OREANDA-NEWS. Fitch Ratings has downgraded Equinox (Eclipse 2006-1) Class A notes to 'Dsf' from 'CCCsf'. The downgrade follows a default of the notes on the payment of interest.

GBP75.3m Class A (XS0259279585) downgraded to 'Dsf'; Recovery Estimate (RE) 90%
GBP16.7m Class B (XS0259280088) affirmed at 'Dsf'; RE0%
GBP0m Class C (XS0259280161 affirmed at 'Dsf'; RE0%
GBP0m Class D (XS0259280591) affirmed at 'Dsf'
GBP0m Class E (XS0259280674) affirmed at 'Dsf'

The transaction is a securitisation of 13 UK commercial mortgage-backed loans, comprising 12 originations by Barclays Bank PLC, and one acquired from Royal Bank of Scotland PLC. After repayment of the GBP1.1m Ocean Park loan, there are currently two loans remaining in the portfolio: the performing GBP18.9m Holland Park Towers loan and the GBP71.6m Ashbourne Portfolio Priority A (APPA) loan, which is in special servicing. The Holland Park loan matures on 15 January.

KEY RATING DRIVERS
The issuer incurred an increase in servicing fees at the October 2015 interest payment date. This meant that available income was insufficient to meet mandatory expenses (namely class A interest), causing an event of default.

This increase was caused by periodic servicing fees being deferred over several quarters, leading to a one-off charge of some GBP120,000. Meanwhile, the accrual of such fees meant that the class B notes continued to receive periodic interest payments, effectively at the expense of class A noteholders. Had these fees been paid on a quarterly basis, a shortfall on class A interest may have been avoided.

RATING SENSITIVITIES
The recovery estimate for the class A notes could decrease in the absence of tangible progress in resolving the defaulted APPA loan.

DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.

DATA ADEQUACY
Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. 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.

Fitch did not undertake a review of the information provided about the underlying asset pool ahead of the transaction's initial closing. The subsequent performance of the transaction over the years is consistent with the agency's expectations given the operating environment and Fitch is therefore satisfied that the asset pool information relied upon for its initial rating analysis was adequately reliable.

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.
-Cash management report, provided by the cash manager as at end-October 2015
-Asset Surveillance Report, provided by the servicer as at 15 December 2015.