UK Hotel-Backed Notes Downgraded

Moody's Investors Services has downgraded two classes of floating-rate notes backed by a loan on a portfolio of United Kingdom hotels.Moody's downgraded classes A and B of the HoteLoC PLC transaction from Aa3 to Baa1 and from A3 to Baa2, respectively. The rating action "has been triggered by the increasing uncertainty that full note repayment (through a negotiated sale or enforcement) will be received by noteholders by May 2007, the legal final maturity date," Moody's said. In May 2005, the loan backing the deal matured and the borrower failed to make the final payment, according to the rating agency. The borrower has been working with the special servicer on a sale of the assets, but "to date no exchange of contracts has been reported," Moody's said. The rating agency can be found on the Web at http://www.moodys.com.