DBRS Places the Ratings of Be-Spoke Loan Funding DAC Under Review with Developing Implications

DBRS Ratings Limited (DBRS) placed the ratings of the Senior Notes and the Mezzanine Notes (together, the Rated Notes) of Be-Spoke Loan Funding DAC (the Borrower) Under Review with Developing Implications (UR-Dev.) as follows:

-- Senior Notes: AA (low) (sf) UR-Dev.
-- Mezzanine Notes: BB (sf) UR-Dev.

The rating on the Senior Notes addresses the timely payment of interest and the ultimate payment of principal payable on or before the Scheduled Maturity Date in September 2025. The rating on the Mezzanine Notes addresses the ultimate payment of interest and principal payable on or before the Scheduled Maturity Date in September 2025.

The ratings were placed UR-Dev. because of a Borrower restructuring expected to become effective in October 2018, where structural changes are expected, including (but not limited to) the extension of the ramp-up period. DBRS will review the impact of the amendments on the ratings of the Rated Notes.

The Borrower is a designated activity company incorporated under the laws of the Republic of Ireland. The transaction is a direct lending warehouse facility set up as a cash flow securitisation with the purpose to fund the purchase of a portfolio of loans granted by Be-Spoke Capital (Ireland) Limited (the Originator) to Spanish small and medium-sized enterprises.

The warehouse had a 12-month ramp-up period, which ended on 28 September 2018. The ramp-up period is expected to be extended in order to allow the Borrower to continue to purchase new assets, subject to satisfying collateral quality tests and concentration limits.

As of 24 August 2018, the transaction portfolio consisted of collateral obligations totalling EUR 151.9 million that were extended to 45 companies based in Spain.

Notes:
All figures are in euros unless otherwise noted.

The principal methodology applicable to the rating is: Rating CLOs and CDOs of Large Corporate Credit.

DBRS has applied the principal methodology consistently and conducted a review of the transaction in accordance with the principal methodology.
DBRS is undertaking a review and will remove the rating from this status as soon as it is appropriate.

Other methodologies referenced in this transaction are listed at the end of this press release.

These may be found on www.dbrs.com at: http://www.dbrs.com/about/methodologies.

For a more detailed discussion of the sovereign risk impact on Structured Finance ratings, please refer to “Appendix C: The Impact of Sovereign Ratings on Other DBRS Credit Ratings” of the “Rating Sovereign Governments” methodology at: http://dbrs.com/research/319564/rating-sovereign-governments.pdf.

The sources of data and information used for the ratings include the Arranger, Natwest Markets and the Originator, Be-Spoke Capital (Ireland) Limited.

DBRS did not rely upon third-party due diligence in order to conduct its analysis.

At the time of the initial rating, DBRS was not supplied with third-party assessments. However, this did not impact the rating analysis.

DBRS considers the data and information available to it for the purposes of providing this rating to be of satisfactory quality.

DBRS does not audit or independently verify the data or information it receives in connection with the rating process.

This is the first rating action since the Initial Rating Date.

The lead analyst responsibilities for this transaction have been transferred to Joana Seara da Costa.

Information regarding DBRS ratings, including definitions, policies and methodologies, is available on www.dbrs.com.

These ratings are UR-Dev. Generally, the conditions that lead to the assignment of reviews are resolved within a 90-day period.

For further information on DBRS historical default rates published by the European Securities and Markets Authority (“ESMA”) in a central repository, see: http://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml.

Ratings assigned by DBRS Ratings Limited are subject to EU and US regulations only.

Lead Analyst: Joana Seara da Costa, Assistant Vice President
Rating Committee Chair: Jerry van Koolbergen, Managing Director
Initial Rating Date: 2 October 2017

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The rating methodologies used in the analysis of this transaction can be found at:
http://www.dbrs.com/about/methodologies.

-- Rating CLOs and CDOs of Large Corporate Credit
-- Legal Criteria for European Structured Finance Transactions
-- Cash Flow Assumptions for Corporate Credit Securitizations
-- Interest Rate Stresses for European Structured Finance Transactions

A description of how DBRS analyses structured finance transactions and how the methodologies are collectively applied can be found at: http://www.dbrs.com/research/278375.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.