Fitch Affirms Juturna (European Loan Conduit No.16) PLC and Pacific Quay Finance PLC
Juturna (European Loan Conduit No.16) PLC
GBP745m class A (XS0172827783) affirmed at 'AA-sf'; Outlook Stable
Pacific Quay Finance PLC
GBP123.4m class A notes (XS0196065972): affirmed at 'AA-sf'; Outlook Stable
Each transaction comprises a single fully-amortising fixed-rate commercial mortgage loan originated to finance the development of English and Scottish headquarters of the British Broadcasting Corporation (BBC) in London and Glasgow, respectively. Both leases have a 30-year term and are an unconditional obligation of the BBC; ie they are un-assignable, non-breakable and fully repairing and insuring.
KEY RATING DRIVERS
The affirmation is based on the continued credit strength of BBC given its capacity as the sole tenant. Both the rent payable under the lease and the loan balance (but not the notes) are indexed annually to the retail price index (RPI), subject to a floor of 0% and a ceiling of 5%. An issuer-level RPI swap transforms periodic variable loan payments into a fixed amount, which combined with the initial loan annuity, provides for fixed-rate debt service under the notes.
Irrespective of any interim fluctuations in the balance of the loan, the transaction's structure provides for full repayment of the loan by 2033 (in the case of Juturna) and 2034 (Pacific Quay) subject to the BBC's continued performance under the lease.
Fitch applied a single tenant CMBS rating approach, whereby the rating is floored by the credit profile of the BBC. Any factors that could affect BBC's credit profile would likely have a corresponding impact on the notes' rating.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.
Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pools and the transactions. There were no findings that were material to this analysis. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring.
The majority of the underlying assets have ratings or credit opinions from Fitch and/or other Nationally Recognized Statistical Rating Organizations and/or European Securities and Markets Authority registered rating agencies. Fitch has relied on the practices of the relevant Fitch groups and/or other rating agencies to assess the asset portfolio information.
Overall, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable.
SOURCES OF INFORMATION
The information below was used in the analysis.
- Loan-by-loan data provided by Mount Street Mortgage Serving (for Juturna) and HSBC (Pacific Quay) as at 16 November 2015 and 26 October 2015, respectively.