250807.mbx

250807.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Thursday, August 7, 2025, Vol. 26, No. 157 Headlines B E L G I U M MEUSE FINCO: Fitch Cuts Sr. Sec. Debt Rating to BB-, Outlook Stable F R A N C E NOVA ORSAY: Moody's Assigns 'Ba3' CFR, Outlook Stable G E R M A N Y AVIV GROUP: S&P Assigned 'B-' Issue Rating; Outlook Positive G R E E C E PIRAEUS FINANCIAL: Moody's Hikes Subordinated Debt Rating to Ba1 I R E L A N D CAIRN CLO XX: S&P Assigns Prelim B- (sf) Rating to Class F Notes CARLYLE EURO 2025-2: S&P Assigns B- (sf) Rating to Class E Notes HAYFIN EMERALD XII: S&P Assigns Prelim B- (sf) Rating to F-R Notes SCULPTOR EUROPEAN XIII: S&P Assigns Prelim 'B-' Rating to F Notes L U X E M B O U R G CULLINAN HOLDCO: Moody's Lowers CFR to Caa1, Outlook Stable N E T H E R L A N D S NIQ GLOBAL: Fitch Assigns First-Time 'BB-' IDR, Outlook Stable S P A I N LUNA 2.5: Fitch Lowers IDR to 'B', Outlook Stable MIRAVET 2023-1: S&P Cuts Cl. F-Dfrd Notes Rating to 'BB+ (sf)' T U R K E Y TURK TELEKOMUNIKASYON: Fitch Hikes IDR to 'BB', Outlook Stable [] Moody's Takes Rating Actions on 17 Turkish Banks U N I T E D K I N G D O M CAISTER FINANCE: S&P Assigns Prelim B- (sf) Rating to Cl. F Notes TALKTALK TELECOM: S&P Cuts ICR to CCC- on Likely Debt Restructuring VICTORIA PLC: Moody's Affirms 'Caa1' CFR, Outlook Remains Negative - - - - - ============= B E L G I U M ============= MEUSE FINCO: Fitch Cuts Sr. Sec. Debt Rating to BB-, Outlook Stable ------------------------------------------------------------------- Fitch Ratings has downgraded Meuse Finco SA's senior secured debt rating to 'BB-' with a Recovery Rating of 'RR3', from 'BB'/'RR2'and removed it from Rating Watch Negative. Fitch has affirmed Meuse Bidco SA's Long-Term Issuer Default Rating (IDR) at 'B+' with a Stable Outlook. The rating actions follow the completion of a tap issue, increasing the term loan to EUR400 million from EUR306 million. 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 reflects its expectations of 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 'B+' IDR, despite the recent increase in debt. Key Rating Drivers Transaction Exhausts Leverage Headroom: The tap issue has added around EUR94 million of debt, which Fitch estimates will lead to an increase in EBITDAR leverage to 4.3x in 2025 (2024: 3.7x) remaining at 4.4x by 2027. This leaves little room for underperformance under the rating. Fitch assumes proceeds from the tap will be used for M&A and shareholder distributions. A looser financial policy, with additional dividend payouts, could lead to negative rating action. Its forecast assumes no dividends from Meuse's joint venture (JV) with Estoril in Portugal from 2026. If the JV generates consistent results and distributes dividends in line with management's expectations, leverage would improve by 0.2x-0.3x, more comfortably within the rating sensitivities. Regulatory Challenges in Core Markets: New player safety regulations in Belgium (2024: 58% of the group's revenues) and the 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, 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 revenue to remain flat 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 it consistently generate positive pre-dividend free cash flow (FCF) margins in the mid-to-high single digits, supporting its rating position at the higher end of the 'B' rating category. 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 a 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). Combined with weaker leverage than BetClic's, this results in a one-notch rating difference. Allwyn's business profile is materially stronger than Meuse's, with larger scale and better geographical diversification. This is moderately balanced by 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 Fitch's Key Assumptions within its Rating Case for the Issuer: - Net gaming revenue CAGR of 2.2% for 2025-2028, primarily driven by organic online growth - EBITDAR margin at 26.6% for 2025-2028 - Neutral working capital for 2025-2028 - Annual capex of 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 assumes 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 it 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 its criteria, Fitch assumed Meuse's EUR100 million revolving credit facility (RCF) is fully drawn on default. Its EUR400 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 'RR3' band, versus previous 'RR2' band with lower debt amount, resulting in a downgrade to 'BB-' instrument rating for its term loan B. 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 EUR100 million and sustained positive FCF margins that Fitch forecasts will stay in the mid-to-high single digits. Meuse has no material maturity before 2030. Issuer Profile Meuse is an omnichannel gaming and sports-betting operator with a leading position in Belgium (60% of gross gaming revenue), 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- Downgrade RR3 BB Meuse Bidco SA LT IDR B+ Affirmed B+ =========== F R A N C E =========== NOVA ORSAY: Moody's Assigns 'Ba3' CFR, Outlook Stable ----------------------------------------------------- Moody's Ratings assigned a Ba3 long term corporate family rating Nova Orsay S.A.S. (Fives or the company), the ultimate parent and consolidating entity of Fives S.A.S. The outlook on Nova Orsay S.A.S. is stable. Concurrently, Moody's withdrew the B3 CFR and B3-PD PDR at Nova Alexandre III S.A.S., the intermediate holding of the group. Moody's expects this entity to be dissolved over time after the repayment of debt it issued. Previously, these ratings were on review for upgrade. The rating action concludes this review process Moody's initiated on 28 March 2025. RATINGS RATIONALE The effective upgrade of Fives to Ba3 from B3 primarily reflects the company using the proceeds from the sale of its cryogenic business unit to significantly reduce its leverage and improve its liquidity, which will more than offset somewhat weakened business profile with reduced scale and profitability. It also factors in Moody's expectations that Fives will follow more conservative financial policies and manage its growth without a substantial and sustained increase in leverage. In July 2025, Fives completed the sale of its cryogenic business unit to the Swedish industrial group Alfa Laval AB for around EUR800 million. The business unit generated around EUR200 million in revenue in 2024 with margins well above Fives' average. With the proceeds, Fives repaid its EUR430 million bond, paid EUR40 million in debt amortization on a state-guaranteed loan, and plans to repay EUR105 million drawings under its revolving credit facility (RCF). Moody's expects further debt repayments with the remaining proceeds in 2025 and 2026. Additionally, it plans to fund a bolt-on acquisition in Italy for EUR60- EUR70 million gross cash consideration (around EUR30- EUR40 million net cash consideration). Reflecting the acquisition and the disposal of the cryogenic business, Moody's forecasts Fives to generate around EUR120 million of Moody's-adjusted EBITDA in both 2025 and 2026, compared to roughly EUR160 million in 2024. In this base case scenario, the company's Moody's-adjusted gross leverage will substantially decrease to about 1.5x in 2025 and 2026 from 5.3x in 2024. Moody's expects that Fives will follow more conservative financial policies and operate largely around Moody's-adjusted debt/EBITDA of 1.5x. While M&A remains a risk factor, the Ba3 CFR assumes that Fives will manage its growth conservatively, not exceeding Moody's-adjusted gross leverage above 3.0x (translating to around 1.5x the company's-reported net leverage). Moody's also do not expect meaningful shareholder distributions. In addition to reduced leverage, the disposal also improves Fives' liquidity. Moody's expects the company to repay EUR105 million outstanding drawings under its EUR164 million RCF. Reduced interest will also support a return to positive free cash flow (FCF) of around EUR20 million in 2026 in Moody's base case scenario. The Ba3 CFR also recognizes Fives' leading positions in engineering niche markets; some exposure to sectors with favorable mid-term trends related to decarbonization, automation and growth in e-commerce; diversified end-market and customer exposure; and improving margins and track record of successful project execution since 2022. Conversely, the Ba3 CFR continues to be constrained by Fives' decreasing order intake in 2024 and Q1 2025 due to weakening demand; relatively low profitability, although typical for engineering companies; lower scale, EBITDA and FCF generation compared to most Ba-rated peers; risks related to project execution; and high FCF and EBITDA volatility in project business exposed to cyclical markets. RATIONALE FOR THE STABLE OUTLOOK The stable outlook reflects Moody's expectations that Fives' Moody's-adjusted gross leverage will reduce towards 1.5x and its Moody's-adjusted funds from operations (FFO)/debt will increase to around 40% by year-end 2026, as the company pays down debt. Moody's also expects that the company will maintain good liquidity, supported by a return to positive FCF in 2026. The stable outlook does not assume sizeable debt-funded M&A that would significantly increase gross leverage, nor meaningful shareholder distributions. ESG CONSIDERATIONS Governance considerations have been among primary drivers of this rating action, reflecting improvement in liquidity and Moody's expectations of a significant and sustained leverage reduction. It also considers improving operational track record since 2022. As a result, Moody's have effectively revised Fives' governance issuer profile score to G-3 from G-4 and its credit impact score to CIS-3 from CIS-4. LIQUIDITY Fives' liquidity is good. It is supported by EUR127 million in cash as of March 2025 and around EUR150 million remaining from the EUR800 million proceeds from the cryogenics unit disposal. Moody's expects that Fives will use the remaining funds for further debt repayment at Fives' discretion. Liquidity is also supported by a fully available EUR164 million RCF pro forma for the transaction. The RCF is due in December 2026 and Moody's expects Fives to refinance it in the coming few months. The company often draws under its RCF to cover volatile project payments and significant working capital swings. It typically builds up working capital in first three quarters of the year, releasing it in the last quarter. Following the debt repayment, Fives does not face any sizeable debt maturities in the next couple of years except the last EUR40 million installment under a French state-guaranteed loan maturing in July 2026. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS An upgrade would primarily require an improvement in business profile, as evidenced by greater EBITDA, enhanced profitability and stronger and less volatile FCF generation. Evidence of Fives following conservative financial policies, as reflected in Moody's-adjusted Debt/EBITDA increasing above 1.5x only temporarily and Moody's-adjusted FFO/debt sustained above 40%, would also support an upgrade. Maintenance of good liquidity would also be critical for an upgrade. Conversely, more aggressive financial policies, for instance because of sizeable debt-funded acquisitions or shareholder distributions that would lead to Moody's-adjusted debt/EBITDA increasing sustainably towards 3.0x, could lead to a downgrade. Additional factors that would build negative rating pressure include evidence of sustained margin erosion and weak cash flow generation, as indicated by Moody's-adjusted FFO/debt deteriorating sustainably below 25%. Weakened liquidity, for instance because of higher-than-expected RCF drawings or significantly negative FCF, could also indicate a downgrade. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Manufacturing published in September 2021. The Ba3 CFR is two notches above the B2 scorecard indicated outcome for the last twelve months to March 2025, which does not yet reflect debt repayments. The 12-18 months forward-looking scorecard-indicated outcome on Fives' new capital structure is Ba2, factoring in debt repayments as well as a revision of Financial Policy factor to Ba from B. The one notch difference to the Ba3 CFR can be mainly explained by the lack of track record of Fives operating sustainably with lower leverage and positive FCF. COMPANY PROFILE Fives is a global industrial engineering group. The company designs machines, process equipment, and production lines for various industries, including automotive, logistics (e-commerce, courier, and retail), steel, aluminum, energy, cement, and aerospace. Before the cryogenics business unit disposal, Fives employed around 9,000 people and operated roughly 100 units in 25 countries. ============= G E R M A N Y ============= AVIV GROUP: S&P Assigned 'B-' Issue Rating; Outlook Positive ------------------------------------------------------------ S&P Global Ratings assigned a 'B-' issuer and issue ratings to AVIV Group GmbH and its term loan B (TLB). The recovery rating on the EUR1.13 billion TLB is '3'. The positive outlook indicates that S&P could raise its rating on AVIV in the next 12-18 months if the group performs in line with our expectations, such that S&P Global Ratings adjusted leverage fell below 7.0x and FOCF to debt improved above 5%. The ratings are in line with the preliminary ratings S&P assigned earlier this year. Real estate online classifieds operator AVIV Group GmbH was split from the media and tech group Axel Springer SE and became a stand-alone entity with its own financing earlier this year. AVIV remains under the majority ownership of financial sponsors KKR & Co. and its affiliates (KKR), and Canadian Pension Plan Investments (CPPI), through its holding company Traviata B.V. AVIV is undergoing a transformation, which S&P expects will lead to operating simplicity and operating expenditure savings. Still, the group is incurring material capitalized development and transformation costs that will continue to constrain S&P Global Ratings-adjusted credit metrics until 2026. S&P said, "We expect tough economic conditions and competition will dampen growth in AVIV's core resale segment in the next year, but new products and acquisitions will continue to support top-line growth. We now anticipate top-line growth of 4%-5% in 2025 (compared with our previous expectation of about 7%), affected by still-tough credit conditions in France, its biggest market, as well as tough competition from Leboncoin and Immoscout in France and Germany, respectively. Belgium and Israel continue to post very strong performance, boosted by the group's clear No. 1 positions in the two countries. We continue to anticipate group revenue growth to return to 7%-8% from 2026 onward, underpinning our expectation that the core resale activity will normalize in France and Germany, while new products (including seller leads and private listings) continue to gain traction. "Slower operational transformation will limit the dip in credit metrics in 2025, but dampen somewhat the improvement in leverage and free cash flow in 2026. High exceptional costs will drive subdued profitability and negative FOCF in 2025. We estimate this will lead to high initial leverage of 9.5x in 2025. At the same time, if the planned transformation proceeds as planned, we expect leverage to improve sharply to below 6.0x in 2026, driven by S&P Global Ratings-adjusted EBITDA margins expanding above 30% (from 18%-22% in 2024-2025). We forecast margins could rise above 35% from 2027 onward, once the transformation plan is fully complete. The EBITDA improvement will mainly come from a sharp reduction in tech platform-related costs, lower transformation costs, and our expectation of sound top-line growth. "After the CEO change, management is reviewing strategic priorities. The new chief executive brings sound experience in the classifieds space, having served as CEO of Avito, a leading Eastern European horizontal classifieds platform. We understand the change in executive leadership has led to a temporary pause in the turnaround plan's execution. Still, we understand that the group remains committed to the transformation and significant cost savings. "Group credit considerations don't affect our view on AVIV's credit quality. The company, along with the online job classifieds business Stepstone (B/Stable/--), was split from Axel Springer in a transaction that closed in second-quarter 2025. KKR and CPPI now own about 90% of AVIV and Stepstone through its holding company Traviata. The remaining minority stake of approximately 10% is owned by Axel Springer SE. The classified businesses, including AVIV, operate as separate and independent entities and have set up financing through separate restricted groups. We view Traviata as the intermediate holding company whose primary purpose is to control these operating companies and which will generally rely on these companies' cash flow to service its financial obligations. Traviata refinanced its term loan with a new payment-in-kind instrument in early 2025. This instrument is subordinated to the debt of all operating companies, is nonrecourse, has a longer maturity than their debt, will not require cash interest payments, and is expected to be repaid after the sale of Stepstone and/or AVIV. "We view Traviata's creditworthiness as somewhat stronger than that of AVIV. This is on account of its lower leverage, larger scale of operations, and a more diversified business mix. Nevertheless, we do not think that the likelihood of extraordinary support from Traviata is strong enough to positively impact our ratings on AVIV. "The positive outlook indicates that we could raise our rating on AVIV in the next 12-18 months if the group performs in line with our expectations, such that S&P Global Ratings-adjusted leverage fell below 7.0x and FOCF to debt improved toward 5%. "We could revise our outlook to stable if AVIV failed to receive the projected cost savings that would improve EBITDA margins toward 30%, or if the top line fell materially short of expectations, leading to sustained leverage above 7.0x and FOCF to debt remaining well below 5% consistently. "We could raise the ratings on AVIV if it delivered strong revenue growth and improving S&P Global Ratings-adjusted EBITDA margins toward 30% such that its S&P Global Ratings-adjusted leverage fell below 7.0x consistently and FOCF to debt approached 5%. This improvement would reflect sound progress in the transformation plan's progress contributing to stronger profitability and cash flow. We could also raise the ratings on AVIV if the parent group's creditworthiness improved materially." =========== G R E E C E =========== PIRAEUS FINANCIAL: Moody's Hikes Subordinated Debt Rating to Ba1 ---------------------------------------------------------------- Moody's Ratings has upgraded Piraeus Financial Holdings S.A.'s (PFH) long-term subordinated debt (Tier 2) rating to Ba1 from Ba2 and its subordinated MTN program ratings to (P)Ba1 from (P)Ba2. Moody's also upgraded Piraeus Bank S.A.'s subordinated MTN program ratings to (P)Ba1 from (P)Ba2. The rest of the ratings and assessments of PFH and its operating subsidiary (Piraeus Bank S.A.) remain unaffected by this rating action. The stable outlook for the holding company's long-term issuer ratings as well as for the senior unsecured debt and long-term deposit ratings of Piraeus Bank S.A. remains unaffected. RATINGS RATIONALE ADVANCED LOSS GIVEN FAILURE (LGF) ANALYSIS POINTS TO LOWER LOSSES FOR SUBORDINATED DEBT CREDITORS The upgrade of the group's subordinated rating to Ba1 from Ba2 is driven by lower losses in case of failure, as Moody's expects the group will continue to maintain significant bail-in-able debt, and therefore sustain a buffer above its internal minimum requirement for own funds and eligible liabilities (MREL). The group's MREL target of 27.5% by the end of June 2025 (with no subordination requirement) was already met at 30.4% in June 2025, providing a good loss absorbing cushion to senior and subordinated creditors. Moody's forward-looking Advanced Loss Given Failure (LGF) analysis therefore indicates lower loss severity for Tier 2 creditors in the event of the bank's failure reflecting the loss absorption provided by more junior instruments of the group. This now results in the positioning of its subordinated rating at the same level as Piraeus Bank S.A.'s Adjusted Baseline Credit Assessment (Adjusted BCA) of ba1, up from one notch lower than its Adjusted BCA previously. Moody's also expects that the group's intention to carry out a reverse merger between PFH and Piraeus Bank S.A. before the end of 2025, which will leave in place one unified legal entity (Piraeus Bank S.A.) that will take over all outstanding junior liabilities of the group (including Tier 2 and Additional Tier 1 notes), is unlikely to have any rating impact. OUTLOOK The stable outlook on PFH's long-term issuer ratings as well as on the long-term deposit and senior unsecured ratings of Piraeus Bank S.A. balances Moody's expectations that although the group's credit profile will continue to improve in the next 12-18 months, its capital metrics will come under some modest pressure from its announced Ethniki Insurance acquisition. Through this acquisition the bank is likely to increase further its non-interest income and improve its earnings profile over the medium term, but capital metrics will decline, while it will take some time for its government-guaranteed delinquent loans and real-estate owned assets to be resolved, continuing to weigh on Moody's capital assessment for the group. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The deposit and senior unsecured debt ratings could be upgraded if there is any further improvement in the bank's tangible capital metrics and overall asset quality, which will make them more comparable to its local peers, while it maintains solid profitability and favourable cost base. In addition, upward rating pressure could be exerted when the bank successfully integrates Ethniki Insurance into its group, and there are visible tangible benefits from this recent transaction that will further improve its solvency. Conversely, the bank's ratings could be downgraded in the event of a sharp increase in its new non-performing exposures (NPEs) formation, or in case it does not meet its capital projections going forward. Any deterioration in the operating environment will also exert downward pressure on the bank's ratings. The ratings could be downgraded as a result of a reduction in the volume of loss-absorbing liabilities protecting creditors and depositors in case of failure, compared to its current funding projections and growth plans. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Banks published in November 2024. The net effect of any adjustments applied to rating factor scores or scorecard outputs under the primary methodology(ies), if any, was not material to the ratings addressed in this announcement. ============= I R E L A N D ============= CAIRN CLO XX: S&P Assigns Prelim B- (sf) Rating to Class F Notes ---------------------------------------------------------------- S&P Global Ratings assigned preliminary credit ratings to Cairn CLO XX DAC's class A-1, A-2, B, 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 switch to semiannual payments. This transaction has a two-year non-call period and the portfolio's reinvestment period will end five years after closing. The preliminary 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 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 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 2,715.74 Default rate dispersion 614.53 Weighted-average life (years) 4.87 Weighted-average life (years) extended to match reinvestment period 5.00 Obligor diversity measure 143.46 Industry diversity measure 17.32 Regional diversity measure 1.16 Transaction key metrics Total par amount (mil. EUR) 450.00 Defaulted assets (mil. EUR) 0 Number of performing obligors 170 Portfolio weighted-average rating derived from S&P's CDO evaluator B 'CCC' category rated assets (%) 1.00 'AAA' target portfolio weighted-average recovery (%) 37.34 Actual weighted-average spread (net of floors, %) 3.97 Actual weighted-average coupon (%) 3.89 Rating rationale S&P said, "Our preliminary ratings reflect our assessment of the preliminary collateral portfolio's credit quality, which has a weighted-average rating of 'B'. At closing, we consider that the portfolio will be 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 modelled the EUR450 million par amount, the actual weighted-average spread of 3.97%, the covenanted weighted-average coupon of 3.89%, 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. "We expect the transaction's documented counterparty replacement and remedy mechanisms to adequately mitigate its exposure to counterparty risk under our counterparty criteria. "Following the application of our structured finance sovereign risk criteria, we consider the transaction's exposure to country risk limited at the assigned preliminary ratings, as the exposure to individual sovereigns does not exceed the diversification thresholds outlined in our criteria. "We expect the transaction's legal structure to be bankruptcy remote, in line with our legal criteria. "Our credit and cash flow analysis indicates that the available credit enhancement for the class B to F 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 preliminary ratings on the notes. The class A-1 and A-2 notes could withstand stresses commensurate with the assigned preliminary 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-1 to E notes based on four hypothetical scenarios. "As our ratings analysis makes additional considerations before assigning ratings in the 'CCC' category, and we would assign a 'B-' rating if the criteria for assigning a 'CCC' category rating are not met, we have not included the above scenario analysis results for the class F notes." Environmental, social, and governance S&P said, "We regard the exposure to environmental, social, and governance (ESG) credit factors in the transaction as being broadly in line with our benchmark for the sector. Primarily due to the diversity of the assets within CLOs, the exposure to environmental credit factors is viewed as below average, social credit factors are below average, and governance credit factors are average. For this transaction, the documents prohibit assets from being related to certain activities. Accordingly, since the exclusion of assets from these industries does not result in material differences between the transaction and our ESG benchmark for the sector, no specific adjustments have been made in our rating analysis to account for any ESG-related risks or opportunities." Cairn CLO XX DAC 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. Cairn Loan Investments II LLP and Polus Capital Management Limited will manage the transaction. Ratings Prelim. Prelim. Amount Credit Class rating* (mil. EUR) enhancement (%) Interest rate§ A-1 AAA (sf) 275.40 38.80 Three/six-month EURIBOR plus 1.35% A-2 AAA (sf) 5.85 37.50 Three/six-month EURIBOR plus 1.70% B AA (sf) 47.25 27.00 Three/six-month EURIBOR plus 2.00% C A (sf) 27.00 21.00 Three/six-month EURIBOR plus 2.40% D BBB- (sf) 31.50 14.00 Three/six-month EURIBOR plus 3.25% E BB- (sf) 18.00 10.00 Three/six-month EURIBOR plus 5.70% F B- (sf) 15.75 6.50 Three/six-month EURIBOR plus 8.43% Sub. Notes NR 35.90 N/A N/A *S&P's preliminary ratings on the class A-1, A-2, and B notes address timely interest and ultimate principal payments. Its preliminary ratings on 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. CARLYLE EURO 2025-2: S&P Assigns B- (sf) Rating to Class E Notes ---------------------------------------------------------------- S&P Global Ratings assigned credit ratings to the class A-1A, A-1B, A-2, B, C, D, and E notes issued by Carlyle Euro CLO 2025-2 DAC. 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 4.45 years after closing and the non-call period will end 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 our counterparty rating framework. Portfolio benchmarks S&P Global Ratings' weighted-average rating factor 2,883.70 Default rate dispersion 361.67 Weighted-average life (years) 4.78 Obligor diversity measure 129.08 Industry diversity measure 19.65 Regional diversity measure 1.32 Transaction key metrics Portfolio weighted-average rating derived from S&P's CDO evaluator B 'CCC' category rated assets (%) 0.00 Actual 'AAA' weighted-average recovery (%) 35.50 Actual weighted-average coupon (%) 4.10 Actual weighted-average spread (%) 3.80 S&P said, "Our ratings reflect our assessment of the collateral portfolio's credit quality, which has a weighted-average rating of 'B'. The portfolio primarily comprises broadly syndicated speculative-grade senior secured term loans and 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 actual weighted-average spread (3.80%), the covenanted weighted-average coupon (3.85%), and the actual weighted-average recovery rate at each rating level calculated in line with our CLO criteria. 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. "Our credit and cash flow analysis show that the class A-2, B, C, and D 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 these classes of notes. The class A-1A, A-1B, and E notes can withstand stresses commensurate with the assigned ratings. "Until the end of the reinvestment period on Jan. 15, 2030, 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 default potential of the current portfolio 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, we consider that 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 is bankruptcy remote, in line with our legal criteria. "For the class E 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 E notes reflects several key factors, including: -- The class E notes' available credit enhancement, which is in the same range as that of other CLOs S&P has rated and that has recently been issued in Europe. -- The 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 26.69% (for a portfolio with a weighted-average life of 4.78 years), versus if it was to consider a long-term sustainable default rate of 3.1% for 4.78 years, which would result in a target default rate of 14.82%. -- S&P does not believe that there is a one-in-two chance of this tranche defaulting. -- S&P does not envision this tranche defaulting in the next 12-18 months. -- Following this analysis, S&P considers that the available credit enhancement for the class E 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 that our ratings are commensurate with the available credit enhancement for the class A-1A to E notes. "In addition to our standard analysis, to provide an indication of how rising pressures among speculative-grade corporates could affect our ratings on European CLO transactions, we have also included the sensitivity of the ratings on the class A-1A to D 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 E notes." Environmental, social, and governance S&P said, "We regard the exposure to environmental, social, and governance (ESG) credit factors in the transaction as being broadly in line with our benchmark for the sector. Primarily due to the diversity of the assets within CLOs, the exposure to environmental credit factors is viewed as below average, social credit factors are below average, and governance credit factors are average. "For this transaction, the documents prohibit assets from being related to certain activities. Accordingly, since the exclusion of assets from these industries does not result in material differences between the transaction and our ESG benchmark for the sector, no specific adjustments have been made in our rating analysis to account for any ESG-related risks or opportunities." The transaction securitizes a portfolio of primarily senior secured leveraged loans and bonds and is managed by Carlyle CLO Partners Manager LLC. Ratings Amount Credit Class Rating* (mil. EUR) Interest rate§ enhancement (%) A-1A AAA (sf) 244.00 Three-month EURIBOR 39.00 plus 1.34% A-1B AAA (sf) 4.00 Three-month EURIBOR 38.00 plus 1.70% A-2 AA (sf) 42.70 Three-month EURIBOR 27.33 plus 1.95% B A (sf) 25.20 Three-month EURIBOR 21.03 plus 2.35% C BBB- (sf) 28.10 Three-month EURIBOR 14.00 plus 3.20% D BB- (sf) 18.00 Three-month EURIBOR 9.50 plus 5.90% E B- (sf) 12.00 Three-month EURIBOR 6.50 plus 8.51% Sub NR 34.20 N/A N/A The ratings assigned to the class A-1A, A-1B, and A-2 notes address timely interest and ultimate principal payments. The ratings assigned to the class B, C, D, and E 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. HAYFIN EMERALD XII: S&P Assigns Prelim B- (sf) Rating to F-R Notes ------------------------------------------------------------------ S&P Global Ratings assigned its preliminary credit ratings to Hayfin Emerald CLO XII DAC's class X, A-R, B-1-R, B-2-R, C-R, D-R, E-R, and F-R notes. At closing, the issuer will also issue unrated subordinated notes. This transaction is a reset of the already existing transaction. The existing classes of notes will be fully redeemed with the proceeds from the issuance of the replacement notes. Under the transaction documents, the rated notes will pay quarterly interest unless a frequency switch event occurs, upon which the notes pay semiannually. This transaction has a 1.7 year non-call period, and the portfolio's reinvestment period will end 4.7 years after closing. The ratings assigned to the reset notes 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, excess spread, and overcollateralization. -- The collateral manager's experienced team, which can affect the performance of the rated notes through collateral selection, ongoing portfolio management, and trading. -- The transaction's legal structure, which S&P expects to be bankruptcy remote. -- The transaction's counterparty risks, which S&P expects to be in line with its counterparty rating framework. Portfolio benchmarks S&P Global Ratings weighted-average rating factor 2,605.43 Default rate dispersion 713.72 Weighted-average life (years) 4.39 Obligor diversity measure 121.38 Industry diversity measure 17.11 Regional diversity measure 1.21 Transaction key metrics Total par amount (mil. EUR) 372.91 Defaulted assets (mil. EUR) 4.86 Number of performing obligors 157 Portfolio weighted-average rating derived from S&P's CDO evaluator B 'CCC' category rated assets (%) 1.74 'AAA' actual portfolio weighted-average recovery (%) 36.47 Actual weighted-average spread (%) 3.77 Actual weighted-average coupon (%) 3.25 Rating rationale 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 that the portfolio will primarily comprise broadly syndicated speculative-grade senior secured term loans and bonds on the effective date. 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 EUR372.91 million par amount, the actual weighted-average spread (3.77%), the actual weighted-average coupon (3.25%), and the actual portfolio weighted-average recovery rates 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. "We expect the transaction's documented counterparty replacement and remedy mechanisms to adequately mitigate its exposure to counterparty risk under our counterparty criteria. "Following the application of our structured finance sovereign risk criteria, we consider the transaction's exposure to country risk to be limited at the assigned preliminary ratings, as the exposure to individual sovereigns does not exceed the diversification thresholds outlined in our criteria. "Until the end of the reinvestment period on April 25, 2030, 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 it compares that with the current portfolio's default potential plus par losses to date. As a result, until the end of the reinvestment period, the collateral manager may through trading deteriorate the transaction's current risk profile, if the initial ratings are maintained. "We expect the transaction's legal structure to be bankruptcy remote, in line with our legal criteria." "The operational risk associated with key transaction parties (such as the collateral manager) that provide an essential service to the issuer is in line with our operational risk criteria. "Our credit and cash flow analysis indicate that the available credit enhancement for the class B-1-R to E-R notes could withstand stresses commensurate with higher preliminary 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 capped our assigned preliminary ratings on the notes. The class X, A-R, and F-R notes can withstand stresses commensurate with the assigned preliminary ratings. "In addition to our standard analysis, to indicate how rising pressures among speculative-grade corporates could affect our ratings on European CLO transactions, we also included the sensitivity of the ratings on the class X 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 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 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." Hayfin Emerald CLO XII is a European cash flow CLO securitization of a revolving pool, comprising mainly euro-denominated senior secured loans and bonds issued by speculative-grade borrowers. Hayfin Emerald Management LLP will manage the transaction. Ratings list Prelim Prelim amount Credit Class rating* (mil. EUR) Interest rate§ enhancement (%) X AAA (sf) 3.00 Three/six-month EURIBOR 38.67 plus 1.00% A-R AAA (sf) 228.70 Three/six-month EURIBOR 38.67 plus 1.42% B-1-R AA (sf) 34.40 Three/six-month EURIBOR 28.11 plus 2.10% B-2-R AA (sf) 5.00 5.20% 28.11 C-R A (sf) 23.30 Three/six-month EURIBOR 21.86 plus 2.65% D-R BBB- (sf) 27.20 Three/six-month EURIBOR 14.56 plus 3.80% E-R BB- (sf) 17.00 Three/six-month EURIBOR 10.01 plus 6.50% F-R B- (sf) 12.20 Three/six-month EURIBOR 6.73 plus 8.50% Sub. Notes NR 25.475 N/A N/A *The preliminary ratings assigned to the class X, 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. SCULPTOR EUROPEAN XIII: S&P Assigns Prelim 'B-' Rating to F Notes ----------------------------------------------------------------- S&P Global Ratings assigned its preliminary ratings to Sculptor European CLO XIII DAC's class A, B, C, D, E, and F notes. At closing, the issuer will also issue unrated subordinated notes. The preliminary ratings assigned to Sculptor European CLO XIII DAC's 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 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 weighted-average rating factor 2,790.10 Default rate dispersion 516.55 Weighted-average life (years) 4.71 Weighted-average life (years) extended to cover the length of the reinvestment period 5.00 Obligor diversity measure 132.12 Industry diversity measure 21.34 Regional diversity measure 1.20 Transaction key metrics Portfolio weighted-average rating derived from S&P's CDO evaluator B 'CCC' category rated assets (%) 0.50 'AAA' targeted weighted-average recovery (%) 37.91 Targeted weighted-average spread (%) 3.84 Targeted weighted-average coupon (%) 4.79 Rationale 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 payments. The portfolio's reinvestment period will end approximately 5.00 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 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 covenanted weighted-average spread (3.65%), the covenanted weighted-average coupon (4.00%), and the targeted weighted-average recovery rates calculated in line with our CLO criteria 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. "Our credit and cash flow analysis indicates that the available credit enhancement for the class B to E notes could withstand stresses commensurate with higher ratings than those assigned. However, until the end of the reinvestment period on Aug. 7, 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 notes. 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. We have therefore capped our preliminary ratings on the notes. "Our credit and cash flow analysis indicates that the available credit enhancement for the class F notes could withstand stresses commensurate with a lower rating. However, we have applied our 'CCC' rating criteria and assigned a rating of '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 26.07% (for a portfolio with a weighted-average life of 5.0 years), versus if we were to consider a long-term sustainable default rate of 3.1% for 5.0 years, which would result in a target default rate of 15.50%. -- 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. 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. "Under our structured finance sovereign risk criteria, we consider the transaction's exposure to country risk 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 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 Sculptor Europe Loan Management Ltd., and the maximum potential rating on the liabilities is 'AAA' under our operational risk criteria. S&P said, "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 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 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 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." Sculptor European CLO XIII DAC 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 Sculptor Europe Loan Management Ltd. Ratings list Prelim. Prelim. Amount Credit Class rating* (mil. EUR) Interest rate§ enhancement (%) A AAA (sf) 248.00 Three/six-month EURIBOR 38.00 plus 1.34% B AA (sf) 44.00 Three/six-month EURIBOR 27.00 plus 2.00% C A (sf) 24.00 Three/six-month EURIBOR 21.00 plus 2.35% D BBB- (sf) 28.00 Three/six-month EURIBOR 14.00 plus 3.25% E BB- (sf) 18.00 Three/six-month EURIBOR 9.50 plus 6.00% F B- (sf) 12.00 Three/six-month EURIBOR 6.50 plus 8.67% Sub NR 33.60 N/A N/A *The preliminary ratings assigned to the class A and B notes address timely interest and ultimate principal payments. The preliminary ratings assigned to the class C, D, E, and F notes address ultimate interest and principal payments. §The payment frequency switches to semiannual and the index switches to six-month EURIBOR when a frequency switch event occurs. EURIBOR--Euro Interbank Offered Rate. NR--Not rated. N/A--Not applicable. =================== L U X E M B O U R G =================== CULLINAN HOLDCO: Moody's Lowers CFR to Caa1, Outlook Stable ----------------------------------------------------------- Moody's Ratings downgraded the long term corporate family rating of Cullinan Holdco SCSp (Graanul or the company) to Caa1 from B3, the probability of default rating to Caa1-PD from B3-PD as well as the rating of the backed senior secured EUR250 million floating rate notes (FRNs) and EUR380 million fixed rate notes (SSNs) maturing October 2026, issued by Cullinan Holdco SCSp, to Caa1 from B3. The outlook remains stable. RATINGS RATIONALE The rating action reflects: -- Moody's expects that changes to the UK's subsidy scheme will result in Drax – Graanul's largest customer that accounted for about 60% of its 2024 revenues – buying less pellets from third-party suppliers including Graanul from 2027 onwards. Depending on the magnitude of lower future sales generated with Drax as well as Graanul's ability to find new customers, materially lower group EBITDA from a significant volume loss could result in an unsustainable capital structure starting 2027. -- Changing regulation in key end markets such as the UK and the EU that adversely affects current treatment of woody biomass could also negatively affect sales volumes. -- In addition, the company has announced its aim to extend the maturity of its backed senior secured bonds by three years, having already secured support from the Revolving Credit Facility (RCF)-providing banks and 50% of noteholders. To incentivize this, the company offers a EUR55 million upfront paydown, which on a pro-forma basis reduces the outstanding amount of the FRNs to EUR231 million and of the SSNs to EUR351 million. -- In addition, Graanul offers a 100 basis point upfront consent fee during the early bird period as well as a step-up call premium equivalent to a 250 basis point PIK margin uplift on the FRNs and the SSNs. It intends to continue paying existing coupons in cash. -- The proposed transaction will constitute a distressed exchange, according to Moody's definitions, which considers such a transaction as default avoidance given the extension of the bonds' maturity. -- The proposed transaction extends the bond maturities by three years to October 2029 and reduces the amount of outstanding bonds by EUR55 million to around EUR575 million (excluding OID). However, substantial risks around Graanul's ability to generate sufficient EBITDA to maintain a sustainable capital structure remain. -- The rating action also reflects the uncertainty in receiving the 90% bondholder consent required for the consensual extension of maturity. The downgrade of the ratings reflects corporate governance considerations associated with the proposed amendment of the backed senior secured notes. The extension of the maturity of the backed senior secured notes, once concluded, will be viewed as a distressed exchange. LIQUIDITY Graanul's liquidity is adequate. It is supported by EUR39 million cash (pro-forma the proposed transaction), access to an undrawn EUR100 million RCF and Moody's expectations of EUR37 million of free cash flow (FCF) generation in 2025. FCF is supported by low capital expenditure of around EUR10 million annually for maintenance, compared to around EUR48 million of annual depreciation. The EUR26 million proceeds from the vessel funding that the company obtained in late 2024 supported the reduction of bond debt. The vessel funding is an amortising loan with quarterly repayments of around EUR1.1 million and a balloon payment of EUR7.5 million at maturity in November 2029. STRUCTURAL CONSIDERATIONS If the proposed consent solicitation is accepted by bondholders and will be put in place, Moody's expects that the lower amount of bond debt that ranks behind the super senior RCF, trade claims and the vessel funding will result in a one-notch difference between the CFR and the instrument rating post the closing of the proposed transaction. OUTLOOK The outlook is stable. It factors in sales visibility over the 2025/26 period and gives Graanul time over the coming months to sign binding contracts with existing or new customers to avoid adverse effects from its production volumes from late 2026 and after. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be downgraded (1) absent a meaningful recovery of wood pellets prices and restoration of sustainable EBITDA; (2) gross debt/EBITDA above 8.0x; (3) EBITA/interest expense below 1.0x; or (4) deterioration of the company's liquidity, including lack of progress on timely refinancing of the RCF or bonds. For ratings to be upgraded Moody's expects greater visibility and certainty around market dynamics from 2027 onwards, and Graanul's ability to maintain current sales volumes and pricing. The ratings could be upgraded if (1) leverage is sustained below 6.5x gross debt/EBITDA, (2) EBITA margin restored to levels above 15%, (3) EBITA/interest expense above 1.5x, and (4) maintenance of adequate liquidity. All metric references are Moody's-adjusted. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Manufacturing published in September 2021. The net effect of any adjustments applied to rating factor scores or scorecard outputs under the primary methodology(ies), if any, was not material to the ratings addressed in this announcement. COMPANY PROFILE Cullinan Holdco SCSp is a Luxembourg-domiciled intermediate holding company that owns the entire share capital of AS Graanul Invest. Graanul is headquartered in Tallinn/Estonia and is the largest utility-grade wood pellet producer in Europe with 12 production plants in the Baltics region (Estonia, Latvia and Lithuania) and the US. The company also owns six combined heat and power plants in Estonia and Latvia, which are biomass-fired and provide the majority of the company's internal heat and power needs, as well as four shipping vessels. In 2024, the company generated around EUR506 million in revenues and around EUR106 million in company-adjusted EBITDA. ===================== N E T H E R L A N D S ===================== NIQ GLOBAL: Fitch Assigns First-Time 'BB-' IDR, Outlook Stable -------------------------------------------------------------- Fitch Ratings has upgraded the Long-Term Issuer Default Ratings (IDRs) of Intermediate Dutch Holdings B.V. and its subsidiaries Nielsen Consumer Inc., Indy Dutch Bidco B.V., and Indy US Holdco, LLC to 'BB-' from 'B+'. Fitch has also assigned a first-time 'BB-' IDR to NIQ Global Intelligence plc (NIQ), which is the new financial filer. The Rating Outlook is Stable. The three subsidiaries are all co-borrowers of the group's senior secured debt. Fitch has also upgraded the senior secured debt to 'BB+' from 'BB' with a Recovery Rating of 'RR2'. NIQ's ratings reflect the solid revenue growth and execution of its cost-savings plan in 2024. The company's recent IPO raised about $1 billion, and NIQ has used the proceeds primarily for debt reduction, which is a credit positive. Fitch expects the company to finish 2025 with leverage near or below its previous positive sensitivity of 4.5x. The company has been executing well on its cost savings plan and has been re-signing many clients after the business combination with GfK, which is an indication that NIQ is viewed positively by its clients and is positioned to continue capturing market share. Fitch has subsequently withdrawn the IDR of Intermediate Dutch Holdings B.V. due to the restructuring. Key Rating Drivers Recent IPO: NIQ raised about $1 billion in its recent initial public offering and is using most of the proceeds for debt reduction. The company has already paid the balance on its RCF, which was $563 million, and plans to reduce its term-loan debt by roughly $490 million. Fitch views the IPO as a credit positive, both for debt reduction and also for the increased financial disclosures. Fitch expects NIQ will continue to reduce leverage over the next two years to achieve its net leverage target of 3.0x. Moderately High Leverage: The company's leverage has improved since the end of 2024, primarily due to voluntary debt reduction. Fitch expects leverage at the end of 2025 will remain close to 4.5x, which was its previous positive sensitivity. The leverage could be lower depending on progress on the cost savings plan and how EBITDA adjustments are calculated. NIQ's execution of its cost savings and associated margin expansion plan has been strong, and Fitch expects it to continue. Fitch expects leverage to trend lower over the next 18 months. Strong Operating Performance: Operating performance in 2024 was strong with organic growth and EBITDA margin expansion. The company has made good progress on its cost savings plans and the integration of GfK. Fitch expects NIQ will achieve EBITDA margins at or above 20% this year. This level would be in line with Fitch's expectations, but well below the roughly 40% average among broader data analytics and processing (DAP) peers. Fitch views the company's lower profitability profile as a constraint on the rating. Improving FCF: The company's potential to generate significant FCF supports the rating. FCF conversion should improve in 2025 as the company achieves its margin targets, capital intensity falls, and one-time integration and restructuring costs fall away. Fitch expects FCF margins of 5% or greater in the next 12 months to 18 months. NIQ's FCF-based leverage metrics are in line with the 'BB' category, and continued improvement as the interest burden drops is a credit positive. Potentially Stronger Combined Company: Initial indications regarding the business combination are positive, with renewed multiyear contracts from many large customers. Fitch views this as confirmation that the combined company is progressing toward market leadership in the retail measurement sector. Its global footprint should appeal to global consumer packaged goods brands and leading retailers. The respective strengths of NIQ in consumer goods and GfK in technology and durables are complementary. Stable Organic Growth: NIQ's 6% organic growth in 2024 demonstrates successful business plan execution. The company benefits from annual rate increases in multiyear contracts, providing a strong growth base. Its growth exceeds rate increases due to new client acquisitions, particularly in the small business sector. NIQ is also just at the beginning of its plan to bring the strengths of GfK to the U.S., where it previously had a small footprint. The company's ability to sustain this growth beyond 2025 should translate into better EBITDA margins and stronger FCF. Peer Analysis While not a direct peer, NIQ can be compared with Boost Parent, LP (J.D. Power; B/Stable), which has smaller revenue scale but stronger margins. J.D. Power had higher leverage than NIQ before the GfK transaction. Another indirect peer, Dun & Bradstreet Holdings, Inc. (BB-/Rating Watch Negative), has materially higher margins but could have higher leverage in the future following a recent announcement of its intention to be purchased by private investment firm, Clearlake Capital Group, L.P. Consumer research and measurement companies must acquire data continuously. Accordingly, their margin profiles are lower than their business services data and analytics peers; this is a structural difference that will persist over time. Key Assumptions - Revenue growth in 2025 of approximately 4% declining over the next several years; - EBITDA expansion as the cost savings program takes effect with margins approaching 20%; - Capital intensity falling slightly as the company's investment in technology platforms tapers; - No acquisitions, dividends or share repurchases. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - EBITDA leverage expected to be sustained above 4.5x; - FCF margin expected to be sustained at close to neutral; - Cash flow from operations (CFO) less capex/total debt expected to be sustained below 4.5%; - Neutral to negative organic revenue growth, potentially reflecting share losses, declining retention and increased competitive pressure or sustained end-market weakness. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Maintaining EBITDA leverage below 4.0x; - FCF margin expected to be above mid-single digits; - CFO less capex/total debt expected to be sustained above 6.5%; - Continued and sustained operational success, measured by achieving the company cost savings plan, improved customer retention rates, organic revenue growth, and EBITDA margin expansion. Liquidity and Debt Structure NIQ recently upsized its revolver to $750 million and has paid down the balance using proceeds from the IPO, which means the full amount is available. Fitch expects the company to have more than $250 million of cash on the balance sheet, bringing liquidity to nearly $1 billion. NIQ plans to partially repay its term loans of $4.0 billion with IPO proceeds. Issuer Profile NIQ is a data and analytics provider for market research and consumer insights. The company aggregates sales and market data, helping retailers and brands understand consumer buying behaviors. 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 ----------- ------ -------- ----- Intermediate Dutch Holdings B.V. LT IDR BB- Upgrade B+ LT IDR WD Withdrawn Nielsen Consumer Inc. LT IDR BB- Upgrade B+ senior secured LT BB+ Upgrade RR2 BB Indy Dutch Bidco B.V. LT IDR BB- Upgrade B+ senior secured LT BB+ Upgrade RR2 BB Indy US Holdco, LLC LT IDR BB- Upgrade B+ senior secured LT BB+ Upgrade RR2 BB NIQ Global Intelligence plc LT IDR BB- New Rating ========= S P A I N ========= LUNA 2.5: Fitch Lowers IDR to 'B', Outlook Stable ------------------------------------------------- Fitch Ratings has downgraded Luna 2.5 S.a.r.l.'s Issuer Default Rating (IDR) to 'B' from 'BB' and its secured debt ratings to 'BB-' from 'BB+'. The Outlook on the IDR is Stable and the Recovery Rating is 'RR2'. The downgrades reflect the unexpected EUR1 billion dividend funded with new toggle notes issued by Luna 1.5, a newly established holding company (holdco). Fitch includes the debt in Luna 2.5's leverage ratios given its assessment of 'open' ringfencing around the Luna 2.5 restricted group. The toggle notes will be structurally and contractually subordinated to the EUR2.3 billion senior secured debt at Luna 2.5. The subordinated notes will have no security or guarantors. The downgrades assumed the successful issue of the toggle notes at the stipulated conditions. If the transaction does not proceed as expected, Fitch will reassess the ratings. Key Rating Drivers Planned Instrument Drives Leverage Increase: The decision of Platinum Equity, the sponsor, to pursue a debt-funded EUR1 billion dividend recapitalisation at Luna 1.5, only weeks after a similar transaction at Luna 2.5, has caused Luna 2.5's EBITDA net leverage to surge to 6.4x on average for 2025-2029, from its previous expectation of around 4.7x after the initial dividend and refinancing in June/July 2025. This is due to its decision to consolidate the planned EUR1 billion (equivalent) toggle notes within Luna 2.5, even though it is outside the restricted group. This drives the IDR and senior debt rating downgrades. The decision for a new debt-funded dividend recapitalisation, although allowed under the loose debt documentation of Luna 2.5, departs materially from the sponsor's previously stated conservative approach towards leverage, which was a key factor underpinning the previous rating. Fitch therefore now views Luna's governance and financial policy as aggressive. Toggle Notes' Debt-Like Features: The proposed toggle notes are treated as debt in its analysis and added to Luna 2.5's credit ratios. Its debt treatment is primarily supported by the not fully deferrable cash interest at the option of the issuer, the presence of event of default and acceleration clauses, the maturity being too close to Luna 2.5's secured debt and the overall materiality of the toggle notes within the capital structure. These features, together with the absence of effective ringfencing around Luna 2.5, increase the probability of default for Luna 2.5 debtholders, in its view. This is notwithstanding the structural and contractual subordination of the proposed toggle notes and the existence of a minimum liquidity mechanism to protect the operating companies from excessive payments to Luna 1.5. Open Ringfencing at Luna 2.5: The proposed toggle notes are included in its rating for Luna 2.5, despite being outside its formal restricted group and structurally and contractually subordinated, unsecured and with no guarantors (at issue date). Fitch believes the contractual ringfencing around secured debt at Luna 2.5 is open, with generous provisions for new debt incurrence, permitted payments and covenant calculation, which do not sufficiently protect the company from the new debt incurred by the holdco, leading us to consolidate the new debt in its credit ratios. Toggle Cash Interest Limits FCF Generation: Sustained high capex and Fitch's assumption of around EUR100 million annually in cash interest payments on Luna 1.5's toggle notes result in continued negative FCF and elevated net leverage of around 6.4x through 2029. This is despite anticipated robust operational performance and EBITDA growth at the operating companies (opcos). Its projections for Urbaser, Luna 2.5's main opco, have slightly improved from its previous review in June 2025, backed by its expectations of a good delivery in 1H25. A decision to defer cash interest payments on Luna's 1.5 notes would support FCF, but would be neutral on gross leverage. Solid Revenue Base: Urbaser has a robust business model and limited execution risk of its strategy. Urbaser benefits from high revenue visibility based on in its portfolio of over 600 long-term municipal concessions. Concessional fees account for 70%-90% of revenues and include indexation clauses to mitigate rising costs. In 2024, Urbaser's contract backlog reached EUR15 billion, equivalent to six years of revenues, driven by inflation-induced growth, new contracts and acquisitions. Contract renewal rates are historically high at 80%, underscoring Urbaser's market position and execution capabilities. Ambitious Growth: Its rating case for Urbaser projects sound revenue growth of 5.5% a year over 2025-2029, driven by an inflation-indexed contract backlog and an ambitious capex plan comprising new investments and acquisitions. Gross annual investments of about EUR0.4 billion-0.5 billion until 2027, which could rise in the later years of the forecast, will be allocated to Urbaser's municipal waste treatment division (48% of the total), its urban services (37%) and its industrial waste treatment activities (15%). Annual investments will largely depend on the company's planned expansion and available market opportunities, given the largely discretionary nature of the capex. M&A Market in a Downturn: Platinum Equity's investment horizon is approaching its natural maturity of five-to-seven years. As of today, no final agreement has been reached to exit the business in a sluggish M&A market. Fitch observes a trend of private equity investors increasingly using debt financing to monetise investments during the prolonged M&A downturn, which could be credit-negative for existing debtholders, depending on the debt increase and covenant strength. Fitch expects Platinum Equity to continue seeking an exit within the forecast period to 2029. Senior Secured Ratings: Luna 2.5's 'BB-' senior secured debt is rated two notches above its IDR, reflecting pledges over guarantor shares, intercompany receivables, and limited prior-ranking debt. A bespoke approach now applies for IDRs below 'BB-'. Fitch used Spain as the relevant country in its recovery calculation, capping senior secured debt recoveries at 'RR2'. There is still debt headroom under the financing documents, while portability provisions would facilitate a potential sale in the event of a change of control, in its view. Peer Analysis Luna 2.5's rating is underpinned by a strong business profile that compares favourably with most peers'. However, its significantly higher leverage relative to all peers' constrains its rating, resulting in an IDR in the 'B' category. FCC Servicios Medio Ambiente Holding, S.A.U. (BBB/Stable), the local competitor, is the closest peer. It has slightly lower business risk due to its stronger market position in Spain and greater geographical diversification, with a better credit quality of its international operations, mainly in Europe, the US and UK, versus Urbaser's Europe and Latin America. Seche Environnement S.A. (BB/Stable), a small French waste operator specialising in the niche markets of materials and energy recovery and hazardous waste management, has a lower contracted share of business and higher exposure to industrial customers, which results in a lower debt capacity than Urbaser. However, this is mitigated by Seche's exposure to activities with higher barriers to entry due to stricter regulations. Paprec Holding SA (BB/Stable), a French waste management operator, has a leading position in the domestic recycling market with increasing exposure to other waste services and waste-to-energy activities. The company has a higher exposure to private clients, exposure to merchant risk from the sale of recycled raw materials and limited geographical diversification, while Urbaser operates largely under long-term contracts with municipalities. The stronger business profile of Urbaser supports a materially higher debt capacity than Paprec. Key Assumptions - Fitch-defined EBITDA margin at about 19.5% over 2025-2029 - Capex (excluding for M&A) to average slightly more than EUR440 million a year for 2025-2029 - M&A outflow of EUR 0.2 billion in 2025 related to announced transactions (Stericycle's Iberian business, waste recovery business in Guadassuar) and small acquisitions of EUR50 million a year for 2026-2029 - Neutral change in working capital for 2025-2029 - Cash tax rate at 26% for 2026-2029 - Restricted cash of EUR64 million related to project finance reserve accounts, overseas blocked cash and working capital needs - Around EUR100 million annual cash interest payments under the EUR1 billion (equivalent) toggle notes - Shareholder distributions of EUR2 billion in 2025; of which EUR1 billion was made in June 2025 - Issued EUR2.3 billion senior secured notes and term-loan B and proposed EUR1 billion (equivalent) toggle notes Recovery Analysis Its recovery analysis assumes that Luna 2.5 would be considered a going concern (GC) in bankruptcy and that it would be reorganised rather than liquidated. Fitch has assumed a 10% administrative claim. Fitch estimates Luna 2.5's GC EBITDA at around EUR460 million, reflecting the high level of predictable earnings from its long-term contracted backlog and assumed moderate inability to pass on some cost increases. Fitch applied Fitch's distressed enterprise value (EV) multiple assumption of 6.5x to calculate a post-reorganisation EV, which is a high-end distressed multiple considering good prospects of the waste management industry with favourable regulation in Luna 2.5's main markets of operations, its strong market position in Spain, long-term contracts with municipal customers and historically high contract renewal rates. At the same time, the EV multiple reflects exposure to the more volatile part of the business (ie. industrial waste sector and Argentina). Fitch expects Luna 2.5's existing receivables factoring facilities of EUR85 million to remain during and after distress without requiring alternative funding for the same amount. This assumption is driven by the granularity and strong credit quality of the group's client base (ie public municipalities) in Spain. Its estimates of creditor claims include total senior debt claims at EUR2.9 billion, which includes its EUR1.5 billion senior secured term loan B (TLB), EUR0.8 million of senior secured notes (SSN), a fully drawn EUR0.4 billion senior secured RCF that ranks pari passu with the senior debt claims, and EUR0.2 billion of other secured debt (largely project finance). Fitch also adds EUR110 million of unsecured claims and EUR1 billion of subordinated debt in the form of the toggle notes. Based on the capital structure, its waterfall analysis generates a recovery for first-lien secured debt in the 'RR2' category due to the country cap for Spain, leading to a 'BB-' rating for the SSN and TLB. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - EBITDA net leverage above 7.2x and/or EBITDA gross leverage above 7.5x on a sustained basis - EBITDA interest coverage below 1.8x on a sustained basis - Consistently negative FCF after dividends - Further extraordinary dividend distributions - A material shift in the business mix towards a lower contracted profile or higher-risk activities (e.g. industrial waste) or adverse divestments weakening current business profile could lead Fitch to review Luna 2.5's debt capacity for its rating Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - EBITDA net leverage below 6.2x and/or EBITDA gross leverage below 6.5x on a sustained basis - EBITDA interest coverage above 2.2x on a sustained basis - Neutral-to-positive FCF after dividends Liquidity and Debt Structure Fitch estimates Luna 2.5's cash at about EUR90 million (before usual adjustments made by Fitch), based on end-March 2025 results and pro-forma for the refinancing in June/July 2025 and the proposed toggle notes in July 2025. This, together with a new available committed RCF of EUR400 million maturing in 6.5 years, will cover negative FCF (after dividends) in the next two years, expected to be around EUR160 million a year, including the service of the interest cost on the toggle notes. Liquidity is further backed by provisions in the toggle notes' documentation to defer cash interest payments when available liquidity at the Luna 2.5 restricted group pro forma of the coupon payment is below EUR550 million, including the undrawn RCF. This minimum liquidity requirement at operating companies is a positive feature under the toggle notes documentation. Urbaser recently refinanced most of its debt, extending maturities to June/July 2032 with bullet repayment. Annual debt maturities over the next seven years are modest, limiting near-term refinancing risk. Issuer Profile Luna 2.5 is the holdco of Urbaser that holds the senior secured instruments. Luna 1.5 is the holdco of Luna 2.5 and holds the proposed subordinated debt. Urbaser is a leading Spanish environmental services company. Summary of Financial Adjustments Luna 2.5's rating perimeter is based on the consolidated accounts of Luna III, which controls Urbaser. The consolidated accounts include debt at Luna 2.5 and Luna 1.5. In its rating case, Fitch also incorporates all cash interest payments on Luna 2.5 and Luna 1.5 debt since these payments are funded exclusively by cash upstreamed from Luna III to Luna 2.5 and, ultimately, to Luna 1.5. Fitch adds EUR0.8 million SSNs, the EUR1.5 billion TLB and the proposed EUR1 billion toggle notes to debt, without any additions to revenue or EBITDA. MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in its credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Luna 2.5 S.a.r.l. LT IDR B Downgrade BB senior secured LT BB- Downgrade RR2 BB+ MIRAVET 2023-1: S&P Cuts Cl. F-Dfrd Notes Rating to 'BB+ (sf)' -------------------------------------------------------------- S&P Global Ratings lowered its credit ratings on Fondo De Titulizacion RMBS Miravet 2023-1's class B-Dfrd, C-Dfrd, D-Dfrd, E-Dfrd and, F-Dfrd notes to 'AA (sf)', 'A+ (sf)', 'BBB+ (sf)', 'BBB (sf)', and 'BB+ (sf)' from 'AA+ (sf)', 'AA- (sf)', 'A+ (sf)', 'A (sf)', and 'BBB+ (sf)', respectively. At the same time, S&P affirmed its 'AAA (sf)' rating on the class A notes. The rating actions reflect its full analysis of the most recent information S&P has received and the transaction's current structural features. S&P said, "After applying our global RMBS criteria, our expected losses decreased despite our higher weighted-average foreclosure frequency (WAFF) assumptions. The higher WAFF reflects the higher arrears in the portfolio, particularly in the 90 days past due arrears bucket. Our weighted-average loss severity (WALS) assumptions decreased, given the lower current loan-to-value (LTV) ratio and our updated model assumptions in Spain. "We raised the valuation haircut to 20% from 10%, in line with comparable transactions in the Spanish market. The valuation haircut reflects the actual data received from comparable asset sales, where we have seen a risk that property prices were overvalued at origination. "In addition, given this portfolio's reperforming nature, we also considered account pay rate information received from the servicer as well as the recovery strategy for non-performing assets since closing. Pay rates have decreased, in line with the portfolio's deteriorating performance. We have considered these factors in our analysis." Table 1 Credit analysis results Rating WAFF (%) WALS (%) Credit coverage (%) AAA 69.15 28.17 19.48 AA 63.55 25.14 15.98 A 60.14 19.72 11.86 BBB 55.72 17.00 9.47 BB 50.50 15.18 7.67 B 49.07 13.59 6.67 WAFF--Weighted-average foreclosure frequency. WALS--Weighted-average loss severity. Available credit enhancement for the class A to F-Dfrd notes has increased since closing, considering the total collateral balance, including defaults. However, if S&P considers the performing balance up to 90 days past due, the transaction's credit enhancement has decreased. The liquidity reserve fund is at its target level (EUR3.14 million) as of April 2025 and can only be used to cover fees and class A interest shortfalls. Table 2 Credit enhancement Current (performing Current balance up (total collateral to 90 days balance including Closing Class past due; %) defaults; %) (March 2023; %) A 33.1 50.5 42.5 B-Dfrd 23.7 43.5 37.0 C-Dfrd 17.3 38.8 33.3 D-Dfrd 13.4 35.9 31.0 E-Dfrd 10.9 34.1 29.5 F-Dfrd 8.4 32.2 28.0 Total arrears, as per the April 2025 investor report, have increased to almost 50% from 38% since closing. In particular, arrears above 90 days past due have increased to 43.9% from 27.5% as of closing, reflecting the transaction's deteriorating performance. The level of delinquencies exceeds S&P's Spanish RMBS index. S&P said, "Our operational, rating above the sovereign, and legal risk analyses remain unchanged since our previous review. Per our updated counterparty criteria, we have amended our assessment on the bank account provider to low from medium as we believe that Banco Santander will be subject to an effective resolution framework. Therefore, these criteria do not cap our ratings. "In our cash flow analysis, we also considered additional scenarios where recoveries on defaulted assets are not received in a single payment after the applicable recovery time, but equally split over a certain period. In our view, the large amount of recoveries received in our cash flow analysis due to the elevated WAFF will positively affect not only the transaction's negative carry but also accelerate the notes' amortization and cure potential liquidity concerns in our analysis. We have considered this scenario in our review as we believe it better captures the transaction's risk. "We affirmed our 'AAA (sf)' rating on the class A notes. Available credit enhancement remains commensurate with the assigned rating. "We lowered our ratings on the class B-Dfrd to F-Dfrd notes. We considered the transaction's resilience in case of additional stresses to some key variables, in particular defaults and loss severity, to determine our forward-looking view. Our downgrades reflect the transaction's deteriorating performance and increase in arrears since closing. "The class C-Dfrd notes do not withstand our cash flow stresses at the assigned rating level. However, we have considered the tranche's relative seniority in the priority of payments and transaction's interest deferral feature, in addition to various sensitivities. We therefore limited our downgrade and lowered our rating by one notch to 'A+ (sf)' from 'AA- (sf)'. "We believe that the ability of the borrowers to repay their mortgage loans will be highly correlated to macroeconomic conditions, particularly the unemployment rate, consumer price inflation, and interest rates. Our forecasts for unemployment in Spain for 2025 and 2026 are 10.6% and 10.3%, respectively. "Furthermore, a decline in house prices typically affects the level of realized recoveries. For Spain in 2025 and 2026, we expect house prices to increase by 3% and 2.4%, respectively. "We ran additional scenarios with increased defaults of 1.1x and 1.3x and increased loss severity of 1.1x and 1.3x. Additionally, as a general downturn of the housing market may delay recoveries, we have also run extended recovery timings to understand the transaction's sensitivity to liquidity risk. The results of the above sensitivity analysis indicate no significant deterioration." Miravet 2023-1 is an RMBS transaction that closed in March 2023. The securitized assets were originated by Abanca, Banco Etchevarria, Bankoa, Caixa Galicia, Caixa Geral, Caixa Nova, and Crediter. The assets are primarily first-ranking loans secured against properties in Spain. =========== T U R K E Y =========== TURK TELEKOMUNIKASYON: Fitch Hikes IDR to 'BB', Outlook Stable -------------------------------------------------------------- Fitch Ratings has upgraded Turk Telekomunikasyon A.S.'s (TT) Long-Term Local-Currency (LTLC) Issuer Default Rating (IDR) to 'BB' from 'BB-, while affirming its Long-Term Foreign-Currency (LTFC) IDR at 'BB-'. The Outlooks on the IDRs are Stable. TT's LTFC IDR remains constrained by Türkiye's 'BB-' Country Ceiling as its Standalone Credit Profile (SCP) is assessed at 'bb'. The ratings reflect uncertainty over the terms of the company's new fixed-line concession agreement, inherent currency mismatch between debt and cash flow despite low leverage. The SCP balances a fairly weak operating environment in Türkiye against TT's strong market position as the country's incumbent integrated telecoms operator, rational market structure and sound profitability. TT's financial policy remains prudent, with an effective hedging strategy that has maintained low net leverage, despite continued lira depreciation against hard currencies. The company's low leverage provides flexibility to manage potential concession payments as the current agreement approaches its expiry in February 2026, forthcoming 5G spectrum auction payments and broader operating environment risks. Key Rating Drivers Strong Market Positions: TT's business profile benefits from its leading incumbent position in Türkiye. The company maintained its market leadership in fixed broadband, with a 54% market share by subscribers and 57% by revenue at end-2024. The company is a strong number three in the mobile market, with a 29% share by subscribers and 23% by revenues at end-2024. The company has recently been gaining momentum in raising its mobile market shares both by subscriber and revenue, even though its market share is lower than peers' due to its later entry into this sector. Rational Competitive Environment: The Turkish telecoms market comprises three main operators - TT, Turkcell and Vodafone). Fitch considers this market structure to be stable and conducive to rational competition among participants. This should allow TT to keep churn fairly low and raise average revenue per user through data monetisation and inflationary price increases. Concession Terms Uncertainty: TT's ratings reflect uncertainty over the terms of the new fixed-line concession agreement. A statement by the Minister of Transport and Infrastructure indicated that the government will extend TT's landline licence, but key details - including the concession fee and payment structure - remain unclear. Fitch assumes that a renewal of the agreement will not negatively affect cash flows compared with the current concession agreement. Overall, the concession-based model for fixed-line operations, as opposed to outright ownership, is a structural weakness for TT relative to its peers. Sound Margins Despite High Inflation: TT has demonstrated an ability to maintain strong profitability despite high inflation, supported by effective pass-through of inflationary pressures to customers. TT's Fitch-defined EBITDA margin was 35% in 2024, in line with the 'a' median of Fitch-rated telecoms companies. This performance is underpinned by a rational market structure and the gradual transition of its customers to shorter contract tenors, which allow the company to implement price increases more frequently to adjust for high inflation. High Capex Weighs on FCF: Fitch expects TT's capex to increase, averaging 33% of sales over 2024-2028, including 5G spectrum payments, which will weigh on free cash flow (FCF). In addition to the 5G rollout, Fitch anticipates that the company will continue to invest in fibre. Greater clarity on the terms and duration of the concession would provide improved visibility for the investments. Considerable Leverage Headroom: TT's Fitch-defined EBITDA net leverage was low, at 0.8x at end-2024. This is well below TT's downgrade sensitivity of 3.2x and provides the company with flexibility to manage operational risks and pursue investment opportunities. Its rating case envisages leverage to go up to 0.9x-1.1x over 2025-2028, driven by increased capex. Its forecasts, however, do not incorporate any changes in concession agreement that could have a material negative impact on the company's cash flow. Viewed as Government-Related Entity: TT is a government-related entity (GRE) of Türkiye under Fitch's GRE Criteria. The sovereign holds a 25% direct stake in the telecoms company through the Ministry of Treasury and Finance, and an additional 60% is indirectly owned through Türkiye's Wealth Fund. Its assessment of the overall links under the GRE Criteria is 'Moderate', with a support score of 15 out of 60. Not Capped by Sovereign IDRs: Fitch used the considerations of the Parent-Subsidiary Linkage (PSL) criteria to determine if TT's IDRs are capped by the sovereign's 'BB-' IDRs, as TT's SCP is above this level. Its analysis leads to a 'consolidated +1' approach, resulting in the upgrade of TT's LTLC IDR as this is no longer capped by the sovereign. This is due to 'porous' legal ring-fencing, including long-dated loan documentation with specific covenants, which limits the extraction of value from the company, in the form of excessive dividend, among others, and 'open' access and control. TT's LTFC IDR, however, cannot be rated above Türkiye's LTFC IDR, due to the constraint by the Country Ceiling. Peer Analysis TT has a similar operating profile to other European incumbent peers, such as Royal KPN N.V. (BBB/Stable) and BT Group plc (BBB/Stable). The strength of TT stems mainly from its leading fixed-line operations in Turkiye with its increasing fibre deployment as a key advantage. It is also a fully integrated telecoms operator with a solid mobile subscriber market share of around 30% and rising pay TV penetration. TT's SCP is, however, affected by FX risk and the operating environment. Leverage thresholds for TT's ratings are tighter than for European peers', due to higher risk from the FX mismatch between mainly hard-currency debt and lira-denominated cash flow. TT's ratings are on a par with Turkcell Iletisim Hizmetleri A.S. (BB-/Stable), its closest Turkish peer. The latter is the largest telecom operator in mobile and the second largest in fixed broadband and its operating profile is broadly comparable to TT's. Both companies actively manage their debt using derivative instruments. Turkcell's ratings are also constrained by the Country Ceiling. Key Assumptions Key Assumptions Within Its Rating Case for the Issuer - Revenue growth gradually slowing to 19% by 2028, from 40% in 2024 - Fitch-defined EBITDA margin at about 35% in 2025-2028 - Capex (including spectrum payments) at 33% of revenue between 2025 and 2028 - Negative net working capital changes at 3% of sales in 2025-2028 - Dividend payments at 50% of net income in 2026-2028 - The fixed-line concession expiring in 2026 to be renewed, with no material changes in concession terms RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - EBITDA net leverage above 3.2x on a sustained basis - Material deterioration in pre-dividend FCF margin, or in the regulatory or operating environments - Negative action on Turkiye's Country Ceiling or Long-Term Local Currency IDR, which could lead to a corresponding action on TT's Long-Term Foreign- or Local-Currency IDRs - Increased FX mismatch between TT's net debt and cash flows especially if combined with excessive reliance on short-term funding, without adequate liquidity over the next 12-18 months - Removal of covenants in debt documentation may lead to a change in PSL assessment, which could result in the IDRs being capped by the sovereign IDRs Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Positive rating action on Turkiye would lead to a corresponding action on TT, provided that TT's SCP is at the same level as, or higher than, the sovereign rating, and the links between the government and TT remain unchanged - Renewal of the concession agreement expiring in 2026, and decreased currency mismatch between TT's net debt and cash flows or more effective hedging may lead to a positive action on the SCP, but not necessarily the IDR Liquidity and Debt Structure TT has adequate short-term liquidity. The liquidity is supported by a cash and cash equivalents balance of around TRY17 billion at end-2024 (including bank deposits) and a further TRY5 billion of debt raised in 1Q25. This should be sufficient to cover local debt maturing in 2025. However, TT would have to raise extra debt to cover Fitch-expected negative FCF driven by increased capex. TT has proven access to international and local capital markets. Issuer Profile TT is an incumbent fixed-line operator in Turkiye, with a range of mobile, broadband, data, TV and fixed-voice services. It is controlled by the Turkish government with an effective control of 85%. Public Ratings with Credit Linkage to other ratings TT's ratings are linked to the sovereign ratings of Turkiye; in particular its LTFC IDR is capped by Turkiye's Country Ceiling. 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 ----------- ------ -------- ----- Turk Telekomunikasyon A.S. LT IDR BB- Affirmed BB- LC LT IDR BB Upgrade BB- Natl LT AAA(tur)Affirmed AAA(tur) senior unsecured LT BB- Affirmed RR4 BB- [] Moody's Takes Rating Actions on 17 Turkish Banks --------------------------------------------------- Moody's Ratings has upgraded the local and foreign-currency long-term deposit, issuer, senior unsecured and subordinate debt ratings – where applicable – of 15 Turkish banks. Moody's also upgraded the Baseline Credit Assessments (BCAs) and adjusted BCAs of 11 Turkish banks and affirmed them for 6 Turkish banks. The local and foreign currency long-term deposit ratings and subordinate rating - where applicable - of 2 Turkish banks were affirmed. The outlooks on the long-term deposit, senior unsecured debt and issuer ratings – where applicable – of all 17 banks has changed to stable from positive. The affected banks are: Akbank T.A.S. (Akbank), T.C. Ziraat Bankasi A.S. (Ziraat Bank), Turkiye Vakiflar Bankasi T.A.O. (Vakifbank), Turkiye Halk Bankasi A.S. (Halkbank), Turkiye Is Bankasi A.S. (Isbank), Turkiye Sinai Kalkinma Bankasi A.S. (TSKB), Yapi ve Kredi Bankasi A.S. (YapiKredi), Turkiye Garanti Bankasi A.S. (Garanti BBVA), Odea Bank A.S. (Odea), Alternatifbank A.S. (Alternatifbank), Export Credit Bank of Turkiye A.S. (Turk Exim), Nurol Investment Bank A.S. (Nurol), Turk Ekonomi Bankasi A.S. (TEB), Sekerbank T.A.S. (Sekerbank), QNB Bank A.S. (QNB Bank), Denizbank A.S. (Denizbank), and HSBC Bank A.S. (Turkiye) (HSBC Turkiye). The rating action follows Moody's decisions to upgrade the Government of Turkiye's (Turkiye) issuer rating to Ba3 from B1 previously and outlook changed to stable from positive. At the same time, Moody's have raised Turkiye's foreign-currency country ceiling to Ba2 from Ba3 and the local-currency country ceiling to Baa3 from Ba1. A List of Affected Credit Ratings is available at https://urlcurt.com/u?l=SYbEEN RATINGS RATIONALE -- IMPROVING OPERATING CONDITIONS AND RESILIENT FINANCIAL PERFORMANCE SUPPORT WEAK + MACRO PROFILE ASSESSMENT Moody's decisions to upgrade the standalone BCAs of 11 Turkish banks and affirm the BCAs of 6 Turkish banks reflects, to differing degrees for each bank (1) the improvements in the operating environment, as captured by the higher Macro Profile for Turkiye to "Weak+" from "Weak "; and (2) a track record of resilient performance by Turkish banks. The revised Macro Profile score for Turkiye is underpinned by the Turkish authorities' firm and tested commitment to monetary policy orthodoxy, prioritizing disinflation targets, which will over time continue to steadily remain conducive to more predictable and improved operating conditions for the banks. This has already eased the banking sector's access to foreign funding and paved the way for a normalization in banks' financial fundamentals. The government's enhanced policy credibility through a decisive shift towards orthodox monetary policy over the last two years is anchoring a steady disinflation process, reducing macroeconomic imbalances and safeguarding domestic confidence in the Turkish Lira and foreign capital inflows - which is supporting the funding profile of the banking system with a rate of dollarization of deposits remaining at a 10-year low (38.5% of total deposits as of June 2025). Although operating conditions are improving, the lagging effect of, albeit moderating, elevated inflation, has led to asset quality challenges, which Moody's expects to ease as disinflation continues. Also, the central bank's latest interest rate decision to cut Turkish Lira rates following further tightening in April, is expected to alleviate pressure on borrowers' repayment capacity and resume banks' net interest margin recovery. UPGRADES OF LONG-TERM RATINGS REFLECT HIGHER BCAs AND/OR THE SOVEREIGN RATING UPGRADE The upgrades of the long-term ratings for the banks – where applicable – reflect the higher standalone credit assessments or BCAs and/or the sovereign rating upgrade of the Government of Turkiye, which provides from one to four notches of uplift from the banks' BCAs, where applicable. While government support considerations remain unchanged, Moody's increased the notches of government support uplift for banks where the deposit ratings were upgraded despite BCA affirmations. At the same time, while the local and foreign-currency Counterparty Risk Ratings (CRRs) of the banks have been upgraded where applicable, some banks' foreign-currency deposit ratings and CRRs remain constrained by the foreign-currency ceiling level at Ba2. AFFIRMATIONS OF LONG-TERM RATINGS WHERE APPLICABLE REFLECT BCA AFFIRMATIONS AND UNCHANGED GOVERNMENT SUPPORT CONSIDERATIONS The affirmations of long-term ratings where applicable are underpinned by the affirmations of their BCAs and unchanged government support assumptions. These banks' BCA affirmations largely reflect to various degrees standalone assessments that are well anchored against greater-than-average asset quality and profitability pressures in the context of ongoing disinflation. STABLE OUTLOOK The stable outlooks on all banks' long-term deposit, issuer and senior unsecured ratings – where applicable – reflect solid loan provisions, capital and liquidity buffers balancing the continued improvements in the operating environment for Turkish banks that presents a steady disinflation process with asset quality weakening and moderating profitability. The stable outlook also takes into account the stable outlook on the Government of Turkiye. BANK SPECIFIC CONSIDERATIONS Akbank T.A.S. (Akbank) Moody's have upgraded the bank's long-term foreign-currency and local-currency deposit ratings to Ba3 from B1. At the same time, Moody's have affirmed the BCA and Adjusted BCA of Akbank at b1, the long-term foreign-currency and local-currency CRRs at Ba3. Although normalizing operating conditions have led to a higher macro profile, Akbank's BCA remains well anchored at b1. The affirmation of Akbank's BCA captures asset quality pressures driven by its notable exposure to retail loans, while profitability is constrained by the high-interest rate environment. Nonetheless, the bank has sound loan provisioning coverage, solid capital buffers, ample liquid assets and supportive fee income generation supporting the BCA. The upgrade of the long-term deposit ratings to Ba3 reflects Moody's continued assessment of a high probability of government support, which now results in one notch of uplift from the bank's b1 BCA (compared to zero previously), driven by Akbank's systemic relevance to the Turkish banking system supported by its market share of deposits and loans. Alternatifbank A.S. (Alternatifbank) Moody's have affirmed the bank's long-term foreign-currency and local-currency deposit ratings at Ba3. At the same time, Moody's have affirmed the BCA and Adjusted BCA of Alternatifbank at b3 and ba3, respectively. The long-term foreign currency CRR has been upgraded to Ba2 from Ba3, reflecting the higher foreign-currency country ceiling of Turkiye at Ba2 from Ba3 while the local-currency CRR has been affirmed at Ba2. Although normalizing operating conditions have led to a higher macro profile, Alternatifbank's BCA is well anchored at b3. The affirmation of the bank's BCA considers the bank's challenged profitability resulting from increasing funding costs and volatile non-interest income, alongside modest capital buffers and a still-high structural reliance on market funding. However, these risks are partially mitigated by the bank's relatively low level of problem loans due to its limited exposure to the retail-loan sector, sound loan loss provisions, solid liquidity and continued access to parental support. The affirmation of Alternatifbank's Adjusted BCA at ba3 reflects the affirmation of the b3 BCA and a continued three-notch uplift based on Moody's assumptions of a very high probability of affiliate support from the parent - The Commercial Bank (P.S.Q.C.) (CBQ, A3 Stable, ba1 BCA) based in Qatar - reflecting 100% ownership and Alternatifbank's status as a material subsidiary of CBQ. Denizbank A.S. (Denizbank) Moody's have upgraded the bank's long-term foreign-currency and local-currency deposit ratings to Ba2 and Ba1 from Ba3 and Ba2, respectively. At the same time, Moody's have also upgraded the BCA and Adjusted BCA of Denizbank to b1 from b2 and ba1 from ba2, respectively. The long-term foreign-currency CRR has been upgraded to Ba2 from Ba3, reflecting the higher foreign-currency country ceiling of Ba2. The long-term foreign currency deposit rating and CRR are constrained by the foreign currency country ceiling at Ba2 while the local-currency CRR has been upgraded to Ba1 from Ba2. The upgrade of Denizbank's standalone BCA to b1 captures the improving operating conditions which will continue to support the bank's resilient financial performance. The BCA upgrade takes into account the bank's strong capital and liquidity reserves which will be maintained. Despite exposures to the retail and SME loan segments, which carry higher risk, the bank has substantial loan loss provisions coverage. Additionally, while the bank's core margin remains challenged due to prevailing high interest rates, robust fee income generation offers reliable support. The upgrade of Denizbank's Adjusted BCA to ba1 reflects the upgrade of the bank's BCA and a continued three-notch uplift based on Moody's unchanged assumptions of very high probability of affiliate support from the parent - Emirates NBD Bank PJSC (ENBD, A1 stable, baa2 BCA) based in the UAE - given the 100% ownership and Denizbank's status as a material and strategically important subsidiary of ENBD. Export Credit Bank of Turkiye A.S. (Turk Exim) Moody's have upgraded the bank's long-term foreign-currency and local-currency issuer ratings to Ba3 from B1. At the same time, Moody's have upgraded the BCA and Adjusted BCA of Turk Exim to ba3 from b1. Moody's have also upgraded the long-term foreign-currency and local-currency CRRs of Turk Exim to Ba2 from Ba3. The upgrade of Turk Exim's standalone BCA to ba3 reflects the improving operating conditions which will continue to support the bank's resilient financial performance. The BCA upgrade takes into account the bank's very low stock of problem loans which Moody's expects to remain low, largely due to credit guarantees from banks on the majority of its loan portfolio. Moody's also expects Turk Exim to maintain sound capital buffers, supported by Turkish Treasury capital injections during periods of market volatility, providing additional stability. Furthermore, Turk Exim continues to benefit from diverse market funding options with favorable terms as well as sound profitability. The upgrade of Turk Exim's long-term issuer ratings to Ba3 reflects the BCA and Adjusted BCA upgrades and Moody's assessments of a very high probability of government support given the Turkish Treasury's 100% ownership of the bank, as well as its mandate as Turkiye's official export credit agency. However, this results in no uplift for Turk Exim's issuer ratings as the BCA and Adjusted BCA are at the same rating level as the sovereign rating. HSBC Bank A.S. (Turkiye) (HSBC Turkiye) Moody's have upgraded the bank's long-term foreign-currency and local-currency deposit ratings to Ba2 and Ba1 from Ba3 and Ba2, respectively. At the same time, Moody's have upgraded the BCA and Adjusted BCA of HSBC Turkiye to b1 from b2 and ba1 from ba2, respectively. The long-term foreign-currency CRR has been upgraded to Ba2 from Ba3 reflecting the higher foreign-currency country ceiling of Turkiye at Ba2. The long-term foreign currency deposit rating and CRR are constrained by the foreign currency country ceiling at Ba2 while the local-currency CRR has been upgraded to Ba1 from Ba2. The upgrade of HSBC Turkiye's standalone BCA to b1 captures the improving operating conditions which will continue to support the bank's financial performance. The BCA upgrade reflects Moody's expectations that the bank will maintain its sound capital buffers, relatively lower stock of problem loans given its predominantly corporate loan book, and a strong liquidity position. The upgrade of HSBC Turkiye's Adjusted BCA to ba1 reflects a three-notch uplift from the bank's b1 BCA based on Moody's assumptions of very high probability of affiliate support from HSBC Holdings plc (HSBC Holdings, A3 stable, a3 BCA) given their ultimate 100% ownership and given HSBC Turkiye's enhanced strategic fit to HSBC Holdings. Nurol Investment Bank A.S. (Nurol) Moody's have upgraded the bank's long-term foreign-currency and local-currency issuer ratings to B3 from Caa1. At the same time, Moody's have upgraded the BCA and Adjusted BCA of Nurol to b3 from caa1. Moody's have also upgraded the long-term foreign-currency and local-currency CRRs to B2 from B3. The upgrade of Nurol's BCA to b3 reflects the improving operating conditions which will continue to support the bank's financial performance. The BCA upgrade considers the bank's strong core profitability driven by its pricing advantage as a boutique investment bank alongside solid capital buffers supported by internal capital generation. These strengths help mitigate the risks stemming from the bank's limited business diversification, significant borrower and sector concentrations, and its substantial but structural reliance on market funding. The upgrade of Nurol's long-term issuer ratings to B3 reflects the upgrade of the bank's BCA and Moody's continued assessment of a low probability of government support that results in no uplift for the bank's ratings. Odea Bank A.S. (Odea) Moody's have affirmed the bank's long-term foreign-currency and local-currency deposit ratings at B1. At the same time, Moody's have affirmed the BCA and Adjusted BCA of Odea at b3 and b1, respectively. Moody's have affirmed the long-term local and foreign-currency CRRs at Ba3. Although normalizing operating conditions have led to a higher macro profile, Odea's BCA remains well anchored at b3. Odea's standalone affirmation reflects strong liquidity and limited recourse to wholesale funding, counterbalanced by strained profitability and modest, albeit improving, capitalisation, following the bank's recent takeover by Abu Dhabi Developmental Holding Company PJSC (ADQ) (Aa2 Stable). The affirmation of Odea's adjusted BCA at b1 reflects the bank's b3 BCA and continues to reflect a high probability of parental support resulting in a two-notch rating uplift from ADQ – the bank's majority shareholder. The affirmation of Odea's long-term deposit ratings at B1 reflects the b1 adjusted BCA affirmation and Moody's assessments of a low probability of government support resulting in no uplift. QNB Bank A.S. (QNB Bank) Moody's have upgraded the bank's long-term foreign-currency and local-currency deposit ratings to Ba2 and Ba1 from Ba3 and Ba2, respectively. At the same time, Moody's have upgraded the BCA and Adjusted BCA of QNB Bank to b1 from b2 and ba1 from ba2, respectively. The long-term foreign-currency CRR has been upgraded to Ba2 from Ba3, reflecting the higher foreign-currency country ceiling of Turkiye at Ba2. The long-term foreign currency deposit rating and CRR are constrained by the foreign currency country ceiling at Ba2 while the local-currency CRR has been upgraded to Ba1 from Ba2. The upgrade of QNB Bank's standalone BCA to b1 captures the improving operating conditions which will continue to support the bank's resilient financial performance. The BCA upgrade takes into account Moody's expectations that the bank will sustain its strong liquidity position and sound capital buffers. While it has sizeable exposure to higher-risk retail and SME loan segments, substantial loan loss provisions help mitigate this risk. Additionally, while high interest rates continue to constrain core margins, strong fee income generation supports overall profitability. The upgrade of QNB Banks's Adjusted BCA to ba1 reflects a three-notch uplift from the bank's b1 BCA based on Moody's assumptions of very high probability of affiliate support from the parent Qatar National Bank (Q.P.S.C.) (QNB, Aa3 stable, baa1 BCA) given QNB's near 100% ownership and driven by QNB Bank's strategic importance to QNB. Sekerbank T.A.S. (Sekerbank) Moody's have upgraded the bank's long-term foreign-currency and local-currency deposit ratings to Ba3 from B1. At the same time, Moody's have upgraded the BCA and Adjusted BCA of Sekerbank to b1 from b2. Moody's have upgraded the long-term foreign-currency and local-currency CRRs to Ba3 from B1. The upgrade of Sekerbank's standalone BCA to b1 captures the improving operating conditions which will continue to support the bank's resilient financial performance. The BCA upgrade reflects the bank's robust capital buffers, sound liquidity position, and modest profitability aided by its predominantly stable and relatively price-insensitive retail deposit base. Additionally, while the bank's asset quality exhibits elevated exposure to the riskier SME loan-segment this risk is mitigated by robust loan loss provision coverage and the bank's prudent risk management practices. The upgrade of Sekerbank's long-term deposit ratings to Ba3 reflects the upgrade of the bank's BCA to b1 and Moody's assessments of a high probability of government support, given Sekerbank's strategic role as a lender to agricultural SMEs in largely unbanked rural areas across Turkiye, which continues to result in a one notch uplift for the bank's deposit ratings. T.C. Ziraat Bankasi A.S. (Ziraat Bank) Moody's have upgraded the bank's long-term foreign-currency and local-currency deposit ratings to Ba3 from B1. At the same time, Moody's have upgraded the BCA and Adjusted BCA of Ziraat Bank to ba3 from b1. Moody's have upgraded the long-term local-currency and foreign-currency CRRs of Ziraat Bank to Ba2 from Ba3. The upgrade of Ziraat Bank's BCA to ba3, captures the improving operating conditions which will continue to support the bank's already resilient financial performance. The upgrade takes into account the bank's strong domestic franchise, particularly in the agriculture segment which supports strong profitability and asset quality. Moody's expects the bank to maintain a relatively low stock of problem loans, sound capital buffers and solid liquidity. While Ziraat has a higher exposure to the SME loan-segment, the associated asset risk is mitigated by the bank's subsidized lending in the agriculture sector. The upgrade of the long-term deposit ratings to Ba3 reflects the BCA upgrade and Moody's assessments of a very high probability of government support, which results in no uplift as the bank's ba3 BCA is at the same level as Turkiye's long-term issuer rating of Ba3. The very high probability of government support is driven by the bank's systemic relevance to the Turkish banking system, which is supported by its large market share of deposits, policy role, 100% government ownership (through Turkiye Wealth Fund) and track record of government support. Turk Ekonomi Bankasi A.S. (TEB) Moody's have upgraded the bank's long-term foreign-currency and local-currency deposit ratings to Ba2 from Ba3. At the same time, Moody's have upgraded the BCA and Adjusted BCA of TEB to b1 from b2 and ba2 from ba3, respectively. The long-term foreign-currency CRR has been upgraded to Ba2 from Ba3, reflecting the higher foreign-currency country ceiling of Turkiye at Ba2. The long-term foreign currency CRR is constrained by the foreign currency country ceiling at Ba2 while the local-currency CRR has been upgraded to Ba1 from Ba2. The upgrade of TEB's BCA to b1 captures the improving operating conditions which will continue to support the bank's financial performance. The BCA upgrade considers Moody's expectations that the bank will maintain sound capital and liquidity buffers. Although the bank maintains a relatively lower stock of problem loans, asset quality is pressured by significant exposures to the higher-risk retail and SME loan-segments. This risk is mitigated by the bank's strong loan loss provision coverage and cautious risk appetite through selective loan growth. Additionally, while core margins remain pressured by the persistently high interest rate environment, fee income generation supports overall profitability. The upgrade of TEB's Adjusted BCA to ba2 reflects a two-notch uplift from the bank's b1 BCA based on Moody's assumptions of a high probability of affiliate support from BNP Paribas (BNPP, A1 stable, baa1 BCA), driven by BNPP's ultimate ownership of near 100% and the banks' strong brand association. Turkiye Garanti Bankasi A.S. (Garanti BBVA) Moody's have upgraded the bank's long-term foreign-currency and local-currency deposit ratings to Ba2 from Ba3. At the same time, Moody's have upgraded the BCA and Adjusted BCA of Garanti BBVA to ba3 and ba2 from b1 and ba3, respectively. The long-term foreign-currency CRR has been upgraded to Ba2 from Ba3 reflecting the higher foreign-currency country ceiling of Turkiye at Ba2. The long-term foreign currency CRR is constrained by the foreign currency country ceiling at Ba2 while the local-currency CRR has been upgraded to Ba1 from Ba2. The upgrade of Garanti BBVA's standalone BCA to ba3, captures the improving operating conditions which will continue to support the bank's already resilient financial performance. The BCA upgrade reflects the bank's sound risk management reflected in strong loan loss provisions mitigating a sizeable exposure to the higher risk retail segment. Also, the bank exhibits strong core margins and capital that are higher than market average as well as ample liquidity with moderate recourse to market funding. The upgrade of Garanti BBVA's Adjusted BCA to ba2 reflects a one-notch uplift from the bank's ba3 BCA based on Moody's assumptions of moderate probability of affiliate support from the parent, Banco Bilbao Vizcaya Argentaria, S.A. (BBVA; A2 RUR, baa2 BCA) given Garanti BBVA's strategic importance to BBVA. The upgrade of the long-term deposit ratings to Ba2 reflects the BCA and Adjusted BCA upgrades and Moody's assessments of high probability of government support which results in no uplift for Garanti BBVA's deposit ratings as these are above the sovereign rating. Turkiye Halk Bankasi A.S. (Halkbank) Moody's have upgraded the bank's long-term foreign-currency and local-currency deposit ratings to Ba3 from B1. At the same time, Moody's have affirmed the BCA and Adjusted BCA of Halkbank at caa1. Moody's have upgraded the long-term local and foreign-currency CRRs of Halkbank to Ba3 from B1. Although normalizing operating conditions have led to a higher Macro Profile, Halkbank's BCA is well anchored at caa1. The affirmation of the bank's BCA reflects Moody's expectations that the bank will maintain its moderate liquidity and continue to leverage its established franchise in SME lending. However, Moody's expects the systemic pressures on asset quality and profitability trends to weigh on the bank's performance, amid slower economic growth and still elevated inflation. Furthermore, Moody's continues to note that the bank's credit profile reflects thin capital buffers, governance considerations and legal risk that could negatively impact profitability. The upgrade of the bank's deposit ratings to Ba3 from B1 reflects Moody's unchanged assessment of very high probability of government support driven by the bank's significance to the Turkish banking system, which is supported by its large market share of deposits and government ownership (through Turkiye Wealth Fund) which stood at 91.5%. This results in four-notches of uplift (from three previously) for Halkbank's long-term deposit ratings from its BCA. Turkiye Is Bankasi A.S. (Isbank) Moody's have upgraded the bank's long-term foreign-currency and local-currency deposit ratings to Ba3 from B1. At the same time, Moody's have upgraded the BCA and the Adjusted BCA of Isbank to b1 from b2. Moody's have upgraded the long-term local and foreign-currency CRRs of Isbank to Ba3 from B1. The upgrade of Isbank's BCA to b1, captures the improving operating conditions-which will continue to support the bank's financial performance. The BCA upgrade reflects the bank's sound profitability and liquidity buffers as well as strong market access. At the same time, Moody's note that the bank remains exposed to the riskier retail loan segment. However, the bank maintains sound capital and solid provisioning coverage against expected asset quality weakening in the context of still elevated inflation and slower economic growth. The upgrade of the long-term deposit ratings to Ba3 reflects Moody's assessments of high probability of government support driven by the bank's systemic relevance to the Turkish banking system, which is supported by its large market share of deposits. This continues to result in a one-notch uplift for Isbank's long-term deposit ratings from its BCA. Turkiye Sinai Kalkinma Bankasi A.S. (TSKB) Moody's have upgraded the bank's long-term foreign-currency and local-currency issuer ratings to Ba3 from B1. At the same time, Moody's have upgraded the BCA and the Adjusted BCA of TSKB to b1 from b2. Moody's have upgraded the long-term foreign-currency and local-currency CRRs of TSKB to Ba3 from B1. The upgrade of TSKB's BCA to b1, captures the improving operating conditions-which will continue to support the bank's financial performance. The BCA upgrade takes into account the bank's low stock of problem loans supported by government guarantees on financing to strategic development areas and sound loan loss provision coverage, strong capital buffers, solid profitability, predominantly guaranteed wholesale funding with a favorable term structure and sound liquidity buffers. The upgrade of TSKB's long-term issuer ratings to Ba3 follows the upgrade of TSKB's BCA to b1 and Moody's assessments of high probability of government support driven by the bank's significance to the Turkish economy as a development bank with a focus on sustainability, which continues to result in a one-notch uplift for TSKB's long-term issuer ratings from its BCA. Turkiye Vakiflar Bankasi T.A.O. (Vakifbank) Moody's have upgraded the bank's long-term foreign-currency and local-currency deposit ratings to Ba3 from B1. At the same time, Moody's have affirmed the BCA and Adjusted BCA of Vakifbank at b2. The long-term foreign-currency and local-currency CRRs have been upgraded to Ba3 from B1. Although normalizing operating conditions have led to a higher Macro Profile, Vakifbank's BCA is well anchored at b2. The affirmation reflects Vakifbank's pressured profitability which remains constrained by the prevailing high interest rate environment. Additionally, the bank also holds significant exposure to the high-risk retail and SME loan-segments, where Moody's expects deterioration amid the still-elevated, albeit improving inflation and still high interest rate environment, coupled with still modest capital buffers. Despite these challenges, the bank has strong fee income generation capacity, robust loan provisioning coverage, and ample liquid assets. The upgrade of the long-term deposit ratings to Ba3 reflects the bank's BCA affirmation and continued assessment of a very high probability of government support which results in a two- notch uplift from the bank's b2 BCA (compared to one notch previously). The very high probably of government support is driven by the bank's systemic relevance to the Turkish banking system, which is supported by its market share of loans and deposits, around 90% ultimate government ownership and a track record of government support. Yapi ve Kredi Bankasi A.S. (YapiKredi) Moody's have upgraded the bank's long-term foreign-currency and local-currency deposit ratings to Ba3 from B1. At the same time, Moody's have affirmed the BCA and Adjusted BCA of YapiKredi at b1. The long-term foreign and local-currency CRRs have been affirmed at Ba3. Although normalizing operating conditions have led to a higher Macro Profile, YapiKredi's BCA is well anchored at b1. The affirmation of the bank's BCA reflects Moody's expectations that the bank will maintain its strong liquidity, sound profitability and core capital levels. Moody's however note that the bank's considerable exposure to the riskier segments of retail (45% of total loans as of March 2025) – particularly credit cards and overdrafts - and to a lesser extent SMEs (8%) led to some asset quality deterioration. The upgrade of the long-term deposit ratings to Ba3 reflects the BCA affirmation and Moody's assessments of high probability of government support driven by the bank's systemic relevance to the Turkish banking system, which results into a one-notch rating uplift (from zero previously) for YapiKredi's long-term deposit ratings from its BCA. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Turkish banks' ratings could be upgraded if the (1) operating environment improves further with inflation declining materially faster than expected; (2) banks maintain their solid financial fundamentals; and/or (3) Turkiye's sovereign rating of Ba3 is upgraded. Turkish banks' ratings could be downgraded if (1) the banking sector's solvency and funding profile deteriorate beyond anticipated asset quality and profitability weakening; (2) the authorities revert to unorthodox policies; and/or (3) Turkiye's sovereign rating of Ba3 is downgraded. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Banks published in November 2024. Akbank T.A.S. (Akbank)'s "Assigned BCA" score of b1 is set two notches below the "Financial Profile" score of ba2 to reflect the issuer's exposures to high-risk loan segments and pressured profitability. Denizbank A.S. (Denizbank)'s "Assigned BCA" score of b1 is set three notches below the "Financial Profile" score of ba1 to reflect the issuer's considerable exposures to high-risk loan segments, pressured core net interest margins amid the high-interest rate environment and modest core capital buffers without regulatory forbearance. Turk Ekonomi Bankasi A.S. (TEB)'s "Assigned BCA" score of b1 is set two notches below the "Financial Profile" score of ba2 to reflect the issuer's considerable exposure to higher-risk loan segments and pressured core margins. Sekerbank T.A.S. (Sekerbank)'s "Assigned BCA" score of b1 is two notches below the "Financial Profile" score of ba2 to reflect the issuer's notable exposure to the higher-risk SME loan-segment and modest profitability coupled with inflationary pressures on its operating efficiency. HSBC Bank A.S. (Turkiye) (HSBC Turkiye)'s "Assigned BCA" score of b1 is four notches below the "Financial Profile" score of baa3 to reflect the issuer's considerable single name concentrations, constrained profitability, and capital sensitivity to fluctuations in the Turkish Lira. Alternatifbank A.S. (Alternatifbank)'s "Assigned BCA" score of b3 is two notches below the "Financial Profile" score of b1 to reflect the issuer's considerable single name concentrations, moderate core capital buffers without regulatory forbearance measure and weak core profitability amid higher interest rates. Nurol Investment Bank A.S. (Nurol Bank)'s "Assigned BCA" score of b3 is three notches below the "Financial Profile" score of ba3 to reflect the issuer's lack of business diversification, modest core capital buffers and constrained profitability amid higher funding costs as a non-deposit taking investment bank. Turkiye Vakiflar Bankasi T.A.O. (Vakifbank)'s "Assigned BCA" score of b2 is two notches below the "Financial Profile" score of ba3 to reflect the issuer's constrained core margins, considerably high concentrations to the higher-risk retail and SME loan segments and still modest core capital buffers. Turkiye Halk Bankasi A.S.'s "Assigned BCA" score of caa1 is set 3 notches below the "Financial Profile" initial score of b1 reflecting the bank's weaker than market average capital and profitability as well as governance considerations and legal risk. Turkiye Garanti Bankasi A.S.'s "Assigned BCA" score of ba3 is set 2 notches below the "Financial Profile" initial score of ba1 reflecting the bank's exposure to riskier loan segments and normalizing profitability. Odea Bank A.S.'s "Assigned BCA" score of b3 is set 2 notches below the "Financial Profile" initial score of b1 reflecting Moody's views that the bank exhibits high sector concentrations and strained profitability. 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 of T.C. Ziraat Bankasi A.S. (Ziraat Bank), Turkiye Is Bankasi A.S. (Isbank), Yapi ve Kredi Bankasi A.S. (YapiKredi), Export Credit Bank of Turkiye A.S. (Turk Exim), Turkiye Sinai Kalkinma Bankasi A.S. (TSKB), and QNB Bank A.S. (QNB Bank). =========================== U N I T E D K I N G D O M =========================== CAISTER FINANCE: S&P Assigns Prelim B- (sf) Rating to Cl. F Notes ----------------------------------------------------------------- S&P Global Ratings has assigned its preliminary credit ratings to Caister Finance DAC's class A1, A2, B, C, D, E, and F notes and class A loan, B loan, C loan, and D loan. The issuer will also issue unrated class R notes at closing. This is a CMBS transaction backed by a senior loan secured on a portfolio of 40 properties which include 39 U.K. holiday parks operated by the Haven Group and one head office of the Haven Group. Haven is the U.K.'s largest holiday park operator based on number of pitches. On the closing date, the issuer will advance a GBP1.5428 billion senior facility A2 loan to Bard Bidco Ltd., the borrower pursuant to the facilities agreement. Certain other lenders will also advance to the borrower a GBP974.4 million senior facility A1 loan and a GBP338.7 million senior capex facility loan. The total senior loan (A1, A2, and capex facility) is GBP2.86 billion. The issuer will advance a GBP81.2 million facility R loan to the borrower, which will rank junior to the senior loan. The issuer will also drawdown the class A to D tranched loan notes from their respective lenders. After the closing date, the issuer may issue additional notes or tranched loan notes subject to certain conditions being met. These include obtaining a rating agency confirmation that such additional issuance will not result in a downgrade or withdrawal of the current ratings on the debt. The senior loan provides for cash trap mechanisms if the loan-to-value (LTV) ratio is greater than 74.5% or if the debt yield is less than 8.3% before year three of the loan and 9.5% from year three onwards. The senior loan has an initial term of two years with four one-year extension options available, subject to the satisfaction of certain conditions. There is no scheduled amortization during the loan term. The portfolio's market value as of Dec. 31, 2024, is GBP3.87 billion, which equates to an LTV ratio of 74% based on the total senior loan and 65% excluding the capex loan. S&P's ratings address the issuer's ability to meet timely payment of interest on the class A to D debt, ultimate payment of interest on the class E and F notes, and payment of principal not later than the legal final maturity in August 2036 on all classes of debt. The legal final maturity date is initially August 2035. However, there is the option to extend the loan's term once by 12 months beyond the third extended loan maturity date in 2030 if there is approval by lenders holding 85% of the senior loan. Should the lenders choose to exercise this option, the legal final maturity date will be automatically extended to August 2036. Preliminary ratings Prelim Prelim. amount Class rating* (mil. GBP) A-1 Note AAA (sf) 374.90 A-2 Note AAA (sf) 0.10 A Loan AAA (sf) 153.00 B Note AA (sf) 122.70 B Loan AA (sf) 41.10 C Note A- (sf) 80.60 C Loan A- (sf) 27.00 D Note BBB- (sf) 201.60 D Loan BBB- (sf) 67.60 E Note BB- (sf) 326.60 F Note B- (sf) 147.60 R Note NR 81.20 *S&P's ratings address timely payment of interest on the class A to D notes and loans, ultimate payment of interest on the class E and F notes, and payment of principal not later than the legal final maturity in August 2036 on all classes of rated debt. The legal final maturity date is initially in August 2035. However, there is the option to extend the term of the loan once by 12 months if approval is obtained by 85% of the lenders. Should the lenders choose to do so, the legal final maturity will also be extended by one year. The ratings therefore address repayment of principal by August 2036. NR--Not rated. TALKTALK TELECOM: S&P Cuts ICR to CCC- on Likely Debt Restructuring ------------------------------------------------------------------- S&P Global Ratings lowered its long-term issuer credit rating on TalkTalk Telecom Group Ltd. (TalkTalk) and its issue rating on its senior secured debt to 'CCC-' from 'CCC+'. The '2' recovery rating on the company's first-lien debt is unchanged, indicating its expectations of 70% (rounded estimate) recovery prospects in the event of payment default. The negative outlook reflects S&P's view that a distressed debt restructuring or liquidity crisis is likely in the next few months, absent any favorable developments. TalkTalk Telecom Group Ltd. (TalkTalk) has launched a consent solicitation for a transaction that involves funding backstopped from its shareholder Ares, as well as changes to the terms of its first- and second-lien instruments. TalkTalk can currently pay payment-in-kind (PIK) interest on its first-lien debt, but cash interest payments on this debt begins from May 2026, pressuring the company's liquidity. The proposed transaction is expected to complete in the coming weeks and includes an amendment to the first-lien debt such that interest will continue to be PIK until maturity. The new proposal also extends the maturity from September 2027 to February 2028. Although the additional new money funding, of GBP101.8 million in total, backstopped from Ares and the PIK on the first-lien debt interest will support the company's thin liquidity, S&P would likely view the proposed transaction as a distressed exchange and tantamount to a default under our criteria. S&P said, "We would likely view the proposed amendment to the company's debt facilities as a distressed exchange. TalkTalk has launched a transaction that includes Ares, an existing minority shareholder, injecting about GBP101.8 million of new funding into the company, in conjunction with restructuring existing debt. The new funding will bear PIK interest of Sterling Overnight Index Average (SONIA) plus 7.5%, and rank ahead of the existing second-lien debt. We view this as inferior to the original promise to second-lien creditors because the additional prior-ranking debt reduces their debt's seniority. We also understand non-consenting second-lien lenders would see their debt rank below consenting lenders' second-lien debt and be covenant-stripped. TalkTalk is also requesting the consent of first-lien lenders to amend interest payments—from May 2026 until maturity—from cash to PIK, and to extend the maturity from September 2027 to February 2028. Non-consenting first-lien lenders' debt would rank below the new 1.5 lien funding facility and be covenant-stripped. We view this as inferior to the original promise of the instruments' terms given the changes in interest payment terms, changes in maturity, and the possible change in seniority of the debt. "We understand discussions with lenders are ongoing and a consent solicitation has been launched. Given the unsustainable nature of TalkTalk's capital structure and its pressured liquidity, we would likely view such a transaction as distressed. Furthermore, we view the compensation offered not adequately compensating for the changes in imputed promise. The proposed transaction does not include consent fees and the new facilities' interest rates remain unchanged, so we will likely view it as a distressed debt exchange akin to a default." The proposed restructuring transaction is subject to the participation level in the consent solicitation. The transaction could be implemented on a consensual basis, with closing expected before the end of September 2025—if the company achieves consent from at least 90% of existing first-lien notes holders. Absent the proposed PIK for interest payments and additional funding from Ares, TalkTalk could face liquidity pressures when cash interest payments on its first lien debt begins from May 2026. The additional funding and PIK interest payments on the first-lien debt support TalkTalk's liquidity. S&P understands that, as part of the proposed transaction, the company will receive additional liquidity backstopped from minority shareholder Ares, in addition to completed asset sales. The company's capital structure would also bear mostly PIK interest, including the first-lien debt, which is currently scheduled for cash interest payments from May 2026. This will provide liquidity headroom. That said, we view the company's operating performance and liquidity as pressured and dependent on the proposed funding and successful delivery of its business plan. S&P said, "Additionally, our liquidity assessment is constrained by TalkTalk's low cash levels, the absence of a revolving credit facility (RCF), and our expectation that intra-year working capital swings will be substantial given the lumpy supplier payments to Openreach in March and September. Based on our views above, we expect that after the company implements the transaction, we will review the rating, the group's new capital structure, and its liquidity position." The negative outlook reflects S&P's view of a high probability of a distressed debt restructuring or liquidity crisis absent favorable developments in the next weeks. S&P could lower the rating if TalkTalk announces: -- An agreement with lenders to undertake a restructuring that S&P would classify as distressed and tantamount to a default, such as the currently proposed transaction; or -- It faced a conventional default, for example, because it has not remained current on its obligations. Although unlikely, S&P could raise its rating on TalkTalk if it manages to improve its liquidity and secure additional financing without undertaking a restructuring that S&P would view as a default under its criteria. VICTORIA PLC: Moody's Affirms 'Caa1' CFR, Outlook Remains Negative ------------------------------------------------------------------ Moody's Ratings has affirmed Victoria plc's (Victoria or the company) Caa1 corporate family rating and Caa1-PD probability of default rating, following the announcement of a proposed notes exchange transaction, which would exchange the outstanding EUR489 million backed senior secured notes due 2026 and a portion of the outstanding backed senior secured notes due 2028 for new First Priority Backed Senior Secured Notes due 2029. Concurrently, Moody's have downgraded to Caa3 from Caa1 the instrument ratings on the EUR489 million and EUR250 million backed senior secured notes due 2026 and 2028 respectively. The outstanding amounts under the two notes will be subordinated to the new First Priority Backed Senior Secured Notes (FPNs) under the newly proposed capital structure. The outlook remains negative. Additionally, Moody's have assigned a Caa1 rating to the proposed FPNs due 2029 issued by Victoria plc. On July 24, Victoria announced that it had entered into binding transaction support agreements with a group of various noteholders representing over 90% of its backed senior secured notes due 2026 and over 50% of total senior secured notes debt. On the same day, the company launched a consent solicitation proposing to extend the maturity of its backed senior secured notes due 2026 to 2031 and reducing the coupon on the notes to 1% from 3.625%. Concurrently, Victoria launched offers to exchange at par all of its outstanding notes due 2026 (and a portion of the notes maturing in 2028) for new notes maturing in 2029. Under the proposed exchanges, the new 9.875% FPNs due 2029 will have a PIK toggle mechanism, giving the company the option to only pay in cash a coupon of 1% during the first 12 months (with the remaining coupon being capitalised). In addition, any amounts outstanding under the backed senior secured notes due in 2026 and 2028 will become subordinated to the FPNs. If the exchange offers are successfully executed as proposed, Moody's would likely classify this transaction as a distressed exchange per Moody's definition and reflect the limited default (LD) upon completion. A distressed exchange is defined as an issuer offering creditors new or restructured debt, or a new package of securities, cash or assets, which represents a diminished financial obligation relative to the original terms, with the effect of avoiding an eventual payment default. Moody's considers distressed exchanges a form of default. Alongside the proposed transaction, Victoria announced the refinancing of its GBP150 million super senior revolving credit facility (RCF), maturing in February 2026 with a new GBP130 super senior facility, which comprises a GBP75 million term loan and a GBP55 million RCF and will conclude when the proposed note exchange offering closes. RATINGS RATIONALE The affirmation of Victoria's Caa1 CFR reflects the fact that Moody's continues to view the company's capital structure as unsustainable. As a result of the proposed notes exchange and the refinancing of the super senior RCF, approximately GBP43 million of debt will be added to the company's balance sheet. Moody's estimates pro forma Moody's-adjusted debt/EBITDA to increase to 10.3x from 9.9x at the end of the fiscal year ending in March 2025 (fiscal 2025) resulting in pro forma Moody's-adjusted EBITA/interest expense well below 0.5x. Governance risk considerations were a key driver for this rating action. The notes exchange transaction and very high pro forma financial leverage are indicative of aggressive financial policies, elevating governance risk. Moody's expects the company's operating performance to improve in fiscal 2026 and fiscal 2027 as a result of recovering demand and significant cost saving initiatives. However, significant uncertainty remains around Victoria's operating performance recovery trajectory, which could be derailed by weakening consumer confidence and competitive pressures. However, Moody's forecasts that Moody's-adjusted debt/EBITDA will remain above 8.5x at the end of fiscal 2027, while Moody's-adjusted EBITA/interest expense will also remain well below 1.0x. In Moody's views, these weak credit metrics, alongside Moody's expectations of negative free cash flow generation, indicate that the refinancing of the capital structure in 2027 remains uncertain. Besides the very weak credit metrics, Victoria's Caa1 CFR is also constrained by the company's (1) activities in mature markets with competitive pressures; (2) sale of consumer discretionary items correlated with the economic cycle; and, (3) exposure to volatile raw material prices and foreign currency movements. The rating is supported by the company's (1) leading positions within the fragmented European soft flooring and ceramic tiles markets; (2) focus on independent retail channels with greater customer diversity and pricing power; (3) low exposure to the new construction segment; and (4) flexible cost structure. LIQUIDITY The company's liquidity is adequate. After the transaction closes, Victoria will have approximately GBP65 million of cash on the balance sheet and access to a GBP55 million super senior RCF. Although Moody's expects the company to use the PIK toggle mechanism and pay only a 1% coupon on the new FPNs for the first 12 months, Moody's still expect free cash flow to be negative over the next 12-18 months. RATING OUTLOOK The negative outlook reflects the uncertainty associated with the recovery of operating performance, Moody's expectations of negative free cash flow leading to a deterioration in the company's liquidity over the next 12-18 months, and the sustainability of the post-transaction capital structure. The outlook could return to stable if operating performance improves significantly from current levels, the 2028 maturities are addressed and liquidity remains at least adequate. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The negative outlook indicates that an upgrade is unlikely over the next 12-18 months. However, the ratings could be upgraded if Victoria successfully refinances its 2028 maturities such that (i) Moody's-adjusted debt/EBITDA leverage is sustainably below 6.25x, (ii) Moody's-adjusted EBITA / interest expense is maintained above 1.0x, (iii) its free cash flow becomes positive on a sustainable basis; and (iv) the company's liquidity remains at least adequate. Any deterioration in liquidity or failure to improve operating performance from current levels could lead to a downgrade, as could a likelihood of restructuring resulting in potentially higher losses. PRINCIPAL METHODOLOGY The principal methodology used in these ratings was Consumer Durables published in September 2021. The net effect of any adjustments applied to rating factor scores or scorecard outputs under the primary methodology(ies), if any, was not material to the ratings addressed in this announcement. COMPANY PROFILE Victoria plc, founded in 1895 in the United Kingdom, is an international designer, manufacturer and distributor of flooring products across carpets, ceramic tiles, underlay, luxury vinyl tile, artificial grass and flooring accessories. Victoria is listed on AIM in London with a market capitalisation of approximately GBP90 million as of time of this publication. The company benefits from good geographic diversification, with more than 74% of its revenue being generated from outside the UK. For the financial year ending in March 2025, the company generated GBP1,115 million of sales and GBP114 million of reported underlying EBITDA. ********* 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 * * *