Fitch Affirms Colston 1,2,3,4 and Bowbell No. 1

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LONDON--(BUSINESS WIRE)-- Fitch Ratings has affirmed the ratings of Colston 1, Colston 2, Colston 3, Colson 4 and Bowbell No. 1 plc, a set of UK Prime RMBS transactions. Colston 1, 2, 3 and 4 are collateralised by mortgages originated by the Governor and Company of Bank of Ireland (rated 'BBB'/Negative/'F2') under its two mortgage brands, Bristol & West and Bank of Ireland Home Mortgages Limited. Bowbell is the first RMBS transaction from Bank of Ireland UK Plc and it comprises approximately 71% of mortgages extracted on the closing date from the Colston series of transactions. A full list of the rating actions is at the end of this commentary.

Since the recent restructuring of Colston 1 in July 2011 and restructuring of Colston 2, 3 and 4 and closing of Bowbell in November 2010, the asset performance of all five transactions has remained relatively stable. As of June 2011, the volume of loans in arrears by three months or more stood at 0.56% for Bowbell, and ranged between 2.03% (Colston 2) and 2.92% (Colston 4) to 1.84% (Colston 4) and 2.43% (Colston 1) a year ago. For this reason, Fitch has affirmed the ratings of the notes. For more detailed information on the restructurings, please refer to Fitch's Press Releases 'Fitch Confirms Colston No.1 plc on Restructuring' published on 25 July 2011 and 'Fitch Affirms Colston 2,3 and 4 Following Restructuring' dated 1 November 2010, both available at www.fitchratings.com.

The credit support for all the notes is provided by overcollateralization and fully-funded non-amortising reserve funds. Additionally, Bowbell No. 1 plc has established a liquidity reserve currently in the amount of GBP72.6m, due to the breach of the transaction's Liquidity Reserve Rating Event. Principal receipts were thus trapped and used to fund this reserve leading to an outstanding principal deficiency ledger (PDL) balance on the Class A notes. Sufficient excess spread generated within the transaction has however allowed the issuer to reduce this outstanding PDL balance to GBP30.4m in August 2011 from GBP66.5m in February 2011.

In line with Fitch's Structured Finance Counterparty Criteria, the agency notes that BoI, having lost its eligibility as a suitably-rated counterparty, have replaced themselves in their role as Guaranteed Investment Contract (GIC) Provider in all five transactions. Societe Generale (rated 'A+'/Stable/'F1+') is now the GIC provider for Colston 1 Colston 4 and Bowbell, while Citibank (rated 'A+'/RWN/'F1+') has taken over this role for Colston 2 and Colston 3.

The rating actions are as follows:

Colston No.1 Plc

Class A (ISIN XS0335627724): affirmed at 'AAAsf'; Outlook Stable

Colston No.2 Plc

Class A2 (ISIN XS0367715934): affirmed at 'AAAsf'; Outlook Stable

Class A3 (ISIN XS0367716585): affirmed at 'AAAsf'; Outlook Stable

Colston No.3 Plc

Class A3 (ISIN XS0395695231): affirmed at 'AAAsf'; Outlook Stable

Class A4 (ISIN XS0395695405): affirmed at 'AAAsf'; Outlook Stable

Colston No.4 Plc

Class A (ISIN XS0400717251): affirmed at 'AAAsf'; Outlook Stable

Bowbell No.1 Plc

Class A (ISIN XS0552792094): affirmed at 'AAAsf'; Outlook Stable

Additional information is available at www.fitchratings.com. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

The sources of information used to assess these ratings, in addition to those mentioned in the applicable criteria, were investor and servicer reports.

Applicable criteria, 'EMEA Residential Mortgage Loss Criteria' dated 7 June 2011 and 'EMEA Residential Mortgage Loss Criteria Addendum - UK' dated 12 August 2011, are available at www.fitchratings.com

Applicable Criteria and Related Research:

EMEA Residential Mortgage Loss Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=649450

EMEA Residential Mortgage Loss Criteria Addendum - South Africa

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=500762

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