OREANDA-NEWS. Fitch Ratings has downgraded Deva Financing plc's notes, as follows:

Class A2 (ISIN XS0392644802) downgraded to 'A+sf' from 'AAAsf'; off Rating Watch Negative (RWN), Outlook Stable
Class A3 (ISIN XS0392644984) downgraded to 'A+sf' from 'AAAsf'; off RWN, Outlook Stable
Class A4 (ISIN XS0392645288) downgraded to 'A+sf' from 'AAAsf'; off RWN, Outlook Stable

The transaction is backed by 45.6% of buy-to-let mortgage loans originated by The Mortgage Business plc (TMB), a subsidiary of Bank of Scotland plc (BoS, A+/Stable/F1).

KEY RATING DRIVERS
Excessive Counterparty Exposure
Fitch placed the notes on RWN in March 2015 as a result of excessive counterparty exposure. The class A notes are solely supported by the reserve fund, which is currently kept in the account bank held with BoS. A default of BoS would result in a complete loss of credit support for the notes. This creates heavy reliance on BoS's creditworthiness, creating excessive counterparty exposure.

Fitch understands that the issuer will not put any remedial measures in place, which has led to the downgrade of the Class A notes to 'A+sf'. The downgrade is in line with Fitch's criteria for rating caps and limitations in global structured finance transactions.

RATING SENSITIVITIES
Deterioration in the asset performance may result from economic factors. A corresponding increase in new defaults and associated pressure on excess spread and the reserve fund, beyond Fitch's expectations, could result in negative rating actions. Furthermore, an unexpected increase in interest rates might jeopardise the loan affordability of the underlying borrowers.

Due to the excessive counterparty exposure, the notes are credit-linked to BoS's rating. Any changes to BoS's Long-term Issuer Default Rating would trigger rating action on the notes.

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.
- Loan-by-loan data provided by Bank of England as at 31 October 2014
- Transaction reporting provided by Lloyds Banking as at 31 May 2015
- Discussions with Lloyds Banking

MODELS
EMEA RMBS Surveillance Model