OREANDA-NEWS. Fitch Ratings has placed Eurosail-UK 07-3 BL Plc, a UK non-conforming RMBS transaction, on Rating Watch Positive (RWP). This follows the restructuring of the transaction as announced on the Irish Stock Exchange on 26 February 2016. A full list of rating actions is at the end of this rating action commentary.

KEY RATING DRIVERS
Foreign Exchange Risk Eliminated
Exposures to euro and US dollar movements against sterling following the bankruptcy of Lehman Brothers (LB), the transactions' initial currency swap provider, have now been eliminated. Sterling-denominated proceeds from the underlying collateral were previously converted at the current foreign exchange (FX) spot rates in order for payments to be made on the euro and US dollar denominated notes. Following the sale of the remaining claim against LB, the noteholders have agreed to redenominate all euro and US dollar notes to sterling, with none of the junior tranches being subject to a write-down. With this key rating driver now removed from the transaction, Fitch believes that the transaction's long-term prospects have improved, leading to the tranches being placed on RWP.

RATING SENSITIVITIES
Fitch will assess the full effect of the restructure on the transaction as well as the performance of the assets and the available credit enhancement for each tranche. The analysis may result in either upgrades or affirmations of tranches that are placed on RWP. All ratings will be reviewed within the next six months.

DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.

DATA ADEQUACY
Fitch has not checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction due to this rating action being the result of an restructuring event. 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.
- Legal documentation provided by the issuer as at 25 January 2016

MODELS
This rating action was the result of a restructuring event and therefore no models were used for the purpose of this action.

Fitch has taken the following rating actions:

Eurosail-UK 07-3 BL Plc
Class A2a (ISIN XS0308648673): 'BBsf'; On RWP
Class A2b (ISIN XS0308650224): 'BBsf'; On RWP
Class A2c (ISIN XS0308659795): 'BBsf'; On RWP
Class A3a (ISIN XS0308666493): 'CCsf'; On RWP; Recovery Estimate (RE) 65%
Class A3c (ISIN XS0308710143): 'CCsf'; On RWP; RE 65%
Class B1a (ISIN XS0308672384): 'Csf'; On RWP; RE 0%
Class B1c (ISIN XS0308716421): 'Csf'; On RWP; RE 0%
Class C1a (ISIN XS0308673192): 'Csf'; On RWP; RE 0%
Class C1c (ISIN XS0308718047): 'Csf'; On RWP; RE 0%
Class D1a (ISIN XS0308673945): 'Csf'; On RWP; RE 0%
Class E1c (ISIN XS0308725844): 'Csf'; On RWP; RE 0%