OREANDA-NEWS. Fitch Ratings has affirmed DRACO (Eclipse 2005-4) plc's GBP3.2m class E notes (XS0238141617) due 2017 at 'CCCsf'/Recovery Estimate (RE) 90%.

Draco (Eclipse 2005-4) plc was a securitisation of five commercial mortgage loans originated in the UK by Barclays Bank plc. Four loans have prepaid since closing in December 2005. The remaining loan (GBP7.8m Herbert House) is in default and special servicing.

KEY RATING DRIVERS
The rating reflects Fitch's unchanged view that net recoveries (after workout costs) on the underlying collateral may be insufficient to redeem the tranche in full unless the collateral value is boosted by a new lease. .

Herbert House defaulted at its maturity in January 2014 and was transferred into special servicing. The loan is secured against a single office property located in Birmingham. The former sole tenant exercised a break option in its lease and vacated the asset in July 2015. A terminal schedule of dilapidations has been served.

The 2013 valuation estimates open market value of the collateral at GBP5.1m (albeit with the previous tenant in place). Fitch believes that a significant loss will be incurred on the loan should the asset not be re-let prior to sale. The unrated GBP4.6m class F notes would absorb the majority of the loss. However, the material possibility of a loss to the class E notes (or the notes remaining outstanding beyond the approaching bond maturity) is the main driver for the 'CCCsf' rating and 90% Recovery Estimate.

RATING SENSITIVITIES
The notes may be upgraded if the asset is re-let at market terms and if there is evidence of sales or good refinancing prospects. The notes will likely be downgraded if a timely/ full repayment becomes unachievable.

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 Capita Asset Services as of end-October 2015