Leviticus SPV S.r.l. is a static cash securitisation of a portfolio of Italian non-performing loans initially worth around EUR 7,385m by gross book value and serviced by Credito Fondiario S.p.A.. The portfolio was originated by Banco BPM S.p.A.

Leviticus SPV S.r.l. will implement a real estate operating company (ReoCo) structure, established according to the provisions of article 7.1 paragraph 4 of Law 130 of 1999. Credito Fondiario S.p.A. will be appointed as the servicer to carry out all core ReoCo activities.

The main purpose of the ReoCo is to encourage third-party acquisitions at auctions above auction base prices or, to repossess real-estate assets at otherwise empty auctions, and re-sell them at better prices in the open market. The implementation of the ReoCo structure could be positive as it might increase recovery rates. However, based on the draft documentation, ReoCo structural fees and costs (except for the ReoCo servicer’s incentive fees) will rank senior to the repayment of assumed debt towards the issuer. Therefore, the benefit of the ReoCo implementation will largely depend on the ability of ReoCo servicer to sell purchased properties at higher prices than would have been realised at auctions.

The overall amount of debt assumed by the ReoCo will be limited to EUR 100 million on a revolving basis. This means that after an asset is sold, even if sold at a loss, the total allowable exposure will not be reduced.

The ReoCo will finance its activities through limited-recourse financing provided by Credito Fondiario S.p.A. or by the holders of Class B Notes and Class J Notes issued by Leviticus SPV S.r.l. This financing will cover costs related to auction deposits, the ReoCo’s operating costs and properties’ maintenance costs.

Scope’s analysis only covers the credit impact associated with the amendments described above. Scope has not addressed other non-credit related effects that may be relevant for investors and/or counterparties when assessing the impact of said amendments.

This announcement does not constitute a rating action nor indicates the likelihood of a credit rating action in the short term. The latest information on the credit ratings of Leviticus SPV S.r.l. along with the associated rating history can be found on www.scoperatings.com.