London, 05 December 2013 -- Moody's has stated today that the proposed appointment of Homeloan
Management Limited ("HML", NR) as back-up administrator,
Citibank N.A., London Branch ("Citibank",
A2 / (P)P-1) as back-up cash manager; and Structured
Finance Management Limited ("SFM", NR) as back-up
administrator facilitator and back-up cash manager facilitator
(the "Proposal") should, if implemented, have
a positive impact on the ratings of 25 tranches across the 6 outstanding
Leek Finance transactions. Please see the end of this press release
for a detailed list of notes affected by the Proposal (the "Affected
Securities").
Moody's has determined that the Proposal , if implemented,
may result in the confirmation of the Affected Securities. However,
Moody's opinion addresses only the mitigation of operational risk associated
with the Proposal. Before taking any positive action on the ratings
Moody's will need to assess other risk factors in the transactions
which may have an impact on the ratings of the Affected Securities.
One of such factors Moody's will consider is exposure to swap counterparty
to reflect Moody's updated Approach to Assessing Swap Counterparties
in Structured Finance Cash Flow Transactions, published in November
2013. https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_SF345541.
On 9 May 2013, Co-Operative Bank Plc was downgraded to Ba3/NP
from A3/P-2. Platform Funding Limited ("Platform"),
which is part of the Co-operative Bank, acts as administrator
and cash manager in the Leek Finance transactions. Following Co-operative
Bank's downgrade, Moody's placed the Affected Securities
on review for downgrade on 16 May 2013 because of insufficient back-up
servicing and back-up cash management arrangements. Co-operative
Bank was then further downgraded to Caa1 on 18 June 2013. In response
to the rating actions and in order to mitigate the operational risk,
Co-operative Bank proposes to appoint HML as Back-up administrator,
Citibank as back-up cash manager; and SFM as back-up
administrator facilitator and back-up cash manager facilitator.
The proposed back-up arrangements are in line with Moody's approach
on operational risk. Moody's understands that HML has already conducted
an onsite operational review of Platform and performed an initial mapping
of the administrator's data systems. According to the draft
Back-Up Administration Agreement, HML is expected to finish
(1) reviewing Platform's computer hardware, (2) producing
a data mapping specifications and (3) writing the requisite IT programmes
necessary to read the files of Platform on its systems, in each
case within the first 60 days of its appointment. During the stand-by
period, Citibank as back-up cash manager will perform a parallel
run and verify the accuracy of the administration report on a regular
basis.
The failure of Platform in its capacity as cash manager to provide the
administration report to the Issuer, the Trustee and the back-up
cash manager on the 5th business day before each interest payment date
("IPD") will prompt the termination of Platform's appointment
as both cash manager and administrator. Citibank N.A.
will then become the cash manager on the business day immediately preceding
the IPD, unless the report delivery failure is remedied on or before
the 2nd business day prior to such IPD. Similarly, HML will
be appointed as replacement administrator 60 days after the notice of
such termination, unless the report delivery failure is remedied
on or before the second business day prior to such IPD.
This cash manager termination will allow sufficient time for Citibank
N.A. as replacement cash manager to perform the cash management
functions before the end of the grace period on the notes, which
falls 5 business days after the due payment date.
Under the Replacement Administration Agreement, SFM as Back-up
administrator facilitator will have the obligation to use best efforts
to identify, within 60 days, a suitable back-up administrator
on behalf of the relevant Issuer should HML as replacement administrator
not be rated by Moody's or have a rating lower than Baa3 at the time it
becomes replacement administrator. Similarly, if Citibank
N.A. is not rated at least Baa3 on or after its appointment
as replacement cash manager, SFM as back-up cash manager
facilitator will have the obligation to use its best efforts to identify
a suitable new back-up cash manager.
Additionally, in each Leek Finance transaction, the Replacement
Cash Management Agreement will provide that, upon the occurrence
of a perfection event relating to the portfolio, the aggregate amount
of notional provisions shall be, as at each calculation date,
the greater of i) the amount provisioned for as at the calculation date
immediately prior to such perfection event, and ii) an amount equal
to 40% of the aggregate principal balance of loans which are at
least 6 months in arrears.
METHODOLOGIES
The methodology used in these ratings was Moody's Approach to Rating RMBS
Using the MILAN Framework, published in November 2013. Please
see the Credit Policy page on www.moodys.com for a copy
of this methodology.
LIST OF AFFECTED SECURITIES
Issuer: Leek Finance Number Seventeen PLC
....GBP270M A2a Notes, Aaa (sf) Placed
Under Review for Possible Downgrade on 16 May 2013; previously on
Apr 10, 2013 Confirmed at Aaa (sf)
....US$462M A2b Notes, Aaa (sf)
Placed Under Review for Possible Downgrade on 16 May 2013; previously
on Apr 10, 2013 Confirmed at Aaa (sf)
....EUR365M A2c Notes, Aaa (sf) Placed
Under Review for Possible Downgrade on 16 May 2013; previously on
Apr 10, 2013 Confirmed at Aaa (sf)
....EUR105.6M Mc Notes, Aa1 (sf)
Placed Under Review for Possible Downgrade on 16 May 2013; previously
on Nov 15, 2011 Upgraded to Aa1 (sf)
....GBP22M Ba Notes, Aa2 (sf) Placed
Under Review for Possible Downgrade on 16 May 2013; previously on
Nov 15, 2011 Upgraded to Aa2 (sf)
....EUR39.5M Bc Notes, Aa2 (sf)
Placed Under Review for Possible Downgrade on 16 May 2013; previously
on Nov 15, 2011 Upgraded to Aa2 (sf)
....EUR48M Cc Notes, A2 (sf) Placed
Under Review for Possible Downgrade on 16 May 2013; previously on
Nov 15, 2011 Upgraded to A2 (sf)
Issuer: Leek Finance Number Eighteen PLC
....GBP171.1M A2a Notes, Aaa
(sf) Placed Under Review for Possible Downgrade on 16 May 2013; previously
on Apr 10, 2013 Confirmed at Aaa (sf)
....US$475M A2b Notes, Aaa (sf)
Placed Under Review for Possible Downgrade on 16 May 2013; previously
on Apr 10, 2013 Confirmed at Aaa (sf)
....EUR128M A2c Notes, Aaa (sf) Placed
Under Review for Possible Downgrade on 16 May 2013; previously on
Apr 10, 2013 Confirmed at Aaa (sf)
....US$350M A2d Notes, Aaa (sf)
Placed Under Review for Possible Downgrade on 16 May 2013; previously
on Apr 10, 2013 Confirmed at Aaa (sf)
....GBP12.5M Ma Notes, Aa1 (sf)
Placed Under Review for Possible Downgrade on 16 May 2013; previously
on Nov 15, 2011 Upgraded to Aa1 (sf)
....EUR83.7M Mc Notes, Aa1 (sf)
Placed Under Review for Possible Downgrade on 16 May 2013; previously
on Nov 15, 2011 Upgraded to Aa1 (sf)
....GBP25.9M Ba Notes, Aa3 (sf)
Placed Under Review for Possible Downgrade on 16 May 2013; previously
on Nov 15, 2011 Upgraded to Aa3 (sf)
....EUR26M Bc Notes, Aa3 (sf) Placed
Under Review for Possible Downgrade on 16 May 2013; previously on
Nov 15, 2011 Upgraded to Aa3 (sf)
Issuer: Leek Finance Number Nineteen PLC
....GBP110M A2a Notes, Aaa (sf) Placed
Under Review for Possible Downgrade on 16 May 2013; previously on
Apr 10, 2013 Confirmed at Aaa (sf)
....US$624.1M A2b Notes,
Aaa (sf) Placed Under Review for Possible Downgrade on 16 May 2013;
previously on Apr 10, 2013 Confirmed at Aaa (sf)
....EUR124.5M A2c Notes, Aaa
(sf) Placed Under Review for Possible Downgrade on 16 May 2013; previously
on Apr 10, 2013 Confirmed at Aaa (sf)
....GBP23M Ma Notes, Aa1 (sf) Placed
Under Review for Possible Downgrade on 16 May 2013; previously on
Nov 15, 2011 Upgraded to Aa1 (sf)
....EUR68M Mc Notes, Aa1 (sf) Placed
Under Review for Possible Downgrade on 16 May 2013; previously on
Nov 15, 2011 Upgraded to Aa1 (sf)
....GBP12M Ba Notes, Aa3 (sf) Placed
Under Review for Possible Downgrade on 16 May 2013; previously on
Nov 15, 2011 Upgraded to Aa3 (sf)
....EUR51M Bc Notes, Aa3 (sf) Placed
Under Review for Possible Downgrade on 16 May 2013; previously on
Nov 15, 2011 Upgraded to Aa3 (sf)
Issuer: Leek Finance Number Twenty PLC
....GBP1489M A Notes, Aaa (sf) Placed
Under Review for Possible Downgrade on 16 May 2013; previously on
Apr 10, 2013 Confirmed at Aaa (sf)
Issuer: Leek Finance Number Twenty One PLC
....GBP1017.7M A Notes, Aaa (sf)
Placed Under Review for Possible Downgrade on 16 May 2013; previously
on Oct 1, 2008 Assigned Aaa (sf)
Issuer: Leek Finance Number Twenty Two PLC
....GBP395.8M A Notes, Aaa (sf)
Placed Under Review for Possible Downgrade on 16 May 2013; previously
on Jan 27, 2009 Assigned Aaa (sf)
Lyudmila Udot
Asst Vice President - Analyst
Structured Finance Group
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Michelangelo Margaria
VP - Sr Credit Officer/Manager
Structured Finance Group
Telephone:+39-02-9148-1100
Emily Rombeau
Associate Analyst
Structured Finance Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Releasing Office:
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moody's announcement on the Leek Finance series