OREANDA-NEWS. Fitch Ratings has affirmed Moda 2014 S. r.l.'s floating rate notes due 2026 as follows:

EUR143.7m Class A (IT0005039075) affirmed at 'A+sf'; Outlook Stable

EUR14.5m Class B (IT0005039083) affirmed at 'Asf'; Outlook Stable

EUR17.5m Class C (IT0005039182) affirmed at 'BBB-sf'; Outlook Stable

EUR3.8m Class D (IT0005039257) affirmed at 'BB+sf'; Outlook Stable

EUR16.9m Class E (IT0005039265) affirmed at 'Bsf'; Outlook Stable

The transaction closed in 2014 and was a securitisation of two commercial mortgage loans totalling EUR198.2m. The loans were granted by Goldman Sachs International Bank to six Italian limited liability companies to finance the acquisition of/refinance certain Italian retail assets. In May 2016, one loan remained, secured on a fashion outlet village; a shopping centre; and two retail galleries. All the real estate is located in Italy and owned by borrowers sponsored by Blackstone.

KEY RATING DRIVERS

The affirmations reflect the full prepayment of the EUR76.7m Franciacorta loan in May 2016, with proceeds being used to pay off the notes' principal on a modified pro rata basis, improving the available credit enhancement for the senior notes. Despite this deleveraging and stable collateral performance, risks remain from the secondary quality property comprising part of the collateral and challenges in working out Italian loans. Fitch applies a 'Asf' category rating cap to reflect these challenges.

The EUR118.1m Vanguard loan continues to perform in line with Fitch's expectations. The loan to value ratio improved slightly to 61.3% in May 2016 from 63.8% one year previously, due to amortisation and portfolio revaluation. All four underlying centres report rising sales figures and stable/improving occupancy, with the weighted-average occupancy reported as 86.6%, up from 83.8% 12 months ago. While passing rent has also remained broadly stable, the portfolio has seen a rise in reported irrecoverable costs, reducing the level of net rent available to service debt.

Fitch considers the La Scaglia property to be the worst in the Vanguard portfolio, raising the risk of adverse selection as a result of asset disposals. However, a voluntary sale of any property (with the exception of La Scaglia) necessitates payment of a 15% release premium in addition to the allocated loan amount. The effect of this is that selling higher quality properties should have a greater deleveraging effect on the Vanguard loan taken as a whole (although selling La Scaglia would modestly increase leverage), improving its exit position in 2019.

Fitch expects a full repayment in a 'Bsf' stress.

RATING SENSITIVITIES

A deterioration in the performance of the income profile of the portfolio or a downturn in the Italian retail sector could result in downgrades.

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.

-Transaction reporting provided by Securitisation Services S. p.A. as at end-May 2016