OREANDA-NEWS. Fitch Ratings has downgraded Taurus CMBS (Pan-Europe) 2007-1 Limited's Class A1, A2, B, C, E and F notes due 2020 and affirmed the class D notes as follows:

EUR98.5m class A1 (XS0305732181) downgraded to 'Dsf' from 'BBB-sf'; Recovery Estimate (RE) 100%
EUR10.9m class A2 (XS0309194248) downgraded to 'CCsf' from 'BBsf'; RE100%
EUR16m class B (XS0305744608) downgraded to 'CCsf' from 'Bsf'; RE100%
EUR23.3m class C (XS0305745597) downgraded to 'CCsf' from 'CCCsf'; RE 90%
EUR18.4m class D (XS0305746215) affirmed at 'Csf'; RE0%
EUR2.5m class E (XS0309195567) downgraded to 'Dsf' from 'Csf'; RE0%
EUR0m class F (XS0309195997) downgraded to 'Dsf' from 'Csf'; RE0%

Taurus CMBS (Pan-Europe) 2007-1 was originally the securitisation of 13 loans originated by Merrill Lynch. The loans comprised both tranched and whole facilities which were secured on collateral located in Switzerland, France and Germany. In July 2015, three loans remained.

KEY RATING DRIVERS
The downgrade of the class A1 notes reflects a senior interest shortfall at the May 2015 interest payment date, which constitutes an event of default. The class A2, B and C notes have been downgraded to reflect an increased likelihood of default, although full ultimate repayment (or in the case of the class C notes, 90%) is expected. The class E and F notes have been downgraded as a result of a loss allocation from the workout of the defaulted Leipzig loan.

Since the last rating action in July 2014, two smaller loans have been repaid. The redemption of EUR23.7m Saturn (which repaid in full) and EUR14.8m Leipzig (with a EUR2m loss) exceeded Fitch's 'Bsf' projections by approximately EUR3.7m. The loss from the Leipzig workout reduced the class F note balance to zero and caused a EUR75,000 principal shortfall on the class E notes.

The EUR134.2m Fishman JEC loan entered safeguard proceedings in July 2014, two months after becoming a specially serviced and accelerated loan. Subsequent non-payment of interest resulted in liquidity facility drawings, which covered material and higher senior expenses (due to legal expenses and fees related to the Fishman workout/ safeguard) and partial note interest. In May 2015, only partial interest payment was made on the senior notes. This constitutes an event of default and triggered the downgrade of the class A1 notes.

The loan remains in safeguard while the French courts address the special servicer's claim that protection should not have been granted to an already accelerated defaulted loan. Meanwhile the Fishman borrowers have made two proposals to the senior noteholders. Both envisage resolution of the loan after bond maturity.

In both proposals, the borrowers aim to repay the loan over time via asset sales and (under one proposal) partial cash sweeps. Proceeds would be paid into borrower accounts no longer pledged to the issuer. Total interest and principal amounts repaid over time may vary between the proposals but in both cases the loan agreement will no longer apply, as interest and principal payments are defined in the proposals. This may have unforeseen effects on the securitisation.

Even if the borrowers meet the proposed annual repayment targets, only the class A1 notes would have a realistic chance of being repaid by bond maturity. This assumes a 49% redemption of Fishman JEC by February 2020, the full repayment of the performing EUR29.7m Hutley loan and the resolution of the defaulted EUR5.3m WPC G&S loan (the latter two are secured on collateral located in Germany).

RATING SENSITIVITIES
All notes rated above 'Dsf' would be downgraded if the issuer security becomes enforced or if the notes remain outstanding beyond bond maturity.

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 sources of information used to assess these ratings were the issuer, servicer, and periodic cash management and servicer reports.