Morningstar DBRS upgrades, confirms ratings on Hermitage securitisation notes

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Hermitage securitisation ratings

Highlights

Morningstar DBRS upgraded Hermitage 2023 plc Class D Notes to AAA (sf) from AA (sf) and confirmed ratings across Hermitage 2023, 2024, and 2025 note classes.
As of 30 April 2026, leases two to three months in arrears stand at 0.0% for all three transactions, with cumulative default ratios at 6.4% for Hermitage 2023, 5.4% for Hermitage 2024, and 2.3% for Hermitage 2025.
Hermitage 2025 features a GBP 104 million revolving period ending March 2026, with increasing credit enhancement for Hermitage 2023 and stable core assumptions for all UK equipment finance securitisation pools.

Rating actions and portfolio review

As reported by Morningstar DBRS, DBRS Ratings Limited has confirmed ratings across Hermitage 2023 plc, Hermitage 2024 plc, and Hermitage 2025 plc, and upgraded the Class D Notes in Hermitage 2023 to AAA (sf) from AA (sf). In Hermitage 2023, the Class C Notes remain at AAA (sf), while in Hermitage 2024 the Class A through Class E Notes are confirmed at AAA (sf), AA (sf), A (sf), BBB (sf), and BB (high) (sf), respectively.

In Hermitage 2025, the Class A through Class E Notes are confirmed at AAA (sf), AA (sf), A (sf), BBB (high) (sf), and BB (high) (sf), respectively. Morningstar DBRS says the rating actions follow annual reviews based on portfolio performance as of the May 2026 payment date, updated probability of default, loss given default and expected loss assumptions, and available credit enhancement for each note class.

The transactions are securitisations of equipment hire purchase and finance lease receivables originated and serviced by Haydock Finance Limited. Hermitage 2023 amortises fully sequentially, while Hermitage 2024 and Hermitage 2025 use mixed pro rata and sequential amortisation structures, with no sequential trigger breached to date.

Credit support and UK asset performance

As of 30 April 2026, leases that were two to three months in arrears stand at 0.0% for all three transactions, unchanged from one year earlier. Leases are classified as defaulted once they are more than three months in arrears, and cumulative default ratios are 6.4% for Hermitage 2023, 5.4% for Hermitage 2024, and 2.3% for Hermitage 2025.

Morningstar DBRS maintains its base case assumptions for the remaining receivables at the B (low) (sf) rating level, keeping probability of default at 6.9% and loss given default at 40.0% for all three transactions. Credit enhancement comes from the subordination of junior notes, increasing for Hermitage 2023 since the initial rating date and remaining stable for Hermitage 2024 and Hermitage 2025 while both transactions stay in pro rata amortisation periods.

Hermitage 2025 also begins with a nine-month revolving period that ends in March 2026, during which the issuer purchases additional receivables totalling GBP 104 million. The review indicates stable arrears and unchanged core assumptions for the UK equipment finance securitisation pools.

Our earlier article covered Bank of England policymaker Alan Taylor’s argument for keeping interest rates on hold for longer, citing heightened uncertainty and inflation risks linked to the Middle East conflict despite weak UK growth. We noted that, with the policy rate still seen as restrictive, policymakers were reluctant to signal near-term cuts even as domestic economic momentum remained fragile.

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