Moody’s: RBS’s donwgrade will not impact the PELICAN MORTGAGES NO.3

Deniz Kılınç / İstanbul, May 4 (DHA) – Moody’s Investor’s Service has announced that Royal Bank of Scotland (RBS) not taking any further action following the breach of Second Trigger Required Rating will not resut in a donwgrade or a withdrawal of the current ratings of the notes issued by PELICAN MORTGAGES NO.3.
Moody’s has reviwed the swap agreement between RBS, acting as swap provider, and SAGRES Sociedade de Titularizaçao de Creditos S.A., about the Pelican 3. According to the announcement by Moody’s, RBS’s downgrade resulted in the breach of the Second Trigger Reuired Rating under the Swap Agreemnt which was set at Baa1, requiring RBS to take suitable remedial action. The Swap agreemtn contemplated several alternative remedial actions such as; transferring the swap to an appropriately rated third party, obtaining a guarantee by an appropriately rated guatantor or taking some other action such that the downgrade of RBS does not have a negative rating impact on the Notes.
Accordingly to the revision, Moody’s has assessed the situation as follows: "Moody’s was infromed that RBS will not take further action following the trigger breach, which constitute ‘other action’ as remedial action under the swap documentation.
"In Moody’s opinion, the fact that RBS does not take further action following the breach of the Secong Trigger Required Rating will not, in and of itself and at this time, result in a reduction or withdrawal of the current ratings of the notes.
"Moody’s has assessed the probability and impact of a deafult of the swap counterparty on the ability of the issuer to meet their obligations under the transaction."