Bulletin: Limes Funding S.A., Compartment 2021-1’s Performance Within Our Expectations As Deutsche Leasing Wraps Up Cyber Attack
FRANKFURT (S&P Global Ratings) Oct. 17, 2023--S&P Global Ratings said today that the performance of Limes Funding S.A., Compartment 2021-1 (Limes 2021-1)'s portfolio remained in line with our expectations. Despite the cyber attack having heavily affected part of Deutsche Sparkassen Leasing AG & Co. KG's (Deutsche Leasing) systems, the servicer produced timely monthly reports, with limited discrepancies in delinquencies, default, and recovery data that have not had any significant impact on the transaction's overall performance. As a result, the issuer has not needed to make any drawings under the liquidity reserve.
Limes 2021-1 is a securitization of a portfolio of equipment lease and hire-purchase receivables originated by Deutsche Leasing via its subsidiaries, for which Deutsche Leasing is the servicer.
We have recently been informed that Deutsche Leasing has completed an internal analysis and has successfully identified how its IT systems have been breached. Also, it has put in place several mitigants that should strengthen the network defenses going forward. By the end of 2023, Deutsche Leasing plans to complete the migration to a new data center characterized by a more enhanced security level. This migration project began in 2021 and has been key for the successful management of the cyber attack as it likely prevented a more severe outcome.
Finally, we have been informed that on the basis of the latest analysis, no material data loss or leakage took place. Deutsche Leasing has confirmed with the competent authorities that it has complied with all data-protection regulations.
Due to the cyber attack, there are delays in processing some of the delinquent and defaulted receivables and the associated recoveries on those. Deutsche Leasing expects to clear this backlog by the end of 2023. However, in line with our expectations, there has been no major deterioration in the portfolio's performance, and we believe Limes 2021-1's credit quality is unlikely to be affected. Additionally, the transaction benefits from a €3.25 million static cash reserve, funded at closing. The reserve can be used to cover senior expenses and interest payments on the class A notes. Due to deleveraging, we expect this reserve to be able to cover expenses for a period of about 15 months.
The evolving landscape of cyber threats continues to emphasize the importance of adaptability, resilience, and preparedness in the industry. This incident serves as an example of how timely response plans, cross-stakeholder collaboration, and sufficient liquidity reserves play an instrumental role in navigating unforeseen challenges brought about by cyber attacks.
Related Research
- Risks For Limes Funding S.A., Compartment 2021-1 Appear Manageable After Deutsche Leasing Cyber Attack, June 13, 2023
- Credit FAQ: How Could Cyber Risks Affect Structured Finance Transactions? Sept. 8, 2021
This report does not constitute a rating action.
| Primary Credit Analyst: | Roberto Amato, Frankfurt + 49 69 3399 9161; roberto.amato@spglobal.com |
| Secondary Contacts: | Giuseppina Martelli, Milan + 39 02 72 111 274; giuseppina.martelli@spglobal.com |
| Matthew Aitken, Frankfurt +49 69 3399 9153; matthew.aitken@spglobal.com |
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