November 14, 2012 / 4:33 PM / 5 years ago

TEXT - Fitch cuts Epic (Caspar) Plc ratings

Nov 14 Fitch Ratings has downgraded Epic (Caspar) plc's class A, B and C
floating-rate notes due October 2014 as follows: 

GBP81.1m Class A (XS0201996369) downgraded to 'AAsf' from 'AAAsf'; RWN 
maintained

GBP29.1m Class B (XS0201997094) downgraded to 'Asf' from 'AAsf'; RWN maintained

GBP29.1m Class C (XS0201997177) downgraded to 'BBBsf' from 'Asf'; off RWN; 
Negative Outlook

GBP27.4m Class D (XS0201997250) affirmed at 'BBsf'; off RWN; Negative Outlook

The downgrade reflects the maturity default of the sole loan in the transaction.
This leaves limited time prior to legal maturity of the notes (less than two 
years) in which the servicer would be able to sell the underlying assets (into a
buyers' market) should the borrower's disposal plan fall through. The active 
engagement of the sponsor alongside evidence of successful asset sales provides 
a reprieve from more severe rating action, although the RWN on the class A and B
notes highlights falling confidence in the continued adequacy of the tail 
period. 

The borrower failed to repay its GBP166.8m securitised loan on 29 October 2012. 
The exit strategy, which involves a bulk sale of the 24 remaining UK mixed-use 
commercial real estate assets, is yet to be executed, prompting the borrower to 
request a creditor 'standstill' until January to allow it to finalise ongoing 
sales negotiations. The issuer stated that the sales price quoted should be 
sufficient for all its indebtedness to be redeemed in full and on time. The 
short length of the standstill lends credence to the borrower's plans.

Fitch intends to resolve the RWN soon after the January 2013 interest payment 
date. If the classes A and B notes remain outstanding without much more 
visibility regarding redemption, they will be subject to further downgrade. 
Fitch applies a 'soft' cap at 'BBBsf' for notes within the past 18 months of 
their life, which would guide rating action. The affirmation of the Class D note
(albeit with a Negative Outlook) reflects Fitch's view that sufficient 
collateral value remains to repay the loan (and the notes) in full by October 
2014.

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