Paris, March 13, 2012 -- Moody's Investor Service has today taken the following actions on Greek
government-related structured finance transactions, following
the downgrade of Greek sovereign debt ratings to C from Ca on 2 March
2012:
1. The rating of the notes issued by Titlos plc has been downgraded
to C(sf) from Ca(sf)
2. The rating of Ariadne S.A. Secured Notes has been
downgraded to Ca(sf) from Caa1(sf), which concludes the review for
downgrade initiated on 29 July 2011.
Moody's did not take action on any other Greek structured finance transaction.
The highest achievable rating for Greek structured finance transactions
remains B1(sf). A detailed list of the ratings affected by today's
actions can be found at the end of this press release.
RATINGS RATIONALE
Moody's took rating actions on two transactions that are directly linked
to the creditworthiness of the Greek government:
--Titlos
Today's downgrade of the notes issued by Titlos, which are
backed by a swap relying on payments by the Greek government, reflects
the Greek sovereign rating downgrade of 2 March 2012. Moody's
understands that the Hellenic swap representing rights to receive payments
from the Greek government, which serves as collateral for this transaction,
is not part of the debt exchange package proposed by the Greek government.
However, Moody's considers the main risk driver of this transaction
to be Greek sovereign risk and as such that its ultimate rating should
closely mirror that of the Greek government. After the debt exchanges
have been completed and a new Memorandum of Understanding between the
European Union (EU) and the Greek government has been finalised and published,
Moody's will re-assess the credit risk profile and ratings of any
outstanding or new securities issued by the Greek government. At
that time, Moody's will also reassess the ratings of the notes
issued by Titlos.
--Ariadne
Today's rating action on Ariadne, a transaction backed by
Greek lottery receivables and an effective payment guarantee from the
Greek government, also reflects the Greek sovereign rating downgrade.
Ariadne's rating is now one notch above that of the Greek government,
as the government guarantee would only be called to the extent that payments
from both the receivables and the reserve fund (liquidity reserve),
which is held at Citibank N.A. (A1/P-1, on
review for downgrade), were insufficient to repay the notes.
While collections from the receivables have not always entirely covered
periodic payments due on the transaction, any shortfall has thus
far been covered using proceeds from the liquidity reserve. As
such, the guarantee has not been called to date. Moody's
has taken into account both the likelihood of a call on the guarantee
and the potential size of losses should a call on the guarantee not be
fully successful. However, in addition to the risks associated
with a potential call on the guarantee, Moody's has considered
the risk that the collections on the lottery receivables become subject
to operational or legal challenges in the context of a sovereign default,
contributing to the strong rating linkage between the transaction and
the Greek government.
--Rating Methodologies
Moody's methodology for rating Titlos considers a full linkage to the
rating of Greece, and any other risk related to the specific transaction
structure.
While Moody's methodology for rating Ariadne is primarily based on the
effective guarantee of the Greek government rather than on the value of
the lottery receivables backing the notes, it also considers some
of the benefit due to proceeds from both the receivables and the reserve
fund.
--Assumption sensitivity
Key modelling assumptions, sensitivities, cash-flow
analysis and stress scenarios on the assets underlying the notes have
not been updated as the downgrade has been primarily driven by the rating
linkage considerations in the context of the Greek sovereign rating downgrade.
The most stressful scenario considered in Moody's analysis envisions a
change to the terms of the receivables repayment mechanism or those of
the government support, resulting from the economic and fiscal challenges
reflected in the rating of the sovereign. New developments,
which would undermine either the embedded sovereign support for these
transactions or the legal strength of the receivables underlying the transactions,
would be credit negative for the transactions.
As the Euro area crisis continues, the rating 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.
For more information please refer to the Rating Implementation Guidance
published on 13 February 2012 "How Sovereign Credit Quality May Affect
Other Ratings".
Issuer: Titlos plc
....EUR5100M A Notes, Downgraded to
C (sf); previously on Jul 29, 2011 Downgraded to Ca (sf)
Issuer: Ariadne S.A. Secured Notes
....EUR650M A Notes, Downgraded to Ca
(sf); previously on Jul 29, 2011 Caa1 (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 entities or their designated
agent(s) and issued with no amendment resulting from that disclosure.
Information sources used to prepare each of 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 in these transaction.
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.
Ariel Weil
Vice President - Senior Analyst
Structured Finance Group
Moody's France SAS
96 Boulevard Haussmann
Paris 75008
France
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Annick Poulain
MD - Structured Finance
Structured Finance Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Releasing Office:
Moody's France SAS
96 Boulevard Haussmann
Paris 75008
France
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moody's downgrades two Greek ABS structured finance transactions
