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T R O U B L E D C O M P A N Y R E P O R T E R
E U R O P E
Wednesday, July 29, 2026, Vol. 27, No. 150
Headlines
A U S T R I A
CONSTANTIA FLEXIBLES: Fitch Assigns 'B' LT IDR, Outlook Positive
A Z E R B A I J A N
BANK RESPUBLIKA: Moody's Affirms Ba3 Deposit Rating, Outlook Stable
KAPITAL BANK: Moody's Affirms Ba2 LT Deposit Ratings, Outlook Pos.
F R A N C E
ECG TOPCO: S&P Assigns 'B' Issuer Credit Rating, Outlook Stable
PREMIUM GROUP: S&P Assigns Preliminary 'B+' ICR, Outlook Stable
I R E L A N D
ANCHORAGE CAPITAL 10: Fitch Affirms 'B-sf' Rating on Cl. F-2 Notes
CVC CORDATUS IX: S&P Assigns B- (sf) Rating to Class F-R-R Notes
HAUS 39: Moody's Puts B1 Rating on D Notes on Review for Downgrade
OCP EURO 2026-16: S&P Assigns B- (sf) Rating to Class F Notes
SALUS - EUROPEAN LOAN 33: DBRS Confirms B(high) Rating on D Debt
I T A L Y
ECARAT DE SA 2024-1: DBRS Hikes Class F Notes Rating to BB(low)
L U X E M B O U R G
DIOT-SIACI SYMPHONY: Moody's Assigns 'B2' CFR, Outlook Stable
FOUNDEVER GROUP: Moody's Lowers CFR & Senior Secured Debt to Ca
HSE INVESTMENT: Fitch Affirms 'B-' LongTerm IDR, Outlook Now Stable
N E T H E R L A N D S
YONDR JK 1: Fitch Assigns 'BB' LongTerm IDR, Outlook Stable
P O R T U G A L
TAGUS STC VIRIATO 2: Fitch Corrects July 8 Ratings Release
S P A I N
AUTO ABS SPANISH 2022-1: Moody's Ups Rating on Cl. E Notes to Ba1
CAIXABANK CONSUMO 6: DBRS Confirms BB(high) Rating on Cl. B Notes
U N I T E D K I N G D O M
ARENA FINANCE: S&P Assigns B- (sf) Rating to Class F Notes
DELTA TOPCO: Fitch Affirms 'BB' LT IDR, Alters Outlook to Pos.
EUROHOME UK 2007-1: S&P Lowers Class B Notes Rating to 'BB- (sf)'
HARBOUR NO. 2: S&P Affirms 'CCC (sf)' Rating on 2 Note Classes
HOXTON CONSUMER 2026-1: Moody's Assigns Ba3 Rating to Cl. E Notes
JUPITER MORTGAGE NO.1: S&P Affirms 'CCC' Rating on F-Dfrd Notes
MORTIMER 2024-MIX: Moody's Affirms B1 Rating on Class X Notes
SOUTH EAST WATER: S&P Cuts Issue Rating to 'BB+', Outlook Negative
X X X X X X X X
TURKMENISTAN: Fitch Affirms 'BB-' Long-Term IDR, Outlook Stable
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A U S T R I A
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CONSTANTIA FLEXIBLES: Fitch Assigns 'B' LT IDR, Outlook Positive
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Fitch Ratings has assigned Constantia Flexibles GmbH a Long-Term
Issuer Default Rating (IDR) of 'B' with a Positive Outlook. Fitch
has also assigned Constantia's EUR1.4 billion term loan B and
EUR500 million bonds senior secured ratings of 'B+' with Recovery
Ratings of 'RR3'.
The rating actions follow completion of the full refinancing of
Constantia's capital structure, with final terms being in line with
its prior expectations.
The IDR reflects high leverage, albeit with deleveraging capacity
as earnings improve. The rating is supported by a solid business
profile, the company's leading position in flexible packaging,
established customer relationships and moderate concentration risk.
The Positive Outlook reflects its expectation of deleveraging to
the positive sensitivity of 6.0x in 2027 and below in 2028,
supported by modest but sustainable revenue growth and strong free
cash flow (FCF) with limited volatility.
Key Rating Drivers
Leverage Constrains Rating: Fitch expects Fitch-adjusted EBITDA
gross leverage to remain high, albeit improving, at 6.5x in 2026,
6x in 2027, and to decline below 6x from 2028 onwards, from 7.5x in
2025. Deleveraging is likely to be driven by stronger profitability
rather than debt reduction. Fitch expects factoring and supply
chain finance to remain in line with the 2025 balance and to add
around 1.0x to Fitch-adjusted leverage in 2026.
Improving FCF Generation: Fitch expects Constantia's FCF generation
to strengthen, with the Fitch-defined FCF margin increasing to 1.9%
in 2026, 4.2% in 2027 and 5.1% in 2028. This will be supported by
higher EBITDA, limited working capital outflows, the absence of
restructuring charges from 2027, lower growth capex from 2026 and
no dividend payments. Fitch forecasts FCF of about EUR100
million-120 million in 2027-2028. However, Fitch believes excess
cash is more likely to be used for acquisitions than voluntary debt
repayment.
EBITDA Growth: Fitch forecasts Fitch-adjusted EBITDA will increase
to about EUR354 million in 2026 from EUR305 million in 2025. Growth
will be driven by the full run-rate from the Aluflexpack
acquisition, integration synergies, recently added growth assets
and market growth. Cost-saving measures beyond integration should
more than offset higher operating costs linked to business
expansion in 2026. Fitch forecasts EBITDA of EUR380 million in 2027
and EUR395 million in 2028, supported by integration synergies and
organic growth. The Fitch-adjusted EBITDA margin should improve to
16% or above from 2027, from 14% in 2025.
Limited Earnings Volatility: Constantia is exposed to changes in
raw material (mainly aluminum and resin) and energy prices. EBITDA
volatility is limited by contractual cost pass-through mechanisms
covering about 85%-90% of contracts. This was evident during the
period of high inflation, elevated energy costs and the imposition
of US tariffs, and Fitch believes the current rise in input costs
will be managed in a similar way. The company's strong customer
relationships and reliable supply record (including during the
pandemic) support pricing flexibility. The small share of packaging
costs in customers' end-product prices also supports its ability to
pass on cost increases.
Acquisition Enhances Scale and Diversification: The acquisition of
Aluflexpack in March 2025 strengthened Constantia's position in
European flexible packaging, adding about EUR350 million of revenue
and EUR35 million of EBITDA, according to management. Fitch
believes the transaction has improved the company's product and
geographical diversification and should support margin expansion
through procurement, commercial, operational and administrative
synergies, as well as increased in-sourcing. Fitch expects synergy
realisation of about EUR30 million in 2026 and 2027, following the
EUR9 million recorded in 2025.
Solid Business Profile: Constantia's business profile is supported
by its leading market position in flexible packaging, loyal
customer relationships and a high share of multi-year contracts.
Most of its end-markets across the pharma and consumer divisions
are fairly defensive as they cater to the basic needs of
end-consumers. Fitch also views the company's private label
offering as providing some resilience in weaker consumer
environments. These strengths are offset by its smaller scale than
larger peers, such as Amcor plc (BBB+/Stable) and Mondi Plc. Its
focus on mono-material and easily recyclable packaging in Europe
positions it well for tighter regulatory requirements.
One-Notch Uplift for Senior Secured: Constantia's proposed senior
secured debt is rated one notch above the IDR to reflect its good
recovery prospects. The instruments rank pari passu with its
proposed EUR305 million revolving credit facility (RCF), In
accordance with Fitch's criteria, the recovery waterfall analysis
includes super senior factoring and senior secured supply chain
financing.
Peer Analysis
Constantia's business profile is stronger than that of most
Fitch-rated packaging peers in the sub-investment grade categories.
Constantia's product and end-market diversification is broader than
that of Ardagh Metal Packaging S.A. (B/Stable), Fischbach MidCo III
GmbH (B/Stable), Nordic Paper Holding AB (B+/Positive) and CANPACK
Group Inc, (BB/Negative), which are more focused on one or two
product lines.
Constantia also benefits from higher barriers to entry and stronger
market positioning, supported by strict requirements in
pharmaceutical and food packaging and its leading flexible
packaging position. However, its business profile remains weaker
than that of larger, more diversified peers such as Amcor plc
(BBB+/Stable) and Mondi plc, due mainly to its smaller scale.
Constantia is differentiated by strong contractual cost
pass-through mechanism and ongoing cost-saving measures, which
support strong FCF generation. Its projected FCF margins of
2.1%-5.1% in 2026-2028 compare favourably with Nordic Paper's
(which Fitch forecasts to turn positive only in 2027), CANPACK's
(likely to generate positive FCF from 2028), Smurfit Westrock plc's
(BBB+/Stable; 1.9%-3.3%) and Amcor's (3.8%-4.4%). These differences
reflect product mix, varying vertical integration, operating
efficiency, capex cycles and dividend policies.
In contrast, Constantia's EBITDA gross leverage of 6.5x in 2026,
with some improvement thereafter, is weaker than FischBach's 4.9x
and Nordics Paper's 3.1x and broadly in line with Ardagh Metal
Packaging's 6.7x. This weaker leverage profile remains the main
constraint on the rating relative to peers.
Fitch’s Key Rating-Case Assumptions
- Revenue to grow 5% in 2026 and 3% in 2027-2028, supported by the
first 12-month contribution of Aluflexpack in 2026, additional
volumes driven by acquired growth assets and organic growth
- EBITDA margin to increase to 15.5% in 2026 and 16.2%-16.3% in
2027-2028 driven by integration synergies, higher volumes and
strict cost management supported by the contractual cost
pass-through mechanism
- Working capital consumption at 0.8% of revenue in 2026 and 0.3%
in 2027-2028
- Capex to decline to 5.5% of revenue in 2026, 4.3% in 2027 and
3.8% on completion of growth capex
- No M&As
- No dividends
- Repayment of subsidiary debt of EUR22 million in 2026, following
the completion of refinancing
Corporate Rating Tool Inputs and Scores
Fitch scored the issuer as follows, using its Corporate Rating Tool
(CRT) to produce the Standalone Credit Profile (SCP):
Business and financial profile factors (assessment, relative
importance): management ('bb+', Lower), sector characteristics
('bbb-', Lower), market and competitive positioning ('bb+',
Moderate), diversification and asset quality ('bb+', Moderate),
company operational characteristics ('bbb-', Moderate),
profitability ('bb', Moderate), financial structure ('ccc+',
Higher), and financial flexibility ('bb+', Moderate).
The quantitative financial subfactors are based on standard CRT
financial period parameters: 20% weight for the latest historical
year 2025, 40% for the forecast year 2026 and 40% for the forecast
year 2027.
B+ to CC considerations apply in its analysis and has no impact.
The governance assessment of 'good' has no impact.
The operating environment assessment of 'bbb+' has no impact.
The SCP is 'b'.
To derive the Long-Term IDR:
Fitch made no adjustments to the SCP, resulting in an IDR of 'B'.
Recovery Analysis
- The recovery analysis assumes that Constantia would be
reorganised as a going concern in bankruptcy rather than
liquidated.
- Fitch assumes a 10% administrative claim.
- Factoring facilities backed by receivables rank super senior
while supply chain financing ranks senior secured, in line with
Fitch's criteria.
- The expected senior secured EUR305 million RCF is assumed to be
fully drawn in post-restructuring and ranks the same as the senior
secured debt of EUR1,900 million.
- Other debt of EUR56 million, expected to be outstanding at
closing, is fully cash-collateralised and ring-fenced from
Constantia or its subsidiaries. The loan is excluded from the
waterfall analysis, as it will be repaid from the cash collateral
and therefore will not affect recoveries available to other
creditors.
- Its going-concern EBITDA estimate of EUR300 million, including
Aluflexpack, reflects its view of a sustainable,
post-reorganisation EBITDA on which Fitch bases the valuation of
the company.
- Fitch uses an enterprise value multiple of 5.5x to calculate a
post-reorganisation valuation. This reflects Constantia's leading
position in its end-markets, long-term relationships with blue-chip
customers and high entry barriers especially for pharma packaging.
- The waterfall analysis output for the senior secured term loan B
(TLB) and other senior secured debt generated a ranked recovery in
the 'RR3' band, indicating an instrument rating of 'B+'.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- EBITDA gross leverage above 7.5x
- FCF margin consistently negative
- EBITDA interest coverage below 2.0x
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- EBITDA gross leverage below 6.0x
- FCF margins sustainably neutral to positive
- EBITDA interest coverage above 2.5x
Liquidity and Debt Structure
At end-2025, Constantia had EUR158 million of cash (adjusted by
Fitch for intra-year working capital changes of EUR50 million) and
an undrawn EUR200 million RCF. Fitch expects EUR119 million of
Fitch-adjusted cash at end-2026 and EUR305 million of fully undrawn
RCF. Fitch forecasts Constantia will generate strong FCF of EUR44
million in 2026, EUR100 million in 2027 and EUR123 million in
2028.
The new capital structure will consist of the TLB and other senior
secured debt totaling EUR1.9 billion with long-dated maturities.
Constantia also supports its working capital management with
factoring and supply chain financing.
Issuer Profile
Constantia is an Austrian flexible packaging manufacturer with an
aluminum and film foil-based packaging products offering. It serves
well-known global customers across the pharma and consumer
end-markets.
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Fitch's latest quarterly Global Corporates Sector Forecasts Monitor
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.
Climate Vulnerability Signals
The results of its Climate.VS screener did not indicate an elevated
risk for Constantia.
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
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Constantia
Flexibles GmbH LT IDR B New Rating B(EXP)
senior secured LT B+ New Rating RR3 B+(EXP)
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A Z E R B A I J A N
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BANK RESPUBLIKA: Moody's Affirms Ba3 Deposit Rating, Outlook Stable
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Moody's Ratings has affirmed Joint Stock Commercial Bank
Respublika's (Bank Respublika) long-term local and foreign currency
bank deposit ratings at Ba3 and maintained the outlook on these
ratings at stable. Concurrently, Moody's affirmed the bank's
Baseline Credit Assessment (BCA) and Adjusted BCA at b1, its
long-term local and foreign currency Counterparty Risk Ratings
(CRRs) at Ba2, and the long-term Counterparty Risk Assessment (CR
Assessment) at Ba2(cr). In addition, Moody's affirmed the Not Prime
(NP) short-term local and foreign currency bank deposit ratings, NP
short-term local and foreign currency CRRs and the NP(cr)
short-term CR Assessment.
RATINGS RATIONALE
The affirmation of Bank Respublika's b1 BCA reflects the bank's
sustained track record of solid financial performance, particularly
its strong asset quality and profitability.
Bank Respublika's b1 BCA is underpinned by its robust asset
quality, as reflected in a problem loan ratio of 1.5% at year-end
2025. Problem loan coverage remained solid at approximately 109%.
Moody's expects asset quality to continue benefiting from favorable
operating conditions in Azerbaijan and the bank's well-diversified
loan portfolio, which is broadly balanced across the microfinance,
small and medium sized enterprises (SME) and retail lending
segments.
Bank Respublika's profitability remains a key strength, supported
by its strategic focus on the SME, microfinance and retail sectors,
which generate healthy margins and strong fee and commission
income. The bank reported a record net profit of AZN61 million in
2025 (2024: AZN51 million), translating into a return on tangible
assets of 2.3%. Moody's expects profitability to remain strong over
the next 12-18 months, albeit with some moderation as credit costs
gradually normalise from exceptionally low levels.
Moody's expects Bank Respublika's capital adequacy to continue
strengthening over the next 12-18 months. The bank's Tangible
Common Equity (TCE)-to-risk-weighted assets (RWA) ratio improved to
11.3% at year-end 2025 from 9.6% at year-end 2024, supported by
strong internal capital generation. Moody's expects dividend
payouts of 20%-30% of net income to continue, however, this should
not materially constrain further capital accumulation.
Bank Respublika's customer deposits accounted for around 60% of
total liabilities at year-end 2025, although the funding profile
remains relatively concentrated, with less stable deposits
representing 49.2% of tangible banking assets (TBA). Wholesale
funding, sourced primarily from domestic banks, international
development institutions and foreign investment funds, is expected
to remain stable and moderate, representing around 30%-40% of TBA
and posing limited refinancing risk. Moody's expects the bank to
maintain adequate liquidity buffers over the next 12-18 months,
supported by core banking liquidity of 10% of TBA at year-end
2025.
Bank Respublika's Ba3 long-term deposit ratings incorporate a
one-notch uplift from government support from the Government of
Azerbaijan (Baa3 positive). The uplift reflects Moody's assumptions
of a moderate probability of support, given the bank's meaningful
market position, with a market share of around 5% of system assets
as of year-end 2025.
RATINGS OUTLOOK
The stable outlook on Bank Respublika's long-term deposit ratings
reflects Moody's expectations that the bank will maintain sound
fundamentals over the next 12-18 months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
A material and sustained improvement in capital adequacy and
funding profile or further enhancement of the operating environment
in Azerbaijan could lead to an upgrade of the bank's BCA and
deposit ratings. An upgrade of the sovereign rating, combined with
a stable BCA, could also result in an upgrade of the deposit
ratings.
Conversely, a significant deterioration in operating conditions
that materially weakens asset quality, capital adequacy, or
liquidity could result in a downgrade. A downgrade of the sovereign
rating could also lead to a downgrade of the deposit ratings.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Banks published
in November 2025.
KAPITAL BANK: Moody's Affirms Ba2 LT Deposit Ratings, Outlook Pos.
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Moody's Ratings has affirmed Kapital Bank OJSC's (Kapital Bank) Ba2
long-term local and foreign currency bank deposit ratings, the
bank's ba3 Baseline Credit Assessment (BCA) and Adjusted BCA, its
Ba1 long-term local and foreign currency Counterparty Risk Ratings
(CRRs), and the Ba1(cr) long-term Counterparty Risk Assessment (CR
Assessment). In addition, Moody's affirmed the Not Prime (NP)
short-term local and foreign currency bank deposit ratings, NP
short-term local and foreign currency CRRs and the NP(cr)
short-term CR Assessment. The outlook on the long-term deposit
ratings remains positive.
RATINGS RATIONALE
The affirmation of Kapital Bank's ba3 BCA and Ba2 long-term deposit
ratings reflects the bank's robust asset quality, strong
profitability, stable funding base with limited reliance on market
funding, and ample liquidity.
Kapital Bank's problem loans (defined as Stage 3 loans under IFRS
9) accounted for around 3.7% of total loans as of year-end 2025,
while problem loan coverage by reserves was around 130% at the same
date. Historically, Kapital Bank's asset quality has been stronger
than that of its peers because of its focus on government-related
enterprises, payroll individual customers, budget recipients and
pensioners. Moody's expects the bank's asset quality to remain
broadly stable over the next 12-18 months, supported by a favorable
operating environment.
In 2025, Kapital Bank reported consolidated net income of AZN275
million, resulting in a return on tangible assets (ROTA) of 2.3%,
compared with 2.0% in 2024. The bank's net interest margin (NIM)
increased to 8.1% from 7.7% in 2024, as higher yields on its
expanding loan portfolio more than offset funding cost pressures.
Moody's expects profitability to remain broadly stable over the
next 12-18 months, with ROTA remaining at or above 2%, supported by
a stronger NIM and growing fee and commission income generated by
the bank's expanding transactional franchise.
At year-end 2025, Kapital Bank's Tangible Common Equity
(TCE)-to-risk-weighted assets (RWA) ratio increased to 14.5% from
13.7% in 2024, primarily driven by strong earnings generation and a
lower dividend payout ratio. In 2025, the dividend payout ratio of
consolidated net profit declined to 35% from a 66% average in
2021-2024, providing additional capacity for capital accumulation.
Moody's also expects slower RWA growth of around 10%-15% over the
next 12-18 months, which will further ease pressure on capital
adequacy.
In 2025, customer deposits declined by 8% but continued to
represent 80% of the bank's non-equity funding base. The share of
less stable funding remained broadly unchanged at 30.6% of tangible
banking assets at year-end 2025, compared with 31.2% a year
earlier. Kapital Bank also benefits from ample liquidity, with core
liquid banking assets accounting for more than 18% of tangible
banking assets as of year-end 2025.
Kapital Bank's Ba2 long-term deposit ratings are based on its ba3
BCA and Moody's assessments of a high probability of government
support from the Government of Azerbaijan (Baa3 positive). This
assessment reflects the bank's position as the country's
second-largest bank by assets and its significant market shares in
both loans and customer deposits. Moody's support assumptions
result in a one-notch uplift from the bank's standalone BCA.
RATINGS OUTLOOK
The positive outlook on Kapital Bank's long-term deposit ratings
reflects both the positive outlook on Azerbaijan, which indicates a
strengthening capacity of the government to support the bank during
periods of stress, and Moody's expectations that Kapital Bank's
credit profile will continue to benefit from the favorable
operating environment. This should support stronger business
opportunities and further strengthening of the bank's credit
fundamentals.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade of Azerbaijan's sovereign rating could lead to an
upgrade of Kapital Bank's deposit ratings over the next 12-18
months. In addition, a sustained improvement in the bank's
profitability, capital adequacy or asset quality, or a further
strengthening of the operating environment in Azerbaijan, could
support an upgrade of both the BCA and the deposit ratings.
Conversely, a material deterioration in operating conditions that
weakens the bank's asset quality, profitability, or capital
adequacy could lead to a downgrade of the BCA and deposit ratings.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Banks published
in November 2025.
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F R A N C E
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ECG TOPCO: S&P Assigns 'B' Issuer Credit Rating, Outlook Stable
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S&P Global Ratings assigned its 'B' long-term issuer credit rating
to ECG Topco SAS, as well as its 'B' issue rating and '3' recovery
rating to the company's senior secured EUR835 million term loan B
(TLB) tranche and EUR95 million delay drawing term loan (DDTL).
S&P said, "The stable outlook reflects our view that ECG will
continue capitalizing on its strong business position and
successful ramp-up of recent acquisitions, supporting our forecast
S&P Global Ratings-adjusted EBITDA margin of about 50% over fiscal
years 2026-2027. While we expect development capital expenditure
(capex) to normalize, we forecast that free operating cash flow
(FOCF) after leases will turn positive by fiscal 2027 and S&P
Global Ratings-adjusted debt to EBITDA will fall below 5.0x while
the company maintains adequate liquidity."
France-based outdoor accommodation operator European Camping Group
(ECG) issued a EUR950 million-equivalent senior secured term loan B
(TLB), split into two tranches ofEUR835 million and GBP100 million.
The proceeds from the issuance were used to repay the existing
EUR841 million unitranche facility, revolving credit facility (RCF)
drawings of EUR68 million, and transaction fees of EUR15 million,
as well as to increase cash on the balance sheet. As part of the
transaction, the group also increased its RCF size to EUR315
million and issued a EUR95 million delay drawing term loan (DDTL)
that S&P assumes it will draw in full this year.
ECG benefits from a leading position in the outdoor accommodation
segment and a track record of sound operating performance,
supported by a successful acquisition strategy. It faces risks
related to business seasonality, high operating leverage, and
volatility in the broader lodging industry.
S&P said, "The final ratings are in line with the preliminary
ratings we assigned on Feb. 16, 2026.ECG issued a EUR950
million-equivalent senior secured TLB, split into two tranches of
EUR835 million and GBP100 million. The group also increased its RCF
to EUR315 million from EUR275 million, and issued a EUR95 million
DDTL. The final capital structure is roughly similar to the
proposed capital structure, and there were no material changes to
the final debt documentation since our original review, nor to our
forecasts.
"We forecast the group's adjusted leverage to fall below 5x in
2027. Following the close of the transaction, we estimate that
about EUR2.2 billion in S&P Global Ratings-adjusted debt will be
outstanding by year-end 2026. Our adjusted debt calculation also
includes about EUR1.03 billion in lease liabilities. The capital
structure implies ECG will post relatively conservative S&P Global
Ratings-adjusted leverage of about 5.1x by year-end 2026 and 4.7x
in fiscal 2027. We also view the group's liquidity as adequate,
with about EUR66 million cash available pro forma the transaction
and EUR315 million available under the upsized RCF."
ECG has a strong position in the growing outdoor accommodation
sector in Europe. ECG operates approximately 450 mostly four- and
five-star campsites across 12 countries, with leading positions in
France, Spain, and Italy. The group offers a well-invested
portfolio of assets, including high-quality sites and a relatively
young mobile home fleet, reinforcing brand recognition and customer
appeal. S&P said, "Although the group generates about 60% of its
revenue in France, it is expanding its presence in Southern Europe
(Spain, Italy, and Croatia), which we expect to enjoy favorable
demand trends in the medium term, while strengthening its ability
to gain customers in Northern European countries. The group's
strategy has focused on increasing its scale through
transformational and bolt-on acquisitions. In 2022, ECG acquired
VacanceSelect, a leading French operator with about 270 campsites,
and in 2025 it acquired Alannia, a leading Spanish operator with
five Mediterranean resorts. The group has also acquired more than
20 campsites since 2022. We think ECG's track record of integrating
these acquisitions and executing on its growth strategy has
contributed to a sound operating performance following the COVID-19
disruption. The group's total consolidated revenue reached EUR813
million, including VacanceSelect Travel (VST), in fiscal 2025, with
S&P Global Ratings-adjusted EBITDA of EUR391 million." This
translates to an S&P Global Ratings-adjusted EBITDA margin of about
48%, which indicates relatively high profitability compared with
rated peers in the lodging industry.
S&P said, "High seasonality and operating leverage constrain
business flexibility, in our view. ECG is highly exposed to the
seasonal nature of the outdoor accommodation business, with revenue
and EBITDA heavily concentrated in the peak summer months. In
fiscal 2025, about 74% of the group's gross accommodation revenue
came in July and August. A further constraint is the group's high
operating leverage (67% of total costs, including rents, are fixed)
and capital-intensive model, which heightens earnings and cash flow
volatility in the event of underperformance. Additionally, the
outdoor accommodation sector is inherently exposed to external
factors, including weather conditions and broader consumer trends,
with leisure demand being volatile and sensitive to economic
cycles. However, we understand, the company has some visibility of
its revenue and cash flow, as holidays are booked and paid for in
advance, which provides flexibility to manage short-term
fluctuations, given that capex investments are made after the
summer and are in part discretionary.
"We expect ECG's FOCF after leases will turn positive over fiscal
2027. We have not made material changes to our forecast, and it
remains largely in line with that published on Feb. 16, 2025.By
fiscal year-end 2026, we expect the group's revenue to increase by
about 9% to EUR885 million and by 5.5% in fiscal 2027 to EUR934
million. Revenue growth should come from increasing revenue per
available room on existing sites, and the ramp-up of the
acquisition of Alannia in Spain and other 2025-2026 site
acquisitions." The projected topline expansion, along with limited
operating expense inflation, should translate into an S&P Global
Ratings-adjusted EBITDA margin of 49.5% in fiscal 2026 and 51.6% in
fiscal 2027, from 48.1% in fiscal 2025.
S&P said, "Although ECG has largely completed its post-COVID-19
catch-up phase, upgrading its camp sites and fleet, the business
remains capital intensive, with recurring capex corresponding to
about 12% of net revenue and development capex about 10%. The group
closed fiscal 2025 with negative EUR63 million FOCF after leases,
and we expect it will remain negative, at about EUR58 million, in
fiscal 2026 due to one-off costs and negative working capital
outflow associated with recent acquisitions. While our assumptions
are based on an organic basis from 2027 onward, we expect the
group's FOCF after leases will tun positive at about EUR14 million,
due to EBITDA expansion and reduced development capex.
"The stable outlook reflects our view that ECG will continue
capitalizing on its strong business position and ramp-up of recent
acquisitions, supporting an S&P Global Ratings-adjusted EBITDA
margin of about 50% over fiscal years 2026-2027. We also expect
FOCF after leases will turn positive by fiscal 2027 and S&P Global
Ratings-adjusted debt to EBITDA will fall below 5.0x, while
maintaining adequate liquidity.
"We could lower our ratings in the next 12 months if, contrary to
our base-case scenario, ECG fails to organically expand its EBITDA
base such that FOCF fails to turn positive from fiscal 2027 and its
liquidity weakens. Rating pressure could also arise if adjusted
debt to EBITDA increases because of leveraging transactions to
pursue acquisitions or return cash to shareholders.
"For a positive rating action, we would need to see resilience in
ECG's earnings and profitability, an ability to generate
meaningfully positive FOCF after leases on a sustainable basis, and
a track record of maintaining adjusted debt to EBITDA comfortably
below 5.0x, with a clear financial policy commitment to maintaining
this level."
PREMIUM GROUP: S&P Assigns Preliminary 'B+' ICR, Outlook Stable
---------------------------------------------------------------
S&P Global Ratings assigned its preliminary 'B+' issuer credit
rating to France-based wealth management platform Premium Holding
SAS (Groupe Premium). At the same time, S&P assigned its
preliminary 'B+' issue rating to the EUR850 million TLB due 2033.
The '3' recovery rating on the debt issuance reflects its
expectations of a meaningful recovery (rounded estimate: 55%) in
the event of default.
The stable outlook on the global scale rating indicates that S&P
expects the company will uphold its current financial policy,
reducing its leverage to materially below 5x, while continuing to
expand its business delivering an EBITDA margin around 35%.
Groupe Premium is refinancing its capital structure. The
transaction involves the planned issuance of an EUR850 million term
loan B (TLB) due 2033, repayment of EUR346 million outstanding
debt, and repayment of a EUR482 million shareholder instrument.
The group's leverage is relatively contained versus global wealth
management peers. Under its base case, S&P forecasts debt to EBITDA
will peak at about 5x in 2026 before incrementally
decreasing--consistent with the group's history of organic earnings
growth and relatively consistent financial policy in the context of
its sponsor ownership.
S&P's ratings on Groupe Premium are underpinned by its solid
position as the leading independent wealth management platform in
France. The group's execution has been solid in this context--with
a clear track record of organic growth and earnings expansion.
Groupe Premium's commission based-model relying on independent
brokers and advisors has provided a scalable foundation for growth.
Its niche position serving French mass-affluent to high-net-worth
individuals has added further momentum, benefiting from the strong
nationwide increase in private savings for retirement and estate
planning.
A vertically integrated model supports fee generation from diverse
sources. The group's business model is built on two complementary
pillars:
-- Distribution, which uses its extensive networks to provide
tax-efficient products like life insurance and pension wrappers,
and
-- In-house product factories, which create asset management and
structured product solutions that drive assets under management
(AUM) and commission growth.
The distribution network built on independent brokers and advisors
drives the flow into both channels, generating commission and AUM
fees from clients and product distributors in the process. While
the group operates in a competitive landscape, its consistent focus
on its niche and track record of organic growth and its effective
mergers and acquisitions (M&A), such as Grifo Group in Italy and
Pierre 1er Gestion, provide a competitive edge and a degree of
resilience.
This strategic advantage is driving strong earnings growth. Our
forecast sees EBITDA growth of 41% in 2026 (including some
basis-effects from some acquisitions in late 2025) and 19% in 2027.
This highlights Groupe Premium's ability to capture market share
from traditional players such as retail banks through both organic
initiatives and strategic M&A.
S&P said, "While Groupe Premium's operating performance is sound,
we consider the group's leverage profile to be aggressive.
Pro-forma the upcoming refinancing, we anticipate S&P Global
Ratings-adjusted debt to EBITDA to reach 4.96x in 2026. However, we
view this as a peak, and we expect this metric to fall toward 4.2x
in 2027 driven by strong EBITDA expansion and a disciplined capital
allocation strategy.
"We consider further releveraging to be outside of our base case.
Management and its sponsor, Eurazeo, have signaled a commitment to
prioritizing reinvestment of medium-term free cash flow toward debt
reduction rather than shareholder distributions. This policy, as
well as lower leverage than for other sponsor-owned companies in
the wealth management or broader business services sectors,
underpins our assessment of Groupe Premium's financial policy. This
is a relatively favorable assessment for a private equity-owned
entity."
Groupe Premium's liquidity is an important rating support. Indeed,
among a group of global wealth managers where liquidity needs are
contained and free cash generation is high, Groupe Premium's
liquidity position is notably solid. S&P said, "The group's
liquidity profile is supported by significant undrawn capacity via
a EUR100 million revolving credit facility (RCF) and consistent
free cash flow generation, which we forecast at EUR62
million-EUR128 million across our base case, including cash
interest and taxation. On the other hand, its needs are well
contained--limited to selective M&A, particularly of independent
financial advisor franchises in France, and capital expenditure
(capex) on the platform. We do not see near term maturity risk for
the group, with its EUR850 million TLB maturing in 2033. This is
broadly supportive of its liquidity position."
S&P said, "The final ratings will depend on our receipt and
satisfactory review of all final documentation and final terms of
the transaction. The preliminary ratings should therefore not be
construed as evidence of final ratings. If we do not receive final
documentation within a reasonable time, or if the final
documentation and final terms of the transaction depart from the
materials and terms reviewed, we reserve the right to withdraw or
revise the ratings. Potential changes include, but are not limited
to, utilization of the proceeds; maturity, size, and conditions of
the term loan; financial and other covenants; security; and
ranking.
"The stable outlook on Groupe Premium reflects our expectation
that, over the next 12 months, the group will continue to grow its
brokerage and wealth management business in France, maintaining its
core leverage metric--gross debt to EBITDA--sustainably below 5x.
It also anticipates a consistent financial policy, including the
absence of large debt-funded acquisitions.
"We could lower the rating if Groupe Premium raises its leverage
meaningfully while its business performance declines. This would
likely result in gross debt to EBITDA starting to exceed 5x on a
sustained basis and by a material margin, with a weakening of
operational cash generation on the back of a material decline of
EBITDA growth or margin.
"We view an upgrade as very remote over the next 12 months. Over
the medium term, we could upgrade Groupe Premium if its business
development outperforms its peers, its leverage remains
consistently materially below 5x, and if structural change supports
its long-term financial policy stability."
=============
I R E L A N D
=============
ANCHORAGE CAPITAL 10: Fitch Affirms 'B-sf' Rating on Cl. F-2 Notes
------------------------------------------------------------------
Fitch Ratings has assigned Anchorage Capital Europe CLO 10 DAC
refinancing notes final ratings and affirmed the non-refinanced
notes, as detailed below.
Entity/Debt Rating Prior
----------- ------ -----
Anchorage Capital
Europe CLO 10 DAC
A XS2828839618 LT PIFsf Paid In Full AAAsf
A-R XS3437414132 LT AAAsf New Rating
B-1 XS2828839881 LT PIFsf Paid In Full AAsf
B-2 XS2828840038 LT PIFsf Paid In Full AAsf
B-R XS3437414306 LT AAsf New Rating
C XS2828840384 LT PIFsf Paid In Full Asf
C-R XS3437414991 LT A+sf New Rating
D XS2828840467 LT PIFsf Paid In Full BBB-sf
D-R XS3437415378 LT BBB-sf New Rating
E XS2828840541 LT PIFsf Paid In Full BB-sf
E-R XS3437415618 LT BB-sf New Rating
F-1 XS2828841192 LT B+sf Affirmed B+sf
F-2 XS2828841275 LT B-sf Affirmed B-sf
Transaction Summary
Anchorage Capital Europe CLO 10 DAC is a securitisation of mainly
senior secured obligations (at least 90%) with a component of
unsecured senior loans, unsecured senior bonds, second-lien loans,
first-lien last-out loans, mezzanine obligations and high-yield
bonds. The refinancing note proceeds have been used to redeem the
outstanding notes other than the class F-1, F-2 and subordinated
notes. The CLO has a remaining reinvestment period of three years
and a weighted-average life (WAL) covenant of seven years at the
refinancing closing date.
KEY RATING DRIVERS
Average Portfolio Credit Quality (Neutral): Fitch assesses the
average credit quality of obligors at 'B'. The Fitch-calculated
weighted average rating factor (WARF) of the identified portfolio
is 24.1.
High Recovery Expectations (Positive): At least 90% of the
portfolio comprise senior secured obligations. Fitch views the
recovery prospects for these assets as more favourable than for
second-lien, unsecured and mezzanine assets. The Fitch-calculated
weighted average recovery rate (WARR) of the identified portfolio
is 64.1%.
Diversified Asset Portfolio (Positive): The transaction has various
concentration limits, including a maximum fixed-rate obligation
limit at 12.5%, a top 10 obligor concentration limit at 22% and a
maximum exposure to the three largest Fitch-defined industries in
the portfolio at 42.5%. These covenants ensure the asset portfolio
will not be exposed to excessive concentration.
Portfolio Management (Neutral): The original Fitch matrices were
updated at this refinancing, so that only two matrices
corresponding to a WAL covenant of seven years are effective. The
two matrices correspond to fixed-rate asset limits of 5% and 12.5%.
The transaction has three years remaining in the reinvestment
period, which is governed by reinvestment criteria similar to those
of other European transactions. Fitch's analysis is based on a
stressed case portfolio with the aim of testing the robustness of
the transaction structure against its covenants and portfolio
guidelines.
Cash Flow Modelling (Positive): The WAL used for the Fitch-stressed
portfolio analysis and matrix analysis was reduced by 12 months and
floored at six years. This is to account for the strict
reinvestment conditions envisaged by the transaction after its
reinvestment period. These include passing the coverage tests and
the Fitch 'CCC' maximum limit, as well as a WAL covenant that
progressively steps down over time, both before and after the end
of the reinvestment period. Fitch believes these conditions would
reduce the effective risk horizon of the portfolio during stress
periods.
Its analysis also considered that the transaction is about 0.7%
below the target par of EUR400 million.
Stable Performance (Neutral): The transaction's performance is
stable with a marginal par shortfall equal to 0.7%, according to
the 3 June 2026 trustee report. Exposure to assets with a
Fitch-Derived Rating of 'CCC+' and below is 4.9% versus a limit of
7.5%, and the portfolio has no exposure to defaulted assets.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
A 25% increase in the mean default rate (RDR) and a 25% decrease in
the recovery rate (RRR) across all ratings of the identified
portfolio would have no impact on the class A-R to E-R notes and
would lead to downgrades of no more than two notches to the class
F-1 notes and below 'B-sf' for the class F-2 notes.
Downgrades, which are based on the identified portfolio, may occur
if the loss expectation is larger than assumed, due to unexpectedly
high levels of defaults and portfolio deterioration. The rated
notes have a rating cushion of up to five notches each, due to the
better metrics of the identified portfolio than the Fitch-stressed
portfolio.
Should the cushion between the identified and the Fitch-stressed
portfolio erode due to manager trading or negative portfolio credit
migration, a 25% increase of the mean RDR and a 25% decrease of the
RRR across all ratings of the Fitch-stressed portfolio would result
in downgrades of up to three notches each for the class A-R, C-R
and E-R notes, two notches each for the class B-R and D-R notes and
to below 'B-sf' for the class F-1 and F-2 notes.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
A 25% reduction in the mean RDR and a 25% increase in the RRR
across all ratings of the Fitch-stressed portfolios would lead to
upgrades of up to four notches each for the rated notes, except for
the 'AAAsf' rated notes.
Upgrades during the reinvestment period, which are based on the
Fitch-stressed portfolio, may occur on better-than-expected
portfolio credit quality and a shorter remaining WAL test, allowing
the notes to withstand larger-than-expected losses for the
remaining life of the transaction.
Upgrades after the end of the reinvestment period may result from
stable portfolio credit quality and deleveraging, leading to higher
credit enhancement and excess spread to cover losses in the
remaining portfolio.
USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10
Form ABS Due Diligence-15E was not provided to, or reviewed by,
Fitch in relation to this rating action.
DATA ADEQUACY
Fitch has checked the consistency and plausibility of the
information it has received about the performance of the asset pool
and the transaction. Fitch has not reviewed the results of any
third-party assessment of the asset portfolio information or
conducted a review of origination files as part of its ongoing
monitoring.
The majority of the underlying assets or risk-presenting entities
have ratings or credit opinions from Fitch and/or other Nationally
Recognized Statistical Rating Organizations and/or European
Securities and Markets Authority- registered rating agencies. Fitch
has relied on the practices of the relevant groups within Fitch
and/or other rating agencies to assess the asset portfolio
information or information on the risk-presenting entities.
Overall, and together with any assumptions referred to above,
Fitch's assessment of the information relied upon for the agency's
rating analysis according to its applicable rating methodologies
indicates that it is adequately reliable.
ESG Considerations
Fitch does not provide ESG relevance scores for Anchorage Capital
Europe CLO 10 DAC.
In cases where Fitch does not provide ESG relevance scores in
connection with the credit rating of a transaction, programme,
instrument or issuer, Fitch will disclose any ESG factor that is a
key rating driver in the key rating drivers section of the relevant
rating action commentary.
CVC CORDATUS IX: S&P Assigns B- (sf) Rating to Class F-R-R Notes
----------------------------------------------------------------
S&P Global Ratings assigned its credit ratings to CVC Cordatus Loan
Fund IX DAC's class A-R-R, B-R-R, C-R-R, D-R-R, E-R-R, and F-R-R
notes. At closing, the issuer has unrated subordinated notes
outstanding from the existing and has also issued additional
subordinated notes. Subject to an extraordinary resolution from the
existing subordinated noteholders, both the existing and the
additional subordinated notes are to be exchanged for EUR44.9
million of subordinated notes.
This transaction is a reset of the already existing transaction,
which S&P rates. The existing classes of notes were fully redeemed
with the proceeds from the issuance of the replacement notes on the
reset date. The ratings on the original notes have been withdrawn.
The existing classes of notes will be fully redeemed with the
proceeds from the issuance of the replacement notes on the reset
date.
The reinvestment period will be approximately 4.58 years, while the
noncall period will be 1.58 years after closing.
Under the transaction documents, the rated notes will pay quarterly
interest unless there is a frequency switch event. Following this,
the notes will switch to semiannual payments.
The ratings assigned to the notes reflect S&P's assessment of:
-- The diversified collateral pool, which primarily comprises
broadly syndicated speculative-grade senior secured term loans and
bonds that are governed by collateral quality tests.
-- The credit enhancement provided through the subordination of
cash flows, excess spread, and overcollateralization.
-- The collateral manager's experienced team, which can affect the
performance of the rated notes through collateral selection,
ongoing portfolio management, and trading.
-- The transaction's legal structure, which is bankruptcy remote.
-- The transaction's counterparty risks, which are in line with
S&P's counterparty rating framework.
Portfolio benchmarks
S&P Global Ratings' weighted-average rating factor 2,728.95
Default rate dispersion 582.57
Weighted-average life (years) 4.67
Obligor diversity measure 128.71
Industry diversity measure 21.76
Regional diversity measure 1.33
Transaction key metrics
Total par amount (mil. EUR) 400
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 (%) 1.04
Target 'AAA' weighted-average recovery (%) 36.03
Actual weighted-average spread net of floors (%) 3.39
Actual weighted-average coupon (%) 4.60
Liquidity Facility
This transaction includes a EUR1.00 million liquidity facility
provided by The Bank of New York Mellon, with a maximum commitment
period of four years and an option to extend for an additional two
years. The margin on the facility is 2.50%, and drawdowns are
limited to the amount of accrued but unpaid interest on CDOs. The
liquidity facility is repaid using interest proceeds, either in a
senior position within the waterfall or directly from the interest
account one business day before the payment date. S&P said, "In our
cash flow analysis, we assume that the liquidity facility is fully
drawn throughout the six-year period, with repayment occurring just
before a breach of the coverage tests."
Rationale
S&P said, "Our ratings reflect our assessment of the collateral
portfolio's credit quality, which has a weighted-average rating of
'B'.
"The portfolio is well-diversified, primarily comprising broadly
syndicated speculative-grade senior secured term loans and bonds.
Therefore, we conducted our credit and cash flow analysis by
applying our criteria for corporate cash flow CDOs.
"In our cash flow analysis, we used the EUR400.00 million target
par amount, the covenanted weighted-average spread of 3.40%, the
covenanted weighted-average coupon of 4.50%, and the identified
weighted-average recovery rate. We applied various cash flow stress
scenarios, using four different default patterns, in conjunction
with different interest rate stress scenarios for each liability
rating category.
"The transaction's documented counterparty replacement and remedy
mechanisms adequately mitigate its exposure to counterparty risk
under our current counterparty criteria.
"Under our structured finance sovereign risk criteria, the
transaction's exposure to country risk is sufficiently mitigated at
the assigned ratings.
"The transaction's legal structure and framework is bankruptcy
remote, in line with our legal criteria.
"Our credit and cash flow analysis indicates that the available
credit enhancement for the class B-R-R, C-R-R, D-R-R, and E-R-R
notes could withstand stresses commensurate with higher ratings
than those assigned. However, as the CLO will be in its
reinvestment phase starting from the effective date, during which
the transaction's credit risk profile could deteriorate, we have
capped our ratings assigned to the notes."
The class A-R-R notes can withstand stresses commensurate with the
assigned rating.
The class F-R-R notes' current break-even default rate cushion is
negative at the assigned rating. S&P said, "Nevertheless, based on
the portfolio's actual characteristics and additional overlaying
factors, including our long-term corporate default rates and recent
economic outlook, we believe this class is able to sustain a
steady-state scenario, in accordance with our criteria." S&P's
analysis further reflects several factors, including:
-- The class F-R-R notes' available credit enhancement, which is
in the same range as that of other CLOs S&P has rated and that has
recently been issued in Europe.
-- S&P's model-generated portfolio default risk, which is at the
'B-' rating level at 22.35% (for a portfolio with a
weighted-average life of 4.67 years) versus 14.93% if it was to
consider a long-term sustainable default rate of 3.2% for 4.67
years.
-- Whether the tranche is vulnerable to nonpayment in the near
future.
-- If there is a one-in-two chance for this note to default.
-- If S&P envisions this tranche to default in the next 12-18
months.
-- Following this analysis, S&P considers that the available
credit enhancement for the class F-R-R 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
all rated classes of notes.
"In addition to our standard analysis, we have also included the
sensitivity of the ratings on the class A-R-R to E-R-R notes, based
on four hypothetical scenarios.
"As our ratings analysis makes additional considerations before
assigning ratings in the 'CCC' category, and we would assign a 'B-'
rating if the criteria for assigning a 'CCC' category rating are
not met, we have not included the above scenario analysis results
for the class F-R-R notes."
Environmental, social, and governance
S&P regards the exposure to environmental, social, and governance
(ESG) credit factors in the transaction as being broadly in line
with its benchmark for the sector.
Primarily due to the diversity of the assets within CLOs, the
exposure to environmental credit factors is viewed as below
average, social credit factors are below average, and governance
credit factors are average.
For this transaction, the documents prohibit assets from being
related to certain activities. Accordingly, since the exclusion of
assets from these industries does not result in material
differences between the transaction and S&P's ESG benchmark for the
sector, no specific adjustments have been made in its rating
analysis to account for any ESG-related risks or opportunities.
CVC Cordatus Loan Fund IX 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. CVC Credit Partners Investment Management Ltd. manages
the transaction.
Ratings
Amount Credit
Class Rating* (mil. EUR) enhancement (%) Interest rate§
A-R-R AAA (sf) 248.00 38.00 Three/six-month EURIBOR
plus 1.29%
B-R-R AA (sf) 42.00 27.50 Three/six-month EURIBOR
plus 1.75%
C-R-R A (sf) 24.00 21.50 Three/six-month EURIBOR
plus 1.95%
D-R-R BBB- (sf) 28.00 14.50 Three/six-month EURIBOR
plus 2.90%
E-R-R BB- (sf) 18.00 10.00 Three/six-month EURIBOR
plus 5.25%
F-R-R B- (sf) 14.00 6.50 Three/six-month EURIBOR
plus 8.42%
Sub NR 44.90 N/A N/A
*The ratings assigned to the class A-R-R and B-R-R notes address
timely interest and ultimate principal payments. S&P's ratings
address ultimate interest and principal payments on the rest of the
other rated notes. 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.
Sub--Subordinated notes.
NR--Not rated.
N/A--Not applicable.
HAUS 39: Moody's Puts B1 Rating on D Notes on Review for Downgrade
------------------------------------------------------------------
Moody's Ratings has placed on review for downgrade the ratings of
five classes of Notes issued by Haus (European Loan Conduit No. 39)
DAC:
EUR194.2M (Current outstanding amount EUR180.15 million) Class A1
Notes, A1 (sf) Placed On Review for Downgrade; previously on Nov 8,
2024 Downgraded to A1 (sf)
EUR19.1M (Current outstanding amount EUR19.09 million) Class A2
Notes, Baa1 (sf) Placed On Review for Downgrade; previously on Nov
8, 2024 Downgraded to Baa1 (sf)
EUR24.6M (Current outstanding amount EUR24.59 million) Class B
Notes, Baa3 (sf) Placed On Review for Downgrade; previously on Nov
8, 2024 Downgraded to Baa3 (sf)
EUR29.9M (Current outstanding amount EUR9.89 million) Class C
Notes, Ba1 (sf) Placed On Review for Downgrade; previously on Nov
8, 2024 Downgraded to Ba1 (sf)
EUR47.6M (Current outstanding amount EUR47.59 million) Class D
Notes, B1 (sf) Placed On Review for Downgrade; previously on Nov 8,
2024 Downgraded to B1 (sf)
Moody's do not rate the Class X Notes.
RATINGS RATIONALE
The rating action reflects the continuing underperformance of the
transaction against its business plan for refurbishing and
reletting the underlying properties, as well as the sponsor's most
recent proposal for a further restructuring of the transaction. In
April 2025[1] and along with other amendments, the maturity date of
the loan was extended by three years to 2029 and an equity
commitment letter was in place until 31-December-25. According to
an RIS notice from July 2026[2], the Issuer is again soliciting
consents to further restructure the transaction including to permit
a deferral of interest on the loan during a stabilisation period
and to temporarily suspend interest cashflows to junior CMBS
notes.
The rating review will focus on the outcome of the consent
solicitation and restructuring of the loan; the commitment of the
sponsor to support the transaction; progress on the refurbishment
and re-leasing efforts of the underlying residential properties;
and the health of the property market for asset sales.
PERFORMANCE SUMMARY
HAUS (EUROPEAN LOAN CONDUIT NO. 39) DAC is a true sale transaction
backed by an original EUR18.75 million senior facility. At closing,
the facility was secured on 6,284 residential units with a
negligible share of commercial units across 92 sites (59
properties) in Germany, mostly in North-Rhine Westphalia.
As of the April 2026 IPD[3], the note balance has declined to
EUR301.32 million from EUR315.50 million at closing (a reduction of
4.5%) due to property disposals. 6,040 residential units remained
in the portfolio. The loan has been in full cash sweep, although
this may change as a result of the latest restructuring proposal.
Vacancy across the portfolio remains elevated, at 44.5%. The number
of units refurbished and then rented has collapsed in recent
quarters, from 172 refurbished and 131 rented in Q4 2024 to 3
refurbished and 2 rented in Q1 2026. Overall there were 45 lease
starts in Q1 2026.
Moody's loan to value (LTV) ratio as of the last rating action was
100.2% compared to a currently reported LTV of 67.27%. The
transaction's debt yield is reported at 3.78%.
Methodology Underlying the Rating Action:
The principal methodology used in these ratings was "EMEA
Commercial Mortgage-backed Securitisations" published in June
2025.
Factors that would lead to an upgrade or downgrade of the ratings:
An upgrade to currently assigned ratings is unlikely at this time.
Main factors or circumstances that could lead to a downgrade of the
ratings are (i) a decline in the property values backing the
underlying loans especially due to continued failure to
successfully execute the business plan; or (ii) an increase in
default risk assessment.
OCP EURO 2026-16: S&P Assigns B- (sf) Rating to Class F Notes
-------------------------------------------------------------
S&P Global Ratings assigned its credit ratings to OCP Euro CLO
2026-16 DAC's A and B Loans and class A, B, C, D, E, and F notes.
At closing, the issuer also issued EUR38.100 million unrated
subordinated notes.
The reinvestment period will be approximately 4.5 years, while the
noncall period will be 1.5 years after closing.
Under the transaction documents, the rated notes and loans will pay
quarterly interest unless a frequency switch event occurs.
Following this, the notes and loans will switch to semiannual
payments.
The ratings assigned to the notes and loans 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 and loans through collateral
selection, ongoing portfolio management, and trading.
-- The transaction's legal structure, which is bankruptcy remote.
-- The transaction's counterparty risks, which are in line with
S&P's counterparty rating framework.
Portfolio benchmarks
S&P Global Ratings' weighted-average rating factor 2,635.59
Default rate dispersion 543.82
Weighted-average life (years) 5.19
Obligor diversity measure 164.52
Industry diversity measure 26.70
Regional diversity measure 1.40
Transaction key metrics
Total par amount (mil. EUR) 400
Defaulted assets (mil. EUR) 0
Number of performing obligors 175
Portfolio weighted-average rating
derived from S&P's CDO evaluator B
'CCC' category rated assets (%) 0.00
Target 'AAA' weighted-average recovery (%) 36.14%
Actual weighted-average spread net of floors (%) 3.28
Actual weighted-average coupon (%) 3.63
Rating rationale
S&P said, "Our ratings reflect our assessment of the collateral
portfolio's credit quality, which has a weighted-average rating of
'B'.
"The portfolio is well-diversified, primarily comprising broadly
syndicated speculative-grade senior secured term loans and bonds.
Therefore, we conducted our credit and cash flow analysis by
applying our criteria for corporate cash flow CDOs.
"In our cash flow analysis, we used the EUR400.00 million target
par amount, the actual weighted-average spread of 3.28%, the actual
weighted-average coupon of 3.63%, and the target weighted-average
recovery rate. We applied various cash flow stress scenarios, using
four different default patterns, in conjunction with different
interest rate stress scenarios for each liability rating category.
"The transaction's documented counterparty replacement and remedy
mechanisms adequately mitigate its exposure to counterparty risk
under our current counterparty criteria.
"Under our structured finance sovereign risk criteria, the
transaction's exposure to country risk is sufficiently mitigated at
the assigned ratings.
"The transaction's legal structure and framework is bankruptcy
remote, in line with our legal criteria.
"Our credit and cash flow analysis indicates that the available
credit enhancement for the B Loan and class B to E notes could
withstand stresses commensurate with higher ratings than those
assigned. However, as the CLO is still in its reinvestment phase
starting from the effective date, during which the transaction's
credit risk profile could deteriorate, we capped our ratings on
these notes and loan."
The A Loan and class A notes can withstand stresses commensurate
with the assigned ratings.
The class F notes' current break-even default rate cushion is
negative at the assigned rating. S&P said, "Nevertheless, based on
the portfolio's actual characteristics and additional overlaying
factors, including our long-term corporate default rates and recent
economic outlook, we believe this class can sustain a steady-state
scenario, in accordance with our criteria." S&P's analysis further
reflects several factors, including:
-- The class F notes' available credit enhancement, which is in
the same range as that of other CLOs S&P has rated and that has
recently been issued in Europe.
-- S&P's model-generated portfolio default risk, which is at the
'B-' rating level at 24.08% (for a portfolio with a
weighted-average life of 5.19 years) versus 16.62% if it was to
consider a long-term sustainable default rate of 3.2% for 5.19
years.
-- Whether the tranche is vulnerable to nonpayment.
-- If there is a one-in-two chance for this tranche defaulting.
-- If S&P envisions this tranche defaulting in the next 12-18
months.
-- Following this analysis, S&P considers that the available
credit enhancement for the class F notes is commensurate with the
assigned 'B- (sf)' rating.
S&P said, "Considering our analysis of the credit, cash flow,
counterparty, operational, and legal risks, we believe our ratings
are commensurate with the available credit enhancement for all
rated classes of notes and loans.
"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 and A and B
Loans, 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."
OCP Euro CLO 2026-16 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. Onex
Credit Partners, LLC and sub-manager Onex Credit Partners Europe
LLP manage the transaction.
Ratings
Amount Credit
Class Rating* (mil. EUR) enhancement (%) Interest rate§
A AAA (sf) 118.00 38.00 Three/six-month EURIBOR
plus 1.26%
A Loan AAA (sf) 130.00 38.00 Three/six-month EURIBOR
plus 1.26%
B AA (sf) 2.30 26.50 Three/six-month EURIBOR
plus 1.72%
B Loan AA (sf) 43.70 26.50 Three/six-month EURIBOR
plus 1.72%
C A (sf) 23.00 20.75 Three/six-month EURIBOR
plus 2.00%
D BBB- (sf) 28.00 13.75 Three/six-month EURIBOR
plus 2.90%
E BB- (sf) 18.00 9.25 Three/six-month EURIBOR
plus 5.00%
F B- (sf) 11.00 6.50 Three/six-month EURIBOR
plus 8.35%
Sub notes NR 38.10 N/A N/A
*The ratings assigned to the A and B Loans and class A and B notes
address timely interest and ultimate principal payments. Our
ratings address ultimate interest and principal payments on the
rest of the other rated notes.
§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.
SALUS - EUROPEAN LOAN 33: DBRS Confirms B(high) Rating on D Debt
----------------------------------------------------------------
DBRS Ratings Limited (Morningstar DBRS) confirmed all credit
ratings on the bonds issued by Salus (European Loan Conduit No. 33)
DAC (the Issuer) as follows:
-- Class A at A (high) (sf)
-- Class B at BBB (sf)
-- Class C at BB (sf)
-- Class D at B (high) (sf)
The trends on all credit ratings remain Negative.
CREDIT RATING RATIONALE
The credit rating actions followed DBRS' review of the collateral's
stable performance over the past 12 months. Morningstar DBRS
observed improving performance in the underlying collateral main
metrics, especially related to contracted rent, occupancy rate, and
decreasing level of rent-free concessions. Meanwhile, Morningstar
DBRS also notes a significant decrease in the collateral market
value (MV) since inception, which significantly increased the
refinancing risk of the loan. We understand that a new valuation
will be instructed in the upcoming months, once this has been
issued, we expect to reassess the transaction for any material
change.
The transaction is a securitisation of a GBP 363.3 million as of
April 2026 (down from GBP 367.5 million at origination)
floating-rate senior commercial real estate loan that Morgan
Stanley & Co. International Plc (Morgan Stanley) advanced in
November 2018 to CityPoint Holdings I Ltd., which is controlled by
Brookfield Asset Management Inc. (the Sponsor). The senior loan is
split into two pari passu facilities: Facility A, which totals GBP
349.9 million (down from GBP 354.0 million at origination), and
Facility B (the capital expenditure (capex) facility), which totals
GBP 13.3 million (down from GBP 13.5 million). Facility A
refinanced the borrower's existing debt, whereas the capex facility
financed some refurbishment works that the Sponsor planned at
issuance. Additionally, there is a nonsecuritised mezzanine
facility totalling GBP 100.6 million that is contractually and
structurally subordinated to the senior facilities. For the
purposes of complying with the applicable risk retention
requirements, Morgan Stanley also advanced a GBP 18.4 million
vertical risk retention (VRR) loan to the Issuer.
The senior loan is secured by a single asset known as Citypoint, a
36-storey office tower in the City of London originally built for
British Petroleum (now BP plc) in 1967. The building comprises
703,258 square feet (sf) of area, with circa 600,000 sf of office
space, and the rest consists of ancillary space, including more
than 60,000 sf of retail space with several restaurants and one of
the largest health clubs in the Square Mile, Nuffield Health. It is
one of the largest office buildings in the City of London and
underwent a comprehensive reconstruction in 2001. Since then, the
owner has maintained the property to a high standard with ongoing
refurbishment works and, as such, the building does not show any
significant signs of obsolescence. In particular, as part of the
Sponsor's business plan to capture the asset's reversionary value
potential, during the course of 2020-21, levels five to eight (the
podium floors) underwent a comprehensive refurbishment at a cost of
around GBP 167 per sf to provide high-quality Grade A offices and
an additional floor area and walkway. Landscaped terraces were also
included, and the dedicated podium reception was refurbished.
Compared with Morningstar DBRS' last annual review conducted in
June 2025, portfolio performance metrics have improved, with
contracted rental income increasing by 10.0% to GBP 40.1 million in
April 2026 from GBP 36.5 million in April 2025. Projected net
rental income also increased to GBP 38.9 million from GBP 36.3
million over the same period. As a result, debt yield increased to
10.69% in April 2026 from 9.99% as of April 2025. As of April 2026,
the CityPoint asset had an occupancy level of 97.6% with space
leased to 20 different tenants. The top five tenants account for
76% of the overall gross rental income. Simpson Thacher & Bartlett
LLP has leases over 13 floors with total annual contracted rent of
GBP 10.7 million, all expiring March 2034. Simmons & Simmons LLP
has leases over five floors with total annual contracted rent of
GBP 7.5 million, all expiring March 2035 and all with a break
option in March 2030. Squarepoint Capital LLP has leases over seven
floors and one storage unit with total annual contracted rent of
GBP 6.7 million; the leases on the seven floors expire in November
2030 and all have a break option in November 2028, while the
storage lease expires in November 2026.
As of the April 2026 interest payment date (IPD), the annual
passing rent stood at GBP 29.6 million, up from last year's GBP
25.1 million, and arrears significantly decreased to GBP 261,400
from GBP 547,000 at the last annual review. There are five tenants
with rent-free periods with a total rent-free amount of GBP 10.59
million. Expiration of the rent-free period profile pans out until
June 2028 with the majority of this (79.89%) expiring by March
2027.
The loan-to-value ratio (LTV) increased to 89.70% at the April 2026
IPD from 54.22% at last review because of the new revaluation of
the Citypoint asset from Savills Plc (Savills). LTV is based on the
latest valuation of GBP 405.0 million from Savills in July 2025
and, following inquiries with the Servicer, Morningstar DBRS
expects that a new valuation will soon be mandated.
Following the restructuring consented to by the noteholders via
extraordinary resolution with effective date as of 17 April 2025,
the financial covenants have been waived. Amendments included
amongst others: three-year extension of the loan and notes maturity
(until January 2028 and 2032, respectively), notes margin step up
with consequent loan margin step-up, new hedging, an injection of
funds into the cash reserve account by way of a new money loan, and
the switch of payments to a sequential basis with Class X being
redeemed as of the April 2025 note payment date.
The original maturity date was 20 January 2022 with two one-year
conditional extension options, which were exercised. The maturity
date was extended to 20 January 2025, and further extended by three
years to 20 January 2028.
As a result of the loan amendment of April 2025, the interest rate
is the aggregate of compounded daily Sterling Overnight Index
Average (Sonia) plus a margin of 2.69% per annum, inclusive of
credit adjustment spread (0.11193%) and capped at 2.78%. The margin
was previously increased to 2.50% effective 20 January 2024 with
the increase in margin passed onto the noteholders and the VRR
lender. The loan is fully hedged with an interest rate cap
agreement provided by Goldman Sachs International with a strike
rate of 4.50%. The cap will terminate on 23 January 2028.
Morningstar DBRS reperformed its underwriting analysis, with an
updated Morningstar DBRS Net Cash Flow (NCF) at GBP 26.6 million,
which translates into a haircut to the Issuer in-place NCF of 9.8%.
Furthermore, Morningstar DBRS updated its stabilised capitalisation
(cap) rate assumption to 6.65% from 6.30% at the last review, which
translates into an updated Morningstar DBRS Value of GBP 400.6
million, broadly in line with the most recent asset valuation from
Savills.
The liquidity facility outstanding balance stood at GBP 19.7
million as of the April 2026 IPD, down from GBP 20.0 million at
issuance. The liquidity support covers the Class A through Class D
notes. According to Morningstar DBRS' analysis, the outstanding
amount of the liquidity facility provides coverage of 9.4 months
based on the interest rate cap strike rate of 4.50% or 8.8 months
based on the 5.0% Sonia cap payable on the notes after the expected
note maturity date. The liquidity coverage is compliant with
Morningstar DBRS' requirement for "A" category-rated transactions.
Morningstar DBRS' credit ratings on the applicable classes address
the credit risk associated with the identified financial
obligations in accordance with the relevant transaction documents.
Where applicable, a description of these financial obligations can
be found in the transactions' respective press releases at
issuance.
Morningstar DBRS' long-term credit ratings provide opinions on risk
of default. Morningstar DBRS considers risk of default to be the
risk that an issuer will fail to satisfy the financial obligations
in accordance with the terms under which a long-term obligation has
been issued.
Notes:
All figures are in British pound sterling unless otherwise noted.
=========
I T A L Y
=========
ECARAT DE SA 2024-1: DBRS Hikes Class F Notes Rating to BB(low)
---------------------------------------------------------------
DBRS Ratings GmbH (Morningstar DBRS) took the following credit
rating actions on the notes issued by acting on behalf and for the
account of its Compartment 2024-1 (ECARAT DE 2024-1) and ECARAT DE
S.A. acting on behalf and for the account of its Compartment 2025-2
(ECARAT DE 2025-2, and together, the Issuers):
ECARAT DE 2024-1
-- Class A Notes confirmed at AAA (sf)
-- Class B Notes confirmed at AA (high) (sf)
-- Class C Notes confirmed at A (high) (sf)
-- Class D Notes confirmed at A (low) (sf)
-- Class E Notes confirmed at BBB (low) (sf)
-- Class F Notes upgraded to BB (low) (sf) from B (low) (sf)
ECARAT DE 2025-2
-- Class A Notes confirmed at AAA (sf)
-- Class B Notes confirmed at AA (sf)
-- Class C Notes confirmed at A (sf)
-- Class D Notes confirmed at BBB (high) (sf)
-- Class E Notes confirmed at BBB (low) (sf)
CREDIT RATING RATIONALE
The credit rating actions follow an annual review of the
transactions and are based on the following analytical
considerations:
-- Portfolio performance, in terms of delinquencies, defaults, and
losses, as of 30 April 2026 (portfolio cut-off date corresponding
to the May 2026 payment date);
-- Probability of default (PD), loss given default (LGD), and
expected loss assumptions based on the remaining receivables for
ECARAT DE 2024-1 and based on a potential portfolio migration
during the revolving period according to the concentration limits
for ECARAT DE 2025-2;
-- Current available credit enhancement to the notes to cover the
expected losses at their respective credit rating levels; and
-- In case of ECARAT DE 2025-2, no revolving period end trigger
events occurred.
The transactions are a securitisation of retail auto loans
originated by Stellantis Bank S.A., German Branch (Stellantis Bank
Germany) to individual and commercial borrowers in Germany.
Stellantis Bank Germany also acts as the Servicer. The transactions
are not subject to residual value risk.
In ECARAT DE 2024-1, the revolving period ended at the July 2025
payment date. In ECARAT DE 2025-2, the transaction includes a
revolving period scheduled to end at the October 2026 payment date.
During the normal amortisation period, the repayment of the notes
is subject to a pro-rata/potential sequential amortisation
mechanism in both transactions.
The legal final maturity dates in ECARAT DE 2024-1 and ECARAT DE
2025-2 are on the November 2035 payment date and the February 2037
payment date, respectively.
PORTFOLIO PERFORMANCE
-- ECARAT DE 2024-1
As of April 30, 2026, delinquencies were low, with loans two to
three months in arrears and above three-month in arrears both
representing 0.1% of the outstanding portfolio balance.
As of 30 April 2026, the cumulative gross loss ratio stood at 1.2%,
below the 1.6% level triggering the end of the pro-rata
amortisation of the notes.
-- ECARAT DE 2025-2
As of April 30, 2026, delinquencies were low, with loans two to
three months in arrears and above three-month in arrears were 0.1%
and 0.0% of the outstanding portfolio balance, respectively.
As of April 30, 2026, the cumulative gross loss ratio stood at
0.2%, below the 1.0% level triggering the end of the revolving
period.
PORTFOLIO ASSUMPTIONS AND KEY CREDIT RATING DRIVERS
-- ECARAT DE 2024-1
Morningstar DBRS updated its base case PD at the B (low) (sf)
credit rating level to 1.9% from 1.8%, at the last annual review,
in line with the updated historical data received for ECARAT DE
2025-2. Morningstar DBRS maintained its base case LGD at 40.5%.
-- ECARAT DE 2025-2
Morningstar DBRS maintained its base case PD and LGD at the B (low)
(sf) credit rating level at 1.9% and 40.9%, respectively.
CREDIT ENHANCEMENT
Credit enhancement (CE) to the notes consists of subordination of
the junior notes in both transactions. In ECARAT DE 2024-1, as of
the May 2026 payment date, CE has been stable since closing and
following the end of the revolving period, due to the pro-rata
amortisation of the notes and was as follows:
-- CE to the Class A Notes at 9.8%,
-- CE to the Class B Notes at 7.2%,
-- CE to the Class C Notes at 4.7%,
-- CE to the Class D Notes at 3.5%,
-- CE to the Class E Notes at 2.2%, and
-- CE to the Class F Notes at 1.2%.
In ECARAT DE 2025-2, as of the May 2026 payment date, CE remained
the same as at closing due to the transaction being in the
revolving period and was as follows:
-- CE to the Class A Notes at 8.3%,
-- CE to the Class B Notes at 5.3%,
-- CE to the Class C Notes at 3.0%,
-- CE to the Class D Notes at 2.0%, and
-- CE to the Class E Notes at 1.0%.
Each transaction benefits from a liquidity reserve available to
cover senior fees, swap payments and interest payments on the Class
A, Class B, Class C, and Class D Notes, if principal collections
are not sufficient to cover related shortfalls in each transaction.
As of the May 2026 payment date, the liquidity reserves were at
their target levels of approximately EUR 3.3 million and EUR 6.1
million, in ECARAT DE 2024-1 and ECARAT DE 2025-2, respectively.
As of the May 2026 payment date, all principal deficiency ledgers
(PDLs) were clear. A Class F PDL exceeding 0.5% of the outstanding
portfolio balance triggers the end of the revolving period in
ECARAT DE 2025-2.
HSBC Continental Europe and BNP Paribas, Germany Branch act as the
account banks for ECARAT DE 2024-1 and ECARAT DE 2025-2,
respectively. Based on Morningstar DBRS' private credit ratings on
each account bank, the downgrade provisions outlined in the
transactions' documents, and other mitigating factors inherent to
the transactions' structures, Morningstar DBRS considers the risk
arising from the exposure to the account bank to be consistent with
the credit ratings assigned to the Class A Notes in each
transaction, as described in Morningstar DBRS' "Legal and
Derivative Criteria for European and Asia-Pacific Structured
Finance Transactions" methodology.
BNP Paribas SA (BNP Paribas) acts as the swap counterparty for both
transactions. Morningstar DBRS' Long Term Critical Obligations
Rating on BNP Paribas at AA (high) is consistent with the First
Rating Threshold as described in Morningstar DBRS' " Legal and
Derivative Criteria for European and Asia-Pacific Structured
Finance Transactions" methodology.
Morningstar DBRS' credit ratings on the applicable classes address
the credit risk associated with the identified financial
obligations in accordance with the relevant transaction documents.
Where applicable, a description of these financial obligations can
be found in the transactions' respective press releases at
issuance.
Morningstar DBRS' long-term credit ratings provide opinions on risk
of default. Morningstar DBRS considers risk of default to be the
risk that an issuer will fail to satisfy the financial obligations
in accordance with the terms under which a long-term obligation has
been issued.
Notes: All figures are in euros unless otherwise noted.
===================
L U X E M B O U R G
===================
DIOT-SIACI SYMPHONY: Moody's Assigns 'B2' CFR, Outlook Stable
-------------------------------------------------------------
Moody's Ratings has assigned a B2 corporate family rating and B2-PD
probability of default rating to Diot-Siaci Symphony BidCo S.a r.l.
(Diot-Siaci, or the group). Moody's also affirmed the B2 rating on
the senior secured bank credit facilities of Acropole Holding SAS.
The outlook on both issuers is stable.
Concurrently, Moody's withdrews the B2 CFR and B2-PD probability of
default rating on DIOT-SIACI BidCo SAS.
RATINGS RATIONALE
---Corporate Family Rating---
The change of the rated entity follows a recent reorganization of
the group's corporate structure. As part of the transaction,
Diot-Siaci Symphony BidCo S.a r.l., a Luxembourg-based holding
company, became the new top entity of the restricted group, sitting
above the previously rated DIOT-SIACI BidCo SAS and serving as
co-borrower under the group's debt facilities.
The B2 CFR reflects Diot-Siaci's (i) leading position in France and
in continental Europe' B2B insurance brokerage market, (ii) a
strong client retention driving predictable and recurring revenues,
(iii) improving product and geographic diversification, and (iv)
healthy and relatively stable EBITDA margins.
These strengths are partly offset by (i) a growth model reliant on
acquisitions, pressuring cash-flow generation and leverage, (ii) a
challenging macroeconomic environment which may weigh on
profitability growth going forward, and (iii) maintained
competitive pressure from global peers.
Diot-Siaci's business profile benefits from its strong franchise as
the leading corporate insurance broker in France and one of the
largest in Europe, as well as its broad range of services across
the insurance value chain, including consulting, intermediation and
claims management. The group's business profile has further
strengthened in recent years through increased business and
geographic diversification, including expansion in reinsurance and
across continental Europe, the Middle East and Africa, supported by
both organic growth and acquisitions.
Diot-Siaci reported robust EBITDA growth of around 22% in 2025,
largely driven by acquisition-led expansion and supported by
healthy organic growth, despite adverse foreign exchange movements
and a slowdown in economic activity. Although challenging market
conditions may weigh on revenue growth in certain segments and
geographies in 2026, Moody's expects earnings to remain resilient,
supported by strong client retention, a high share of recurring
revenue, and EBITDA margins remaining close to 25%.
The rating is constrained by the group's weaker financial profile,
reflected in its high leverage. Following the refinancing completed
in 2025, Diot-Siaci's Moody's-adjusted Debt-to-EBITDA ratio
increased to slightly above 7.0x. However, Moody's expects the
company will reduce its financial leverage to below 7.0x over the
next 12-18 months through EBITDA growth.
The rating also incorporates Moody's expectations that the group's
new ownership structure, with Ardian Holding, the Burrus Group and
management as shareholders, will continue to support its growth
strategy while maintaining a prudent financial policy.
The assigned rating also incorporate Diot-Siaci's environmental,
social and governance (ESG) considerations, as per Moody's General
Principles for Assessing Environmental, Social and Governance Risks
methodology. Similar to other privately-owned broking groups,
Moody's assessments of Diot-Siaci's exposure to governance risks is
high, reflected in a Governance Issuer Profile Score (IPS) of G-4,
driven by its higher risk financial strategy, primarily relating to
its relatively high gross leverage and its concentrated private
ownership. Private ownership gives rise to governance risks related
to concentration of effective control and limitations on external
oversight, albeit that the management team has a strong track
record of operating performance.
--Probability of Default Rating and Term Loan Ratings---
Diot-Siaci's probability of default rating of B2-PD is aligned with
its CFR, reflecting Moody's assumptions of a 50% family recovery
rate as is customary for capital structures that include bank
debt.
The B2 rating on the senior secured First Lien Term Loan B and the
B2 rating on the senior secured revolving credit facility on
Acropole Holding SAS reflect Moody's views of the probability of
default of Diot-Siaci, along with Moody's loss given default (LGD)
assessment of the debt obligations and the absence of strong
covenants.
OUTLOOK
The stable outlook reflects Moody's expectations of a stable EBITDA
margin remaining close to 25% going forward, and that the financial
leverage ratio should remain below 7.0x following on a sustainable
basis. The outlook also reflects the stability of the company's
credit metrics within the current rating triggers, as well as
Moody's anticipations that Diot-Siaci's external growth strategy
will continue. This would possibly affect financial leverage and
increase execution risks, although somewhat mitigated by the
group's solid track-record and stable organic growth.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Diot-Siaci's ratings could be upgraded in case of: (i) a financial
leverage ratio (Moody's calculation) reducing sustainably below
5.5x EBITDA, and (ii) EBITDA margin increasing sustainably to above
35%
Conversely, Diot-Siaci's ratings could be downgraded in case of:
(i) a deterioration of the financial leverage to above 7.0x for a
sustained period, or (ii) a reduction in EBITDA margin below 20%
for a sustained period.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Insurance
Brokers and Service Companies published in February 2024.
FOUNDEVER GROUP: Moody's Lowers CFR & Senior Secured Debt to Ca
---------------------------------------------------------------
Moody's Ratings has downgraded Foundever Group S.A.'s (Foundever)
corporate family rating to Ca from Caa2 and its probability of
default rating to Ca-PD from Caa2-PD following the company's
announced debt recapitalization transaction. Concurrently, Moody's
downgraded the ratings on Foundever Group S.A.'s senior secured
bank credit facility (consisting of a $250 million multicurrency
revolving credit facility due 2026 and a EUR1.0 billion term loan B
due 2028) to Ca from Caa2, and the $1.4 billion senior secured term
loan B due 2028 issued by Foundever Worldwide Corporation to Ca
from Caa2. The outlook for both entities remains stable.
On July 17, 2026, Foundever announced that it has reached an
agreement with a group of its lenders and its equity investor to
implement a comprehensive debt recapitalization designed to reduce
debt and leverage, extend debt maturities and enhance liquidity.
The company expects to close the transaction in the coming weeks.
Under the current proposal, participating term lenders would
receive approximately $250 million of cash consideration, 40% of
the company's pro forma equity, including a 5% bonus to Steerco
lenders, and new first-lien term loan debt equal to 60% of existing
term loan claims. The company's equity holder would contribute $225
million of new common equity capital and retain voting control. The
transaction would reduce gross debt by more than $900 million,
lower annual cash interest expense, extend term loan maturities to
March 2031, extend the $175 million revolving credit facility to
December 2030 and establish a new $225 million three-year committed
receivables financing program. The new exchange debt would benefit
from enhanced liability management protections and tighter covenant
protections relative to the existing debt structure.
The downgrade of the PDR to Ca-PD from Caa2-PD and debt instrument
ratings to Ca from Caa2 reflect the high likelihood that the
proposed transaction will be completed and that Moody's will
consider it a default with an average recovery to creditors. Once
the transaction closes, Moody's will downgrade the company's PDR to
D-PD to acknowledge that a default has occurred.
Governance risk was a key ESG consideration in the rating action
because the announced restructuring transaction will likely be
considered a default, highlighting aggressive financial strategy
and risk management and negative implications for creditors.
RATINGS RATIONALE
Foundever's Ca CFR reflects the company's: (1) imminent risk of a
debt restructuring that would result in a substantial loss to
existing debt holders; (2) unsustainable capital structure and weak
liquidity; (3) ongoing operating headwinds, including revenue
contraction, meaningful margin erosion and cash flow deficits; (4)
concentrated operations in the highly competitive and fragmented CX
BPO industry, which requires meaningful investment in technological
innovation and value-added capabilities to maintain market position
and address increasingly complex client needs; and (5) uncertainty
around the rapid evolution of GenAI and its potential disruption to
the CX BPO market, which could erode revenue and reduce already low
operating margins.
At the same time, the rating is supported by the company's: (1)
solid global footprint with a diversified portfolio of service
offerings and technical capabilities, placing it among the top
three global CX BPO providers as measured by total revenue; (2)
long-standing relationships with large customers across diverse
industry verticals and geographies; and (3) favorable fundamentals
for outsourcing end-to-end CX BPO solutions.
Moody's considers Foundever's liquidity as weak over the next 12 to
15 months, reflecting the August 2026 maturity of the fully drawn
of 250 million revolving credit facility, Moody's expectations for
negative free cash flow, the loss of accounts receivable factoring
facilities and cash flow volatility. The company projects to have
about $390 million of cash on hand prior to the debt
recapitalization transaction.
The stable outlook reflects the high likelihood that Foundever will
complete the proposed debt exchange, which Moody's will consider a
default, and Moody's expectations for an average recovery for
creditors.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's could upgrade Foundever's ratings if it materially reduces
debt, extends maturities and achieves a more sustainable capital
structure. An upgrade would also require an improved liquidity
profile.
Moody's could downgrade Foundever's ratings if Moody's expects a
less than average recovery for creditors.
The principal methodology used in these ratings was Business and
Consumer Services published in February 2026.
Foundever's Ca CFR is four notches below Moody's
scorecard-indicated outcome of B3. The difference reflects the high
likelihood of a default and average recovery to creditors.
Foundever Group S.A., domiciled in Luxembourg, is a leading global
provider of CX BPO services and solutions. Foundever is projected
to generate annual revenue of around $3.3 billion in 2026. The
company is owned by the Creadev Investment Fund (Creadev), which is
controlled by the Mulliez family of France.
HSE INVESTMENT: Fitch Affirms 'B-' LongTerm IDR, Outlook Now Stable
-------------------------------------------------------------------
Fitch Ratings has revised HSE Investment S.a r.l.'s Outlook to
Stable from Positive, while affirming its Long-Term Issuer Default
Rating (IDR) at 'B-'. It has also assigned HSE's proposed senior
secured notes (SSNs) of up to EUR400 million an expected 'B-(EXP)'
senior secured rating with a 'RR4' Recovery Rating. Fitch has
affirmed HSE's existing SSNs at 'B' with 'RR3'.
The new SSNs' lower rating compared with the existing notes
reflects reduced recovery expectations due to a higher amount of
senior secured debt after the issue. The final rating is subject to
final documentation being in line with the terms already reviewed.
The Outlook revision reflects its expectations of re-leveraging
following the new issue with pro forma EBITDAR gross leverage
increasing to 5.0x, which would no longer support a near-term
upgrade. The IDR reflects HSE's small scale and DACH-concentrated
operations, balanced by a solid niche positioning with a core group
of loyal customers and a diversified product offering.
Key Rating Drivers
Leverage Increase Expected: Fitch forecasts the contemplated SSN
issue to increase the restricted group's EBITDAR gross leverage to
5.0x until end-2028, from a previously estimated 4.0x or below
based on the current capital structure with outstanding EUR310
million SSNs. Fitch considers this leverage profile to be no longer
supportive of a near-term upgrade, which, together with HSE's short
history of operational improvement, led to the Outlook revision to
Stable.
The final placement amount and terms will depend on the
participation of the existing payment-in kind (PIK) lenders in
converting their notes to the new SSNs. Fitch expects the PIK
lenders to be incentivised to participate, with final take-up
likely to reach, or come close to, the EUR400 million target,
particularly given that the current capital structure emerged from
a prior debt restructuring and that a concurrent consent
solicitation is being proposed to PIK lenders to soften certain
covenant protections.
Slower Organic Deleveraging: The EBITDAR margin improved to 12.9%
in 2025 from 11.7% in 2024, which, alongside revenue growth, led to
higher EBITDAR at EUR83 million (2024: EUR72 million), albeit still
below its positive rating sensitivity. Fitch expects consistent
growth in EBITDAR to over EUR90 million by 2027-2028. Sales growth
with healthy EBITDAR margins of 13%-13.5% in 2026-2029 will be the
main driver of organic deleveraging, but at a slower pace versus
its prior estimates. Fitch projects EBTIDAR leverage at 5.0x until
end-2028, before reducing to 4.7x by end-2029.
Reduced but Positive FCF: HSE's business model requires only
limited capex intensity, which allows the company to translate its
profitability into consistently positive free cash flow (FCF), at
1%-3% of sales in 2023-2025. Fitch expects FCF to remain positive
during 2026-2029, though lower than previously forecast due to
higher cash debt service after the new SSN issue. Fitch now
forecasts a small positive FCF margin below 1% in 2026-2027, before
gradually improving to 1%-2% in 2028-2029.
Solid Performance Continues Into 2026: HSE reported strong results
in 2025, with sales growth of 4%. The performance was driven by an
increased merchandise value sold per customer with both order
frequency and average selling prices up on the year. This momentum
has been carried into 2026, as Q1 delivered revenue growth of just
under 7% and gross margin improvement of 70 bps. This was partly
offset by a small decrease in total customers as continued growth
of HSE's e-commerce audience was insufficient to offset a decline
in TV customers. Stabilisation of net acquired customers will
underpin the quality and sustainability of growth prospects.
Transitioning Away From TV: Fitch views the TV shopping industry as
structurally declining, as well as being exposed to increased
competition from online retailers and marketplaces, similarly to
more conventional fashion and beauty retailers. HSE has made great
progress in diversifying away from TV, with its digital channels
(webshop and apps) taking a greater share of sales each year.
Digital channels, in addition to providing opportunities to
stabilise and expand HSE's customer base, have the benefit of
bringing in younger shoppers, who will be customers for longer.
Fitch views the continued progress in moving towards e-commerce as
central to HSE's ongoing recovery.
Small Scale, Niche Position: HSE's scale is fairly small relative
to its non-food retail peer group. Future expansionary growth
remains limited by its core business remaining anchored to the
German-speaking part of Europe (DACH region) and by the
specificities of the channels in which it operates. International
expansion attempts beyond these geographies have not always been
successful. Fitch expects challenges in attracting new customers
due to a slower ramp-up of the social network live (livestream)
commerce format in Europe compared with other parts of the world.
PIK Notes Treated as Equity: Fitch treats the PIK notes, which sit
above and outside the SSN restricted group, as equity, reflecting
their structural and contractual subordination, lack of security
and PIK interest. Fitch understands the maturity of the
non-converted PIK will be extended beyond that of the new SSNs,
allowing us to continue treating the notes as equity, and that HSE
does not intend to convert further PIK notes into SSNs post this
transaction. HSE is soliciting consent to amend certain provisions
of the remaining PIK notes and the intercreditor agreement, which
Fitch assumes will not be detrimental to the interests of the SSN
holders, with the remaining PIK to be viewed as equity.
Peer Analysis
HSE's closest peer is QVC Group, Inc., which entered Chapter 11
bankruptcy protection on 16 April 2026. QVC has a business model
similar to HSE but has a larger scale and greater geographic
diversification. The recent bankruptcy filings follow years of
operating declines, which have increased QVC's leverage and risk to
its business model longevity. Major challenges include declines in
linear television viewership and reduced interest in QVC's core
television shopping segment. The company's growth in social
commerce, driven by its pivot to platforms like Instagram and
TikTok, has not been enough to mitigate declines in its core
business.
HSE's 2025 performance, in contrast, partly reflects the company's
more effective pivot towards digital platforms, with TV customers
now accounting for less than half of their customer base.
HSE is small compared with The Very Group Limited (TVG; B-/Stable),
but its weaker business profile is offset by much lower leverage
compared with TVG's 7.6x for FY25 (year-end June 2025), as well as
higher fixed-charge coverage (FCC), resulting in a similar IDR.
Fitch’s Key Rating-Case Assumptions
- Annual revenue growth of 3%-3.3%, led by wellness, jewelry and
beauty categories
- EBITDA margin of 11.1%-11.4%, supported by product mix
improvements and operating cost efficiencies
- Annual working-capital outflows of about EUR2 million
- Annual capex of EUR14 million-16 million, peaking in 2026
- Non-operating and extraordinary cash outflows averaging EUR9
million a year
- No dividend distribution
- No M&A
- Readily available cash above EUR25 million (after Fitch's EUR15
million restriction of cash for operating purposes) to be used to
prepay the SSN principal
Corporate Rating Tool Inputs and Scores
- Fitch scored the issuer as follows, using its Corporate Rating
Tool (CRT) to produce the Standalone Credit Profile (SCP):
- Business and financial profile factors (assessment, relative
importance): management ('bb-', Moderate), sector characteristics
('b-', Higher), market and competitive positioning ('b-', Higher),
diversification and asset quality ('bb-', Moderate), company
operational characteristics ('bb+', Lower), profitability ('bb',
Moderate), financial structure ('b', Moderate), and financial
flexibility ('b', Moderate).
- The quantitative financial subfactors are based on standard CRT
financial period parameters: 20% weight for the historical year
2025, 40% for the forecast year 2026 and 40% for the forecast year
2027.
- B+ to CC considerations apply in its analysis and result in an
adjustment of -1 notch.
- The governance assessment of 'some deficiencies' has no impact.
- The operating environment assessment of 'aa-' has no impact.
- The SCP is 'b-'.
- To derive the Long-Term IDR:
- Fitch made no adjustments to the SCP, resulting in an IDR of
'B-'.
Recovery Analysis
The recovery analysis assumed that HSE would be considered a going
concern (GC) in bankruptcy and that it would be reorganised rather
than liquidated in a default. Fitch has assumed a 10%
administrative claim.
Fitch has applied a distressed enterprise value/EBITDA of 5x, in
line with that of Takko Holding Luxembourg 2 S.à.r.l., above the
4.5x Fitch used for TVG, but below the 5.5x Fitch used for Afflelou
S.A.S.
Its GC EBITDA estimate at EUR50 million reflects the level of
earnings required for the company to sustain operations as a GC in
unfavourable market conditions with reduced attractiveness of its
product offering, shrinking volumes and with an inability to pass
on cost increases.
Its EUR311 million outstanding SSNs rank behind its EUR35 million
super senior revolving credit facility (SSRCF), assumed fully drawn
at default. Fitch treats supplier financing as senior unsecured and
therefore rank them lower than the SSNs in the waterfall.
Waterfall-generated recovery computation (WGRC) resulted in a
ranked recovery for the SSNs in the 'RR3' band, indicating a 'B'
rating.
Pro-forma for the placement of the proposed EUR400 million notes,
the senior secured debt quantum will increase by about EUR90
million. Fitch considers the new debt to also rank behind the
SSRCF, which, as per WGRC, results in a ranked recovery in the
'RR4' band for the announced new SSNs. This indicates a 'B-(EXP)'
rating for the new placement - with no notching uplift from HSE's
IDR.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Failure to maintain sales growth, indicating a structural market
decline
- Consistently negative FCF margin as a result of profitability
decline, unfavourable working capital changes or excess capex
- EBITDAR gross leverage consistently above 5.5x
- EBITDAR fixed charge cover approaching 1.0x
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- A stabilised to growing customer base, with customers acquired at
least offsetting customers lost
- Growth in scale, with EBITDAR approaching EUR100 million
- EBITDAR margin maintained above 13%, supporting positive FCF
generation
- EBITDAR gross leverage consistently below 4.5x
- EBITDAR fixed charge cover above 1.5x
Liquidity and Debt Structure
Fitch anticipates that the transaction costs from the proposed SSNs
and PIK conversion will reduce the readily available cash to below
EUR10 million (after Fitch's EUR15 million restriction of cash for
operating purposes). Positive FCF generated over 2026-2029 will
increase the cash balance back to about EUR25 million, above which
Fitch expects the cash to be used to prepay the SSN principal as
required by the bond indenture. Fitch expects the EUR35 million RCF
to remain undrawn.
The debt maturity profile is comfortable and will be further
improved by the proposed transaction by extending the maturity of
the SSNs to 2032 from 2029.
Issuer Profile
HSE is the holding company of Home Shopping Europe, a home shopping
TV network and an online shopping platform with operations in the
DACH region.
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Fitch's latest quarterly Global Corporates Sector Forecasts Monitor
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.
Climate Vulnerability Signals
The results of its Climate.VS screener did not indicate an elevated
risk for HSE.
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
----------- ------ -------- -----
HSE Investment
S.a r.l. LT IDR B- Affirmed B-
senior secured LT B-(EXP)Expected Rating RR4
senior secured LT B Affirmed RR3 B
=====================
N E T H E R L A N D S
=====================
YONDR JK 1: Fitch Assigns 'BB' LongTerm IDR, Outlook Stable
-----------------------------------------------------------
Fitch Ratings has assigned Yondr JK 1 LLC a Long-Term Issuer
Default Rating (IDR) of 'BB' and its $715 million senior secured
notes a rating of 'BB'. The Rating Outlook is Stable.
The ratings reflect predictable contracted revenue under a 15-year
licensing lease agreement supported by a guaranty from an
investment grade hyperscaler. Under Fitch's rating case cash flow
is not sufficient to amortize the debt during the initial lease
term, which exposes the project to lease renewal risk. However, the
location in a Tier-1 data center market with low latency to
population centers and high barriers to entry mitigates this risk.
The project, scheduled for delivery in four phases from January
through October 2028, faces completion risk. Fitch considers this
manageable because of its straightforward scope, reasonable budget
and schedule, experienced contractor and a signed construction
contract on a guaranteed maximum price (GMP) basis, despite limited
liquidity if delays occur. Favorable lease terms also reduce this
risk. The tenant may terminate each phase only after a 12-month
delay. Debt protections are weak for project finance and allow
additional debt. Any additional projects require rating
confirmation.
Fitch's rating case assumes reasonable downside stresses and
additional debt allowed by the project documents after completion.
The project life coverage ratio (PLCR) at debt maturity is 1.28x,
consistent with the assigned rating.
The IDR matches the debt ratings, reflecting senior ranking and no
material subordinated liabilities.
KEY RATING DRIVERS
Completion Risk - Stronger
Mitigated Completion Risk with Strong Execution Support
Fitch does not view completion risk as a constraint on the
project's credit profile. The completion risk assessment benefits
from relatively straightforward construction in four phases, an
experienced contractor, an executed GMP contract and reasonable
contingencies. Construction is in its initial stage and is on
track, and schedule and milestones are reasonable according to the
technical advisor (TA).
All owner-furnished, contractor-installed items have been procured.
In addition, the lease allows delivery up to 12 months beyond the
target completion date for each phase, upon delivery of written
notice within 30 days after the expiration of the 12-month period,
which mitigates delay risk. In this case, only the delayed phase
would be terminated. The limited available liquidity in a delay
scenario is mitigated by Yondr's and HITT's positive track record
in delivering a similar project, on budget and on schedule.
Supply Risk - Midrange
Manageable Power Supply Risk with Adequate Capacity Planning
The project faces manageable power supply risk. Campus
infrastructure allocations have been properly planned to support
full delivery of Building 2A's 48 MW critical capacity via the
NOVEC-owned Brambleton and Wishing Star Substations. As of today,
50 MVA has been constructed and energized, and the remaining
infrastructure improvements required to bring power to the site are
underway and expected to be completed by 3Q26.
A further capacity upgrade to 70 MVA will be available prior to
each phase's service commencement date, available approximately one
year before the last data hall's commencement date, in accordance
with the TA analysis, which mitigates supply risk.
Revenue Risk - Midrange
Strong Contracted Revenues with Renewal and Termination Risk
The revenue profile is supported by a long-term take-or-pay lease
with an investment-grade hyperscale tenant, which provides strong
visibility into contracted cash flows. The asset has a strong
competitive position in Northern Virginia, a leading global data
center market with high barriers to entry, low latency and
sustained structural demand for cloud capacity. Demand volatility
is limited, supported by tight market conditions and continued
hyperscale demand. However, cash flow under Fitch's rating case is
not sufficient to amortize debt during the initial lease term,
which creates lease renewal risk. However, the location in a Tier 1
market mitigates this risk.
The lease includes termination for convenience provisions. Material
termination fees create a meaningful economic disincentive, but
they add optionality. The termination fee would not fully pay the
debt in some scenarios. However, Fitch believes the facility can be
leased to another tenant if the option is exercised.
Operation Risk - Midrange
Predictable Operating Cost Structure with Pass-Through Protections
All electricity costs and property taxes are fully passed through
to the tenant, reflecting a modified gross and electric structure.
Operating expenses are predictable and consist of property and
insurance expenses and other operating expenses like facility
management, reactive maintenance, fuel, security, and landscaping
expenses. Maintenance capex is the issuer's responsibility. The
lease includes reasonable service-level agreement (SLA)
requirements.
Infrastructure Development & Obsolescence Risk - Neutral
Modern, Scalable Asset in Leading Data Center Market
The project has a stable infrastructure and obsolescence profile,
supported by its location in Northern Virginia, a leading and
global data center market with strong connectivity, low latency and
sustained demand from hyperscale cloud tenants. The facility is a
new hyperscale data center built to modern specifications, with
efficient and scalable design features that meet current and
evolving tenant needs.
Lifecycle capex requirements are predictable and reflected in the
financial profile, supporting the asset's ability to maintain
technical performance and competitiveness. The standardized and
modular design also provides flexibility to accommodate future
technological developments and changes in tenant demand.
Debt Structure - Weaker
Structure with Refinancing Risk and Weaker Covenants
Fixed-rate senior secured notes mature in 2031, with partial
limited amortization over their life. The project faces refinancing
risk at debt maturity. The issuer, a new SPV, does not have a
refinancing track record, although Yondr's access to financial
markets partly mitigates this risk. The debt structure has
structural strengths, including senior secured ranking, an adequate
security package and liquidity support through a debt service
reserve and prefunded interest. These features provide strong
protection through cash flow priority and downside resilience.
The issuer is also subject to special purpose entity covenants that
largely limit its activities to the project and related permitted
activities. They require separateness through separate books,
accounts and financial statements, prohibit asset commingling with
third parties and restrict guarantees of third-party debt.
Debt provisions are weaker than typical project finance structures,
and this is reflected in the assessment. The issuer may incur
additional debt after the commencement date under a basket equal to
USD25 million plus 50.0% of NOI. It may also incur project-related
debt of up to 90% loan-to-cost (LTC) for pari passu debt after the
commencement date (or 95% for non-pari passu). The issuer must
obtain a Fitch rating confirmation before it undertakes an
additional project. Debt for that project does not require a
separate rating affirmation, but it remains subject to certain
conditions.
Peer Analysis
Stingray Compute LLC (BB-/Stable) and SE Cosmos, LLC (BB-/Stable)
are Yondr JK 1's most relevant peers. SE Cosmos and Yondr JK 1's
ratings are not constrained by completion risk, while Stingray
Compute faces elevated completion and power supply risk. While both
peers present sufficient cash flow to amortize the rated debt
within the initial lease term, Yondr JK 1 depends on additional
extensions to fully amortize the total debt under Fitch's rating
case. All three projects face weaker debt provisions than typical
project finance structures.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Significant construction delays that result in increased
unavoidable financing costs not covered by either contingencies or
debt service reserve;
- A degradation in the project's financial profile, resulting in a
decline in the minimum PLCR below 1.25x or debt service coverage
ratio (DSCR) below 1.0x in 2029 and 2030.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Sustained operational and financial performance in line with or
above Fitch's rating case, with the PLCR above 1.35x.
Financial Profile
Fitch's base and rating cases assess cash flow over 25 years
because, under Fitch's rating case assumptions, the project is
unable to fully repay the original debt and additional allowances
during the initial lease term. The rating case stresses the
five-year refinancing rate to 9.0%. It also includes additional
debt allowed after completion under one of the baskets at 90% LTC,
and stresses operating costs, lease rates and vacancy at renewal.
The PLCR in 2031 is 1.28x under the rating case, commensurate with
the rating. The low DSCR in 2029 and 2030 after completion is
mitigated by a six-month debt service reserve account (DSRA). This
provides cushion against further cost escalations or SLA penalties
in Fitch's downside scenario, which includes additional debt and
reasonable cost stresses.
TRANSACTION SUMMARY
Yondr JK 1 LLC issued $715 million of senior secured notes to
partially fund the development of NoVa North Building 2A in Aldie,
Loudoun County, VA (48 MW data center building). Total project
costs are $874 million, implying an 82% loan to cost for the
proposed notes. The notes have a five-year tenor and are secured by
a first lien on all assets, contracts, and cash flows.
SECURITY
The security package provides comprehensive first lien coverage
over substantially all project assets, supported by controlled cash
flow arrangements, a fully funded DSRA and a parent-level
completion guarantee. However, the absence of clearly defined
lender step-in rights, combined with ongoing construction risk and
potential flexibility for additional pari passu debt, limits the
overall strength of creditor control.
While Fitch has received the executed financing and security
documents, the mortgage has not been delivered. The indenture
permits the issuer to take up to 180 days following closing to
deliver the mortgage and related real estate deliverables.
Date of Relevant Committee
22-Jun-2026
Climate Vulnerability Signals
The results of its Climate.VS screener did not indicate an elevated
risk for Yondr JK 1.
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 Prior
----------- ------ -----
Yondr JK 1 LLC LT IDR BB New Rating BB(EXP)
Yondr JK 1
LLC/Senior
Secured Debt/1 LT LT
USD 715 mln 6.875%
bond/note 30-Jun-2031
985925AA4 LT BB New Rating BB(EXP)
===============
P O R T U G A L
===============
TAGUS STC VIRIATO 2: Fitch Corrects July 8 Ratings Release
----------------------------------------------------------
This is a correction of a Rating Action Commentary published on 8
July 2026. It corrects two inputs in the cash flow model relating
to the principal draw amounts of the priority of payments, and
factors in the portfolio amortisation profile that became available
after Fitch assigned its expected ratings. The correction results
in updated expected ratings for the class A and B notes.
Fitch Ratings has updated Tagus, STC S.A. / Viriato Finance No. 2
(Viriato 2) class A and B notes ratings at 'AA-(EXP)sf' and
'A-(EXP)sf', respectively.
The assignment of final ratings is contingent on the receipt of
final documents conforming materially to information already
reviewed.
Entity/Debt Rating Prior
----------- ------ -----
Tagus, STC S.A. /
Viriato Finance No. 2
Class A LT AA-(EXP)sf Upgrade A+(EXP)sf
Class B LT A-(EXP)sf Upgrade BBB+(EXP)sf
Class C LT BB(EXP)sf Affirmed BB(EXP)sf
Class D LT NR(EXP)sf Affirmed NR(EXP)sf
Class E LT NR(EXP)sf Affirmed NR(EXP)sf
Class X LT A(EXP)sf Affirmed A(EXP)sf
Transaction Summary
Viriato 2 is a nine-month revolving securitisation of a portfolio
of fully amortising unsecured consumer loans originated and
serviced in Portugal by WiZink Bank S.A.U. Sucursal em Portugal
(WiZink Portugal). WiZink Portugal is the Portuguese branch of
Wizink Bank, S.A.U., registered in Spain and majority-owned by
Värde Partners, and acts as portfolio servicer, originator and
seller.
KEY RATING DRIVERS
Model Error Correction: Fitch has corrected the principal draw
amounts modelling in the cash flow model and factored in the
updated portfolio amortisation profile that became available after
Fitch assigned its expected ratings, which has resulted in higher
model-implied-ratings for the class A and B notes of 'AAsf' and
'Asf', respectively, by three and two notches. The class A and B
notes are rated one notch below their model-implied ratings due to
the volatility of model results influenced by multiple variables
like the amortisation profile and the level and timing of credit
losses.
Its initial modelling had treated the principal draw amount to be
available to cover senior expenses, net swap payments, and interest
for the class A to D notes (class D only when it is the most
senior) if interest available funds were insufficient, in line with
the term sheet and preliminary versions of the transaction
documents. However, the final documents state that the principal
draw amounts can only be used for the class B and C notes when they
become the most senior outstanding class or their interest payments
are not subordinated due to a breach of their respective principal
deficiency triggers.
Asset Assumptions Reflect Pool Profile: Fitch sets base-case
lifetime default and recovery rates of 8% and 20% for the total
pool, based on the historical data provided by the originator,
Portugal's economic outlook, pool features, and WiZink Portugal's
underwriting and servicing strategies. The estimated lifetime loss
rate is 20.5% for the 'AA-sf' rating case.
Short Revolving Period: The transaction will have a nine-month
revolving period during which new receivables can be purchased by
the special purpose vehicle. Fitch considers any credit risk
stemming from the revolving period to be sufficiently captured by
default multiples. Fitch expects about 17% of the pool balance to
be replenished during the revolving period, assuming an annualised
prepayment rate of 10%.
Pro-Rata Amortisation: The class A to E notes will be repaid
pro-rata after the revolving period until a sequential amortisation
event occurs, primarily linked to performance triggers, such as the
cumulative balance of defaults or entries to the principal
deficiency ledger. Fitch views triggers sufficiently robust to
prevent the pro-rata amortisation from continuing in the event of a
deterioration in performance. Fitch also considers the tail risk
posed by the pro-rata pay-down to be mitigated by a mandatory
switch to sequential amortisation when the outstanding pool balance
falls below 10% of the initial balance.
Payment Interruption Risk Mitigated: Fitch views payment
interruption risk on the notes as mitigated in the event of
servicer distress. This is based on liquidity protection in the
form of a dedicated liquidity reserve, the operational capabilities
of WiZink Portugal, the very high frequency of cash collection
sweeps into the transaction account bank every two days, and the
presence of a back-up servicer facilitator.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Long-term asset performance deterioration such as increased
delinquencies or reduced portfolio yield, which could be driven by
changes in portfolio characteristics, macroeconomic conditions,
business practices or the legislative landscape.
- A simultaneous increase of defaults by 25% and a decrease of
recoveries by 25% could lead to downgrades of up to two notches
each for the class A and B notes, and three notches for the C
notes.
Expected impact on the notes' ratings of increased defaults (class
A/B/C/D/E/X)
Increase default rates by 10%:
'AA-sf'/'A-sf'/'BBsf'/'NRsf'/'NRsf'/'Asf'
Increase default rates by 25%:
'A+sf'/'BBB+sf'/'B+sf'/'NRsf'/'NRsf'/'Asf'
Increase default rates by 50%:
'A-sf'/'BBB-sf'/'CCCsf'/'NRsf'/'NRsf'/'Asf'
Expected impact on the notes' ratings of reduced recoveries (class
A/B/C/D/E/X)
Reduce recovery rates by 10%:
'AA-sf'/'A-sf'/'BBsf'/'NRsf'/'NRsf'/'Asf'
Reduce recovery rates by 25%:
'AA-sf'/'A-sf'/'BBsf'/'NRsf'/'NRsf'/'Asf'
Reduce recovery rates by 50%:
'AA-sf'/'A-sf'/'BBsf'/'NRsf'/'NRsf'/'Asf'
Expected impact on the notes' ratings of increased defaults and
reduced recoveries (class A/B/C/D/E/X)
Increase default rates by 10% and reduce recovery rates by 10%:
'AA-sf'/'A-sf'/'BBsf'/'NRsf'/'NRsf'/'Asf'
Increase default rates by 25% and reduce recovery rates by 25%:
'Asf'/'BBBsf'/'Bsf'/'NRsf'/'NRsf'/'Asf'
Increase default rates by 50% and reduce recovery rates by 50%:
'BBB+sf'/'BB+sf'/'NRsf'/'NRsf'/'NRsf'/'Asf'
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Increasing credit enhancement ratios as the transaction
deleverages to fully compensate for the credit losses and cash flow
stresses commensurate with higher ratings will be positive for
ratings.
USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10
Form ABS Due Diligence-15E was not provided to, or reviewed by,
Fitch in relation to this rating action.
DATA ADEQUACY
Fitch reviewed the results of a third-party assessment conducted on
the asset portfolio information, and concluded that there were no
findings that affected the rating analysis.
Fitch conducted a review of a small, targeted sample of the
originator's origination files and found the information contained
in the reviewed files to be adequately consistent with the
originator's policies and practices and the other information
provided to the agency about the asset portfolio.
Overall, and together with any assumptions referred to above,
Fitch's assessment of the information relied upon for the agency's
rating analysis according to its applicable rating methodologies
indicates that it is adequately reliable.
ESG Considerations
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.
=========
S P A I N
=========
AUTO ABS SPANISH 2022-1: Moody's Ups Rating on Cl. E Notes to Ba1
-----------------------------------------------------------------
Moody's Ratings has upgraded the ratings of four notes in Auto ABS
Spanish Loans 2022-1, FT. The notes are backed by auto loan
contracts originated and serviced by Stellantis Financial Services
Espana, E.F.C., S.A.
Moody's affirmed the rating of the notes that had sufficient credit
enhancement to maintain their current rating.
EUR550.6M Class A Notes, Upgraded to Aaa (sf); previously on Oct
6, 2025 Affirmed Aa2 (sf)
EUR40.9M Class B Notes, Upgraded to Aa2 (sf); previously on Oct 6,
2025 Affirmed A3 (sf)
EUR36.8M Class C Notes, Upgraded to A3 (sf); previously on Oct 6,
2025 Upgraded to Baa1 (sf)
EUR48M Class D Notes, Affirmed Baa3 (sf); previously on Oct 6,
2025 Upgraded to Baa3 (sf)
EUR23.7M Class E Notes, Upgraded to Ba1 (sf); previously on Oct 6,
2025 Upgraded to Ba3 (sf)
RATINGS RATIONALE
The rating action is prompted by decreased key collateral
assumptions due to reduced residual value exposure and an increase
in credit enhancement for the affected tranches.
Revision of Key Collateral Assumptions
As part of the rating action, Moody's reassessed Moody's expected
default rate and recovery rate assumptions for the portfolio
reflecting the collateral performance to date.
The performance of the transaction has remained stable since the
last rating action. 60 days plus arrears currently stand at 0.14%
of current pool balance showing a stable trend over the past year.
Cumulative defaults currently stand at 0.99% of original pool
balance plus all replenishments and additions since closing date,
up from 0.80% a year earlier.
Moody's maintained the expected default rate assumption at 2.20% as
a percentage of current pool balance. The revised expected default
rate assumption corresponds to 1.18% as a percentage of original
pool balance, previously 1.48%.
Moody's maintained the assumption for the fixed recovery rate at
40.00%.
Moody's reassessed Moody's Portfolio Credit Enhancement ("PCE")
assumption for this transaction. PCE reflects the credit
enhancement consistent with the highest rating achievable in Spain.
Moody's have maintained the PCE assumption at 11.00%.
The total RV Exposure decreased to 34.2% from 42.4% as of latest
rating action. Moody's determined the Aaa RV CE of 10.6% and the
Aa2 RV CE at 9.4% to account for the residual value market risk.
The residual value credit enhancement (RV CE) captures additional
portfolio losses which would arise on the securitised RV cash flows
following a decline in the market prices of used cars in a severe
recession environment. The pool contains lease agreements which
permit the lessee to return their vehicle at the end of the lease
in lieu of the final payment, which is not a default and thus is
not captured in the loss assumptions for the lease receivables
described in the previous section. The sum of the RV CE and PCE, as
described above, determines the total credit enhancement that is
needed to be consistent with the rating for each Class of notes.
Increase in Available Credit Enhancement
Sequential amortization and a non-amortizing reserve fund led to
the increase in the credit enhancement available in this
transaction.
For instance, the credit enhancement for the most senior tranche
affected by the upgrade action increased to 25.50% from 23.39%
since the last rating action.
The principal methodology used in these ratings was "Moody's Global
Approach to Rating Auto Loan- and Lease-Backed ABS" published in
June 2025.
Factors that would lead to an upgrade or downgrade of the ratings:
Factors or circumstances that could lead to an upgrade of the
ratings include (1) performance of the underlying collateral that
is better than Moody's expected, (2) an increase in available
credit enhancement and (3) improvements in the credit quality of
the transaction counterparties.
Factors or circumstances that could lead to a downgrade of the
ratings include (1) an increase in sovereign risk, (2) performance
of the underlying collateral that is worse than Moody's expected,
(3) deterioration in the notes' available credit enhancement and
(4) deterioration in the credit quality of the transaction
counterparties.
CAIXABANK CONSUMO 6: DBRS Confirms BB(high) Rating on Cl. B Notes
-----------------------------------------------------------------
DBRS Ratings GmbH (Morningstar DBRS) confirmed its credit ratings
on the bonds issued by Caixabank Consumo 6 F.T. (the Issuer) as
follows:
-- Class A Notes at AA (high) (sf)
-- Class B Notes at BB (high) (sf)
CREDIT RATING RATIONALE
The confirmation follows an annual review of the transaction and is
based on the following analytical considerations:
-- Portfolio performance, in terms of delinquencies, defaults, and
losses, as of the March 2026 payment date;
-- Updated probability of default (PD), loss given default (LGD),
and expected loss assumptions for the aggregate collateral pool;
and
-- Current available credit enhancement to the rated notes to cover
the expected losses at their respective credit rating levels.
The transaction is a securitisation of unsecured consumer loans
granted to individuals residing in Spain by CaixaBank, S.A.
(CaixaBank), which also services the portfolio and acts as the
Issuer account bank. The transaction closed in June 2023 and
included a 12-month revolving period, which ended in June 2024.
PORTFOLIO PERFORMANCE
As of the February 2026 cut-off date, loans that were one to two
months and two to three months in arrears represented 0.2% and 0.1%
of the outstanding portfolio balance, respectively, while loans
that were more than three months in arrears represented 1.4%. Gross
cumulative defaults amounted to 3.5% of the aggregate initial
collateral balance and subsequent portfolios, with cumulative
recoveries of 12.6% to date.
PORTFOLIO ASSUMPTIONS AND KEY DRIVERS
Morningstar DBRS updated its base case PD and LGD assumptions to
5.0% and 88.7%, respectively.
CREDIT ENHANCEMENT
The subordination of the Class B Notes and the cash reserve provide
credit enhancement to the Class A Notes. As of the March 2026
payment date, credit enhancement to the Class A Notes increased to
31.8% from 22.2% last year. The credit enhancement for the Class B
Notes is currently zero; however, the cash reserve will begin to
provide support to the Class B Notes once the Class A Notes have
been fully repaid.
The transaction benefits from an amortising cash reserve which is
available to cover senior expenses and all payments due on the
senior-most series of notes outstanding at the time. The reserve
was funded to EUR 100.0 million at closing through a subordinated
loan granted by CaixaBank. The reserve remained at EUR 100.0
million since closing and until June 2025, when it started to
amortise, with a target level set at 5.0% of the outstanding
principal balance of the notes. The amortisation of the reserve is
subject to the condition that it was fully replenished to its
target level on the previous payment date. As of the March 2026
payment date, the reserve stood at its target level of EUR 48.8
million.
CaixaBank acts as the account bank for the transaction. Based on
the account bank reference rating of AA (low) on CaixaBank, which
is one notch below its Morningstar DBRS Long Term Critical
Obligations Rating of AA, the downgrade provisions outlined in the
transaction documents, and other mitigating factors inherent in the
transaction structure, Morningstar DBRS considers the risk arising
from the exposure to the account bank to be consistent with the
credit ratings assigned to the notes, as described in Morningstar
DBRS' "Legal and Derivative Criteria for European and Asia-Pacific
Structured Finance Transactions" methodology.
Morningstar DBRS' credit ratings on the applicable classes address
the credit risk associated with the identified financial
obligations in accordance with the relevant transaction documents.
Where applicable, a description of these financial obligations can
be found in the transactions' respective press releases at
issuance.
Morningstar DBRS' long-term credit ratings provide opinions on risk
of default. Morningstar DBRS considers risk of default to be the
risk that an issuer will fail to satisfy the financial obligations
in accordance with the terms under which a long-term obligation has
been issued.
Notes:
All figures are in euros unless otherwise noted.
===========================
U N I T E D K I N G D O M
===========================
ARENA FINANCE: S&P Assigns B- (sf) Rating to Class F Notes
----------------------------------------------------------
S&P Global Ratings has assigned its credit ratings to Arena Finance
Securities DAC's A, B, C, D, E, and F notes.
Arena Finance Securities DAC is a CMBS transaction backed by a
senior loan secured on a portfolio of five properties in
Birmingham, comprising the National Exhibition Centre, the
International Convention Centre, the Vox Conference Venue, Utilita
Arena, and bp pulse LIVE.
At closing, the issuer advanced a GBP611.4 million senior facility
A1 loan to LHTCA Bidco Ltd., the borrower, pursuant to the
facilities agreement. Certain lenders will also advance a GBP51.2
million senior capital expenditure (capex) facility loan to the
borrower. The total senior loan is GBP662.6 million. At closing,
the issuer also advanced a GBP41.4 million facility R loan to the
borrower, which ranks junior to the senior loan. Facility A1 and R
loans are the securitized loans.
After the closing date, the issuer may issue additional notes,
subject to certain conditions, including obtaining a rating agency
confirmation stating that the additional issuance will not result
in a downgrade or withdrawal of the current ratings on the notes.
To satisfy E.U., U.K., and U.S. risk-retention requirements, an
additional amount of unrated class R notes will be acquired by the
retaining sponsor, LHTCA Midco Ltd. For EU and U.K. risk retention
requirements, this is at least 5% of the nominal value of the
securitized loan. For U.S. risk retention requirements, this is at
least 5% of the fair value of all the notes issued by the issuer at
closing (determined using a fair value measurement framework under
U.S. generally accepted accounting principles).
The senior loan includes cash-trap mechanisms if the loan-to-value
(LTV) ratio exceeds 80% or the debt yield is less than 8.2%. The
senior loan has an initial two-year term with four one-year
extension options available, subject to the satisfaction of certain
conditions. For the fourth extension option, conditions include
obtaining the approval of the majority of lenders (or all lenders
after a permitted change of control). There is no scheduled
amortization during the loan term.
The portfolio's market value as of March 11, 2026, was GBP940.6
million, which equates to an LTV ratio of 70.4%, based on the total
senior loan and 65.0% excluding the capex loan.
S&P's ratings address the issuer's ability to meet timely payment
of interest on the class A, B, C, and D notes, ultimate payment of
interest on the class E and F notes, and payment of principal not
later than the legal final maturity in August 2037 on all classes
of notes. The legal final maturity is initially August 2036.
However, there is the option to extend the loan term once by 12
months beyond the third extended loan maturity date in 2031,
subject to approval by lenders holding 66.7% of the senior loan.
Should the lenders choose to exercise this option, the legal final
maturity date will be automatically extended to August 2037.
S&P's ratings on the notes reflect its assessment of the underlying
loan's credit, cash flow, and legal characteristics, and an
analysis of the transaction's counterparty and operational risks.
Ratings
Class Rating* Amount (mil. GBP)
A AAA (sf) 256.0
B AA (sf) 54.0
C A (sf) 56.0
D BBB- (sf) 96.1
E BB- (sf) 75.3
F B- (sf) 74.0
R NR 41.4
*S&P's ratings address timely payment of interest on the class A,
B, C, and D notes, ultimate payment of interest on the class E and
F notes, and payment of principal not later than the legal final
maturity in August 2037 on all classes of rated notes.
NR--Not rated.
DELTA TOPCO: Fitch Affirms 'BB' LT IDR, Alters Outlook to Pos.
--------------------------------------------------------------
Fitch Ratings has revised Delta Topco Limited's (Formula 1) Outlook
to Positive from Stable and affirmed its Long-Term Issuer Default
Rating (IDR) at 'BB'. It has also affirmed Delta 2 (Lux) S.a r.l.'s
senior secured instrument rating at 'BB+' with a Recovery Rating of
'RR2'.
The Positive Outlook reflects Fitch's expectation that Formula 1
will deleverage while generating strong Fitch-defined free cash
flow (FCF) over the next 24 months, despite 2026's race
cancellations due to the Iran-US conflict. Fitch-defined EBITDA
leverage is forecast to fall to 2.6x by 2028 from 3.5x in 2026,
aligning with a 'BB+' rating, underpinned by strong fan engagement
and contracted revenue visibility. Fitch assumes a normalised
24-race calendar in 2027.
Formula 1 lacks a committed financial policy but retains
significant discretionary capacity to manage its financial profile.
Fitch expects dividend distributions to be aligned with operating
performance. The Outlook could be revised to Stable if future
calendar disruptions affect deleveraging or FCF.
Key Rating Drivers
Race Cancellations in Middle East: Formula 1 cancelled its Bahrain
and Saudi Arabia races in 2026 due to the Iran-US conflict.
Tensions eased following the signing of the now suspended
memorandum of understanding, but the threat of further conflict has
increased. Formula 1 plans for Qatar and Abu Dhabi races in
December; however, given the ongoing uncertainty, there is a risk
that the races may not proceed. Fitch's more conservative rating
case assumes both races are cancelled, with one replacement race
added, resulting in a 21-race calendar.
Replacement Races: If further races are cancelled, Formula 1 could
arrange replacements in Europe or elsewhere, though race fees would
likely be lower. The 2027 calendar remains unpublished, though
Fitch forecasts a full 24 race schedule including all four races in
the Middle East (ME). Should the conflict be extended, Formula 1
would have more time to relocate races or identify alternative
promoters. Fitch believes ME races are material contributors to
race fees.
Potential Temporary Leverage Impact: Fitch forecasts EBITDA
leverage to remain stable at 3.5x in 2026 under its 21-race
assumption. Barring race cancellations, Fitch believes leverage
would be closer to 3.0x in 2026. Race cancellations will primarily
affect race promoter fees and hospitality revenue, with media
rights and sponsorship revenue less sensitive to individual races
in the short term. Formula 1 has flexibility with partners to
deliver inventory and has benefitted from upselling contracts.
Fitch forecasts deleveraging to 2.9x in 2027 and 2.6x in 2028 with
a full race calendar.
Solid Cash Generation: Fitch forecasts pre-dividend FCF margin at
13% in 2026, despite a truncated race calendar, averaging 17%
across 2026-2029, supported by stable EBITDA growth. Main cash
outflows consist of team payments, interest, taxes and capex, with
the terms of the new 2026 Concorde agreement providing a clearer
link between Formula 1's profitability and team payments. While
taxes will normalise at higher levels, strong FCF provides headroom
to absorb unexpected shocks, provided dividends are commensurate
with operating performance.
Evolving Strategy: Formula 1's direct race revenue has grown an
average of 14% annually during 2022-2026, underscoring strong
demand. Hospitality offerings such as The Paddock Club continue to
scale up, including a debut in Melbourne and other
ultra-high-net-worth products in development. F1TV will expand
outside the US, broadening the digital revenue base, while
licensing revenue is set to grow, leveraging partnerships with
Disney and Lego. These initiatives will allow Formula 1 to build a
brand ecosystem capable of attracting and retaining fans.
New Business Secured: Formula 1 has secured the return of the race
in Türkiye (2027-2031), which will replace the Netherlands from
2027 while Barcelona is expected to rotate with Belgium through
2032. New sponsorships with Standard Chartered and Marsh and
multiple renewals at higher contract values reflect the brand's
commercial appeal, supported by Formula 1's technology
capabilities. Its 2026 US Apple TV deal has driven record F1TV
subscriptions and offers broader opportunities across content,
marketing, and distribution. However, measuring the extent of
viewership across the Apple ecosystem presents near-term
challenges.
Revenue Visibility: Formula 1's revenue is primarily sourced from
multiyear contracts with media companies, race promoters and
corporate sponsors, accounting for about 80% of total revenue
annually. All race revenue except Las Vegas Grand Prix (LVGP) is
from fixed-fee contracts and not directly exposed to attendance
volatility. The contracted revenue pipeline at end-1Q26 was USD15.9
billion. Fitch expects Formula 1 to proactively manage contract
renewals for 2027-2029 with fairly few contracts up for renewal in
2027. The company has a record of upselling contracts across its
revenue segments.
Narrow Product Diversification: A cost cap and evolving technical
regulations have improved competition, which is important for fan
engagement. However, after the new 2026 engine regulations drew
some driver criticism over driving experience, the regulator
Federation Internationale de l'Automobile has modified some of the
regulations, with further changes to be introduced in 2027. Broader
fan engagement metrics remain strong, though periods of repeat
champions, race cancellations or adverse driver reaction to
regulation changes could weaken appeal to fans and media partners,
affecting viewership and revenue.
Better LVGP Performance: LVGP improved its performance in 2025,
which Formula 1 expects to continue in 2026, supported by strong
early ticket sales and expanded year-round activities at Grand Prix
Plaza. Contract renewal terms with Las Vegas Convention and
Visitors Authority and LVGP's casino partners, alongside expected
infrastructure developments in the city, will improve future race
economics, with the race running through 2037. LVGP is a material
revenue contributor, and its sustained success remains important
given geopolitical risks to other high-value races.
Peer Analysis
Formula 1's rating benefits from holding the exclusive commercial
rights to one of the most popular sports in the world. Its
operating profile and its main product are unique, and, given the
lack of direct peers, Fitch benchmarks it against a wide range of
Fitch-rated media companies.
Higher-rated larger peers, such as Informa PLC (BBB/Stable) or
Pearson Plc (BBB/Stable), have lower leverage and stronger product
diversification. Similar to these companies, Formula 1 is exposed
to secular shifts in media consumption and economic cycles through
advertising revenue, though this is mitigated by its long-term
contracts.
ITV plc (BBB-/Stable) has smaller scale, weaker revenue visibility
driven by volatilities in content production activities and
advertising trends, and exposure to secular pressures in linear
television. Its leverage thresholds are tighter than Formula 1 at
any given rating level.
Formula 1 compares favourably with the broader media peer group in
the non-investment-grade range, as it demonstrated resilience
during the pandemic with its flexible cost structure, ample
liquidity and strong relationships with key partners and
customers.
Fitch’s Key Rating-Case Assumptions
- Twenty-one races to be held in 2026 with all ME races cancelled
and one replacement race added
- Twenty-four races held in 2027-2029 with all ME races included
- Revenue to rise 2% in 2026, 13% in 2027 and in the
mid-single-digits for 2028-2029
- Fitch-defined EBITDA margin (pre-IFRS16 basis) at 24% in 2026,
before gradually improving to 26% by 2028
- Cash taxes for 2026-2029 higher than in previous years
- Capex at 4% of revenue in 2026 and 1.8% in 2027-2029
- Excess cash flows managed at Formula 1, with dividend payments to
Liberty Media at USD300 million-500million a year between 2026 and
2029, weighted towards the later years
- No M&As or dividend recapitalisations in 2026-2029
- Shareholder loan from Liberty Media not included in credit
metrics
Corporate Rating Tool Inputs and Scores
Fitch scored the issuer as follows, using its Corporate Rating Tool
(CRT) to produce the Standalone Credit Profile (SCP):
Business and financial profile factors (assessment, relative
importance): management ('bb+', Moderate), sector characteristics
('bbb', Lower), market and competitive positioning ('bbb-',
Moderate), diversification and asset quality ('bb', Higher),
company operational characteristics ('bbb-', Moderate),
profitability ('bbb+', Lower), financial structure ('bb', Higher),
and financial flexibility ('bb+', Moderate).
The quantitative financial subfactors are based on custom CRT
financial period parameters: 20% weight for the historical year
2025, 60% for the forecast year 2026 and 20% for the forecast year
2027.
The governance assessment of 'good' has no impact.
The operating environment assessment of 'aa-' has no impact.
The SCP is 'bb'.
To derive the Long-Term IDR: Fitch made no adjustments to the SCP,
resulting in an IDR of 'BB'.
Recovery Analysis
Fitch rates Formula 1's senior secured rating in accordance with
its Corporates Recovery Ratings and Instrument Ratings Criteria,
with a generic approach to instrument notching for 'BB' rated
issuers. Fitch labels Formula 1's debt as "Category 2 first lien"
according to its criteria, which results in a Recovery Rating of
'RR2', with a one-notch uplift from the IDR to 'BB+'.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to
Downgrade
- Fitch-defined EBITDA leverage above 3.8x on a sustained basis
- Material decline in the popularity of the sport driving a loss of
(or significant reduction in contract terms at renewal) contracts
with key broadcasters or sponsors, in turn leading to material
pressure on revenue
- Cash flow from operations (CFO) less capex below 6% of total debt
on a sustained basis
- EBITDA interest coverage expected to remain below 4.5x on a
sustained basis
- Change in the Concorde agreement leading to an increase in the
Prize Fund team's share of Formula 1's pre-team share EBIT
Factors that Could, Individually or Collectively, Lead to an
Outlook Revision to Stable
- Loss of high-value races or fewer total races constraining
revenue and EBITDA growth, leading to Fitch-defined EBITDA leverage
remaining above 2.8x in 2028
- Material shareholder distributions pressuring Fitch-defined FCF
Factors That Could, Individually or Collectively, Lead to Upgrade
- Fitch-defined EBITDA leverage below 2.8x on a sustained basis,
supported by a clearly communicated financial policy
- CFO less capex above 10% of debt on a sustained basis
- EBITDA interest coverage above 5.5x on a sustained basis
- Increase in average contract length with broadcasters, sponsors
and promoters
Liquidity and Debt Structure
Fitch forecasts Formula 1's balance sheet cash at about USD700
million in 2026 after assuming that a portion of cash will be paid
annually on a discretionary basis to its parent, Liberty Media.
Fitch forecasts pre-dividend FCF for 2026 at USD500 million and to
average USD750 million over 2026-2029. Therefore, liquidity remains
comfortable with increasing balance sheet cash providing sufficient
headroom to repay short-term liabilities and debt service
obligations. Formula 1's liquidity also benefits from a USD500
million revolving credit facility till September 2029.
At end-March 2026, Formula 1's gross debt comprised a USD2.55
billion term loan B maturing in September 2031 and USD791 million
term loan A maturing in September 2029.
Issuer Profile
Formula 1 is responsible for the commercial running and development
of the FIA Formula One World Championship, for which it coordinates
and/or transacts with stakeholders including the FIA, the teams,
race promoters, worldwide media organisations, sponsors and
licensees.
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Fitch's latest quarterly Global Corporates Sector Forecasts Monitor
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.
Climate Vulnerability Signals
The results of its Climate.VS screener did not indicate an elevated
risk for Formula 1.
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
----------- ------ -------- -----
Delta Topco Limited LT IDR BB Affirmed BB
Delta 2 (Lux)
S.a r.l.
senior secured LT BB+ Affirmed RR2 BB+
EUROHOME UK 2007-1: S&P Lowers Class B Notes Rating to 'BB- (sf)'
-----------------------------------------------------------------
S&P Global Ratings lowered to 'BB- (sf)' from 'BB+ (sf)' and
removed from CreditWatch negative its credit rating on Eurohome UK
Mortgages 2007-1 PLC's class B2 notes. At the same time, S&P
affirmed its 'A+ (sf)' ratings on the class A, M1, and M2 notes,
and 'BBB (sf)' rating on the class B1 notes.
S&P said, "On May 5, 2026, we placed our rating on Eurohome UK
Mortgages 2007-1 PLC's class B2 notes on CreditWatch negative
following the updates to our U.K. sector and industry variables
under our global RMBS criteria.
"Following our review, we lowered and removed from CreditWatch
negative our rating on the class B2 notes. At the same time, we
affirmed our rating on the class A, M1, M2, and B1 notes.
Eurohome UK Mortgages 2007-1 PLC is a U.K. RMBS transaction backed
primarily by a pool of nonconforming mortgage loans.
"The rating actions follow our May 5, 2026, placement of our rating
on the class B2 notes on CreditWatch negative due to the
implementation of updates to our U.K. sector and industry variables
under our global RMBS criteria. They also reflect our full analysis
of the most recent transaction information and the transaction's
current structural features.
"The performance of the loans in the collateral pool has
deteriorated slightly since our previous review. Based on our
calculation methodology, total arrears increased to 21.27% in June
2026, of which 14.95% is in 90+ days arrears. Cumulative losses
remain at 7.03%. Credit enhancement has increased for all classes
of notes since our previous review.
"After applying our updated sector and industry variables, the
overall effect in our credit analysis resulted in an increase in
the weighted-average foreclosure frequency (WAFF) at all rating
levels. This increase was due to a curtailment of seasoning credit
for interest-only loans and higher income adjustment. Some of this
increase is partially offset by lower anchor default probabilities,
lower loan-to-value ratio adjustments, and recalibration and
reduction of the originator adjustment.
"Our weighted-average loss severities (WALS) have increased at all
rating levels, driven by updated repossession costs, increased
loan-level loss severity floors, and limited credit to house price
indexation, considering the property valuation dates and observed
loss severity. Our lower overvaluation assessment for London and
the South East partially offsets some of this negative effect."
Credit analysis results
Rating level WAFF (%) WALS (%) Credit coverage (%)
AAA 50.23 28.63 14.38
AA 41.30 23.47 9.70
A 36.11 15.53 5.61
BBB 31.01 11.49 3.56
BB 25.61 8.58 2.20
B 24.33 6.00 1.46
WAFF--Weighted-average foreclosure frequency.
WALS--Weighted-average loss severity.
The reserve fund currently is at GBP5,549,589.6 and is below its
required level of GBP6,300,000. It is not amortizing as the total
cumulative losses are greater than 1.25%.
The transaction's sequential priority of payments and the notes'
amortization have increased the available credit enhancement for
the class A, B1, and B2 notes, with the pool factor falling to
14.94%.
The ratings remain capped at the counterparty level under S&P's
counterparty criteria.
S&P said, "The liquidity facility remains undrawn. However, the
liquidity facility agreements held with Deutsche Bank AG do not
comply with our counterparty criteria, as the transaction documents
lack a strong commitment from the liquidity provider to replace
itself or draw-to-cash its obligation if we lower our rating below
'A-1'. Furthermore, following our June 9, 2015, downgrade of
Deutsche Bank, it failed to take any remedial actions. Therefore,
in scenarios where we give benefit to the liquidity facility, the
ratings remain capped at the 'A ' long-term issuer credit rating
(ICR) on Deutsche Bank.
"Barclays Bank PLC is the swap counterparty. Under our counterparty
criteria, the collateral assessment for the swap is "no
collateral". Therefore, in scenarios where we give credit to the
swap counterparty, we limit the maximum supported rating for the
notes to the swap counterparty, which corresponds to the 'AA- '
resolution counterpart rating on Barclays Bank.
"The bank account documents do not comply with our counterparty
criteria. As a result, the ratings on the notes are capped at our
'A+' long-term ICR on the bank account provider, U.S. Bank Europe
DAC.
"Following the application of our criteria, we have determined that
our assigned ratings on this transaction's classes of notes should
be the lower of the rating as capped by our counterparty criteria
and the rating that the class of notes can attain under our global
residential loans criteria.
"Our credit and cash flow results for the class A, M1, and M2 notes
indicate that these notes could withstand our stresses at higher
ratings than those currently assigned. However, due to the bank
account provider rating cap, we affirmed our 'A+ (sf)' ratings on
these classes of notes.
"Under our credit and cash flow analysis, the class B1 notes could
withstand our stresses at higher ratings than that currently
assigned. However, we affirmed the rating because it is constrained
by additional factors that we considered. These include the
exposure of this class to tail-end risk due to any potential
increase in defaults from the high level of interest-only loans and
high arrears, its relative position in the capital structure, and
the significantly lower credit enhancement for the subordinated
classes than for the senior notes. We also considered the
consistently high level of fees in the transaction.
"We lowered to 'BB- (sf)' from 'BB+ (sf)' and removed from
CreditWatch negative our rating on the class B2 notes because our
credit and cash flow results indicate their available credit
enhancement remains commensurate with the assigned rating."
The transaction is backed primarily by a pool of nonconforming
mortgage loans.
HARBOUR NO. 2: S&P Affirms 'CCC (sf)' Rating on 2 Note Classes
--------------------------------------------------------------
S&P Global Ratings removed from CreditWatch negative and affirmed
its credit ratings on Harbour No. 2 PLC's class A2 notes at 'AA
(sf)', class B-Dfrd notes at 'A (sf)', and C-Dfrd notes at 'BBB
(sf)'. S&P also affirmed its 'B- (sf)' rating on the class D-Dfrd
notes, 'CCC+ (sf)' rating on the class E-Dfrd notes, 'CCC (sf)'
rating on the class F-Dfrd notes, and 'CCC (sf)' rating on the
class X-Dfrd notes.
S&P said, "The rating actions follow our May 5, 2026, placement of
our ratings on the class A2, B-Dfrd, and C-Dfrd notes on
CreditWatch due to the implementation of updates to our U.K. sector
and industry variables under our global RMBS criteria. They also
reflect our full analysis of the most recent transaction
information and the transaction's current structural features.
"The performance of the loans in the collateral pool has been
stable since closing. Based on our calculation methodology, total
arrears increased to 55.72% in March 2026 from 55.42% at closing.
Cumulative losses total 0.24%.
"After applying our updated sector and industry variables, the
overall effect in our credit analysis resulted in an increase in
the weighted-average foreclosure frequency (WAFF) due to a
curtailment of seasoning credit for interest-only loans and higher
income adjustment. Some of this increase is partially offset by
lower anchor default probabilities, lower loan-to-value ratio
adjustments, and recalibration and reduction of the originator
adjustment.
"Our weighted-average loss severities (WALS) have increased, driven
by updated repossession costs, increased loan-level loss severity
floors, and limited credit to house price indexation, considering
the property valuation dates and observed loss severity. Our lower
overvaluation assessment for London and the South East partially
offsets some of these negative effects."
Credit analysis results
Rating level WAFF (%) WALS (%) Credit Coverage (%)
AAA 77.02 34.91 26.89
AA 70.13 30.41 21.33
A 65.91 23.03 15.18
BBB 61.45 18.82 11.56
BB 56.21 15.64 8.79
B 54.95 12.66 6.95
WAFF--Weighted-average foreclosure frequency.
WALS--Weighted-average loss severity.
Both the general reserve and the liquidity reserve are at their
required levels.
S&P said, "Although the class A2 and B-Dfrd notes passed cash flow
stresses at higher rating levels than those assigned, we considered
recovery period extensions beyond our standard 18-month assumption,
the upcoming interest-only maturity dates, high level of arrears,
the limited excess spread, and relative levels of subordination. We
therefore removed from CreditWatch negative and affirmed our
ratings on the class A2 and B-Dfrd notes.
"Our cash flow analysis indicates that the available credit
enhancement for the class C-Dfrd notes and D-Dfrd notes is
commensurate with the ratings currently assigned. We therefore
removed from CreditWatch negative and affirmed our rating on the
class C-Dfrd notes and affirmed our rating on the class D-Dfrd
notes.
"The class E-Dfrd, F-Dfrd, and X-Dfrd notes did not pass any of the
rating scenario stresses, including benign steady state scenarios
where we apply the actual servicing fees and lower prepayment
stress in our cash flow modelling. However, because our rating on
these notes addresses ultimate payment of principal and interest,
we believe default is not virtually imminent, as the notes can
continue to defer interest until maturity. Under our 'CCC'
criteria, we believe these notes will require favorable economic
conditions for repayment at maturity to occur. We therefore
affirmed our 'CCC+ (sf)' rating on class E-Dfrd notes, 'CCC (sf)'
rating on the class F-Dfrd notes, and 'CCC (sf)' rating on the
class X-Dfrd notes.
"Counterparty risk does not constrain the ratings as we consider
the transaction to be in line with our counterparty criteria."
Harbour No. 2 Auburn 15 PLC is a U.K. transaction primarily backed
by first-lien nonconforming residential mortgage loans.
HOXTON CONSUMER 2026-1: Moody's Assigns Ba3 Rating to Cl. E Notes
-----------------------------------------------------------------
Moody's Ratings has assigned definitive ratings to Notes issued by
Hoxton Consumer Loan Funding 2026-1 DAC:
GBP392.5M Class A Asset-Backed Floating Rate Notes due June 2037,
Definitive Rating Assigned Aaa (sf)
GBP27.5M Class B Asset-Backed Floating Rate Notes due June 2037,
Definitive Rating Assigned Aa2 (sf)
GBP20.0M Class C Asset-Backed Floating Rate Notes due June 2037,
Definitive Rating Assigned A2 (sf)
GBP18.75M Class D Asset-Backed Floating Rate Notes due June 2037,
Definitive Rating Assigned Baa2 (sf)
GBP16.25M Class E Asset-Backed Floating Rate Notes due June 2037,
Definitive Rating Assigned Ba3 (sf)
Moody's have not assigned a rating to the subordinated GBP25M Class
F Asset-Backed Variable Rate Notes due June 2037 and GBP9.75M Class
X Notes due June 2037.
RATINGS RATIONALE
The Notes are backed by a static pool of UK unsecured consumer
loans originated by Lendable Ltd (NR), the transaction's original
lender. Lendable Ltd also acts as the servicer in this transaction.
This represents the first public securitisation issuance of loans
originated by Lendable Ltd.
The portfolio consists of approximately GBP500 million of unsecured
consumer loans as of July 15, 2026 pool cut-off date extended to
private individuals in the UK. The weighted average remaining
maturity of the final portfolio is 3.5 years and the weighted
average seasoning is 0.75 years. All the loans are fixed-rate
loans.
The reserve fund is 1.25% of outstanding balance of Class A to E
notes floored at 0.25% of outstanding balance of Class A to E notes
at closing. 80.0% of reserve fund required amount is allocated to
senior reserve fund which will be available to pay interest on
Class A and B and senior expenses, and 20.0% to junior reserve fund
available to pay interest on the Class A to E notes and senior
expenses.
The ratings are primarily based on the credit quality of the
portfolio, the structural features of the transaction and its legal
integrity.
The transaction benefits from various credit strengths such as a
granular portfolio, the static structure, the simple product mix
and the credit enhancement provided via subordination of the Notes.
However, Moody's notes that the transaction features some credit
weaknesses, such as an unrated servicer and some complexity given
multiple principal paydown structures under certain scenarios.
Various mitigants have been included in the transaction structure,
such as a back-up servicer, Lenvi Servicing Limited, and explicit
asset performance trigger events respectively.
Principal amortisation is initially sequential and switches to pro
rata only once the Class A support ratio reaches its 27% target;
thereafter, the structure reverts to sequential amortisation upon
the breach of specific triggers, including PDL accumulation and
cumulative default levels.
All the loans are fixed-rate loans, whereas the Class A-E Notes are
floating-rate liabilities. As a result, the issuer is subjected to
a fixed-floating interest-rate mismatch. To mitigate the
fixed-floating rate mismatch, the issuer has entered into a swap
agreement with Barclays Bank PLC (A1(cr)/P-1(cr)). Under the swap
agreement, the issuer will pay a fixed swap rate of 3.75% and will
receive SONIA on a notional linked to a fixed swap schedule.
Moody's determined the portfolio lifetime expected defaults of
7.90%, expected recoveries of 20% and portfolio credit enhancement
("PCE") of 22% related to borrower receivables. The expected
defaults and recoveries capture Moody's expectations of performance
considering the current economic outlook, while the PCE captures
the loss Moody's expects the portfolio to suffer in the event of a
severe recession scenario. Expected defaults and PCE are parameters
used by us to calibrate its lognormal portfolio loss distribution
curve and to associate a probability with each potential future
loss scenario in the ABSROM cash flow model to rate Consumer ABS.
Portfolio expected defaults of 7.90% are in line with the UK
Consumer Loan ABS average and are based on Moody's assessments of
the lifetime expectation for the pool taking into account (i)
historic performance of the loan book of the originator, (ii)
benchmark transactions, and (iii) other qualitative
considerations.
Portfolio expected recoveries of 20% are higher than the UK
Consumer Loan ABS average and are based on Moody's assessments of
the lifetime expectation for the pool taking into account (i)
historic performance of the loan book of the originator, (ii)
benchmark transactions, and (iii) other qualitative
considerations.
PCE of 22% is in line with the UK Consumer Loan ABS average and is
based on Moody's assessments of the pool which is mainly driven by:
(i) evaluation of the underlying portfolio, complemented by the
historical performance information as provided by the originator,
and (ii) the relative ranking to originator peers in the EMEA
Consumer loan. The PCE level of 22% results in an implied
coefficient of variation ("CoV") of 31.61%.
The principal methodology used in these ratings was "Consumer Loan
Securitizations" published in May 2026.
Factors that would lead to an upgrade or downgrade of the ratings:
Factors that would lead to an upgrade of the ratings include
significantly better than expected performance of the pool together
with an increase in credit enhancement of Notes.
Factors or circumstances that could lead to a downgrade of the
ratings would be (1) worse than expected performance of the
underlying collateral; (2) deterioration in the credit quality of
the transaction counterparties; or (3) an increase in sovereign
risk.
JUPITER MORTGAGE NO.1: S&P Affirms 'CCC' Rating on F-Dfrd Notes
---------------------------------------------------------------
S&P Global Ratings removed from CreditWatch negative and affirmed
its 'AA (sf)' and 'A (sf) credit ratings on Jupiter Mortgage No.1
PLC's class B-Dfrd and C-Dfrd notes, respectively. S&P lowered to
'BBB- (sf)' from 'BBB (sf)' and removed from CreditWatch negative
its rating on the class D-Dfrd notes and to 'B- (sf)' from 'B+
(sf)'and removed from CreditWatch negative its rating on the class
E-Dfrd notes. At the same time, S&P affirmed its 'AAA (sf)' ratings
on the class A notes and A loan and its 'CCC (sf)' rating on the
class F-Dfrd notes.
S&P said, "On May 5, 2026, we placed our ratings on Jupiter
Mortgage No.1 PLC's class B-Dfrd, C-Dfrd, D-Dfrd, and E-Dfrd notes
on CreditWatch negative following the updates to our U.K. sector
and industry variables under our global RMBS criteria.
"The rating actions follow our May 5, 2026, placement of our
ratings on the class B-Dfrd to E-Dfrd notes on CreditWatch negative
due to the implementation of updates to our U.K. sector and
industry variables under our global RMBS criteria. They also
reflect our full analysis of the most recent transaction
information and the transaction's current structural features.
"The performance of the loans in the collateral pool has
deteriorated since our previous review. Based on our calculation
methodology, total arrears increased to 24.6% in March 2026 from
24.0% at our previous review. Total 90+ day arrears increased to
19.3% from 18.2% at our previous review. Cumulative losses have
been steadily increasing and currently stand at 1.4%, up from 0.5%
at our previous review.
"After applying our updated sector and industry variables, the
overall effect on our credit analysis resulted in an increase in
the weighted-average foreclosure frequency (WAFF) at all rating
levels. This is due to a curtailment of seasoning credit for
interest-only loans, partially offset by lower anchor default
probabilities, lower loan-to-value ratio adjustments, and the
recalibration and reduction of the originator adjustment.
"Our weighted-average loss severities (WALS) have decreased at the
'AAA' to 'AA' rating levels and increased at the 'A' to 'B' rating
levels, driven by updated repossession costs, increased loan-level
loss severity floors, and limited credit to house price indexation,
considering the property valuation dates and loss severity. Our
lower overvaluation assessment for London and the South East
offsets this negative effect at the 'AAA' to 'AA' rating levels and
partially offsets this negative effect at the 'A' to 'B' rating
levels.
"The overall effect of the above is a decrease in credit coverage
at the 'AAA' and 'AA' rating levels and an increase in credit
coverage at the 'A' to 'B' rating levels."
Credit analysis results
Rating level WAFF (%) WALS (%) Credit Coverage (%)
AAA 49.19 27.40 13.48
AA 41.52 22.67 9.41
A 37.43 15.91 5.95
BBB 33.45 12.44 4.16
BB 29.21 9.77 2.85
B 28.20 7.28 2.05
WAFF--Weighted-average foreclosure frequency.
WALS--Weighted-average loss severity.
The reserve fund is at its required level. However, due to the
limited excess spread, the unrated class Z and VRR note's principal
deficiency ledgers' (PDL) debits are outstanding at GBP16,145,472
and GBP849,762, respectively.
S&P said, "We affirmed our ratings on the class A to C-Dfrd notes
because our credit and cash flow results indicate their available
credit enhancement remains commensurate with their assigned
ratings. We therefore affirmed our ratings on these classes of
notes and removed from CreditWatch negative our ratings on the
class B-Dfrd and C-Dfrd notes.
"The downgrades of the class D-Dfrd and E-Dfrd notes reflect the
effects of our updated sector and industry variables as discussed
above, which have resulted in an increase in credit coverage at the
lower rating levels, deterioration in these notes' cash flow
results due to the increased arrears and loans past maturity, in
addition to rising cumulative losses and PDLs. We lowered to 'BBB-
(sf)' from 'BBB (sf)' and removed from CreditWatch negative our
rating on the class D-Dfrd notes because our credit and cash flow
results indicate their available credit enhancement is no longer
commensurate with their assigned rating.
"The class E-Dfrd notes face shortfalls under our standard cash
flow analysis at the 'B' rating level. Therefore, we applied our
'CCC' criteria to assess if either a rating of 'B-' or a rating in
the 'CCC' category would be appropriate. Our 'CCC' rating criteria
specify the need to assess whether there is any reliance on
favorable business, financial, and economic conditions to meet the
payment of interest and principal. In our view, based on cash flow
results in a steady state scenario (applying actual unstressed
fees, actual prepayments, no spread compression, and no basis
risk), payment of ultimate interest and principal on the class
E-Dfrd notes is not dependent upon favorable business, financial,
and economic conditions. We therefore lowered to 'B- (sf)' from 'B+
(sf)' and removed from CreditWatch negative our rating on the class
E-Dfrd notes.
"The class F-Dfrd notes continue to face shortfalls under our
standard cash flow analysis at the 'B' rating level. Therefore, we
applied our 'CCC' criteria to assess if either a rating of 'B-' or
a rating in the 'CCC' category would be appropriate. Our 'CCC'
rating criteria specify the need to assess whether there is any
reliance on favorable business, financial, and economic conditions
to meet the payment of interest and principal. In our view, based
on cash flow results in a steady state scenario (applying steady
state fees, actual prepayments, no spread compression, and no basis
risk), and given the available credit enhancement, payment of
ultimate interest and principal on the class F-Dfrd notes is
dependent upon favorable business, financial, and economic
conditions. We therefore affirmed our 'CCC (sf)' rating on the
class F-Dfrd notes.
"Counterparty risk does not constrain the ratings as we consider
the transaction to be in line with our counterparty criteria."
Jupiter Mortgage No.1 PLC is an RMBS transaction backed by a
portfolio of nonconforming loans secured over predominantly
residential properties across England, Wales, Scotland, and
Northern Ireland originated by NRAM Ltd. and Bradford and Bingley
PLC.
MORTIMER 2024-MIX: Moody's Affirms B1 Rating on Class X Notes
-------------------------------------------------------------
Moody's Ratings has upgraded the ratings of one Note in Mortimer
2024-MIX PLC, two Notes in Paragon Mortgages (No. 12) PLC and two
Notes in Twin Bridges 2023-2 PLC.
The Mortimer 2024-MIX PLC Notes are backed by residential contracts
originated and serviced by LendInvest BTL Limited and LendInvest
Loans Limited, Paragon Mortgages (No. 12) PLC Notes are backed by
residential contracts originated by Mortgage Trust Limited and
Paragon Mortgages Limited and serviced by Paragon Finance PLC, and
Twin Bridges 2023-2 PLC Notes are backed by residential contracts
originated and serviced by Paratus AMC Limited.
Moody's affirmed the ratings of the Notes that had sufficient
credit enhancement to maintain their current ratings.
Paragon Mortgages (No. 12) PLC
GBP815.2M Class A1 Notes, Affirmed Aaa (sf); previously on Nov 19,
2025 Affirmed Aaa (sf)
GBP145M Class A2a Notes, Affirmed Aaa (sf); previously on Nov 19,
2025 Affirmed Aaa (sf)
EUR245M Class A2b Notes, Affirmed Aaa (sf); previously on Nov 19,
2025 Affirmed Aaa (sf)
US$311M Class A2c Notes, Affirmed Aaa (sf); previously on Nov 19,
2025 Affirmed Aaa (sf)
GBP25M Class B1a Notes, Affirmed Aaa (sf); previously on Nov 19,
2025 Upgraded to Aaa (sf)
EUR126M Class B1b Notes, Affirmed Aaa (sf); previously on Nov 19,
2025 Upgraded to Aaa (sf)
GBP17M Class C1a Notes, Upgraded to Aaa (sf); previously on Nov
19, 2025 Upgraded to Aa1 (sf)
EUR106M Class C1b Notes, Upgraded to Aaa (sf); previously on Nov
19, 2025 Upgraded to Aa1 (sf)
Twin Bridges 2023-2 PLC
GBP404.8M Class A Notes, Affirmed Aaa (sf); previously on Nov 21,
2023 Definitive Rating Assigned Aaa (sf)
GBP28.6M Class B Notes, Upgraded to Aaa (sf); previously on Nov
21, 2023 Definitive Rating Assigned Aa1 (sf)
GBP14.9M Class C Notes, Upgraded to Aa3 (sf); previously on Nov
21, 2023 Definitive Rating Assigned A2 (sf)
GBP9.2M Class D Notes, Affirmed Baa1 (sf); previously on Nov 21,
2023 Definitive Rating Assigned Baa1 (sf)
Mortimer 2024-MIX PLC
GBP247.0M Class A Notes, Affirmed Aaa (sf); previously on Nov 6,
2024 Definitive Rating Assigned Aaa (sf)
GBP18.6M Class B Notes, Affirmed Aa2 (sf); previously on Nov 6,
2024 Definitive Rating Assigned Aa2 (sf)
GBP10.0M Class C Notes, Upgraded to A1 (sf); previously on Nov 6,
2024 Definitive Rating Assigned A2 (sf)
GBP4.3M Class D Notes, Affirmed Baa2 (sf); previously on Nov 6,
2024 Definitive Rating Assigned Baa2 (sf)
GBP5.7M Class E Notes, Affirmed Ba2 (sf); previously on Nov 6,
2024 Definitive Rating Assigned Ba2 (sf)
GBP3.6M Class X Notes, Affirmed B1 (sf); previously on Nov 6, 2024
Definitive Rating Assigned B1 (sf)
RATINGS RATIONALE
The rating action is prompted by an increase in credit enhancement
for all the affected tranches, and, for Mortimer 2024-MIX PLC and
Twin Bridges 2023-2 PLC, by decreased key collateral assumptions
due to better than expected collateral performance.
Increase in Available Credit Enhancement
Sequential amortization led to the increase in the credit
enhancement available in these transactions.
For instance, the credit enhancement for Mortimer 2024-MIX PLC
tranche C affected by the upgrade action increased to 4.36% from
3.50% since closing; the credit enhancement for Paragon Mortgages
(No. 12) PLC tranches C1a and C1b affected by the upgrade action
increased to 14.82% from 12.12% since the last rating action; and
finally, for Twin Bridges 2023-2 PLC tranches B and C affected by
the upgrade action increased to 24.12% and 12.06% from 6.50% and
3.25% since closing respectively.
Revision of Key Collateral Assumptions
As part of the rating action, Moody's reassessed Moody's lifetime
loss expectation for the portfolio reflecting the collateral
performance to date.
The performance of Mortimer 2024-MIX PLC, Paragon Mortgages (No.
12) PLC and Twin Bridges 2023-2 PLC has remained stable since last
review. 90 days plus arrears for Mortimer 2024-MIX PLC currently
stand at 0.68% of current pool balance showing a slightly
increasing trend over the past year. 90 days plus arrears for Twin
Bridges 2023-2 PLC currently stand at 3.02% of current pool balance
showing a stable trend over the past year. 90 days plus arrears for
Paragon Mortgages (No. 12) PLC currently stand at 2.02% of current
pool balance showing a stable trend over the past year. Cumulative
losses currently stand at 0.00% of original pool balance for
Mortimer 2024-MIX PLC, at 0.87% of original pool balance for
Paragon Mortgages (No. 12) PLC and at 0.12% of original pool
balance for Twin Bridges 2023-2 PLC.
Based on the observed performance to date, Moody's decreased the
expected loss assumption as a percentage of original pool balance
to 1.35% from 1.70% for Mortimer 2024-MIX PLC and to 0.95% from
1.30% for Twin Bridges 2023-2 PLC. The revised expected loss
assumptions correspond to 1.65% and 3.00% as a percentage of
current pool balance for Mortimer 2024-MIX PLC and Twin Bridges
2023-2 PLC respectively.
Moody's reassessed loan-by-loan information to estimate the loss
Moody's expects the portfolio to incur in a severe economic stress
scenario.
Moody's maintained the MILAN Stressed Loss assumption at 10.90% for
Mortimer 2024-MIX PLC and at 9.50% for Paragon Mortgages (No. 12)
PLC. Moody's increased MILAN Stressed Loss assumption to 11.30%
from 9.80% for Twin Bridges 2023-2 PLC mainly due to increased
borrower concentration in the collateral portfolio.
Counterparty Exposure
The rating action took into consideration the Notes' exposure to
relevant counterparties, such as servicer, account banks or swap
providers as well as eligible investments for cash proceeds.
Moody's considered how the liquidity available in the transactions
and other mitigants support continuity of Note payments, in case of
servicer default, using the CR assessment as a reference point for
servicers. The rating of the B Notes is constrained by operational
risk in Mortimer 2024-MIX PLC due to lack of liquidity.
The principal methodology used in these ratings was "Residential
Mortgage-Backed Securitizations" published in October 2024.
Factors that would lead to an upgrade or downgrade of the ratings:
Factors or circumstances that could lead to an upgrade of the
ratings include (1) performance of the underlying collateral that
is better than Moody's expected, (2) an increase in available
credit enhancement and (3) improvements in the credit quality of
the transaction counterparties.
Factors or circumstances that could lead to a downgrade of the
ratings include (1) an increase in sovereign risk, (2) performance
of the underlying collateral that is worse than Moody's expected,
(3) deterioration in the notes' available credit enhancement and
(4) deterioration in the credit quality of the transaction
counterparties.
SOUTH EAST WATER: S&P Cuts Issue Rating to 'BB+', Outlook Negative
------------------------------------------------------------------
S&P Global Ratings lowered its issue ratings on the debt issued by
South East Water (Finance) Ltd. (SEW) to 'BB+' from 'BBB-'. At the
same time, S&P revised its stand-alone credit profile on SEW down
to 'bb' from 'bb+'. S&P also assigned a recovery rating of '3' to
SEW's debt, reflecting its expectation of 65% recovery in the event
of a default.
The negative outlook reflects S&P's view of SEW's tight liquidity,
S&P Global Ratings-adjusted funds from operations (FFO) to debt
below its downside threshold of 5% for the next 24 months, and
significant execution risks associated with SEW's implementation of
its turnaround plan.
SEW's weak operational performance, caused by supply interruptions,
has materially worsened its profitability despite strong revenue
growth. SEW's March 2026 annual results showed a severe operational
decline that has had significant reputational and regulatory
repercussions. Despite a 23% increase in revenues on the back of
regulatory price increases, supply interruptions between November
and January 2026 have sharply weakened SEW's profitability.
S&P estimates that SEW's EBITDA margin was only 27% in March 2026
compared to 39% in the previous year. The main reason for the
decline in profitability was GBP54.7 million of incident-related
costs, which include compensation payments, bottled-water
distribution, tankering costs, and operational responses.
The first of these incidents affected approximately 24,000
households and related to a deterioration in raw water quality and
a failure of the pre-treatment process. This meant that the Pembury
water treatment plant could not reliably supply customers with
drinking water and the company had to issue a boil-water notice.
The second incident affected about 77,000 households and involved
burst pipes and widespread leaks caused by a freeze-thaw event.
This incident led to further supply interruptions and operational
constraints at SEW's water-treatment plants.
In the first year of the regulatory period, SEW recorded a rate of
supply interruptions of 277.6 minutes per customer against a
12.4-minute target. This generated an Outcome Delivery Incentive
(ODI) penalty of GBP7.65 million. SEW's net ODI position for the
first year of the regulatory period was an GBP18.2 million penalty,
with the largest contributor being supply interruptions. S&P
expects SEW to accumulate around GBP50 million-GBP55 million in ODI
penalties in the current regulatory period, Asset Management Period
(AMP) 8.
Ofwat's findings suggest that the supply interruption incidents
were not exceptional one-off events but the result of systemic
failures in asset management. The supply interruption incidents
caused Ofwat to launch a new investigation into SEW. Ofwat's
findings show that SEW's failings go beyond poor performance
because of extreme weather. The findings suggest that there were
fundamental failures in asset management, operational planning,
governance, and corporate learning, which S&P finds to be more
serious.
S&P finds particularly concerning the finding that SEW frequently
operated with water storage levels materially below what Ofwat
regarded as prudent, particularly before known periods of high
demand. Additionally, Ofwat identified insufficient preventive
maintenance of groundwater sources and boreholes and concluded that
SEW had become too reactive in its approach.
Ofwat states that SEW has experienced several supply interruptions
incidents since 2018, finding that while SEW identified lessons and
created action plans, it did not consistently deliver improvements.
In S&P's view, this implies recurring failures in execution rather
than isolated operational events.
SEW's 2025/2026 annual results and the findings from Ofwat's
enforcement cases lead S&P to believe that SEW no longer operates
at the higher end of the strong business risk profile category.
SEW's regulatory framework is more credit-supportive than those of
other jurisdictions with a strong/adequate regulatory advantage.
SEW also gained a positive outcome from the Competition and Markets
Authority's (CMA's) re-determination. This has provided SEW with
GBP100 million more in allowances and reduced its ODI-related
risks, with approximately GBP80 million directly improving
operational resilience and increasing funding for demand
management.
However, S&P thinks that SEW's inability to convert its regulatory
asset base into stable cash flow metrics more than offsets that
relative regulatory strength. Recurrent operational issues, sizable
ODI penalties, and regulatory intervention have a significant
negative impact on SEW's profitability. Therefore, the company now
sits in the middle of the strong business risk profile category and
no longer benefits from a positive comparable rating analysis
modifier.
Ofwat accepted undertakings and a redress package instead of
enforcing penalties for breaches in SEW's statutory duties and
license conditions. This will result in a supervised multi-year
operational turnaround program and a GBP30.5 million
shareholder-funded redress package. S&P sees this as a constructive
regulatory response that could improve SEW's incident responses and
resilience management. The undertakings focus on:
-- Maintaining an efficient and resilient water supply system;
-- Improving customer service and incident responses;
-- Incorporating an independent monitor that Ofwat appoints and
SEW funds;
-- Reviewing hydraulic models to support demand forecasting; and
-- Improving water storage and resilience.
The redress package will incorporate:
-- A community fund of GBP1.5 million;
-- Vulnerable site storage of GBP1 million;
-- Business storage schemes of GBP5 million;
-- Household water butts of GBP5 million;
-- Accelerated smart metering of GBP5 million; and
-- Additional resilience spending of GBP13 million.
The undertakings and redress package could reduce the probability
of recurrent customer-service failures by improving SEW's planning,
monitoring, and operational readiness. However, Ofwat's
investigation identified more structural issues, such as storage
deficits, asset condition, and limited connectivity in some of the
regions within SEW's catchment area. Rectifying these issues will
require large capital investments to renew assets and reconfigure
the network. S&P believes that improvements in these areas mostly
depend on investments in the current regulatory period, CMA's
additional funding, and SEW's remediation plan.
SEW's liquidity position is tight; although the company has secured
a GBP200 million backstop facility, it cannot be drawn until the
first quarter of 2027, leaving limited flexibility until the
company successfully accesses capital markets. S&P understands SEW
is seeking to raise additional debt in the coming months to finance
its capital program. Without the backstop, SEW's liquidity sources
only cover uses by 1.1x from the 12 months starting end-March
2026.
S&P said, "SEW has no headroom under our FFO-to-net-debt 5%
downside threshold. We estimate SEW's FFO to debt at 1.6% in the
first year of the current regulatory period and note that this
reflects revenue in Ofwat's final determination. We project an
average ratio of 5.3% for the remainder of this period, which runs
until March 31, 2030. A GBP200 million equity injection in May 2025
reduced SEW's regulatory gearing to 66.5% as of March 31, 2026,
which sits at the lower end for the water sector. However, the main
rating constraint is SEW's operational execution, which has
continuously hindered its cash flow generation. This puts pressure
on both our assessment of SEW's business risk profile and on its
credit metrics.
"The negative outlook reflects our view that SEW's adjusted FFO to
debt will remain below our 5% downside threshold for the next 24
months. The room for underperformance will be limited, with FFO to
debt averaging 5.3% for the remainder of the current regulatory
period, AMP8. The turnaround plan and its review by an independent
monitor could improve SEW's operational performance following the
undertaking agreement with Ofwat. However, we believe that there
are significant execution risks due to SEW's historical
underperformance versus our projections.
"We could lower the rating on SEW's debt if we believe that the
company is unable to secure new financing at a reasonable cost.
This could happen if SEW cannot access capital markets, or if the
terms of the secured financing agreement undermine its financial
metrics. In line with the rest of the sector, SEW needs significant
funding to deliver investments in the current regulatory period.
"We could also lower the rating if we do not project that SEW's FFO
to debt will recover to above 5% by the financial year ending March
31, 2028. Additionally, we could downgrade SEW's debt if we
continue to see persistent operational underperformance.
"We could revise the outlook to stable if we had greater confidence
in SEW's FFO to debt recovering above the 5% threshold in the
absence of further liquidity and operational issues. We would also
need to see reasonable progress in SEW's implementation of its
turnaround plan."
===============
X X X X X X X X
===============
TURKMENISTAN: Fitch Affirms 'BB-' Long-Term IDR, Outlook Stable
---------------------------------------------------------------
Fitch Ratings has affirmed Turkmenistan's Long-Term Issuer Default
Ratings (IDRs)at 'BB-' with a Stable Outlook.
Turkmenistan's rating reflects its extremely strong sovereign
balance sheet, with the highest sovereign net foreign assets/GDP
and lowest general government debt among 'BB' and 'B' category
peers, underpinned by the world's fourth-largest gas reserves.
These strengths are balanced against weak governance,
unconventional and opaque economic policy, particularly the
exchange-rate framework; a challenging business environment; high
commodity dependence; and export market concentration. Significant
gaps remain in official data reporting, despite some improvements.
Key Rating Drivers
Strong External Balance Sheet: Fitch expects Turkmenistan's
external position to remain among the strongest across the 'BB' and
'B' peer groups. Fitch forecasts the sovereign net foreign assets
to reach 59.3% of GDP in 2027, well above the peer median (-1.6%),
and the current account surplus to narrow to an average of 1.2% of
GDP in 2026-2027, as lagged windfall export revenue from higher
energy prices in 2026 is offset by export capacity constraints and
higher imports, rising transport costs and continued public
investment.
Significant External Reserves: Fitch projects FX reserves to cover
an average of 46 months of current external payments in 2026-2027,
the highest among Fitch-rated sovereigns. Its FX reserves'
estimates were generally aligned with the sovereign's deposits in
BIS-reporting banks, though they have diverged since late-2024.
Fitch sees external liquidity metrics remaining robust - external
debt service at 3.9% of current external receipts in 2027 (BB
median: 14.1%). External finances should weaken in the medium term
due to lower energy prices, yet with solid buffers.
Stable Gas Production: Fitch expects gas production (roughly
two-thirds of total goods exports in 2025) to remain largely stable
in 2026-2027, partly due to constrained pipeline infrastructure
capacity. China will remain the largest gas export market due to
stable demand under long-term contracts. Construction of the fourth
phase of the Galkynysh gas field kick-started in April 2026, with
USD5.1 billion fully financed domestically. The project should add
10 billion cubic meters (bcm) to annual gas production capacity,
though Fitch does not expect it on stream by 2031.
Limited Diversification: Fitch expects limited near-term
diversification of gas exports away from China. Elevated
geopolitical uncertainty continues to cloud export-diversification
prospects. Timelines for several long-term major pipeline expansion
projects remain uncertain, including a planned fourth pipeline to
China that would add 25bcm annual capacity. Fitch expects continued
expansion of downstream petrochemical to provide a modest boost to
economic diversification.
Very Low Public Debt: Fitch forecasts general government debt to
edge down further to 2.7% of GDP by end-2027 with no domestic debt,
reflecting its expectation of modest fiscal deficits and limited
new borrowing. The public debt ratio will remain significantly
below its projected 'BB' median of 52.1%. Fitch anticipates ongoing
prioritising of socio-economic stability and development aligned
with its long-term national objectives, using a combination of
government resources and project-based financing to support
infrastructure and industrial investment.
Large, Opaque Fiscal Buffer: The outstanding balance of the
Turkmenistan Stabilisation Fund stood at TMT27.6 billion (10.2% of
GDP) at end-2025, of which TMT16.3 billion (6.0% of GDP) were
fiscal reserves under Fitch's definition deposited at the central
bank. The fund is entirely denominated in local currency, with
inflows derived from profits of state-owned entities within the
government's tier-2 public finances, and not captured in the state
budget. Tier-2 public finances remain more than double that of the
state budget and lack transparency.
Weakness in Exchange-Rate Regime: FX policy remains opaque, and a
substantial gap persists between the official exchange rate, fixed
at TMT3.5/USD since 2015, and the parallel market rate which has
remained stable at around TMT19/USD, despite improved external
liquidity. Its baseline assumes the official rate will remain
unchanged through 2028, and for the authorities not to draw on
reserves to narrow the gap. The persistent exchange-rate distortion
constrains foreign investment, with the requirement for SOEs to
surrender FX earnings.
Modest GDP Growth: Fitch forecasts GDP growth to hover around 2.5%
in 2026-2027 supported by continued public investment and stable
hydrocarbon exports. Its historical series is based on IMF
estimates, which are considerably lower than the official growth
figure of roughly 6.3%. Fitch expects the existing macroeconomic
policy framework will remain intact, with the state playing a
dominant role in the economy.
Growth Constraints and Inflation: The private-sector growth outlook
remains constrained by structural bottlenecks, a predominance of
credit resource to SOEs, and a challenging business environment.
Fitch expects inflation to rise, averaging 5.3% in 2026, due to
higher import prices and easing credit conditions, before
moderating in 2027. The economy faces medium- to long-term risks
from climate change, reflecting its heavy dependence on hydrocarbon
exports and exposure to transition risks.
ESG - Governance: Turkmenistan has a low World Bank Governance
Indicators (WBGI) ranking at the 15th percentile, reflecting the
centralisation of power, and a low World Bank assessment of voice
and accountability, regulatory quality, rule of law and control of
corruption.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Public/External Finances: A marked deterioration in the public
and external balance sheets, driven, for example, by lower energy
prices, disruption to key export contracts, a large and sustained
increase in government spending, or the crystallisation of
contingent liabilities.
- Macro: Greater risk that weak economic policy credibility leads
to macro-instability and erosion of sovereign balance-sheet
strength.
- Structural: Destabilising political or geopolitical developments
that have an adverse impact on the economy and sovereign balance
sheet.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Structural: An improvement in governance standards, economic data
availability and reliability and/or the business environment,
likely to be underpinned by policies to open up the economy.
- Macro: Improved credibility and consistency of economic policy
that reduces macroeconomic distortions and enhances the economy's
capacity to absorb shocks.
- Public/External Finances: Additional sharp improvement in the
external and public-sector balance sheet, for example reflecting
persistently high prices of key hydrocarbon exports or greater
export capacity and/or greater transparency of fiscal policy and
the public-sector balance sheet.
Sovereign Rating Model (SRM) and Qualitative Overlay (QO)
Fitch's proprietary SRM assigns Turkmenistan a score equivalent to
a rating of 'BB+' on the Long-Term Foreign-Currency (LT FC) IDR
scale.
Fitch's sovereign rating committee adjusted the output from the SRM
to arrive at the final LT FC IDR by applying its QO, relative to
SRM data and output, as follows:
- Macro: -1 notch to reflect a) an opaque and inconsistent economic
policy framework, which includes a large differential between the
official and parallel market exchange rate, and use of FX
rationing, despite a strong external position; and b) that the use
of the official exchange rate highly flatters some key GDP
metrics.
- Public Finances: -1 notch to reflect the distortion of key public
debt ratios by the official exchange rate, the large and highly
interconnected public sector, expenditure and revenue rigidities
(the latter from heavy reliance on gas exports to a single
customer), and uncertainty over the size and remit of off-budget
funds.
Fitch's SRM is the agency's proprietary multiple regression rating
model that employs 18 variables based on three-year centred
averages, including one year of forecasts, to produce a score
equivalent to a LT FC IDR. Fitch's QO is a forward-looking
qualitative framework designed to allow for adjustment to the SRM
output to assign the final rating, reflecting factors within its
criteria that are not fully quantifiable and/or not fully reflected
in the SRM.
Debt Instruments: Key Rating Drivers
Fitch does not currently rate any debt instruments for this
sovereign.
Country Ceiling
The Country Ceiling for Turkmenistan is 'BB-', in line with the
Long-Term Foreign-Currency IDR. This reflects the absence of
constraints and incentives, relative to the IDR, against capital or
exchange controls being imposed that would prevent or significantly
impede the private sector from converting local currency into
foreign currency and transferring the proceeds to non-resident
creditors to service debt payments.
Fitch's Country Ceiling Model produced a starting point uplift of
zero notches above the IDR. Fitch's rating committee did not apply
a qualitative adjustment to the model result.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
Data on the financial account of the balance of payments (BoP) is
incomplete, in particular as the government does not publish
figures on official international reserves, and net errors and
omissions. Available BoP data is consistent with trends in external
debt, central bank net foreign assets, and its estimate of FX
reserves, outweighing the uncertainty created by incomplete BoP
data and giving Fitch sufficient confidence in the BoP information.
Its assessment of the BoP data provides us with sufficient
confidence in its analysis of the credit profile to maintain the
rating.
Climate Vulnerability Signals
Turkmenistan has an elevated Climate Vulnerability Signal
(Climate.VS) of 50 in 2035, mainly to reflect its exposure to
transition risks associated with fossil fuel dependence and green
energy costs, alongside physical climate vulnerabilities. Fitch has
not adjusted the rating beyond that to reflect these factors -
given the long time scale and high levels of uncertainty involved
in the potential impact of the risks, and action the entity might
take to adapt to or mitigate the exposure.
ESG Considerations
Turkmenistan has an ESG Relevance Score of '5[+]' for Political
Stability and Rights as World Bank Governance Indicators have the
highest weight in Fitch's SRM and are therefore highly relevant to
the rating and a key rating driver with a high weight. As
Turkmenistan has a percentile rank above 50 for the respective
Governance Indicator, this has a positive impact on the credit
profile.
Turkmenistan has an ESG Relevance Score of '5' for Rule of Law,
Institutional & Regulatory Quality and Control of Corruption as
World Bank Governance Indicators have the highest weight in Fitch's
SRM and are therefore highly relevant to the rating and are a key
rating driver with a high weight. As Turkmenistan has a percentile
rank below 50 for the respective Governance Indicators, this has a
negative impact on the credit profile.
Turkmenistan has an ESG Relevance Score of '4' for Human Rights and
Political Freedoms as the Voice and Accountability pillar of the
World Bank Governance Indicators is relevant to the rating and a
rating driver. As Turkmenistan has a percentile rank below 50 for
the respective Governance Indicator, this has a negative impact on
the credit profile.
Turkmenistan has an ESG Relevance Score of '4[+]' for Creditor
Rights as willingness to service and repay debt is relevant to the
rating and is a rating driver for Turkmenistan, as for all
sovereigns. As Turkmenistan has track record of 20+ years without a
restructuring of public debt as captured in its SRM variable, this
has a positive impact on the credit profile.
Except for the matters discussed above, the highest level of ESG
credit relevance, if present, is a score of '3'. A score of '3'
means ESG issues are credit-neutral or have only a minimal credit
impact on the entity, either due to their nature or the way in
which they are being managed by the entity. Fitch's ESG Relevance
Scores are not inputs in the rating process; they are an
observation on the relevance and materiality of ESG factors in the
rating decision.
Entity/Debt Rating Prior
----------- ------ -----
Turkmenistan LT IDR BB- Affirmed BB-
ST IDR B Affirmed B
LC LT IDR BB- Affirmed BB-
LC ST IDR B Affirmed B
Country Ceiling BB- Affirmed BB-
*********
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-
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Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante,
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Editors.
Copyright 2026. All rights reserved. ISSN 1529-2754.
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