Only Greek government-related transactions and transactions highly linked to Greek banks affected
Paris, July 29, 2011 -- Moody's Investor Service has today taken the following actions on
a limited number of Greek structured finance transactions:
1. Titlos plc, a government-related transaction,
has been downgraded to Ca(sf) from Caa1(sf);
2. Ariadne S.A. Secured Notes, also a government-related
transaction, has been placed on review for downgrade;
3. Four transactions with high linkage to Greek banks--namely
Axia III Finance Plc, Katanalotika Plc, Praxis II Finance
Plc, and Epihiro Plc --have also been placed on review
for downgrade.
Moody's did not take any action on any other Greek structured finance
transaction.
The highest achievable rating for Greek structured finance transactions
remains Ba1(sf). A detailed list of the ratings affected by today's
actions can be found at the end of this press release.
RATINGS RATIONALE
Today's rating actions follow the downgrade to Ca from Caa1 of the
Greek government debt rating and the placement on review for downgrade
of the ratings of Greek banks on 25 July 2011. Moody's anticipates
that Greek banks will suffer substantial economic losses on their holdings
of Greek government debt under the debt exchange proposal made by major
financial institutions.
--GOVERNMENT-RELATED TRANSACTIONS
Moody's took rating actions on two transactions that are directly
linked to the creditworthiness of the Greek government:
- Moody's downgraded to Ca(sf) from Caa1(sf) the rating of
Titlos plc, a transaction backed by a swap relying on payments by
the Greek government. The downgrade of this transaction mirrors
the Greek sovereign rating downgrade.
- Moody's placed on review for downgrade the rating of Ariadne
S.A. Secured Notes, a transaction backed by Greek
lottery receivables and a guarantee from the Greek government.
The government guarantee would only be called to the extent that both
the payments from the receivables and the liquidity reserve were insufficient
to repay the notes. Moody's review will consider the re-assessment
of the credit risk profile of Greek debt after the debt exchanges have
been completed as well as the amount of receivable collections and the
liquidity reserve.
--TRANSACTIONS HIGHLY LINKED TO GREEK BANKS
Moody's placed four asset-backed transactions on review for
downgrade today that are highly linked to either Piraeus Bank or Alpha
Bank AE (both rated B3, on review for downgrade), because
their issuer accounts, including reserve funds, are held at
these banks. Should the banks become insolvent, all sources
of liquidity in these transactions could become trapped in their insolvency
estate, creating immediate payment defaults and, potentially,
more severe losses.
Increased default expectations for the Greek banks will result in increased
default expectations for transactions highly linked to these banks.
Moody's review will consider the outcome of the Greek bank rating
review.
--ALL OTHER GREEK STRUCTURED FINANCE TRANSACTIONS
The downgrade of Greek government debt will not affect other Greek structured
finance transaction ratings because the combination of the announced EU
support programme and debt exchange proposals by major financial institutions
points to an orderly restructuring of Greek government debt. Moody's
stated on 10 June 2011 that the orderly restructuring of Greek government
debt would likely have no further impact on Greek structured finance ratings,
with the exception of highly linked transactions.
Upon an orderly default of the Greek government, some temporary
disruption may occur and severe losses could arise. However,
Moody's has already reflected these extreme loss scenarios in the
current ratings of the notes.
PREVIOUS RATING ACTIONS AND PRINCIPAL METHODOLOGIES
The applicable principal methodologies for each asset class are listed
in the index of methodologies under the research and ratings tab on Moodys.com.
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, but also considers the benefit of
the non-amortizing liquidity reserve. Moody's methodology
for rating Titlos considers a full linkage to the rating of Greece.
LIST OF AFFECTED TRANSACTIONS BY RELEASING OFFICE
Releasing Office:
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
Issuer: Axia III Finance Plc
A Certificate, B1 (sf) Placed Under Review for Possible Downgrade;
previously on Jun 10, 2011 Downgraded to B1 (sf)
Issuer: Praxis II Finance Plc
A Certificate, Ba3 (sf) Placed Under Review for Possible Downgrade;
previously on Jun 10, 2011 Downgraded to Ba3 (sf)
Issuer: EPIHIRO PLC
Class A Asset Backed Floating Rate Notes due January 2035 Notes,
Ba3 (sf) Placed Under Review for Possible Downgrade; previously on
Jul 1, 2011 Downgraded to Ba3 (sf)
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.
Releasing Office:
Moody's France SAS
96 Boulevard Haussmann
75008 Paris
France
Issuer: Ariadne S.A. Secured Notes
A Notes, Caa1 (sf) Placed Under Review for Possible Downgrade;
previously on Jun 3, 2011 Downgraded to Caa1 (sf)
Issuer: Titlos plc
A Certificate, Downgraded to Ca (sf); previously on Jun 3,
2011 Downgraded to Caa1 (sf)
Issuer: KATANALOTIKA PLC
A Certificate, Ba3 (sf) Placed Under Review for Possible Downgrade;
previously on Jul 1, 2011 Downgraded to Ba3 (sf)
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 rating has 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 rating 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 this transaction
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.
Paris
Ariel Weil
Vice President - Senior Analyst
Structured Finance Group
Moody's France SAS
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
London
Katherine Frey
MD - EMEA Structured Fin
Structured Finance Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moody's France SAS
96 Boulevard Haussmann
Paris 75008
France
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moody's takes action on very few Greek structured finance transactions following Greece's downgrade to Ca
