DBRS Downgrades Four Classes of Indus (Eclipse) 2007-1 plc and Places Classes A, X, B, C and D Under Review Negative

DBRS has today downgraded the following four classes of the Indus (Eclipse) 2007-1 plc transaction and placed classes A, X, B, C and D Under Review Negative:

Class B to AA (low) from AA, Under Review Negative Implications
Class C to BBB (low) from A, Under Review Negative Implications
Class D to CCC from BBB, Under Review Negative Implications
Class E to C from BB, Stable
Classes A and X, AAA Under Review Negative Implications

As a result of the review of the bonds prompting the downgrades to Classes B, C and D, those same classes, in addition to Classes A and X, have been placed Under Review with Negative Implications while DBRS completes a more detailed review of the loans securing the transaction.

The downgrade is a result of the two loans in special servicing. DBRS expects losses to occur with the resolution of the APEX loan, the smallest loan in the transaction. In addition, following the compulsory purchase order of one of the properties securing the Agora Max loan, the residual debt has caused a decrease in the ICR and DSCR for the loan, as the price was not sufficient to satisfy the allocated loan balance. The losses expected with APEX and the residual debt load on the Agora Max loan prompted the downgrades, as the credit support was found to be insufficient to support the ratings.

DBRS notes that there are many loans on the servicer’s watchlist, primarily due to loan to value (LTV) covenant breaches. While the ICR and DSCR ratios are consistent with DBRS expectations, and the current LTVs are largely at or below DBRS expectations, DBRS is concerned that there could be greater value decline in the markets, and will endeavor to review each loan to ensure the further value decline and potential ICR decline is properly reflected in its ratings.

Upon completing a full review of each loan, DBRS will publish its findings, including any impact it has upon the ratings, in a full Surveillance Report.

Note:
All figures are in GBP unless otherwise noted.

The applicable methodology is CMBS Rating Methodology and CMBS Surveillance, which can be found on our website under Methodologies.

This is a Structured Finance rating.