasing credit enhancement and potential upgrades. Fitch found that a 15% decrease in the WAFF and 15% increase of the WARR would imply the following: Class A: 'AAAsf' Class B: 'AAAsf' Class C: 'AA+sf' Class D: 'Asf' Class E: 'BBBsf' Class F: 'B-sf' USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. Prior to the transaction closing, Fitch reviewed the results of a third party assessment conducted on the asset portfolio information and concluded that there were no findings that affected the rating analysis. Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. ESG Considerations 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. OEG GLOBAL: Moody's Affirms 'B1' CFR, Outlook Remains Stable ------------------------------------------------------------ Moody's Ratings has affirmed the B1 long term corporate family rating, the B1-PD probability of default rating of OEG Global Limited (OEG). Moody's also affirmed the B1 rating of the existing backed senior secured notes due 2029 (SSN) issued by OEG Finance Plc which are to be upsized from EUR465 million to EUR540 million. The outlook on both entities remains stable. The upsizing of the SSN supports the acquisition of a US based offshore energy rental services busines announced on the June 30, 2025 (the acquisition). RATINGS RATIONALE The ratings affirmation reflects Moody's assessments that OEG's credit profile remains overall unchanged after the completion of the acquisition of a regional leader in specialized rental solutions to the offshore energy sector in the USA. Moody's previously expected OEG to pursue small M&A transactions, with considerations no higher than $30 million, and exclusively targeting expansion of OEG's renewables division. Moody's have assessed, however, that the acquisition is credit neutral; it is an opportunistic transaction rather than strategically planned and further strengthen OEG's market share in the USA. The acquired fleet of cargo carrying units (CCU) would underpin the fulfillment of a recent contract award from a major oil & gas company in the USA, enabling OEG to maintain largely unchanged its previously planned investments in CCU fleet. Additionally, Moody's also expects the acquisition to be accretive to OEG's EBITDA and to Moody's adjusted free cash flow. On the other hand, the acquisition is financed entirely through new debt, which increases Moody's expected Moody's adjusted debt to EBITDA at the end of 2025 to about 4.0x on a pro-forma basis, from 3.7x Moody's previously expected. The acquisition is likely to increase OEG's Moody's adjusted EBITDA margin, which has weakened in the first quarter of 2025 due to a different business mix. OEG's B1 CFR reflects the company's: (1) leading position in the CCU rental market for oil & gas customers, further enhanced by the acquisition; (2) CCU division's predictable and resilient demand, with growth opportunities from increasing compliance with international standards of developing countries and expansion of ancillary services to existing clients; (3) strong cash flow generation from a large invested asset base of about 75k CCU units, with a younger average life than peers; (4) well-established presence and a track record, albeit short as a combined entity, in offshore wind projects, with the combination of its brands having worked on 90% of projects in Europe and the entirety of projects in Asia; and, (5) already having reached a highly scalable cost base in the renewables division, which provides clear competitive advantage when bidding for contracts in an industry still highly fragmented. The B1 CFR also takes into account: (1) a degree of customer and geographic concentration present in both the CCU and the renewables divisions; (2) the limited visibility and reliability of the historical pro-forma consolidated cash flow statements due to the significant number of acquisitions closed by the company in the past 3 years; (3) the renewables division being exposed to contracts win through bidding process, and contract unlikely to last more than 12-18 months on average; there is a potential for pricing pressure and likely EBITDA margin compression in the medium term, exacerbated by labour costs inflation; and, (4) the high probability of OEG completing further acquisitions which are likely to slow down Moody's base case deleveraging trajectory. LIQUIDITY OEG's liquidity is good. Liquidity is supported by a positive Moody's adjusted free cash flow and a super senior revolving credit facility (RCF) due in 2029. The RCF was upsized in conjunction with the transaction from $40 million to $75 million. Moody's expects the company to retain the cash generated within the business or to deploy for M&A add-on, and over time to build a sizeable cash buffer on the balance sheet. STRUCTURAL CONSIDERATIONS The B1 rating of the SSN is in line with the CFR. The $75 million revolver is structured as super senior and ranks ahead of the SSN. Moody's also views a number of existing secured senior facilities at OEG's operating companies to rank ahead of the SSN, although the amount is limited and amortizing over time. The only existing financial maintenance covenant has a springing nature and is tested only if the RCF is more than 40% drawn; if applicable, net leverage test is set at 5.5x and Moody's expects the company to be able to retain ample capacity. RATIONALE FOR THE STABLE OUTLOOK The stable outlook reflects Moody's expectations of mid to high single digit revenue growth and stable Moody's adjusted EBITDA margins at around 27%. Additionally, Moody's expects the company to continue to operate within its net debt leverage target of 2.5-3.5x, which Moody's understands it would have reached the higher end of the range on a pro-forma basis for the acquisition. Moody's also expects M&A activity not to be transformational, focused on the renewables division and largely funded with available cash on balance sheet, while maintaining at least adequate liquidity. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded over time if (1) OEG continues to diversify away from oil & gas customers improving the business profile; (2) Moody's adjusted debt to EBITDA approaches 3.5x, Moody's adjusted FCF/Debt ratio moves towards 10%, as well as Moody's adjusted EBITDA approaching 30%. An upgrade would also require the company to maintain a good liquidity profile. Ratings downgrade could occur if Moody's adjusted debt to EBITDA increases above 4.5x or Moody's adjusted FCF/Debt falls below 5% on a sustainable basis. Negative pressure on the rating could also develop if Moody's assesses that OEG's financial policy or M&A activity has become more aggressive, or Moody's adjusted Free Cash Flow becomes negative. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Oilfield Services published in January 2023. OEG's B1 CFR is positioned two notches below the Ba2 scorecard-indicated rating outcome derived from the company's 2024 audited accounts. The two notches differential reflect the expected decline in Moody's adjusted EBIT margin, integration cost resulting from the acquisition as well as the overhanging risk of additional M&A likely to be funded with existing liquidity and/or with additional debt. COMPANY PROFILE OEG is the largest global offshore service specialist with a focus on CCU logistics and a heritage going back more than 50 years. OEG Renewables is a one-stop shop provider of mission critical services to the development and maintenance of offshore wind farms, both above and below the sea surface. OEG Renewables contributes more than 50% of the group revenue and almost a third of group EBITDA through an asset light business model. The group posted revenue of $537.4 million and company's adjusted EBITDA of $154.2 million (28.7% margin) for the financial year ending December 31, 2024. PRAX PETROLEUM: Teneo Financial Named as Administrators ------------------------------------------------------- Prax Petroleum Limited was placed into administration proceedings in the High Court of Justice Business and Property Courts of England and Wales, Court Number: CR-2025-004412, and Paul James Meadows and Clare Boardman and Christopher Hirst of Teneo Financial Advisory Limited were appointed as administrators on June 30, 2025. Prax Petroleum engaged in the wholesale of petroleum and petroleum products. Its registered office is c/o Teneo Financial Advisory Limited, The Colmore Building, 20 Colmore Circus Queensway, Birmingham, B4 6AT It principal trading address is at Harvest House Horizon Business Village, 1 Brooklands Road, Weybridge, KT13 0TJ The joint administrators can be reached at: Paul James Meadows Clare Boardman Christopher Hirst Teneo Financial Advisory Limited The Colmore Building 20 Colmore Circus Queensway Birmingham, B4 6AT For further details contact: The Joint Administrators Email: praxcreditors@teneo.com PRAX TREASURY: Teneo Financial Named as Administrators ------------------------------------------------------ Prax Treasury Limited was placed into administration proceedings in the High Court of Justice Business and Property Courts of England and Wales, Court Number: CR-2025-004411, and Clare Boardman, Matthew Roe, and Paul James Meadows of Teneo Financial Advisory Limited were were appointed as administrators on June 30, 2025. Prax Treasury engaged in the wholesale of petroleum and petroleum products and retail sale of automotive fuel in specialised stores. Its registered office is c/o Teneo Financial Advisory Limited, The Colmore Building, 20 Colmore Circus Queensway, Birmingham, B4 6AT Its principal trading address is at Harvest House Horizon Business Village, 1 Brooklands Road, Weybridge, KT13 0TJ The joint administrators can be reached at: Paul James Meadows Clare Boardman Matthew Roe Teneo Financial Advisory Limited The Colmore Building 20 Colmore Circus Queensway Birmingham, B4 6AT For further details, contact: The Joint Administrators Tel No: praxcreditors@teneo.com STATE OIL: Teneo Financial Named as Administrators -------------------------------------------------- State Oil Limited was placed into administration proceedings in the High Court of Justice Business and Property Courts of England and Wales, Court Number: CR-2025-004410, and Clare Boardman, Matthew Roe and Paul James Meadows of Teneo Financial Advisory Limited were appointed as administrators on June 30, 2025. State Oil Limited engaged in the wholesale of petroleum and petroleum products and retail sale of automotive fuel in specialised stores. Its registered office is c/o Teneo Financial Advisory Limited, The Colmore Building, 20 Colmore Circus Queensway, Birmingham, B4 6AT Its principal trading address is at Harvest House Horizon Business Village, 1 Brooklands Road, Weybridge, KT13 0TJ The joint administrators can be reached at: Paul James Meadows Clare Boardman Matthew Roe Teneo Financial Advisory Limited The Colmore Building 20 Colmore Circus Queensway Birmingham, B4 6AT For further details, contact: The Joint Administrators Tel No: praxcreditors@teneo.com ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2025. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter Chapman at 215-945-7000. * * * End of Transmission * * *