Notes Downgraded in UK Hotel Deal

Moody's Investors Service has downgraded the class C and D notes of HOTELoC PLC, a transaction secured by properties operated by Thistle Hotels in the United Kingdom.About £131 million (approximately $249 million) in securities are affected by the rating action. The ratings lowered were as follows: class C, from Baa1 to Baa2, and class D, from Ba3 to B2. Moody's affirmed the ratings of the class A, B, E1, E2, and E3 notes. All the notes in the transaction are backed by one loan secured by a portfolio of 31 hotels located throughout the United Kingdom. Moody's downgraded the class C and D notes in part because the "agreed sale price for the sale of three hotels" was "significantly below the required release premium (but above the allocated loan amount and the minimum sale price agreed by Noteholders)." Also among factors contributing to the downgrades were "continued uncertainty regarding the timing of the deleveraging of the transaction due to the conditions attached to the sale" and the fact that the performance of the hotels "continues to be below original expectations." Moody's can be found on the Web at http://www.moodys.com.