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TEXT-S&P affirms rtgs on BELLATRIX (ECLIPSE 2005-2) class D, E nts
Fri, 3rd Aug 2012 12:50
(The following statement was released by the rating agency)
Aug 03 -
OVERVIEW
-- Following our review of the three loans remaining in the transaction, we have affirmed our ratings on BELLATRIX (ECLIPSE 2005-2)'s class D and E notes at 'A (sf)' and 'D (sf)', respectively
-- Although we believe that the class E notes may experience additional losses, we are of the opinion that the class D notes remain adequately protected, given the available amount of credit enhancement.
-- BELLATRIX (ECLIPSE 2005-2) was originally backed by 13 loans secured against U.K. commercial properties. At present, three of these loans remain outstanding. The transaction's legal final maturity date is in January 2017.
-- These ratings are based on our criteria for rating European CMBS. However, these criteria are under review. As a result of this review, our future European CMBS criteria may differ from the current criteria. The criteria change may affect the ratings on all outstanding notes in this transaction.
Standard & Poor's Ratings Services today affirmed its credit ratings on BELLATRIX (ECLIPSE 2005-2) PLC's class D and E notes (see list below).
Today's rating actions follow our review of the credit quality of the three remaining underlying loans in the pool.
BELLATRIX (ECLIPSE 2005-2) is a U.K. commercial mortgage-backed securities (CMBS) transaction that was arranged by Barclays Bank PLC (A+/Negative/A-1) in August 2005. The transaction was originally backed by 13 loans secured on 39 predominantly office properties located across the U.K., with a high concentration in Greater London. Only three loans remain outstanding in the transaction, Oxford St, Cavendish Square, and Rivermead Court. As of the April 2012 interest payment date, the aggregate outstanding securitized balance has reduced to GBP16,586,100. The transaction's legal final maturity date is in January 2017.
THE OXFORD STREET LOAN (43% OF THE SECURITIZED LOAN POOL)
The loan has an outstanding balance of GBP7.2 million and matures in April 2013.
The loan is backed by a mixed-use property (consisting of a multi-storey car park with a restaurant on the ground floor) located in Central Manchester. The asset is fully occupied by two unrated tenants on long leases that expire in 2025.
In April 2012, the servicer reported a projected interest coverage ratio (ICR) of 2.40x and a loan-to-value (LTV) ratio of 56%, based on a valuation dated November 2011.
Taking into account our review of the loan, we do not currently anticipate principal losses on this loan.
THE CAVENDISH SQUARE LOAN (35% OF THE SECURITIZED LOAN POOL)
The loan has an outstanding balance of GBP5.8 million and matures in April 2013.
The loan is backed by an asset of good quality located in the West End in Central London. The property is fully let to a single tenant until 2020.
In April 2012, the servicer reported a projected interest coverage ratio (ICR) of 1.38x and a loan-to-value (LTV) ratio of 75%, based on a valuation dated March 2005.
Taking into account our review of the loan, we do not currently anticipate principal losses on this loan.
THE RIVERMEAD COURT LOAN (22% OF THE SECURITIZED LOAN POOL)
The loan has an outstanding balance of GBP4.1 million and matures in April 2014.
The loan is backed by two adjoining office buildings located at the Kenn Business Park entrance in Clevedon, North Somerset. The property is 83% occupied by a single tenant until 2020, with a break option in 2017.
In April 2012, the servicer reported a projected interest coverage ratio (ICR) of 1.54x and a loan-to-value (LTV) ratio of 65%, based on a valuation dated May 2005.
Taking into account our review of the loan, we consider that the risk of principal losses in 2014 has increased in light of the difficult commercial real-estate market and lending conditions, which could further depress property values.
COUNTERPARTY RISK
Our review confirms that, based on our 2012 counterparty criteria, the counterparties can support the ratings up to the current levels (see 'Counterparty Risk Framework Methodology And Assumptions,' published on May 31, 2012).
Taking into consideration our review of the three remaining loans in the transaction, we consider that the amount of credit enhancement available to the class D notes remains adequate to absorb the amount of losses that the underlying assets would suffer under a 'A' stress scenario. As a consequence, we have today affirmed our 'A (sf)' rating on the class D notes.
Given that the class E notes experienced losses in November 2010, we have affirmed our 'D (sf)' rating on this class of notes.
POTENTIAL EFFECTS OF PROPOSED CRITERIA CHANGES
We have taken today's rating actions based on our criteria for rating European CMBS. However, these criteria are under review (see 'Advance Notice Of Proposed Criteria Change: Methodology And Assumptions For Rating European Commercial Mortgage-Backed Securities,' published on Nov. 8, 2011).
As highlighted in the Nov. 8 Advance Notice Of Proposed Criteria Change, our review may result in changes to the methodology and assumptions we use when rating European CMBS, and consequently, it may affect both new and outstanding ratings on European CMBS transactions.
On June 4, we published a request for comment outlining our proposed criteria changes for CMBS Global Property Evaluation Methodology. The proposed criteria do not significantly change Standard & Poor's longstanding approach to deriving property net cash flow and value. We therefore anticipate limited impact for European outstanding ratings when the updated CMBS Global Property Evaluation Methodology criteria are finalized.
However, because of its global scope, the proposed CMBS Global Property Evaluation Methodology does not include certain market-specific adjustments. An application of these criteria to European transactions will therefore be published when we release our updated rating criteria.
Until such time that we adopt new criteria for rating European CMBS, we will continue to rate and monitor these transactions using our existing criteria (see 'Related Criteria And Research').
RELATED CRITERIA AND RESEARCH
-- Criteria Methodology Applied To Fees, Expenses, And Indemnifications, July 12, 2012
-- Standard & Poor's Ratings Definitions, June 22, 2012
-- Request For Comment: CMBS Global Property Evaluation Methodology, June 4, 2012
-- Counterparty Risk Framework Methodology And Assumptions, May 31, 2012
-- European Structured Finance Scenario And Sensitivity Analysis: The Effects Of The Top Five Macroeconomic Factors, March 14, 2012
-- Request For Comment: Methodology For Rating Debt Issues Based On Imputed Promises, Feb. 10, 2012
-- Global Structured Finance Scenario And Sensitivity Analysis: The Effects Of The Top Five Macroeconomic Factors, Nov. 4, 2011
-- Advance Notice Of Proposed Criteria Change: Methodology And Assumptions For Rating European Commercial Mortgage-Backed Securities, Nov. 8, 2011
-- Nonsovereign Ratings That Exceed EMU Sovereign Ratings: Methodology And Assumptions, June 14, 2011
-- Principles Of Credit Ratings, Feb. 16, 2011
-- Timeliness Of Payments: Grace Periods, Guarantees, And Use of 'D' and 'SD' Ratings, Dec. 23, 2010
-- Methodology: Credit Stability Criteria, May 3, 2010
-- Global Methodology For Rating Interest-Only Securities, April 15, 2010
-- Use Of CreditWatch And Outlooks, Sept. 14, 2009
-- Understanding Standard & Poor's Rating Definitions, June 3, 2009
-- Standard & Poor's Revises Criteria Methodology For Servicer Risk Assessment, May 28, 2009
-- European Legal Criteria For Structured Finance Transactions, Aug. 28, 2008
-- Framework For Credit Analysis In European CMBS Transactions, May 21, 2007
-- Weighing Country Risk In Our Criteria For Asset-Backed Securities, April 11, 2006
-- Rating U.S. CMBS In The Face Of Interest Shortfalls, Feb. 23, 2006
-- Technical Challenges In European CMBS Structures, Feb. 16, 2006
-- European CMBS Loan Level Guidelines, Sept. 1, 2004
-- European CMBS Monthly Bulletin, published monthly
RATINGS LIST
Class Rating
BELLATRIX (ECLIPSE 2005-2) PLC
GBP393.69 Million Commercial Mortgage-Backed Floating Rate Notes
Ratings Affirmed
D A (sf)
E D (sf)
(Bangalore Ratings Team, Hotline: +91 80 4135 5898, Bhanu.priya@thomsonreuters.com, Group id: BangaloreRatings@thomsonreuters.com, Reuters Messaging: Bhanu.Priya.reuters.com@reuters.net)
COPYRIGHT
Copyright Thomson Reuters 2012. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Aug 03 -
OVERVIEW
-- Following our review of the three loans remaining in the transaction, we have affirmed our ratings on BELLATRIX (ECLIPSE 2005-2)'s class D and E notes at 'A (sf)' and 'D (sf)', respectively
-- Although we believe that the class E notes may experience additional losses, we are of the opinion that the class D notes remain adequately protected, given the available amount of credit enhancement.
-- BELLATRIX (ECLIPSE 2005-2) was originally backed by 13 loans secured against U.K. commercial properties. At present, three of these loans remain outstanding. The transaction's legal final maturity date is in January 2017.
-- These ratings are based on our criteria for rating European CMBS. However, these criteria are under review. As a result of this review, our future European CMBS criteria may differ from the current criteria. The criteria change may affect the ratings on all outstanding notes in this transaction.
Standard & Poor's Ratings Services today affirmed its credit ratings on BELLATRIX (ECLIPSE 2005-2) PLC's class D and E notes (see list below).
Today's rating actions follow our review of the credit quality of the three remaining underlying loans in the pool.
BELLATRIX (ECLIPSE 2005-2) is a U.K. commercial mortgage-backed securities (CMBS) transaction that was arranged by Barclays Bank PLC (A+/Negative/A-1) in August 2005. The transaction was originally backed by 13 loans secured on 39 predominantly office properties located across the U.K., with a high concentration in Greater London. Only three loans remain outstanding in the transaction, Oxford St, Cavendish Square, and Rivermead Court. As of the April 2012 interest payment date, the aggregate outstanding securitized balance has reduced to GBP16,586,100. The transaction's legal final maturity date is in January 2017.
THE OXFORD STREET LOAN (43% OF THE SECURITIZED LOAN POOL)
The loan has an outstanding balance of GBP7.2 million and matures in April 2013.
The loan is backed by a mixed-use property (consisting of a multi-storey car park with a restaurant on the ground floor) located in Central Manchester. The asset is fully occupied by two unrated tenants on long leases that expire in 2025.
In April 2012, the servicer reported a projected interest coverage ratio (ICR) of 2.40x and a loan-to-value (LTV) ratio of 56%, based on a valuation dated November 2011.
Taking into account our review of the loan, we do not currently anticipate principal losses on this loan.
THE CAVENDISH SQUARE LOAN (35% OF THE SECURITIZED LOAN POOL)
The loan has an outstanding balance of GBP5.8 million and matures in April 2013.
The loan is backed by an asset of good quality located in the West End in Central London. The property is fully let to a single tenant until 2020.
In April 2012, the servicer reported a projected interest coverage ratio (ICR) of 1.38x and a loan-to-value (LTV) ratio of 75%, based on a valuation dated March 2005.
Taking into account our review of the loan, we do not currently anticipate principal losses on this loan.
THE RIVERMEAD COURT LOAN (22% OF THE SECURITIZED LOAN POOL)
The loan has an outstanding balance of GBP4.1 million and matures in April 2014.
The loan is backed by two adjoining office buildings located at the Kenn Business Park entrance in Clevedon, North Somerset. The property is 83% occupied by a single tenant until 2020, with a break option in 2017.
In April 2012, the servicer reported a projected interest coverage ratio (ICR) of 1.54x and a loan-to-value (LTV) ratio of 65%, based on a valuation dated May 2005.
Taking into account our review of the loan, we consider that the risk of principal losses in 2014 has increased in light of the difficult commercial real-estate market and lending conditions, which could further depress property values.
COUNTERPARTY RISK
Our review confirms that, based on our 2012 counterparty criteria, the counterparties can support the ratings up to the current levels (see 'Counterparty Risk Framework Methodology And Assumptions,' published on May 31, 2012).
Taking into consideration our review of the three remaining loans in the transaction, we consider that the amount of credit enhancement available to the class D notes remains adequate to absorb the amount of losses that the underlying assets would suffer under a 'A' stress scenario. As a consequence, we have today affirmed our 'A (sf)' rating on the class D notes.
Given that the class E notes experienced losses in November 2010, we have affirmed our 'D (sf)' rating on this class of notes.
POTENTIAL EFFECTS OF PROPOSED CRITERIA CHANGES
We have taken today's rating actions based on our criteria for rating European CMBS. However, these criteria are under review (see 'Advance Notice Of Proposed Criteria Change: Methodology And Assumptions For Rating European Commercial Mortgage-Backed Securities,' published on Nov. 8, 2011).
As highlighted in the Nov. 8 Advance Notice Of Proposed Criteria Change, our review may result in changes to the methodology and assumptions we use when rating European CMBS, and consequently, it may affect both new and outstanding ratings on European CMBS transactions.
On June 4, we published a request for comment outlining our proposed criteria changes for CMBS Global Property Evaluation Methodology. The proposed criteria do not significantly change Standard & Poor's longstanding approach to deriving property net cash flow and value. We therefore anticipate limited impact for European outstanding ratings when the updated CMBS Global Property Evaluation Methodology criteria are finalized.
However, because of its global scope, the proposed CMBS Global Property Evaluation Methodology does not include certain market-specific adjustments. An application of these criteria to European transactions will therefore be published when we release our updated rating criteria.
Until such time that we adopt new criteria for rating European CMBS, we will continue to rate and monitor these transactions using our existing criteria (see 'Related Criteria And Research').
RELATED CRITERIA AND RESEARCH
-- Criteria Methodology Applied To Fees, Expenses, And Indemnifications, July 12, 2012
-- Standard & Poor's Ratings Definitions, June 22, 2012
-- Request For Comment: CMBS Global Property Evaluation Methodology, June 4, 2012
-- Counterparty Risk Framework Methodology And Assumptions, May 31, 2012
-- European Structured Finance Scenario And Sensitivity Analysis: The Effects Of The Top Five Macroeconomic Factors, March 14, 2012
-- Request For Comment: Methodology For Rating Debt Issues Based On Imputed Promises, Feb. 10, 2012
-- Global Structured Finance Scenario And Sensitivity Analysis: The Effects Of The Top Five Macroeconomic Factors, Nov. 4, 2011
-- Advance Notice Of Proposed Criteria Change: Methodology And Assumptions For Rating European Commercial Mortgage-Backed Securities, Nov. 8, 2011
-- Nonsovereign Ratings That Exceed EMU Sovereign Ratings: Methodology And Assumptions, June 14, 2011
-- Principles Of Credit Ratings, Feb. 16, 2011
-- Timeliness Of Payments: Grace Periods, Guarantees, And Use of 'D' and 'SD' Ratings, Dec. 23, 2010
-- Methodology: Credit Stability Criteria, May 3, 2010
-- Global Methodology For Rating Interest-Only Securities, April 15, 2010
-- Use Of CreditWatch And Outlooks, Sept. 14, 2009
-- Understanding Standard & Poor's Rating Definitions, June 3, 2009
-- Standard & Poor's Revises Criteria Methodology For Servicer Risk Assessment, May 28, 2009
-- European Legal Criteria For Structured Finance Transactions, Aug. 28, 2008
-- Framework For Credit Analysis In European CMBS Transactions, May 21, 2007
-- Weighing Country Risk In Our Criteria For Asset-Backed Securities, April 11, 2006
-- Rating U.S. CMBS In The Face Of Interest Shortfalls, Feb. 23, 2006
-- Technical Challenges In European CMBS Structures, Feb. 16, 2006
-- European CMBS Loan Level Guidelines, Sept. 1, 2004
-- European CMBS Monthly Bulletin, published monthly
RATINGS LIST
Class Rating
BELLATRIX (ECLIPSE 2005-2) PLC
GBP393.69 Million Commercial Mortgage-Backed Floating Rate Notes
Ratings Affirmed
D A (sf)
E D (sf)
(Bangalore Ratings Team, Hotline: +91 80 4135 5898, Bhanu.priya@thomsonreuters.com, Group id: BangaloreRatings@thomsonreuters.com, Reuters Messaging: Bhanu.Priya.reuters.com@reuters.net)
COPYRIGHT
Copyright Thomson Reuters 2012. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
