OREANDA-NEWS. Fitch Ratings has affirmed Avoca CLO VII plc's notes, as follows:

Class A-1 (ISIN XS0289562745): affirmed at 'AAAsf'; Outlook Stable
Class A-2 (ISIN XS0289563396): affirmed at 'AAAsf'; Outlook Stable
Class A-3 (ISIN XS0289564014): affirmed at 'AAAsf'; Outlook Stable
Class B (ISIN XS0289565763): affirmed at 'AAsf'; Outlook Stable
Class C1 (ISIN XS0289566571): affirmed at 'Asf'; Outlook Stable
Class C2 (ISIN XS0290383412): affirmed at 'Asf'; Outlook Stable
Class D1 (ISIN XS0289566902): affirmed at 'BBBsf'; Outlook Stable
Class D2 (ISIN XS0290383768): affirmed at 'BBBsf'; Outlook Stable
Class E1 (ISIN XS0289567546): affirmed at 'Bsf'; Outlook Stable
Class E2 (ISIN XS0290384493): affirmed at 'Bsf'; Outlook Stable
Class F (ISIN XS0289568437): affirmed at 'CCCsf'; Recovery Estimate (RE) 0%
Class V (ISIN XS0290386431): affirmed at 'AAAsf'; Outlook Stable

Avoca CLO VII plc is a securitisation of mainly European senior secured loans, with a total note issuance of EUR711m invested in a portfolio of EUR663m. The portfolio is actively managed by KKR Credit Advisors.

KEY RATING DRIVERS
The affirmation reflects the substantial deleveraging of the class A-1 and A-3 notes over the past year, which offset the deterioration observed in the portfolio. Since the end of the transaction's reinvestment period in May 2014, the class A-1 notes have been paid down using principal proceeds from the portfolio to 14.1% of their initial principal balance, and the class A-3 notes to 29.6%. As a result, over the past 12 months credit enhancement has increased across all rated notes and all par value tests are passing and improved.

Asset performance has deteriorated over the past year. The weighted average rating factor has increased to 34.5 from 33.2. Exposure to Italy and Spain has increased to 7.6% from 6.2%. The weighted average maturity is extended by almost one year and the maturity profile has shifted with more assets maturing between 2020 and 2023 and fewer assets maturing in 2017 and 2018. Obligor concentration has increased to 50.7% for the largest 10 obligors, from 36% in 2014.

The largest industry exposure is telecommunications and the top three industries represent 42.8% of the portfolio, up from 34.8% a year ago. There are no defaulted assets in the portfolio.

The affirmation of the class V combination notes reflects the affirmation of its components, class A-1, A-2 and A-3. The class V notes' rating addresses the timely payment of interest and the ultimate repayment of principal by the stated maturity date.

RATING SENSITIVITIES
Increasing the default probability by 25% would likely result in a downgrade of up to one notch. Applying a recovery rate haircut of 25% on all the assets would likely result in a downgrade of up to two notches.

DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.

DATA ADEQUACY
Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pools and the transactions. There were no findings that were material to this analysis.

Fitch did not undertake a review of the information provided about the underlying asset pools ahead of the transaction's initial closing. The subsequent performance of the transactions over the years is consistent with the agency's expectations given the operating environment and Fitch is therefore satisfied that the asset pool information relied upon for its initial rating analysis was adequately reliable.

Overall, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable.

SOURCES OF INFORMATION
The information below was used in the analysis:
-Loan-by-loan data provided by Deutsche Bank as at 30 September 2015
-Transaction reporting provided by Deutsche Bank as at 30 September 2015