OREANDA-NEWS. August 10, 2015. Fitch Ratings has upgraded PICTS plc's GBP151.9m fixed-rate notes (ISIN XS00202417134), due March 2039 to 'A+sf' from 'Asf'. The Outlook is Stable.

The transaction is a securitisation of rental income derived from a property located at 33 Old Broad Street, London, which benefits from a 35-year lease to Bank of Scotland, the obligations of which are guaranteed by Halifax Bank of Scotland (HBOS).

KEY RATING DRIVERS
The upgrade reflects that of Lloyds Banking Group (LBG) plc (see "Fitch Upgrades Lloyds Banking Group's IDR to 'A+' and VR to 'a'", dated 19 May 2015, on www.fitchratings.com), of which HBOS is a wholly owned subsidiary.

At closing, the note issuance was EUR153.2m. The property had a market value of GBP134.7m and a vacant possession value of GBP91m. The collateral occupies a prime location and comprises 17,865 square metres of office space. The bond issue had a loan-to-vacant possession value ratio of 167.5% and is scheduled to fully amortise from rental income, starting from the April 2014 interest payment date. Since Fitch's last rating action in January 2015, the note amortised by EUR554,000.

RATING SENSITIVITIES
The notes are credit-linked to HBOS's rating, and therefore LBG's. Changes to LBG's rating are likely to affect the rating of 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.
- Transaction reporting provided by BNY Mellon as at 20 April 2015