TEXT-Fitch cuts Talisman-3 Finance p.l.c.'s class D notes; affirms others

Tue Nov 6, 2012 7:29am EST

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Nov 06 - Fitch Ratings has downgraded Talisman-3 Finance p.l.c.'s class D notes and affirmed the class E and F notes, as follows:

EUR42.7m class D (XS0256115865) downgraded to 'Csf' from 'CCsf'; Recovery Estimate (RE) 80%

EUR10m class E (XS0256116327) affirmed at 'Csf'; RE 0%

EUR5m class F (XS0256116673) affirmed at 'Csf'; RE 0%

The downgrade of the class D notes follows the announcement of final recoveries on the Berlin/Dresden loan, indicating that approximately EUR5.7m of the class D notes will be written off at the January 2013 interest payment date (IPD). The class E and F notes will be entirely written off at the same time.

The recoveries were applied to the notes sequentially in October 2012, redeeming the class B notes (EUR13.7m) and C notes (19.6m) in full and the class D notes in part (by EUR9.8m). As the special servicer confirmed that no more recoveries are expected after the IPD, the corresponding losses will be allocated to the class D, E and F notes three months in arrears.

The only remaining loan, Waterloo (EUR27.2m), is performing well. Vacancy is currently at 2.8%, the lowest level since origination and slightly down from 2.9% a year ago. The stability of the collateral is reflected in the December 2010 re-valuation, which showed only a modest 1.3% decline in asset value since December 2005. Fitch expects a full recovery on this loan, ultimately redeeming the remainder of Class D.

A performance report will shortly be available on www.fitchratings.com.

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