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Rating Action:

Moody's downgrades the ratings of seven Italian ABS directly linked to Italian government and Italian regions

Global Credit Research - 20 Jul 2012

Frankfurt am Main, July 20, 2012 -- Moody's Investors Service has today announced the following actions:

-- The ratings of 11 tranches in seven Italian asset-backed securities (ABS) transactions have been downgraded.

-- The underlying ratings of two tranches wrapped by financial guarantors in POSILLIPO FINANCE II S.R.L. SERIES 2007-1 have been downgraded.

-- The ratings of five tranches issued by Cartesio S.r.l. - Series 2003-1 remain on review for downgrade due to the high linkage to Dexia Crediop S.p.A (B2), which acts as one of the cross-currency swap counterparties in this transaction.

The ratings of all the affected transactions above are directly linked to the ratings of the Italian sovereign and sub-sovereigns and follow Italy's downgrade to Baa2 from A3 on 13th July, and subsequent sub-sovereign downgrades 16th July.

Please click on this link http://moodys.com/viewresearchdoc.aspx?docid=PBS_SF292509 for the complete list of affected ratings and underlying ratings. This list is an integral part of this press release and identifies each affected issuer.

For additional information on Structured Finance ratings, please refer to the webpage containing Moody's related announcements http://www.moodys.com/eusovereign.

RATINGS RATIONALE

Today's rating actions follow (1) the weakening of the Italian government's credit profile, as captured by Moody's downgrade of Italy's government bond rating to Baa2 from A3, with a negative outlook; and (2) the rating agency's subsequent downgrade of the long-term issuer and debt ratings of 23 Italian sub-sovereign entities, including regional and local governments as well as two associated entities. For more details on the rationale for the sovereign and sub-sovereign downgrades, refer to the press releases (http://www.moodys.com/research/Moodys-downgrades-Italys-government-bond-rating-to-Baa2-from-A3--PR_250567 and http://www.moodys.com/research/Moodys-downgrades-Italian-sub-sovereign-ratings-following-sovereign-downgrade--PR_250041).

The Italian government and several of the downgraded Italian regions, including the Region of Lazio, the Region of Abruzzo, the Region of Campania and the Autonomous Region of Sicily, are the obligors for the seven Italian ABS transactions affected by today's rating actions. The assets in each of the affected transactions are unsecured, direct obligations of the sovereign or aforementioned sub-sovereign entities.

Moody's methodology for rating these transactions considers a linkage to the rating of the Italian government or the respective Italian sub-sovereign (Region of Lazio, the Region of Abruzzo, the Region of Campania and the Autonomous Region of Sicily) as the assets are unsecured, direct obligations of the Italian government or the respective Italian region for each of the transaction.

In POSILLIPO FINANCE II S.R.L. SERIES 2007-1, the A2 tranche that benefits from a financial guarantee provided by Assured Guaranty (Europe) Ltd. (Aa3, on review for downgrade) remains on review for downgrade, pending the conclusion of the review on the guarantors' ratings.

As the euro area crisis continues, the ratings of the structured finance notes remain exposed to the uncertainties of credit conditions in the general economy. The deteriorating creditworthiness of euro area sovereigns as well as the weakening credit profile of the global banking sector could negatively impact the ratings of the notes. Furthermore, as discussed in Moody's special report "Rating Euro Area Governments Through Extraordinary Times -- An Updated Summary," published in October 2011, Moody's is considering reintroducing individual country ceilings for some or all euro area members, which could affect further the maximum structured finance rating achievable in those countries.

Moody's has conducted no additional cash flow analysis or stress scenarios, as the ratings affected by today's actions were directly derived from the rating of the underlying security, guarantor or reference credit.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

The ratings have been disclosed to the rated entities or their designated agent(s) and issued with no amendment resulting from that disclosure.

Information sources used to prepare the ratings are the following: parties involved in the ratings, public information, and confidential and proprietary Moody's Investors Service information.

Moody's did not receive or take into account a third party assessment on the due diligence performed regarding the underlying assets or financial instruments related to the monitoring of these transactions in the past six months.

Moody's considers the quality of information available on the rated entities, obligations or credits satisfactory for the purposes of issuing these ratings.

Moody's adopts all necessary measures so that the information it uses in assigning the ratings is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Moody's Investors Service may have provided Ancillary or Other Permissible Service(s) to the rated entities or their related third parties within the two years preceding the credit rating action. Please see the special report "Ancillary or other permissible services provided to entities rated by MIS's EU credit rating agencies" on the ratings disclosure page on our website www.moodys.com for further information.

Please see the ratings disclosure page on www.moodys.com for general disclosure on potential conflicts of interests.

Please see the ratings disclosure page on www.moodys.com for information on (A) MCO's major shareholders (above 5%) and for (B) further information regarding certain affiliations that may exist between directors of MCO and rated entities as well as (C) the names of entities that hold ratings from MIS that have also publicly reported to the SEC an ownership interest in MCO of more than 5%. A member of the board of directors of this rated entity may also be a member of the board of directors of a shareholder of Moody's Corporation; however, Moody's has not independently verified this matter.

Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history.

The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Yuezhen Wang
Associate Analyst
Structured Finance Group
Moody's Deutschland GmbH
An der Welle 5
Frankfurt am Main 60322
Germany
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Carole Gintz
VP - Senior Credit Officer
Structured Finance Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Releasing Office:
Moody's Deutschland GmbH
An der Welle 5
Frankfurt am Main 60322
Germany
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Moody's downgrades the ratings of seven Italian ABS directly linked to Italian government and Italian regions
No Related Data.

 

© 2013 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

 


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