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Lunar Funding I Ltd.'s Series 6 Notes Rating Placed On Watch Negative Following Action On Underlying Collateral

Overview

  • On April 17, 2020, we placed on CreditWatch negative our 'BB (sf)' rating on Mitchells & Butlers Finance PLC class C1 notes.
  • Consequently, under our criteria for rating repackaged securities, we have placed on CreditWatch negative our 'BB' rating on Lunar Funding I Ltd.'s series 6 notes because we weak-link our rating on the notes to our issue rating on the underlying collateral, Mitchells & Butlers Finance PLC.

LONDON (S&P Global Ratings) May 11, 2020--S&P Global Ratings today placed on CreditWatch negative its 'BB' credit rating on Lunar Funding I Ltd.'s series 6 notes.

Today's CreditWatch negative placement follows our April 17, 2020, rating action on Mitchells & Butlers Finance PLC (see "34 Tranches On Seven U.K. Corporate Securitizations Placed On CreditWatch Negative Due To COVID-19 Uncertainty," published April 17, 2020).

Under our "Global Methodology For Rating Repackaged Securities" criteria, we weak-link our rating on Lunar Funding I Ltd.'s series 6 notes to the lowest of:

  • Our rating on the fixed- and floating-rate asset-backed class C1 notes issued by Mitchells & Butlers Finance PLC;
  • Our issuer credit rating (ICR) on NatWest Markets PLC as the fee payer;
  • Our ICR on Deutsche Bank AG (London Branch) as custodian;
  • Our ICR on NatWest Markets as bank account provider; and
  • Our ICR on the Bank of New York Mellon (London Branch) as custodian, which we derive from our ICR on the Bank of New York Mellon as branch parent.

Therefore, following our recent CreditWatch negative placement of our 'BB (sf)' rating on Mitchells & Butlers Finance PLC class C1 notes, we have consequently place on CreditWatch negative our 'BB' rating on Lunar Funding I Ltd.'s series 6 notes.

The CreditWatch placements on Mitchells & Butlers Finance PLC reflected the potential effect that the U.K. government's measures to contain the spread of COVID-19 could have on both the U.K. economy and the relevant business sectors. In our view, the credit quality of the transaction may decline due to health and safety fears related to COVID-19. We believe this may negatively impact the cash flows available to the issuer.

S&P Global Ratings acknowledges a high degree of uncertainty about the rate of spread and peak of the coronavirus outbreak. Some government authorities estimate the pandemic will peak about midyear, and we are using this assumption in assessing the economic and credit implications. We believe the measures adopted to contain COVID-19 have pushed the global economy into recession (see our macroeconomic and credit updates here: www.spglobal.com/ratings). As the situation evolves, we will update our assumptions and estimates accordingly.

Environmental, social, and governance (ESG) factors relevant to the rating action:  

  • Health and safety

Related Criteria

  • Criteria | Structured Finance | General: Counterparty Risk Framework: Methodology And Assumptions, March 8, 2019
  • Legal Criteria: Structured Finance: Asset Isolation And Special-Purpose Entity Methodology, March 29, 2017
  • Criteria | Structured Finance | General: Global Framework For Assessing Operational Risk In Structured Finance Transactions, Oct. 9, 2014
  • General Criteria: Methodology Applied To Bank Branch-Supported Transactions, Oct. 14, 2013
  • Criteria | Structured Finance | General: Global Methodology For Rating Repackaged Securities, Oct. 16, 2012
  • General Criteria: Methodology: Credit Stability Criteria, May 3, 2010

Related Research

  • 34 Tranches On Seven U.K. Corporate Securitizations Placed On CreditWatch Negative Due To COVID-19 Uncertainty, April 17, 2020
  • 2017 EMEA Structured Credit Scenario And Sensitivity Analysis, July 6, 2017
  • Global Structured Finance Scenario And Sensitivity Analysis 2016: The Effects Of The Top Five Macroeconomic Factors, Dec. 16, 2016
  • European Structured Finance Scenario And Sensitivity Analysis 2016: The Effects Of The Top Five Macroeconomic Factors, Dec. 16, 2016
  • Assessing Credit Quality By The Weakest Link, Feb. 13, 2012
Primary Credit Analyst:Shane Ryan, London + 44 20 7176 3461;
shane.ryan@spglobal.com
Secondary Contacts:Rebecca Mun, London (44) 20-7176-3613;
rebecca.mun@spglobal.com
Emanuele Tamburrano, London (44) 20-7176-3825;
emanuele.tamburrano@spglobal.com

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