PRESS RELEASE: S&P Rates Tesco Property Finance 3's U.K. CMBS

29th Jun 2010 13:01

The following is a press release from Standard & Poor's: OVERVIEW -- We have assigned a preliminary 'A-' credit rating to Tesco Property Finance 3's fixed-rate notes. -- This will be a sale and leaseback transaction involving 41 properties The Tesco Passaic Limited Partnership owns. -- The properties comprise 41 supermarkets leased to subsidiaries of Tesco PLC that it guarantees. LONDON (Standard & Poor's) June 29, 2010--Standard & Poor's Ratings Services today assigned its 'A-' preliminary credit rating to Tesco Property Finance 3 PLC's fixed-rate notes. The transaction will be a sale and leaseback transaction involving 41 properties The Tesco Passaic Limited Partnership (the partnership) owns. The properties comprise 41 supermarkets leased to subsidiaries of Tesco PLC that it guarantees. The transaction will be structured so that the bond obligations will be ultimately supported by the payment stream emanating from the underlying occupational leases. To mitigate the risk that rental receipts are insufficient to meet fixed interest and principal payments under the partnership loan, partnership and issuer level swaps will be entered into with Tesco as the ultimate swap counterparty to provide fixed payments at each interest payment date. Investors should note that the rating on the bonds will be credit-linked to our rating on Tesco (A-/Stable/A-2). Therefore, any change in the rating on Tesco will likely lead to a change in the rating on the bonds. RELATED CRITERIA AND RESEARCH -- Presale: Tesco Property Finance 3 PLC, June 29, 2010 -- New Issue: Tesco Property Finance 2 PLC, Sept. 28, 2009 -- Tesco PLC, Nov. 12, 2009 -- European Structured Finance Outlook 2010: Conditions Improving For Primary Issuance, But New Equilibrium Still Some Way Off, Feb. 1, 2010 -- Advance Notice Of Proposed Criteria Change: Review Of Criteria Assumptions And Methodology On European CMBS Transactions With Concentrated Loan Exposures, Nov. 11, 2009 -- Adjustments Needed In European Commercial Real Estate Finance, But There is Time, June 10, 2009 -- Scenario Analysis: CMBS Downgrades To Increase As European Real Estate And Debt Market Conditions Further Deteriorate, Sept. 26, 2008 -- European Legal Criteria For Structured Finance Transactions, Aug. 28, 2008 -- European CMBS Loan Level Guidelines, Sept. 2, 2004 -- European CMBS Monthly Bulletin (published monthly) Related articles are available on RatingsDirect. 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(END) Dow Jones Newswires June 29, 2010 08:01 ET (12:01 GMT)