OREANDA-NEWS. Fitch Ratings has taken multiple rating actions on the notes of Fornax (Eclipse 2006-2) as follows:

EUR16.m class C (XS0267554508) affirmed at 'A+sf' Outlook Stable
EUR19.9m class D (XS0267554920) affirmed at 'BBBsf'; Outlook changed to Negative from Stable
EUR24.8m class E (XS0267555570 affirmed at 'B-sf'; Outlook changed to Negative from Stable
EUR16.8m class F (XS0267555737) downgraded to 'CCsf' from 'CCCsf'; Recovery Estimate (RE) revised to 50% from 90%
EUR6.7m class G (XS0267556032) affirmed at 'Dsf'; RE 0%

This transaction is a securitisation of 19 commercial mortgage backed loans originated by Barclays Bank PLC. There are currently four loans remaining in the portfolio, three are in special servicing and the remaining one is performing. Loan collateral is domiciled in Germany, Italy and Austria.

KEY RATING DRIVERS
The main rating drivers are the performance of Cassina Plaza and Kingbu loans, which alongside the ATU Austria loan, have been in default for several years. The Cassina Plaza loan remains the most problematic given its collateral is a tertiary quality Italian office with little visibility over occupational demand after contracted income rolls in just under three years. Each year that passes without resolution contributes to falling value in Fitch's estimation, largely driving today's negative rating action. Only the Bielefield/Berlin loan remains in primary servicing.

The transaction has switched to sequential principal payment due to a breach of a number of triggers (most notably a notes write-down). While the repayment in full of the Century Plaza loan since September 2014 is credit-positive, its impact on the ratings is minimal given it was the smallest loan.

Within special servicing both the ATU Austria and Kingbu loans have amortised through cash sweep (and also asset sales in the case of Kingbu), with principal falling by 31% and 43% respectively. Although properties are being liquidated from the Kingbu portfolio, the rate of sale is slow, raising doubts about eventual proceeds from the remaining assets (being standalone restaurants). In the ATU Austria loan, the sole tenant, ATU, recently extended its leases to 2030 from 2020, mitigating refinancing risk albeit only in proportion to the credit standing of the tenant.

The Cassina Plaza loan makes up 47% of the remaining portfolio and defaulted at maturity in November 2013. It entered standstill, and was subsequently extended until October 2015. The office is in a peripheral location within the province of Milan. The last reported occupancy was 67%, with the rent roll dominated by Nokia Siemens (contributing 50%, with two years remaining until break). The special servicer has entered into a consensual sale framework agreement with the borrowers and a liquidator has now been appointed, creating downside risk to the valuation.

RATING SENSITIVITIES
A failure to hasten recoveries from out-of-town properties such as those securing the ATU and Kingbu loans, as well as a lack of visibility and considerable downside risk on the Cassina Plaza loans, could both lead to negative rating action, particularly on the notes with Negative Outlooks.

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 pools 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 pools 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.

SOURCES OF INFORMATION
The information below was used in the analysis.

-Loan-by-loan data provided by Capita as at 8 July 2015
-Transaction reporting provided by Capita as at 8 July 2015