OREANDA-NEWS. Fitch Ratings has affirmed Ares European CLO VII B.V.'s notes, as follows:

EUR207.4m Class A-1 (XS1084357554): affirmed at 'AAAsf'; Outlook Stable
EUR23.3m Class A-2A (XS1084357984): affirmed at 'AA+sf'; Outlook Stable
EUR11.3m Class A-2B (XS1084358792): affirmed at 'AA+sf'; Outlook Stable
EUR20.4m Class B (XS1084359170): affirmed at 'A+sf'; Outlook Stable
EUR14.2m Class C (XS1084359840): affirmed at 'BBB+sf'; Outlook Stable
EUR28.3m Class D (XS1084360343): affirmed at 'BBsf'; Outlook Stable
EUR11.3m Class E (XS1084360426): affirmed at 'B-sf'; Outlook Stable

Ares European CLO VII BV is an arbitrage cash flow collateralised loan obligation (CLO). Net proceeds from the issuance of the notes were used to purchase a EUR340m portfolio of European leveraged loans and bonds. The portfolio is managed by Ares Management Limited. The transaction features a four-year reinvestment period.

KEY RATING DRIVERS
The affirmation reflects the transaction's performance, which has been in line with Fitch's expectations. Since closing in September 2014, all notes have experienced marginal increases in credit enhancement as a result of trading increasing the par value of the portfolio.

The transaction went effective as of October 2014 and will remain in its reinvestment period until the end of 2018, during which the manager can purchase and sell assets as long as collateral quality tests, portfolio profile tests and coverage tests are satisfied or if failing, maintained or improved.

All portfolio profile and coverage tests are currently passing. Also, all collateral quality tests are currently passing at the current matrix point. The covenants for the portfolio have moved since closing: the weighted average rating factor to 35 from 33, the weighted average rating recovery to 68.9% from 69% and the weighted average spread to 4.25% from 4%, which are also currently passing. The portfolio's current results are 32.66, 69.9% and 4.47%, respectively. The weighted average coupon is currently 6.46%, compared with a minimum trigger of 5%.

The majority of the assets are rated in the 'B' category and are well diversified with 121 assets from 95 obligors. The largest industry is chemicals at just below 12%, followed by healthcare. The largest country exposure is to Germany with over 27%, followed by the US with 14% and Netherlands with just above 13%. European peripheral exposure is represented by Spain and Italy and remains at 5%, around half of the maximum allowed exposure of 10%.

RATING SENSITIVITIES

As the loss rates for the current portfolio are below those modelled for the stress portfolio, the sensitivities shown in the new issue report still apply for this transaction. Detailed sensitivity analysis is available in the new issue report dated 10 October 2014 at www.fitchratings.com.

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.

The majority of the underlying assets have ratings or credit opinions from Fitch and/or other Nationally Recognized Statistical Rating Organizations and/or European Securities and Markets Authority registered rating agencies. Fitch has relied on the practices of the relevant Fitch groups and/or other rating agencies to assess the asset portfolio information.

Prior to the transaction closing, Fitch did not review the results of a third party assessment conducted on the asset portfolio information.

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 citi as at 6 August 2015
-Transaction reporting provided by citi as at 6 August 2015

REPRESENTATIONS AND WARRANTIES
"A comparison of the transaction's Representations, Warranties & Enforcement Mechanisms to those typical for the asset class is available by accessing the appendix that accompanies the initial new issue report (see Ares European CLO VII B.V. Appendix, dated 6 October 2014 at www.fitchratings.com). In addition refer to the special report "Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions" dated 26 March 2015 available on the Fitch website."