(The following statement was released by the rating agency)
Feb 03 -
OVERVIEW
-- On Nov. 30, 2011, we lowered and removed from CreditWatch negative our counterparty rating on Assured Guaranty (Europe), the provider of a financial guarantee for Posillipo Finance II's class A2 notes.
-- On Jan. 27, 2012, we lowered and removed from CreditWatch negative our long-term rating on the Region of Campania, the ultimate obligor for the payments on Posillipo Finance II's class A1 notes.
-- Consequently, we have taken corresponding rating actions in this transaction as our ratings on the class A1 and A2 notes are weak-linked to the ratings on the Region of Campania and Assured Guaranty (Europe), respectively.
-- Posillipo Finance II is an Italian ABS transaction, which was designed to securitize claims arising from contracts to supply medical equipment and services to health care units in the region of Campania.
Standard & Poor's Ratings Services today lowered and removed from CreditWatch negative its credit ratings on Posillipo Finance II S.r.l.'s class A1 and A2 asset-backed floating-rate notes, following our corresponding rating actions on Assured Guaranty (Europe) Ltd. and the Region of Campania (see list below).
DOWNGRADE OF REGION OF CAMPANIA
Our rating on the class A1 notes is weak-linked to our long-term rating on the Region of Campania (BBB+/Negative). The Region of Campania, a regional government, is the ultimate obligor for the payments on the class A1 notes following the downgrade of the previous guarantor, Ambac Assurance U.K. Ltd., on Nov. 9, 2010. The Region of Campania irrevocably pays sums owed to Posillipo Finance II by each of the health care units that the transaction has securitized claims for since closing in 2007.
The payment mechanism that ensures timely payment of interest and principal on the notes does not benefit from a cash flow prioritization because these debt-like repayments are not supported by an irrevocable payment mandate issued from the region to the treasurer, unlike payments on the region's direct bond issues. Because of this mechanism, our rating on Posillipo Finance II's class A1 notes is one notch below the rating on the Region of Campania. Therefore, we have lowered our rating on Posillipo Finance II's class A1 notes to 'BBB (sf)'. At the same time, we removed the rating from CreditWatch negative to reflect our long-term rating on the region, which we lowered and removed from CreditWatch negative on Jan. 27, 2012 (see 'Ratings On 13 Italian LRGs Lowered To 'BBB+' And Lazio 'BBB+' Rating Affirmed On Italy Rating Action; All Outlooks Neg').
DOWNGRADE OF ASSURED GUARANTY (EUROPE)
Assured Guaranty (Europe) (AA-/Stable) provides an unconditional and irrevocable financial guarantee for the timely payment of interest and principal on the class A2 notes. Our rating on these notes is therefore weak-linked to the rating on Assured Guaranty (Europe) as guarantor. Consequently, following the downgrade on Nov. 30, 2011 of Assured Guaranty (Europe), we have today lowered to 'AA- (sf)' our rating on the class A2 notes to reflect the 'AA-' rating on the guarantor (see 'Assured Guaranty Ltd. And Operating Companies Downgraded; Outlook Stable').
Posillipo Finance II is an Italian ABS transaction, which closed in 2007.
STANDARD & POOR'S 17G-7 DISCLOSURE REPORT
SEC Rule 17g-7 requires an NRSRO, for any report accompanying a credit rating relating to an asset-backed security as defined in the Rule, to include a description of the representations, warranties and enforcement mechanisms available to investors and a description of how they differ from the representations, warranties and enforcement mechanisms in issuances of similar securities. The Rule applies to in-scope securities initially rated (including preliminary ratings) on or after Sept. 26, 2011.
If applicable, the Standard & Poor's 17g-7 Disclosure Report included in this credit rating report is available at http://standardandpoorsdisclosure-17g7.com.
RELATED CRITERIA AND RESEARCH
-- Ratings On 13 Italian LRGs Lowered To 'BBB+' And Lazio 'BBB+' Rating Affirmed On Italy Rating Action; All Outlooks Neg, Jan. 27, 2012
-- Assured Guaranty Ltd. And Operating Companies Downgraded; Outlook Stable, Nov. 30, 2011
-- Global Structured Finance Scenario And Sensitivity Analysis: The Effects Of The Top Five Macroeconomic Factors, Nov. 4, 2011
-- Principles Of Credit Ratings, Feb. 16, 2011
-- Counterparty And Supporting Obligations Update, Jan. 13, 2011
-- Counterparty and Supporting Obligations Methodology And Assumptions, Dec. 6, 2010
-- European Legal Criteria For Structured Finance Transactions, Aug. 28, 2008
-- New Issue: Posillipo Finance II S.r.l., March 27, 2008
RATINGS LIST
Class Rating
To From
Posillipo Finance II S.r.l.
EUR1.74 Billion Asset-Backed Floating-Rate Notes Series 2007-1
Ratings Lowered And Removed From CreditWatch Negative
A1 BBB (sf) BBB+ (sf)/Watch Neg
A2 AA- (sf) AA+ (sf)/Watch Neg
(Bangalore Ratings Team, Hotline: +91 80 4135 5898 satish.kb@thomsonreuters.com, Group id: BangaloreRatings@thomsonreuters.com, Reuters Messaging: satish.kb.thomsonreuters.com@reuters.net)
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