Scope Ratings GmbH (Scope) monitors and reviews its credit ratings on an ongoing basis and at least annually, or every six months in the case of sovereigns, sub-sovereigns and supranational organisations.

Scope performs monitoring reviews to determine whether material changes and/or changes in macroeconomic or financial market conditions could have an impact on the credit ratings. Scope considers all available and relevant information when undertaking the monitoring review.

Monitoring reviews are conducted by performing a peer comparison, benchmarking against the rating-change drivers, and/or reviewing the credit ratings’ performance over time, as deemed appropriate by the Lead Analyst or Analytical Team Head, in addition to an assessment of all aspects of the relevant methodologies, including key rating assumptions and models. Scope publicly announces the completion of each monitoring review on its website.

Scope completed the monitoring review for Buonconsiglio 4 S.r.l. on 4 August 2023. The credit ratings remain as follow:

Class A (ISIN IT0005473647), EUR 117.7m original balance, EUR 88.5m current balance: BBB_SF

Class B (ISIN IT0005473654), EUR 16.5m original balance, EUR 16.5m current balance: Not rated

Class J (ISIN IT0005473662), EUR 5.9m original balance, EUR 5.9m current balance: Not rated

The reviews were conducted considering available servicer reports, payment reports and investor reports up to July 2023. 

This monitoring note does not constitute a credit rating action, nor does it indicate the likelihood that Scope will conduct a credit rating action in the short term. Information about the latest credit rating actions connected with this monitoring note along with the associated rating history can be found on www.scoperatings.com.

Rating factors

Rating factors assessed during the monitoring review include realised profitability on closed positions, the timing of cumulative collections and the amount of recovery expenses, against Scope’s expectations. Additionally, the review addressed the risk of a slowdown of the Italian economy driven by persistent inflationary pressures combined with tighter monetary policy, and the potential deterioration of borrowers’ affordability conditions which could impair servicers’ performance on collections. The ratings also consider the issuers’ exposure to key counterparties, the legal and structural protection provided to the notes, the liquidity protection and the interest rate hedging agreements.

Faster than expected cumulative collections (positive). Aggregate gross and net collections amount to EUR 42.5m and EUR 36.5m, respectively. Total gross collections are split between judicial proceeds (61.8%), DPO proceeds (32.6%) and other sources of collections (5.6%). Aggregate net collections, which represent 267.5% of the original servicer’s expectations, have outpaced Scope’s timing expectations under the class A rating scenario.

High profitability of closed positions (positive). Gross collections from closed borrowers are 74.6% of cumulative collections and were mainly obtained through judicial proceeds (78.9%), DPOs (17.7%) and other sources of collections (3.4%). Based on Scope’s analysis, secured closed debtors account for around 4.6% of the transaction’s initial GBV. Profitability on these debtors, at 105%, is above Scope’s expectations under the B case scenario.

High recovery expenses (negative). Cumulative recovery expenses, at 14.3% of cumulative collections, are significantly above Scope’s lifetime assumption of 9%.

The methodologies applicable for the reviewed ratings (General Structured Finance Rating Methodology, 25 January 2023, Non-Performing Loan ABS Methodology, 3 August 2023, Counterparty Risk Methodology, 13 July 2023) are available on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.
Lead analyst Stefano Bracchi, Associate Analyst

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