January 15, 2013 / 2:57 PM / 5 years ago

TEXT - Fitch affirms FIP Funding S.r.l.

(The following statement was released by the rating agency)
    Jan 15 -  Fitch Ratings has affirmed FIP Funding S.r.l.'s (FIP) notes due
January 2023, as follows:

EUR141.6m Class A1 (IT0003872717) affirmed at 'A-sf'; Outlook Negative 
EUR1,292.5m Class A2 (IT0003872774) affirmed at 'A-sf'; Outlook Negative

The affirmation reflects Fitch's affirmation of the Republic of Italy 
('A-'/Negative) - guarantor of the sole tenant in the collateral securing the 
notes - in December 2012. 

As of July 2012, the notes were backed by a portfolio of 256 sites located 
throughout Italy, the majority of which are offices. The portfolio also includes
police training centres and other specialist-use assets. The remaining 
collateral value is EUR3,069m according to the annual appraisal procured for the
borrower. This compares with an original portfolio value of EUR3,691m as of 
December 2004. 138 assets have been disposed of since the transaction closed in 
July 2005. 

Cumulative asset disposals as of July 2012 accounted for 20.5% of the original 
portfolio transfer value, below the covenanted minimum disposal target (25.4%). 
This breach of covenant has resulted in a pro-rata allocation of principal funds
between the class A1 and A2 notes. 

As of July 2012, the reported loan-to-value ratio (LTV) was 47.5%, from 59.9% at
closing. Assuming no asset sales, the loan exit LTV reported at closing was 
41.5%; with asset disposals, the release price mechanism helps ensure further 
de-leveraging. 

The tenant, Agenzia del Demanio (a public entity fully guaranteed by the 
Republic of Italy), benefits from a lease break option on the entire portfolio 
in December 2013. Since no notice was given at YE12, Fitch understands that an 
automatic renewal of the master lease for another nine years will commence in 
January 2014. The agency believes that the increased visibility over the lease 
profile for the next 10 year should facilitate asset disposals in the medium 
term. 

Surveillance data on the transaction is available on www.fitchratings.com 

 (Caryn Trokie, New York Ratings Unit)

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