DBRS Assigns Ratings to Phoenix Funding 2 Limited Notes

DBRS Ratings Limited (“DBRS”) has today assigned a ‘A’ (sf) rating to the Class A notes issued by Phoenix Funding 2 Limited (“Phoenix 2, issuer”).

Phoenix 2 is the securitisation of first-ranking Irish mortgage loans originated by KBC Bank Ireland plc (“KBCI”). The issuer purchased these mortgage loans funded by the issuance of two classes of mortgage-backed notes. The mortgage portfolio is seasoned about 7 years and is serviced by KBCI.

The credit enhancement for the Class A notes is provided by the subordination of Class B and a reserve fund which can amortise in certain circumstances. The liquidity for payment of interest on Class A notes can be also supported by the use of principal receipts.

The ratings are based upon DBRS review of the following analytical considerations:

• The transaction’s capital structure and the form and sufficiency of available credit enhancement. Relevant credit enhancement is in the form of subordination, a reserve fund, and excess spread.
• The credit quality of the mortgages backing the notes and the ability of the servicer to perform collection activities on the collateral.
• The transaction parties’ capabilities with respect to originations, underwriting, servicing and financial strength.
• The ability of the transaction to withstand stressed cash flow assumptions and repay investors according to the terms of the transaction documents.
• The legal structure and presence of legal opinions addressing the assignment of the assets to the issuer and the consistency with the DBRS Legal Criteria for European Structured Finance Transactions.

Notes:
All figures are in Euro unless otherwise noted.

The principal methodologies applicable are:
• Master European Residential Mortgage-Backed Securities Rating Methodology
• Legal Criteria for European Structured Finance Transactions
• Derivative Criteria for European Structured Finance Transactions
• Operational Risk Assessment for European Structured Finance Servicers
• Unified Interest Rate Model Methodology for European Securitisations

These can be found on dbrs.com under Methodologies. For a more detailed discussion of sovereign risk impact on Structured Finance ratings, please refer to DBRS commentary “The Effect of Sovereign Risk on Securitisations in the Euro Area”.

The sources of information used for this rating include investor reports and documents provided by the issuer. DBRS considers the information available to it for the purposes of providing this rating was of satisfactory quality. The information upon which DBRS ratings and reports are based, and any other Content displayed on the Site, is obtained by DBRS from sources DBRS believes to be accurate and reliable. DBRS does not audit the information it receives in connection with the rating process, and it does not and cannot independently verify that information in every instance. The extent of any factual investigation or independent verification depends on facts and circumstances.

These ratings concern existing financial instruments. This is the first DBRS rating on these financial instruments.

For additional information on this rating, please see the linking document which is located at

For further information on DBRS’s historic default rates published by the European Securities and Markets Administration (“ESMA”) in a central repository see http://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml.

Ratings assigned by DBRS Ratings Limited are subject to EU regulations only.

Initial Lead Analyst: Kali Sirugudi
Initial Rating Date: 15/07/2013
Rating Committee Chair: Claire Mezzanotte
Lead Surveillance Analyst: Keith Gorman