12 EMEA CMBS tranches downgraded and seven confirmed
London, 03 August 2011 -- Today's rating action concludes the rating review of 12 transactions which
had certain classes placed on review for downgrade following Moody's
implementation of its rating guidance, "Global Structured Finance
Operational Risk Guidelines: Moody's Approach to Analyzing Performance
Disruption Risk", on 2 March 2011. For these 12 transactions,
the corporate trust division of U.S. Bank National Association
performs the functions of the note trustee and cash manager.
A detailed list of the rating actions can be found before the Regulatory
Disclosures section.
RATINGS RATIONALE
The 12 classes of Notes listed below are downgraded due to operational
risk in the transactions which could lead to payment disruptions on the
Notes. The operational risk arises if there is a disruption in
the performance of certain transaction parties (such as a servicer or
cash manager) which could disrupt the payment flow to investors.
In these transactions, the cash manager relies on certain information
provided by the respective servicers in order to draw on the liquidity
facility. The servicers also facilitate the transfer of debt service
from the borrowers' account into the respective issuer's account.
In the event of a failure or bankruptcy of the respective servicers,
it is highly probable that the cash manager would need to draw on the
liquidity facility to prevent a temporary disruption in payments to noteholders
while a replacement servicer is found. However, in Moody's
opinion, there is significant uncertainty whether the cash manager
would be able to draw on the liquidity facility without input from the
servicer. The reliance on an unrated servicer (no Moody's
corporate rating) with no structural mitigants to prevent payment disruption
on the notes is not commensurate with the highest rating in these transactions.
Moody's believes that the period of potential disruption is influenced
by the complexity of the transaction and whether assets are located in
the main EMEA CMBS jurisdictions such as the United Kingdom (UK),
Germany, The Netherlands and France or in jurisdictions where the
CMBS market is less developed. Also, the form of liquidity
mechanism in the transaction would influence Moody's view on operational
risk i.e. whether there is a liquidity facility in place
or a servicer advance mechanism.
The assets under Talisman-3 Finance p.l.c.,
Cornerstone Titan 2005-1 p.l.c., Titan
Europe 2006-1 p.l.c., Titan Europe 2006-2
p.l.c. and Titan Europe 2006-5 p.l.c.
are located in the UK or Germany and all five transactions have a liquidity
facility. Moody's does not expect a payment disruption of
more than two interest payment dates in case of a servicer default.
As a result, Moody's downgraded the effected classes under
these transactions to a Aa2(sf) rating level.
Cornerstone Titan 2007-1 p.l.c., Titan
Europe 2006-3 p.l.c. and Titan Europe 2007-2
Ltd., contain some assets in jurisdictions like Finland,
Switzerland, Poland, Luxemburg, Belgium or the Czech
Republic. In Moody's opinion, transfer of servicing
for assets located in these jurisdictions could be more difficult and
could take more time than in jurisdictions such as the UK and Germany
for instance. Cornerstone Titan 2007-1 p.l.c.
and Titan Europe 2007-2 Ltd. also have a servicer advance
mechanism in place rather than a liquidity facility. Overall though,
Moody's expects that the payment disruption would be limited to
two interest payment dates in case of a servicer default. The effected
classes under these are downgraded to a Aa3(sf) rating level.
Talisman-4 Finance p.l.c., Talisman-5
Finance p.l.c., Taurus CMBS (UK) 2006-2
p.l.c. and Imser Securitisation 2 S.r.l.
are subject to similar operational risk factors as the transactions mentioned
above however, the operational risk factors are already consistent
with the current rating level in these transactions. Therefore
the respective ratings under the transactions are confirmed.
RATING METHODOLOGY
The principal methodology used in these ratings was "Moody's Approach
to Real Estate Analysis for CMBS in EMEA: Portfolio Analysis (MORE
Portfolio)" published in April 2006. Please see the Credit Policy
page on www.moodys.com for a copy of this methodology.
Other methodology used in these ratings was "Update on Moody's Real Estate
Analysis for CMBS Transactions in EMEA" published in June 2005.
Other factors used in these ratings are described in "Global Structured
Finance Operational Risk Guidelines: Moody's Approach to Analyzing
Performance Disruption Risk" republished in June 2011.
The updated assessment is a result of Moody's on-going surveillance
of commercial mortgage backed securities (CMBS) transactions. For
Moody's prior review and analysis of these transactions, please
see the research tab on the issuer/entity page on Moodys.com.
The lead analyst and rating office for each of the transactions affected
are generally different from the contact and office listed at the end
of this press release. For each transaction, the lead analyst
name is available on the issuer page and the rating office is available
on the ratings tab of the issuer on www.moodys.com.
List of affected securities:
Issuer: Cornerstone Titan 2005-1 p.l.c.
....GBP0.05M X Notes, Downgraded
to Aa2 (sf); previously on Mar 2, 2011 Aaa (sf) Placed Under
Review for Possible Downgrade
Issuer: Cornerstone Titan 2007-1 p.l.c.
....EUR661M A-1 Notes, Downgraded
to Aa3 (sf); previously on Mar 2, 2011 Aaa (sf) Placed Under
Review for Possible Downgrade
....EUR0.1M X Notes Downgraded to Aa3
(sf); previously on Mar 2, 2011 Aaa (sf) Placed Under Review
for Possible Downgrade
Issuer: Imser Securitisation 2 S.r.l.
....EUR186.02M A2a Notes, Confirmed
at Aa3 (sf); previously on Mar 2, 2011 Aa3 (sf) Placed Under
Review for Possible Downgrade
....EUR35M A2b Notes, Confirmed at Aa3
(sf); previously on Mar 2, 2011 Aa3 (sf) Placed Under Review
for Possible Downgrade
....EUR53.555M A3a Notes, Confirmed
at Aa3 (sf); previously on Mar 2, 2011 Aa3 (sf) Placed Under
Review for Possible Downgrade
....EUR75M A3b Notes, Confirmed at Aa3
(sf); previously on Mar 2, 2011 Aa3 (sf) Placed Under Review
for Possible Downgrade
Issuer: TALISMAN-3 FINANCE PLC
....EUR27.5M B Notes, Downgraded
to Aa2 (sf); previously on Mar 2, 2011 Aaa (sf) Placed Under
Review for Possible Downgrade
....EUR27.5M C Notes, Downgraded
to Aa2 (sf); previously on Mar 2, 2011 Aaa (sf) Placed Under
Review for Possible Downgrade
....EUR0.05M X Notes, Downgraded
to Aa2 (sf); previously on Mar 2, 2011 Aaa (sf) Placed Under
Review for Possible Downgrade
Issuer: Talisman-4 Finance plc
....EUR570M A Notes, Confirmed at Aa3
(sf); previously on Mar 2, 2011 Aa3 (sf) Placed Under Review
for Possible Downgrade
Issuer: TALISMAN-5 FINANCE PLC
....EUR415M A Notes, Confirmed at Aa3
(sf); previously on Mar 2, 2011 Aa3 (sf) Placed Under Review
for Possible Downgrade
Issuer: TAURUS CMBS (UK) 2006-2 P.L.C.
....GBP364M A Notes, Confirmed at Aa3
(sf); previously on Mar 2, 2011 Aa3 (sf) Placed Under Review
for Possible Downgrade
Issuer: Titan Europe 2006-1 p.l.c.
....EUR433.76M A Notes, Downgraded
to Aa2 (sf); previously on Mar 2, 2011 Aa1 (sf) Placed Under
Review for Possible Downgrade
....EUR0.05M X Notes, Downgraded
to Aa2 (sf); previously on Jul 5, 2011 Aaa (sf) Placed Under
Review for Possible Downgrade
Issuer: TITAN EUROPE 2006-2 p.l.c.
....EUR0.05M X Notes, Downgraded
to Aa2 (sf); previously on Mar 2, 2011 Aaa (sf) Placed Under
Review for Possible Downgrade
Issuer: TITAN EUROPE 2006-3 p.l.c.
....EUR0.05M X Notes, Downgraded
to Aa3 (sf); previously on Mar 2, 2011 Aaa (sf) Placed Under
Review for Possible Downgrade
Issuer: Titan Europe 2006-5 p.l.c.
....EUR0.05M X Notes, Downgraded
to Aa2 (sf); previously on Mar 2, 2011 Aaa (sf) Placed Under
Review for Possible Downgrade
Issuer: TITAN EUROPE 2007-2 LIMITED
....EUR971.8M A1 Notes, Downgraded
to Aa3 (sf); previously on Mar 2, 2011 Aaa (sf) Placed Under
Review for Possible Downgrade
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 entity or its 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.
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 entity,
obligation or credit satisfactory for the purposes of issuing a rating.
Moody's adopts all necessary measures so that the information it uses
in assigning a rating 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 entity or its related third parties within the
three years preceding the credit rating action. Please see the
ratings disclosure page on our website www.moodys.com for
further information.
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.
London
Viola Karoly
Analyst
Structured Finance Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
London
Christophe de Noaillat
Senior Vice President
Structured Finance Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
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 concludes on the operational risk review for 12 EMEA CMBS transactions
