Ratings On Three Classes Of Notes Lowered To 'D (sf)' In HSBC's Malachite Funding Vehicle After Portfolio Liquidation

OVERVIEW

  • Malachite Funding is an HSBC-sponsored vehicle that securitizes a portfolio of predominantly structured finance securities.
  • Following the liquidation of the portfolio, we have lowered our ratings on three classes of junior mezzanine notes.
LONDON (S&P Global Ratings) Jan. 18, 2019--S&P Global Ratings today lowered to 
'D (sf)' from 'CCC- (sf)' its credit ratings on three classes of junior 
mezzanine notes issued by Malachite Funding Ltd. (see list below).

Today's downgrades follow the liquidation of the portfolio.  

The issuer, in accordance with the transaction documents, announced a clean-up 
redemption of the notes in the last quarter of 2018. The Tier 2 income notes 
could not be fully repaid due to insufficient funds following the liquidation 
of the portfolio. Based on the redemption notice, each of these Tier 2 notes 
were unpaid approximately 13.4% of the outstanding principal amount.

Our ratings on these classes of notes address the ultimate payment of the 
principal amount outstanding plus the current and all the capitalized 
interest. Consequently, we have lowered to 'D (sf)' from 'CCC- (sf)' our 
ratings on these classes of notes. Our ratings on these classes of notes will 
remain at 'D (sf)' for 30 days before the withdrawal becomes effective.

Malachite Funding is an HSBC-sponsored vehicle that securitizes a portfolio of 
predominantly structured finance securities.
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