(The following statement was released by the rating agency)LONDON, May 13 (Fitch) Fitch Ratings has upgraded Morpheus (European Loan Conduit No.19) plc's class B notes due 2029 and affirmed the class C, D and E notes, as follows:GBP12.5m class B (XS0198458266) upgraded to 'AAAsf' from 'AA+sf'; Outlook Stable GBP15.3m class C (XS0198459157) affirmed at 'A+sf'; Outlook StableGBP11.3m class D affirmed at 'BBB-sf'; Outlook Stable  GBP7m class E affirmed at 'CCCsf'; Recovery Estimate 90%KEY RATING DRIVERSThe upgrade of the most senior tranche reflects the sequential principal allocation and expected substantial scheduled amortisation. The affirmations reflect the ongoing stable performance of the portfolio of UK loans, the absence of event of defaults and the high weighted average (WA) interest coverage. At the February 2014 interest payment date, 60 loans with an aggregate balance of GBP49.6m remained, down from 419 loans/GBP581.9m at closing in August 2008. Approximately 77% by balance provides for some scheduled amortisation, while almost half of the pool matures by the end of 2015. The majority of loans has a remaining balance of less than GBP1m and is secured on a single asset.The reported WA loan-to-value (LTV) ratio of 64% largely relies on pre-crisis valuations, conducted between 1990 and 2005. Three loans have a reported LTV of above 100%. Given past performance, modest LTV and further amortisation, Fitch believes that most borrowers will be able to repay their loans. After closing, surplus interest has been used to repay GBP2.2m of the class E notes, creating overcollateralisation (OC). Presently, GBP1.3m of OC remains, after absorbing GBP0.9m of losses realised in the workout of defaulted loans. Fitch believes that in a 'Bsf' stress, the OC will eventually be eroded and up to 10% of the class E notes may get written down. Although all loans continue to make debt service payments, a few borrowers are supporting these payments from equity as the collateral is vacant. Other owner-occupied collateral is expected to fare well, especially some financing backed by residential assets located in London.There is an interest shortfall occurring on the class D and E notes, as the margin of the notes has almost tripled since closing, given some of the highest margin loans repaid the senior note classes. Both affected note tranches are subject to an available funds cap and therefore the ratings reflect only the likelihood of a principal loss. RATING SENSITIVITIESA loss allocation to the class E notes, once the OC has been neutralised, would result in a downgrade of the tranche. A resulting reduction in subordination could trigger rating actions to more senior notes, albeit in reverse sequential order.Fitch estimated 'Bsf' recoveries are EUR45.4m. The latest surveillance data is available at the below link:https://
  www.fitchratings.com/creditdesk/sectors/perf_analytics/esf/deal_summ/dow
  nload_file.cfm?deal_id=87147480Contacts: Lead Surveillance AnalystMario SchmidtAssociate Director+44 20 3530 1042Fitch Ratings Limited30 North ColonnadeLondon E14 5GNSecondary AnalystWill RendellAssociate Director+44 20 3530 1416Committee ChairpersonAlessandro PighiSenior Director+44 20 3530 1158Media Relations: Athos Larkou, London, Tel: +44 203 530 1549, Email: athos.larkou@fitchratings.com.Additional information is available at 
  www.fitchratings.com.
 The sources of information used to assess these ratings were the issuer, servicer, and periodic cash manager and servicer reports.Applicable criteria, 'EMEA CMBS Rating Criteria', dated 3 April 2013, 'Global Structured Finance Rating Criteria', dated 24 May 2013, are available at 
  www.fitchratings.com.
 Applicable Criteria and Related Research:  EMEA CMBS Rating Criteria 
  http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=704358
 Global Structured Finance Rating Criteria
  http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708661
 Additional Disclosure Solicitation Status 
  http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=829921
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