OREANDA-NEWS. Fitch Ratings has affirmed Telereal Secured Finance PLC's (Telereal) fixed rate GBP454.3m notes due December 2033 (XS0987936076) at 'BBBsf'; Outlook Positive.

Telereal is a securitisation of a fully-amortising loan secured by rental cash flows derived from a portfolio of operational properties occupied by British Telecommunications plc (BT; BBB/Positive) and located throughout the UK.

KEY RATING DRIVERS
The affirmation reflects BT's credit strength and its continued reliance on the property portfolio to house UK network operations.

BT benefits from the flexibility to vacate properties (that are surplus to operational requirements) up to a limit known as the specified allowance. Exceeding this limit will incur the payment of compensation to the landlord in lieu of lost rental income. This helps offset the reliance on portfolio vacant possession value (VPV) to redeem the notes.

As compensation varies per property, BT's choice of property to vacate within the specified allowance is a key input in Fitch's analysis. Fitch considered the compensation received in relation to the rent foregone per asset as a measure to construct a worst case vacation scenario.

Fitch notes that since using all but GBP98,500 of the current specified allowance it is clear that those properties vacated to date do not represent a worst case scenario. The reliance on VPV to redeem notes in lieu of lost income is now negligible and is expected to reach zero in due course.

RATING SENSITIVITIES
Any rating action on BT would lead to a corresponding change in the rating of the bonds.

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.