Reuters logo
Fitch Affirms Telereal Transactions
May 18, 2017 / 4:28 PM / 7 months ago

Fitch Affirms Telereal Transactions

(The following statement was released by the rating agency) LONDON, May 18 (Fitch) Fitch Ratings has affirmed Telereal Secured Finance Plc's and Telereal Securitisation plc's (together, Telereal) fixed-rate notes due December 2033 as follows: Telereal Secured Finance Plc: GBP418.4m secured bond (XS0987936076) affirmed at 'BBB+sf'; Outlook Stable Telereal Securitisation plc: GBP203.6m class A-3 notes (XS0139445471) affirmed at 'AAsf'; Outlook Stable GBP347.8m class A-4 notes (XS0139446362) affirmed at 'AAsf'; Outlook Stable GBP250.8m class A-5 notes (XS0186854930) affirmed at 'AAsf'; Outlook Stable GBP89.0m class A-6 notes (XS0186855077) affirmed at 'AAsf'; Outlook Stable GBP56.1m class A-7 notes (XS0274201762) affirmed at 'AAsf'; Outlook Stable GBP137.8m class A-8 notes (XS0274204865) affirmed at 'AAsf'; Outlook Stable GBP215.0m class B-2 notes (XS0139654635) affirmed at 'BBB+sf''; Outlook Stable GBP35.0m class B-3 notes (XS0140277772) affirmed at 'BBB+sf'; Outlook Stable GBP290.5m class B-4 notes (XS0186855150) affirmed at 'BBB+sf'; Outlook Stable GBP112.4m class B-5 notes (XS0186855234) affirmed at 'BBB+sf'; Outlook Stable GBP195.0m class B-6 notes (XS0274208007) affirmed at 'BBB+sf'; Outlook Stable GBP193.4m class B-7 notes (XS0275282878) affirmed at 'BBB+sf'; Outlook Stable GBP128.3m class C-1 notes (XS0275279064) affirmed at 'BBB+sf'; Outlook Stable GBP58.0m class C-2 notes (XS0275282282) affirmed at 'BBB+sf'; Outlook Stable The Telereal transactions are securitisations of two fully amortising loans secured by rental cash flows derived from a portfolio of operational properties occupied by British Telecommunications plc (BT; BBB+/Stable) and located throughout the UK. BT has the option to vacate properties with an aggregate annual rent of GBP8.1 million without making compensation payments. According to the March 2017 investor report, GBP1.2 million has been granted but not yet vacated by BT. Fitch adjusted the projected rental income accordingly. KEY RATING DRIVERS The affirmations of Telereal Secured Finance Plc's secured bond and Telereal Securitisation Plc's class B and C notes reflect BT Group plc's rating (reviewed on 24 April 2017, "Review - No Action", thus maintaining the rating at BBB+/Outlook Stable). All notes are scheduled to fully amortise by the maturity date in 2033, with debt service covered by rental income paid by BT. The affirmation of Telereal Securitisation Plc's class A notes reflects Fitch's view that vacant possession value (VPV) of the underlying properties in a 'AAsf' rating stress is adequate to cover the class of notes. In its 'AAsf' scenario, Fitch assumes BT defaults. Much of the portfolio occupies urban space with high land value (73% by value is in London and southeast England). Nevertheless, Fitch assumes the Telereal Securitisation Plc portfolio remains in its current use, athough this is likely to offer overall lower value given the public interest in preserving the UK's fixed line telecoms infrastructure. Fitch expects that an alternative tenant would have rent set under arbitration in line with industrial properties. Current passing rent across the portfolio is generally lower than local prime industrial rents (according to Cushman and Wakefield data). This headroom provides additional cushion in case of tenant default. Fitch views day one tenant default as the most stressful scenario. The class A notes stand a very high chance of being repaid in full with portfolio quality broadly average, given class A loan to value of 27% (based on the 2016 VPV). Fitch has tested that this holds under 'AAsf' assumptions. For the South East and Rest of UK portfolios, respectively, the 'AAsf' assumptions applied are: capitalisation rates of 9.36% and 9.16%, rental value declines of 18.1% and 14.3%, structural vacancy of 15.65% and 43.2%, and depreciation of 3% (for both). RATING SENSITIVITIES Any rating action on BT would lead to a corresponding change in the ratings of the class B and C notes. The rating of the class A notes is sensitive to drivers of long-term occupational demand for the specialised properties comprising the pool, which depends on, among other things, technological developments, the telecommunications regulatory environment in the UK, industrial rents and alternative uses of the properties. DUE DILIGENCE USAGE Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. SOURCES OF INFORMATION: The sources of information used to assess these ratings were the issuer, servicer, and periodic investor reports (dated March 2017). Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. There were no findings that were material to this analysis. Fitch has not reviewed the results of any third-party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring. Fitch did not undertake a review of the information provided about the underlying asset pool ahead of the transaction's initial closing. The subsequent performance of the transaction over the years is consistent with the agency's expectations given the operating environment and Fitch is therefore satisfied that the asset pool information relied upon for its initial rating analysis was adequately reliable. Overall and together with the 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. Contacts: Lead Surveillance Analyst Mario Schmidt Associate Director +44 20 3530 1042 Fitch Ratings Limited 30 North Colonnade London E14 5GN Committee Chairperson Euan Gatfield Managing Director +44 20 3530 1157 Media Relations: Athos Larkou, London, Tel: +44 203 530 1549, Email: Additional information is available on Applicable Criteria Global Structured Finance Rating Criteria (pub. 03 May 2017) here Rating Criteria for Commercial Mortgage-Backed Securities (CMBS) and Loans in EMEA (pub. 23 Dec 2016) here Structured Finance and Covered Bonds Counterparty Rating Criteria (pub. 20 Mar 2017) here Structured Finance and Covered Bonds Counterparty Rating Criteria: Derivative Addendum (pub. 20 Mar 2017) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here Solicitation Status here#solicitation Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE here. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2017 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided “as is” without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below