/raid1/www/Hosts/bankrupt/TCREUR_Public/100303.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
E U R O P E
Tuesday, March 3, 2010, Vol. 11, No. 043
Headlines
B E L G I U M
DEXIA BANK: Moody's Cuts Jr. Subordinated Debt Rating to 'Ba2'
D E N M A R K
FIH ERHVERVSBANK: Moody's Downgrades Jr. Sub. Debt Rating to B2
* DENMARK: Bankruptcies Up 16% to 533 in February 2010
F R A N C E
RHODIA SA: Fitch Gives Stable Outlook; Affirms 'BB-' Rating
G E R M A N Y
BRENNTAG HOLDING: S&P Puts 'B+' Rating on CreditWatch Positive
DUKE 2002: S&P Withdraws 'BB' Rating on Class E Notes
ELVA 2007-2: Fitch Cuts Ratings on Three Classes of Notes to 'D'
EUROHOME MORTGAGES: Moody's Junks Rating on Class D Notes
GENERAL MOTORS: Increase Funding for Opel Unit to EUR1.9 Billion
I R E L A N D
ANGLO IRISH: Moody's Downgrades Subordinated Debt Rating to 'Ba1'
HUGHES & HUGHES: WH Smith Mulls Bid for Two Concession Shops
IPOS GROUP: Uniphar to Offload Stake in Affiliated Pharmacies
MAGNOLIA FINANCE: Moody's Withdraws Caa1 Rating on Class A Notes
THUNDERBIRD INVESTMENTS: S&P Cuts Ratings on Three Notes to 'D'
I T A L Y
EUROHOME MORTGAGES: Moody's Junks Rating on Class D Notes
GLOBAL GARDEN: Lenders Take Over Business; 3i's Stake Wiped Out
K A Z A K H S T A N
BANK CENTERCREDIT: Fitch Affirms Individual Rating at 'D/E'
L U X E M B O U R G
EUROMAX IV: S&P Cuts Ratings on Four Classes of Notes to 'CCC-'
N E T H E R L A N D S
AMSTEL CORPORATE: S&P Downgrades Rating on Class E Notes to 'B-'
AMSTEL CORPORATE: S&P Affirms Rating on Class E Notes at 'BB'
DSB BANK: Former CFO Cleared of Wrongdoing in Bankruptcy Probe
NIBC BANK: Moody's Confirms Perpetual Debt Securities at 'Ba1'
SENSATA TECHNOLGIES: Modifies Dutch Auction Tender Offer for Notes
R U S S I A
ALLIANCE OIL: Fitch Withdraws 'B' Foreign Currency Rating
BANK SOCIETE: Moody's Changes Outlook on 'D-' BFSR to Positive
ROSBANK: Moody's Confirms 'D' Bank Financial Strength Rating
S L O V A K R E P U B L I C
SKYEUROPE AIRLINES: Creditor Claims Reach EUR123 Million
S P A I N
AYT CAJA: Fitch Affirms Rating on Class D Notes at 'B+'
FTPYME TDA: Moody's Junks Rating on Class C Notes From 'Ba1'
FTPYME TDA: Moody's Downgrades Rating on 3SA Notes to 'Ba3'
PYMES BANESTO: Moody's Junks Rating on Class C Notes From 'Baa3'
U K R A I N E
BANK FINANCE: Moody's Upgrades Global Deposit Ratings to 'Caa1'
NADRA BANK: May Face Liquidation After Failing to Secure Funds
NADRA BANK: Moody's Confirms 'Caa2' Long-Term Local Ratings
TRANSBANK AKB: Faces Liquidation After Search for Investor Fails
U N I T E D K I N G D O M
ALBA 2005-1: S&P Puts BB+ Rating on Class E Notes on Watch Neg.
ALLIANCE & LEICESTER: Moody's Reviews Subordinated Debt Ratings
CATALYST HEALTHCARE: S&P Affirms 'BB+' Long-Term Debt Ratings
GALA CORAL: Lenders In Talks to Improve Debt Restructuring Terms
HARRY NEAL: In Liquidation; 120 Jobs Affected
MANCHESTER UNITED: Financiers Mull Billion-Pound Takeover
READER'S DIGEST: Committee Hired BDO UK as Pension Advisor
SANDWELL COMMERCIAL: S&P Cuts Rating on Class E Notes to 'B'
SANDWELL COMMERCIAL: S&P Lowers Rating on Class E Notes to 'B'
STERLINGMAX I: S&P Downgrades Rating on Class D Notes to 'B'
ULTRALASE: Senior Lenders Take Over Business in Pre-Pack Deal
WESTERN CIVIL: Creditors Call for Probe Into Collapse
X X X X X X X X
* Support for Eurozone Members in Financial Distress, Says S&P
*********
=============
B E L G I U M
=============
DEXIA BANK: Moody's Cuts Jr. Subordinated Debt Rating to 'Ba2'
--------------------------------------------------------------
Moody's Investors Service took these actions on its ratings on
some of Dexia Group's EMTN programs allowing for the issuance of
undated junior subordinated debt, in line with its revised
Guidelines for Rating Bank Hybrids and Subordinated Debt published
in November 2009:
-- Dexia Banque Internationale a Luxembourg Euro MTN program:
junior subordinated debt program's rating upgraded to Baa1
Stable from Baa2 (on review for possible downgrade);
-- Dexia Bank Belgium Euro MTN program: junior subordinated debt
program's rating downgraded to Ba2 Stable from A3 (on review
for possible downgrade);
-- issuing vehicle Dexia Overseas Limited (guaranteed by DBB)
Euro MTN program: junior subordinated debt program's rating
downgraded to Baa1 (stable outlook) from A2 (on review for
possible downgrade);
This concludes the review for possible downgrade that was
initiated on November 18, 2009, on these hybrid securities'
program ratings. DBB and DBIL Bank Financial Strength Ratings and
debt and deposit ratings remain unchanged at C- (stable outlook)
and A1 (stable outlook) / Prime-1, respectively.
Prior to the global financial crisis, Moody's had incorporated
into its ratings an assumption that support provided by national
governments and central banks to shore up a troubled bank would,
to some extent, benefit the subordinated debt holders as well as
the senior creditors. However, during the crisis, the systemic
support for these instruments has not been forthcoming in many
cases. The revised methodology largely removes previous
assumptions of systemic support, resulting in the rating action.
In addition, the revised methodology generally widens the notching
on a hybrid's rating that is based on the instrument's features.
Rating Action in Detail
Dexia has no outstanding hybrid securities under the above
mentioned programs. These EMTN programs however allow for the
issuance of undated subordinated debt. Moody's opinion is that,
given the restructuring of the group, there is still some risk of
coupon deferral on junior debt securities issued by the group's
main banking entities and issuing vehicles (please refer to
Moody's rating action on Dexia's main operating units published on
February 12, 2010).
Moody's upgrade of DBIL's junior subordinated program rating to
Baa1 from Baa2 reflects the junior subordinated claim in
liquidation of the junior debt securities that might be issued
under this program. It also incorporates the mandatory nature of
coupon payment, the weak solvency triggers and the cumulative
nature of the interest on such instruments limiting the expected
loss for investors. The rating outlook is stable in line with the
rating outlook on DBIL's BFSR and long-term ratings.
Moody's downgrade of Dexia Overseas' junior subordinated program
rating to Baa1 from A2 is in line with the rating action taken on
February 12, 2010, on the junior subordinated instruments issued
under this program. This program is no longer active. The rating
outlook is stable in line with the rating outlook on DBB's BFSR
and long-term ratings.
Moody's downgraded DBB's junior subordinated program rating to Ba2
from A3, in line with the Ba2 rating of the junior subordinated
debt already issued by DBB but out of the scope of this program
(please refer to Moody's rating action on Dexia's main operating
units published on February 12, 2010). Moody's notes that there
is no junior subordinated debt outstanding under this programme.
The rating outlook is stable in line with the rating outlook on
DBB's BFSR and long-term ratings.
Rating History and Moody's Methodologies
Moody's previous rating action on Dexia was on February 12, 2010,
when Moody's upgraded to C- from D+ the bank financial strength
ratings of Dexia's main banking entities, DBB, Dexia Credit Local
and DBIL. The rating agency also affirmed the A1 long-term debt
and deposit ratings of DBB, DCL and DBIL. The outlooks on the
long-term debt and deposit ratings and on the BFSRs were changed
to stable from negative. The short-term debt and deposit ratings
were affirmed at Prime-1. Moody's also affirmed, with a stable
outlook, the A2 dated subordinated debt ratings of DBB, DCL and
DBIL.
Dexia SA, headquartered in Brussels, had total assets of
EUR577 billion at year-end 2009 and recorded a net profit, group
share, of EUR1 billion for the full year 2009, up from a net loss
of EUR3.3 billion in 2008.
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D E N M A R K
=============
FIH ERHVERVSBANK: Moody's Downgrades Jr. Sub. Debt Rating to B2
---------------------------------------------------------------
Moody's Investors Service downgraded its ratings on certain Danish
hybrid securities, in line with its revised Guidelines for Rating
Bank Hybrids and Subordinated Debt published in November 2009.
This concludes the review for possible downgrade that began on
November 18, 2009. Moody's has also downgraded certain junior
subordinated securities that were initially not put on review.
Prior to the global financial crisis, Moody's had incorporated
into its ratings an assumption that support provided by national
governments and central banks to shore up a troubled bank would,
to some extent, benefit the subordinated debt holders as well as
the senior creditors. Contrary to this expectation -- and past
behavior of most governments -- the systemic support for these
instruments has not been forthcoming in many cases during this
crisis. The revised guidelines largely remove previous
assumptions of systemic support, resulting in the rating action.
In addition, the revised hybrid ratings guidelines generally widen
the possible notching on a hybrid's rating that is based on the
instrument's features.
Rating Action in Detail
The starting point in Moody's revised approach to rating hybrid
securities is the Adjusted Baseline Credit Assessment. The
Adjusted BCA reflects the bank's standalone credit strength,
including parental and/or cooperative support, if applicable. The
Adjusted BCA excludes systemic support.
The characteristics of most Danish cumulative junior subordinated
debt and non-cumulative Tier 1 securities are fairly standardized:
* The junior subordinated debt is dated, ranks subordinated to
senior debt in liquidation and allows or requires the issuer to
defer coupon payments only if a regulatory minimum capital
trigger is breached. Any deferred interest is cumulative. A
permanent principal write-down is possible if share capital is
reduced to zero in a restructuring outside liquidation. The
rating assessment takes into account these features, as well as
the demonstrated behavior of Danish regulators to impose losses
on subordinated securities through the use of good bank / bad
bank structures. As a result, for Denmark, unless stated
otherwise, junior subordinated debt is rated at the Adjusted BCA
level minus two notches.
* The loss absorption for Tier 1 securities while the issuer
remains a going concern stems from the non-cumulative coupon
skip mechanism. Coupon skip is mandatory following breach of an
available free reserve trigger, and allowed or required if a
minimum regulatory capital trigger is breached. A permanent
principal write down is possible if share capital is reduced to
zero in a restructuring outside liquidation. Taking into
account their deeply subordinated claim in liquidation, this
means that, unless stated otherwise, these instruments are rated
at Adjusted BCA minus three notches.
The rating actions on each Danish bank are detailed below:
1) Danske Bank A/S (Aa3/P-1/C)
The Adjusted BCA for Danske Bank is A3, which is the same level as
its standalone Baseline Credit Assessment (BCA).
These securities issued by Danske Bank were affected by this
rating action:
* Junior subordinated debt and junior subordinated EMTN programme
ratings (Upper Tier 2): Downgraded to Baa2 from A3.
* Tier 1 securities: Downgraded to Baa3 from Baa1.
The outlook for the affected instruments for Danske Bank is
negative, in line with the negative outlook for Danske Bank 's C
BFSR.
2) DLR Kredit A/S (A3)
The issuer rating for DLR Kredit is A3.
These securities issued by DLR Kredit were affected by this rating
action:
* Tier 1 securities: Downgraded to Baa3 from Baa2.
The outlook for the affected instruments for DLR Kredit is
negative, in line with the negative outlook for DLR Kredit's A3
issuer rating.
3) FIH Erhvervsbank A/S (Baa3/P-3/D-)
The Adjusted BCA for FIH Erhvervsbank is Ba3, which is the same
level as its BCA.
These securities issued by FIH Erhvervsbank were affected by this
rating action:
* Junior subordinated debt and junior subordinated EMTN programme
ratings (Upper Tier 2): Downgraded to B2 from B1.
The outlook for the affected instruments for FIH Erhvervsbank is
negative, in line with the negative outlook for FIH Erhvervsbank's
D- BFSR.
4) Jyske Bank A/S (A1/P-1/C+)
The Adjusted BCA for Jyske Bank is A2, which is the same level as
its BCA.
These securities issued by Jyske Bank were affected by this rating
action:
* Junior subordinated debt and junior subordinated EMTN programme
ratings (Upper Tier 2): Downgraded to Baa1 from A3.
* Tier 1 securities: Downgraded to Baa2 from Baa1.
The outlook for the affected instruments for Jyske Bank is
negative, in line with the negative outlook for Jyske Bank 's
C+BFSR.
5) Nykredit Bank A/S (A1/P-1/C-)
The Adjusted BCA for Nykredit Bank is A1, which is three notches
higher than the standalone BCA due to parental support from
Nykredit Realkredit A/S.
These securities issued by Nykredit Bank were affected by this
rating action:
* Junior subordinated EMTN program ratings (Upper Tier 2):
Downgraded to A3 from A2.
The outlook for the affected instruments for Nykredit Bank is
negative, in line with the negative outlook for Nykredit Bank 's
C- BFSR.
6) Nykredit Realkredit A/S (A1/P-1)
The issuer rating for Nykredit Realkredit is A1.
These securities issued by Nykredit Realkredit were affected by
this rating action:
* Junior subordinated debt ratings (Upper Tier 2): Downgraded to
A3 from A2.
* Tier 1 securities: Downgraded to Baa1 from A3.
The outlook for the affected instruments for Nykredit Realkredit
is stable, in line with the stable outlook for Nykredit Realkredit
's A1 issuer rating.
7) Spar Nord Bank A/S (A2/P-1/C-)
The Adjusted BCA for Spar Nord Bank is Baa1, which is the same
level as its BCA.
These securities issued by Spar Nord Bank were affected by this
rating action:
* Junior subordinated EMTN program ratings (Upper Tier 2):
Downgraded to Baa3 from Baa2.
The outlook for the affected instruments for Spar Nord Bank is
stable, in line with the stable outlook for Spar Nord Bank's C-
BFSR.
8) Sydbank A/S (A1/P-1/C+)
The Adjusted BCA for Sydbank is A2, which is the same level as its
BCA.
These securities issued by Sydbank were affected by this rating
action:
* Junior subordinated debt and junior subordinated EMTN programme
ratings (Upper Tier 2): Downgraded to Baa1 from A3.
* Tier 1 securities: Downgraded to Baa2 from Baa1.
The outlook for the affected instruments for Sydbank is negative,
in line with the negative outlook for Sydbank's C+ BFSR.
The last rating action on Danske Bank A/S, Jyske Bank A/S,
Nykredit Bank A/S, Nykredit Realkredit A/S and Sydbank A/S was on
November 18, 2009, when the entity's junior subordinated debt and
non-cumulative hybrid securities ratings were placed on review for
possible downgrade.
* DENMARK: Bankruptcies Up 16% to 533 in February 2010
------------------------------------------------------
Borsen, citing statistics from Experian, reports that Danish
bankruptcies increased by 16% year-on-year in February to 533.
===========
F R A N C E
===========
RHODIA SA: Fitch Gives Stable Outlook; Affirms 'BB-' Rating
-----------------------------------------------------------
Fitch Ratings has revised the Outlook on France-based Rhodia
S.A.'s to Stable from Negative and affirmed the company's Long-
term Issuer Default Rating and senior unsecured ratings at 'BB-',
respectively.
The rating action reflects the continuous sequential recovery in
volumes and pricing in Rhodia's Polyamide and Silcea's divisions
in H209, resulting in strong free cash flow generation, reduced
net financial indebtedness and credit metrics exceeding Fitch's
initial forecast for FY09. While visibility, especially for the
second half of 2010, is limited and uncertainties remain,
particularly with regard to European markets, the Stable Outlook
also reflects Fitch's improved expectations for the current year.
In particular the polyamide market is expected to remain tight in
2010 due to maintenance shutdowns at key producers and continued
favorable demand trends especially in Asia and Brazil.
Rhodia's performance in H209 benefited from the group's exposure
to the Latin American and Asian automotive markets where demand
rebounded from record low levels in H109. Profitability was also
aided by low raw material prices compared to 2008 levels, and
EUR120 million of cost savings realized during the year. The
group further reduced its capital expenditures by over 30% and
suspended dividend payments in order to preserve cash. Group
sales showed a 15.4% decline to EUR4.0bn in FY09 while the
recurring EBITDA margin dropped to 12.1% from 13.9%. Reported net
leverage (net debt/EBITDA) increased slightly to 2.1x at FYE09
compared with 2.0x at FYE08.
The agency expects Rhodia could achieve in FY10 a more than 25%
higher recurring EBITDA (compared to EUR487 million in FY09) in
continuation of the trends seen in the second half of 2009, and
driven by strong performance in emerging markets where the group
achieves around 45% of its sales. Fitch forecasts that Rhodia
will achieve positive free cash flow also in FY10, however, it is
anticipated to be substantially below the record levels seen in
FY09. The agency further expects a stable or slightly reduced net
leverage in FY10.
Rhodia's ratings continue to reflect its diversified business
profile, its relatively moderate financial leverage as well as its
comfortable liquidity position. Furthermore, Rhodia does not face
significant debt maturities before end-2013. The group's
diversified product portfolio -- with product sales to a broad
spectrum of consumer and industrial markets -- helped mitigate the
sharp downturn. The downturn saw the group endure volume
decreases in Polyamide and Silcea, driven by the exposure to auto,
electronics, housing and textile end-markets. This was partly
offset by the profit generation in Acetow, supplying the cigarette
filter industry, and in Eco Services, a North American sulphuric
acid business and the group's Energy division, which trades
Rhodia's Carbon Emission Rights.
Fitch notes that Rhodia's CER monetization strategy results in
substantial EBITDA contribution. FY09 EBITDA margin excluding the
Energy division was only 8% and 10% in FY08. Fitch remains
cautious given the inherent price volatility of CERs and
uncertainties about the sustainability of the CER program under
equal terms beyond 2013. It focuses its analysis mainly on the
utilization of the CER proceeds (e.g. if used for debt repayments
or acquisitions). Fitch also notes Rhodia's substantial pension
deficit, which has increased to EUR1.6 billion due to changes in
actuarial assumptions in FY09. While the yearly cash outflow is
expected to remain broadly stable around EUR110 million these cash
outflows continue to burden cash flows and coverage ratios. The
agency understands that in FY10 no exceptional contributions have
to be made.
Rhodia's liquidity position is comfortable in Fitch's view.
Rhodia had EUR791 million of cash and cash equivalents on-balance
sheet at FYE09 and access to a largely undrawn, secured EUR600
million revolving credit facility (EUR543 million undrawn at
FYE09, EUR57 million utilized for letters of credit) maturing in
2012. In addition, Rhodia has access to a EUR240 million
securitization program with over 80% availability at FYE09. Fitch
expects headroom under the RCF covenants which were reset in April
2009 to remain comfortable. In FY09 management maintained a
strong focus on improving its working capital management, as well
as cash preservation in a difficult operating environment. In
this respect Fitch assumes that working capital trends will
reverse to some extent in FY10, reflecting the pick-up in
business. The agency also includes in its forecast assumptions,
in line with management guidance, up to EUR250 million in capital
expenditures, EUR25 million in dividend payments, equal sized cash
outflows for pensions compared to the previous year and small- to
medium sized bolt-on acquisitions.
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G E R M A N Y
=============
BRENNTAG HOLDING: S&P Puts 'B+' Rating on CreditWatch Positive
--------------------------------------------------------------
Standard & Poor's Ratings Services said that it had placed all of
its ratings, including its 'B+' long-term corporate credit rating,
on Germany-based chemical distributor Brenntag Holding GmbH on
CreditWatch with positive implications following a group
announcement that it plans to launch an IPO in the near term and
use the proceeds towards debt reduction.
S&P's '2' recovery ratings on Brenntag's senior secured debt and
'6' recovery ratings on its second-lien notes remain unchanged,
indicating S&P's expectation for substantial recovery (70%-90%)
and neglible recovery (0-10%), respectively, for lenders in an
event of payment default.
"The CreditWatch placement reflects the near-term possibility of
an improved credit profile if the group is successful with its IPO
plans," said Standard & Poor's credit analyst Per Karlsson.
A successful IPO, together with conversion of a shareholder loan
to equity, would suggest that the group's debt levels will be
reduced materially from an adjusted EUR2.7 billion in September
2009 to a pro-forma figure of about EUR1.5 billion. If the IPO
and loan conversion take place, the group's prospective credit
measures point to a credit profile several notches above the
current 'B+' rating.
The current rating is constrained by Brenntag's highly leveraged
debt structure, which is a result of its private equity ownership
and strong growth focus in recent years. This is partly is offset
by what S&P consider to be a 'satisfactory' business risk profile,
as evidenced by the group's recent resilient operating
performance.
In resolving the CreditWatch placement, S&P will focus on the
group's potential new capital structure, if the IPO is successful.
S&P will also evaluate the new shareholder structure, Brenntag's
prospective financial policy and acquisition strategy, and any new
business plan. The debt reduction that S&P expects to follow the
proposed IPO points to the possibility of a multi-notch upgrade.
S&P expects to complete its review when the IPO has been
completed. If the prospects of an IPO become less likely, S&P
will probably affirm the ratings with a stable or positive
outlook.
DUKE 2002: S&P Withdraws 'BB' Rating on Class E Notes
-----------------------------------------------------
Standard & Poor's Ratings Services withdrew its credit ratings on
DUKE 2002 Ltd.'s class B, C, D, and E notes due to their
redemption. At the time of the redemption, S&P's ratings on the
class B and C notes were on CreditWatch negative.
WestLB AG arranged this partially funded synthetic transaction,
which closed in September 2002. The EUR814.4 million notes issued
were initially tied to a reference pool of 77 commercial and
residential real estate loans secured on 122 properties in The
Netherlands and the U.K.
At closing, the collateral in the transaction included public-
sector Pfandbriefe and medium-term notes issued by Westfaelische
Hypothekenbank AG. Subsequent to closing, the issuer used
Pfandbriefe and MTNs issued by Hypo Real Estate Bank (a successor
entity to Westfaelische Hypotheken Bank) as collateral for certain
notes.
This issuer previously redeemed all other classes in the
transaction.
Ratings List
DUKE 2002 Ltd.
EUR814.35 Million Floating-Rate Amortizing Credit-Linked Notes
Ratings Withdrawn
Rating
------
Class To From
----- -- ----
B NR AAA/Watch Neg
C NR AAA/Watch Neg
D NR BBB
E NR BB
NR -- Not rated.
ELVA 2007-2: Fitch Cuts Ratings on Three Classes of Notes to 'D'
----------------------------------------------------------------
Fitch Ratings has downgraded Elva 2007-2's (Part of Euclid CDO)
EUR358,500,000 notes, due June 2014, to 'D':
-- EUR73 million class A (ISIN: XS0294844906): downgraded to 'D'
from 'CC'
-- US$5 million class A2 (ISIN: XS0298421677): downgraded to 'D'
from 'CC'
-- US$10 million class A3 (ISIN: XS0298421834): downgraded to
'D' from 'CC'
The rating action follows the default of the class A, A2 and A3
notes after principal on those notes has been written-down. So
far, nine credit events, under the managed pool by Deutsch Asset
Management, have been triggered with weighted average recoveries
of 46%. The portfolio was heavily concentrated in financial
institutions which lead to low recoveries at the time of the
defaults of three Icelandic Banks and Lehman Brothers.
Additionally, the initial credit enhancement of 4.85% at closing
has fluctuated and been significantly reduced by trading losses
over time incurred by the manager.
The losses on the portfolio due to credit events, together with
the reduced credit enhancement, have not been enough to cover the
initial subordination of the class A, A2, A3 notes issued in 2007.
Class A has been written down to EUR60,010,672 from EUR73,000,000.
Class A2 has been unwound, which under Fitch's default definition
is considered as a default. Class A3 has been written down to US$
8,220,640 from US$10,000,000.
ELVA Funding Plc Series 2007-2 is a funded synthetic CDO
referencing a portfolio that initially referenced primarily
investment grade corporate obligations, maturing in June 2014. At
closing, the issuer entered into a credit default swap agreement
with Morgan Stanley Capital Services, Inc. (the swap counterparty)
under which the latter purchased protection on a managed reference
portfolio of 125 non-equally weighted reference entities.
Deutsche Asset Management International GmbH acted as a portfolio
advisor for the term of the notes. Changes in the reference
portfolio could only be made subject to eligibility criteria that
defined guidelines and restrictions on replacements and
substitutions.
EUROHOME MORTGAGES: Moody's Junks Rating on Class D Notes
---------------------------------------------------------
Moody's Investors Service has downgraded these classes of notes
issued by Eurohome Mortgages 2007-1 plc:
-- Class A, downgraded to A2 from Aa1; previously on 9 October
2009 Placed Under Review for Possible Downgrade;
-- Class B, Downgraded to B1 from A2; previously on 9 October
2009 Placed Under Review for Possible Downgrade;
-- Class C, Downgraded to Ca from Baa3; previously on 9 October
2009 Placed Under Review for Possible Downgrade;
-- Class D, Downgraded to C from B3; previously on 9 October
2009 Placed Under Review for Possible Downgrade;
-- Class E, Downgraded to C from Ca; previously on 9 October
2009 Placed Under Review for Possible Downgrade;
-- Class X, Downgraded to C from Ca; previously on 9 October
2009 Placed Under Review for Possible Downgrade.
The ratings of the German Mortgage Early Repayment Certificates
and the Italian Mortgage Early Repayment Certificates were not
affected by this rating action.
The rating action concludes the review for possible downgrade,
which was initiated on October 9, 2009. The downgrades were
prompted by worse-than-expected collateral performance.
The transaction is backed by mortgage loans originated by Deutsche
Bank in Germany and Italy and was closed and initially rated in
July 2007. The provisioning mechanism for defaulted loans in the
Italian sub-pool has led to reserve fund drawings on the interest
payment dates from August 2008 through February 2009 and unpaid
principal deficiency ledgers starting in February 2009. According
to this mechanism, the equivalent of the loan amount of defaulted
loans (loans classified as defaulted ("credito in sofferenza") in
accordance with the Bank of Italy Instructions or under which
there are 12 or more delinquent monthly installments) is credited
to the PDL and leads to trapping of available excess spread and,
if excess spread is insufficient, to drawings of the reserve fund.
Since the last review on January 30, 2009, delinquencies and
defaults have increased steeply in the transaction. Both sub-
pools have experienced far higher delinquencies than Moody's
initial assumptions. Terminated loans in the German sub-pool rose
to 14.6% from 8.4% of current balance between November 2008 and
February 2010. In the Italian sub-pool, cumulative defaulted
loans increased to 9.9% of original balance from 2.2% during the
same time frame. Moody's notes that during the latest reporting
period there were about EUR3.7 million of new Italian defaulted
loans reported, which was the second highest quarterly amount of
new defaulted loans reported since closing. As of February 2010,
for the German sub-pool arrears 30+ days (including terminated
loans) were equal to 22.8% of current balance while for the
Italian sub-pool loans of an amount equal to 26.8% of current
balance were in arrears (including defaulted loans).
Moody's notes that the transaction has used all of its reserve
fund and as of the last payment date, Class C has an unpaid PDL of
EUR336,719, while Class D has an unpaid PDL of EUR6.3 million and
Class E has an unpaid PDL of EUR4.2 million. As a result of these
existing unpaid PDL, Class D did not receive interest payments for
the first time in February 2010. Class E and Class X had already
not received interest on previous payment dates.
Besides the defaulted loans from the Italian sub-pool, losses from
the German sub-pool will also be credited to the PDL once the
foreclosure process in respect of the relevant receivable is
completed. In August 2009 and February 2010, initial losses have
been realized on the German sub-pool. So far the aggregate amount
of these losses is EUR58,801. Based on the significant amount of
outstanding German loans that are already terminated and the high
amount of new defaulted loans reported for the Italian sub-pool in
recent quarters, Moody's expects a further increase in the balance
of unpaid PDL.
During the review process, Moody's assessed loan-by-loan
information for both the Italian and the German sub-pools. Based
on this information, Moody's has determined an updated MILAN AaaCE
number for the combined pool of 28.6%. The initial MILAN AaaCE at
closing was approximately 14.2%, while it was increased to 18.6%
in January 2009.
In addition to the loan-by-loan information, Moody's was provided
with roll rates for delinquent loans in the Italian sub-pool.
Initial results of property sales in the German sub-pool were also
provided. Based on a roll rate analysis for the two sub-pools,
Moody's has increased its cumulative default assumption for both
sub-pools. As a result of the updated cumulative default
assumptions as well as an updated recovery rate assumption for the
German sub-pool, the expected loss assumption for the combined
portfolio was revised to 9% of the original portfolio balance.
The loss assumption was increased to 4.4% in January 2009 while
the initial assumption at closing of the transaction was about
1.9%.
Moody's has also factored into its analysis the negative sector
outlook for German and Italian RMBS. The sector outlook reflects
these expectations of key macro-economic indicators: German GDP to
grow by 1.2% in 2010 and by 2.3% in 2011, Italian GDP to grow by
0.9% in 2010 and 1.3% in 2011; German unemployment to increase to
8.6% in 2010 from 8.1% in 2009, Italian unemployment to increase
to 9.4% in 2010 from 8% in 2009.
Moody's ratings address the expected loss posed to investors by
the legal final maturity of the notes. Moody's ratings address
only the credit risks associated with the transaction. Other non-
credit risks have not been addressed, but may have a significant
effect on yield to investors.
Moody's will continue to monitor the performance of this RMBS
transaction closely.
GENERAL MOTORS: Increase Funding for Opel Unit to EUR1.9 Billion
----------------------------------------------------------------
John Reed and Daniel Schafer at The Financial Times report that
General Motors announced on Tuesday that it was increasing its
contribution to the restructuring of Opel from EUR600 million to
EUR1.9 billion (US$2.6 billion).
According to the FT, GM said that the increased funding -- which
comes after pressure from Germany and other governments -- would
come in the form of both equity and loans.
"Under its viability plan, Opel/Vauxhall had estimated funding
requirements of EUR3.3 billion," the FT quoted the company as
saying in a statement. "However, an additional EUR415 million had
been requested by the respective European governments to offset
the potential impact of adverse market developments."
As a result, the amount GM was seeking from European governments
would decline from EUR2.7 billion to less than EUR2 billion, the
FT states.
The FT notes Mr. Reilly also said that he hoped to have the plan
agreed with unions and five European countries from which it is
seeking EUR2.7 billion of loans and guarantees within a month.
About General Motors
General Motors Company -- http://www.gm.com/-- is one of the
world's largest automakers, tracing its roots back to 1908. With
its global headquarters in Detroit, GM employs 209,000 people in
every major region of the world and does business in some 140
countries. GM and its strategic partners produce cars and trucks
in 34 countries, and sell and service these vehicles through these
brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Opel,
Vauxhall and Wuling. GM's largest national market is the United
States, followed by China, Brazil, the United Kingdom, Canada,
Russia and Germany. GM's OnStar subsidiary is the industry leader
in vehicle safety, security and information services.
GM acquired its operations from General Motors Company, n/k/a
Motors Liquidation Company, on July 10, 2009, pursuant to a sale
under Section 363 of the Bankruptcy Code. Motors Liquidation or
Old GM is the subject of a pending Chapter 11 reorganization case
before the U.S. Bankruptcy Court for the Southern District of New
York.
At September 30, 2009, GM had US$107.45 billion in total assets
against US$135.60 billion in total liabilities.
About Motors Liquidation
General Motors Corporation and three of its affiliates filed for
Chapter 11 protection on June 1, 2009 (Bankr. S.D.N.Y. Lead Case
No. 09-50026). General Motors changed its name to Motors
Liquidation Co. following the sale of its key assets to a company
60.8% owned by the U.S. Government.
The Honorable Robert E. Gerber presides over the Chapter 11 cases.
Harvey R. Miller, Esq., Stephen Karotkin, Esq., and Joseph H.
Smolinsky, Esq., at Weil, Gotshal & Manges LLP, assist the Debtors
in their restructuring efforts. Al Koch at AP Services, LLC, an
affiliate of AlixPartners, LLP, serves as the Chief Executive
Officer for Motors Liquidation Company. GM is also represented by
Jenner & Block LLP and Honigman Miller Schwartz and Cohn LLP as
counsel. Cravath, Swaine, & Moore LLP is providing legal advice
to the GM Board of Directors. GM's financial advisors are Morgan
Stanley, Evercore Partners and the Blackstone Group LLP.
Bankruptcy Creditors' Service, Inc., publishes General Motors
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by General Motors Corp. and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
=============
I R E L A N D
=============
ANGLO IRISH: Moody's Downgrades Subordinated Debt Rating to 'Ba1'
-----------------------------------------------------------------
Moody's Investors Service has downgraded the dated subordinated
debt of Anglo Irish Bank Corporation Ltd to Ba1, from Baa1. The
ratings remain on review for possible downgrade. The downgrade of
the dated subordinated debt reflects the risk that the potential
for losses on the dated subordinated debt has increased given the
likely restructuring of the bank, as discussed below. In addition
the review for possible downgrade on the A3/Prime-1 bank deposit
and senior debt ratings and on the Caa2 rated junior subordinated
debt is maintained. The C debt rating on the bank's Tier 1
securities, the Aa1 (negative outlook) rating on the debt
guaranteed by the Irish government, and the E bank financial
strength rating (BFSR -- mapping to a baseline credit assessment
of Caa1) are unaffected by this rating action. The A3/Prime-1
bank deposit and senior debt ratings, the Baa1 dated subordinated
debt rating and the Caa2 junior subordinated debt rating were
originally placed on review for possible downgrade on December 8
2009.
The bank's restructuring plan, required as a result of the
substantial state aid that the bank has received over the last
year, primarily the EUR4 billion capital injection from the Irish
government, was submitted to the European Commission in late 2009.
Moody's understands that the plan includes several different
options including a restructuring of the bank outside of a
liquidation scenario although the rating agency notes that this
remains at a relatively early stage of an iterative process with
the European Commission and other stakeholders.
In Moody's view the likelihood of the bank being wound-up over a
short or even medium-term timeframe is very low. This is because
of the potential impact that this could have on the Irish
sovereign and the rest of the domestic banking system. The
deflationary impact that any sale of the bank's assets would have
would be likely to lead to severe consequences for the National
Asset Management Agency, the key element in the Irish government's
support package to the banking sector given the sector's large
exposure to residential and commercial development lending, as
well as the other Irish banks who will still have exposure to the
commercial property market after the transfer of assets to NAMA.
Moody's therefore believes that the most likely outcome will be a
restructuring of the bank outside of a liquidation scenario, most
probably a split of the bank into a smaller operating bank and a
non-bank that will be wound down over a long period of time (a
"good bank / bad bank" split). Moody's would also note that the
development lending and associated property lending of the bank
will be acquired by NAMA, leading to a substantial reduction in
the size of the bank. However the complexities of this type of
split for a bank such as Anglo Irish are large and there are
considerable risks and uncertainties also attached to this option.
Therefore the review for possible downgrade will continue to focus
on the form that the bank will take once the restructuring plan by
the European Commission has been approved. Moody's noted however
that, given the bank's poor standalone fundamentals (as evidenced
by the E BFSR) and the uncertain future of its business model,
ongoing support from the Irish government remains the key rating
factor.
As such Moody's notes that the government has publicly stated that
it is committed to providing capital to the bank's participating
in NAMA (including Anglo Irish), within the constraints of EU
State Aid requirements. While throughout its restructuring
Moody's believes that the commitment and availability of
government support for Anglo Irish is unlikely to reduce, the
rating agency did note that the degree of support in the future
may be affected by the final form of the bank and the nature of
any guarantees that may be put in place post a reorganization. As
such Moody's would note that there is the potential for the senior
ratings to be upgraded if, following a reorganization, guarantees
are put in place by the Irish government, although this would also
depend on the form that those guarantees may take.
As a result of the likely restructuring of Anglo Irish, Moody's
believes that the potential for losses on the dated subordinated
securities of the bank has increased substantially. In the event
of "good bank / bad bank" split, Moody's assumption is that the
junior securities, including the dated subordinated debt, would be
left in the bad bank to help absorb losses, and in the event,
albeit highly unlikely, of the bank being wound up then these
securities would also be likely to suffer substantial losses.
Therefore the dated subordinated debt has been downgraded to Ba1
and left on review for further downgrade, pending the details of
the reorganization.
In Ireland, as in most countries, the authorities have so far not
imposed losses on dated subordinated debt outside of a liquidation
scenario. As a result, and due to the Irish government guarantee
(which explicitly covered dated subordinated debt but which
expires in September 2010), Moody's have so far incorporated
systemic support into this class of debt. Dated subordinated debt
issued by Irish banks had received uplift from the adjusted
baseline credit assessment to one notch below the senior debt
rating. However, due to the possibility of greater burden
sharing, and the magnitude of the challenges that the financial
system faces in Ireland, Moody's believe in the case of Anglo
Irish that subordinated debt is at significantly greater risk of
burden sharing than previously incorporated into Moody's ratings.
Moody's will closely examine further developments to assess
whether such burden sharing may also impact other Irish issuers.
If this is the case then Moody's would likely review its approach
to rating this class of debt at other Irish-domiciled banks.
The junior subordinated debt also remains on review for possible
downgrade. The review of these instruments will focus on whether
the coupons, which are already being deferred, will be able to be
restarted in the future, post the likely reorganization.
Moody's aims to complete the review of the bank's ratings
following the conclusion of the European Commission's assessment
of the bank's restructuring plan.
The last rating action on Anglo Irish was on December 8, 2009,
when the bank's deposit, senior debt, dated subordinated and
junior subordinated debt ratings were placed on review for
possible downgrade.
Anglo Irish Bank had total assets of EUR88.5 billion at end-March
2009. The bank is headquartered in Dublin, Ireland.
HUGHES & HUGHES: WH Smith Mulls Bid for Two Concession Shops
------------------------------------------------------------
Ian Kehoe at The Sunday Business Post reports that WH Smith is
considering a bid for the assets of Hughes & Hughes Ltd., which
went into receivership on Feb. 26.
According to the report, WH Smith is believed to be particularly
interested in taking control of Hughes & Hughes' valuable
concession shops at Dublin and Cork Airports. Both shops
continued to trade over the weekend, the report notes.
WH Smith has already tendered for the right to have stores in
Terminal Two at Dublin Airport, and industry sources said it was
mulling over a play for the existing outlets, the report notes.
Easons is also a potential bidder for some of Hughes & Hughes'
outlets at the airport and nationwide, the report says. The
receiver, Deloitte, will begin talks with potential trade buyers
over the coming days as it seeks a quick deal, the report states.
As reported by the Troubled Company Reporter-Europe on March 1,
2010, the Irish Independent said Ulster Bank has appointed a
receiver to the Hughes & Hughes bookstore chain, putting 225 jobs
at risk.
"Until the recent past our business has continued to grow . . .
however, a series of factors, in a relatively short timeframe and
largely outside our control, has ultimately led to receivership,"
the Irish Independent quoted the firm as saying in a statement
issued on Feb. 26. The statement singled out "being unable to
sufficiently renegotiate occupation costs either on the high
street or in the airports" as a major difficulty for the
bookseller, which gets the "majority" of its business from airport
sales, the Irish Independent noted. According to the Irish
Independent, Hughes & Hughes' statement also cited the fall in
passenger numbers through Cork and Dublin airports as something
that hit the retailer "particularly badly". Other challenges
identified by Hughes & Hughes included the "weakness of the
economy", the exchange rate differential with sterling" and the
online books revolution, the Irish Independent stated.
IPOS GROUP: Uniphar to Offload Stake in Affiliated Pharmacies
-------------------------------------------------------------
Ian Kehoe at The Sunday Business Post Online reports that drugs
distribution firm Uniphar is prepared to offload its stake in
almost 150 Irish pharmacies affiliated with troubled independent
pharmacy ownership scheme Ipos.
Uniphar was one of the main backers of the Ipos scheme, which was
designed to help pharmacists buy their own outlets, the Post.ie
discloses. As part of the deal, Uniphar retained a minority
equity stake in most pharmacies in the scheme, the Post.ie notes.
Uniphar is seeking to sell its shares to the individual
pharmacists involved, the Post.ie says.
It is expected that most of the 150 pharmacists will seek to buy
out Uniphar, and the Irish Pharmacy Union is working with the
pharmacists involved, the Post.ie states.
Citing the Sunday Business Post Online, the Troubled Company
Reporter-Europe reported on Feb. 24, 2010, that Bank of Scotland
(Ireland) has seized up to 40 properties to reduce its exposure to
Ipos. The Post.ie said the bank has installed Paul McCann, a
partner at Grant Thornton accountants, as receiver to a number of
companies in the Ipos scheme, including Nish Property, Ipos
Property Holding and Ipos 19 Property.
The Post.ie recalled KPMG accountant Kieran Wallace was appointed
liquidator to the three main holding companies in the scheme.
During a series of creditors' meetings, it emerged that the
businesses could leave a shortfall of as much as EUR240 million
when they were wound up, the Post.ie noted. The Post.ie said the
bank advanced more than EUR35 million to funds in the Ipos scheme,
which were used to help pharmacists buy their own outlets. The
scheme has struggled in light of the economic downturn, with many
pharmacists unable to pay dividends or meet interest repayments,
the Post.ie recounted.
MAGNOLIA FINANCE: Moody's Withdraws Caa1 Rating on Class A Notes
----------------------------------------------------------------
Moody's Investors Service has withdrawn its ratings of this class
of notes issued by Magnolia Finance VI plc - series 2007-24
Alpaca:
-- Class A EUR70,000,000 Alpaca Deferrable Interest CPPI Notes
due 2018, Withdrawn; previously on Apr 8, 2008 Downgraded to
Caa1
The rating was withdrawn for business reasons.
THUNDERBIRD INVESTMENTS: S&P Cuts Ratings on Three Notes to 'D'
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered to 'D' from 'CCC-' its
credit ratings on the class A, B1, and B2 notes in Thunderbird
Investments PLC's EUR25 million secured fixed- and floating-rate
series 17 notes.
The downgrades to 'D' follow notification to S&P that losses from
credit events in the underlying reference portfolios have exceeded
the available credit enhancement, and that a cash settlement
payment is due from the issuer to the swap counterparty. This
results in a principal loss for the noteholders.
=========
I T A L Y
=========
EUROHOME MORTGAGES: Moody's Junks Rating on Class D Notes
---------------------------------------------------------
Moody's Investors Service has downgraded these classes of notes
issued by Eurohome Mortgages 2007-1 plc:
-- Class A, downgraded to A2 from Aa1; previously on 9 October
2009 Placed Under Review for Possible Downgrade;
-- Class B, Downgraded to B1 from A2; previously on 9 October
2009 Placed Under Review for Possible Downgrade;
-- Class C, Downgraded to Ca from Baa3; previously on 9 October
2009 Placed Under Review for Possible Downgrade;
-- Class D, Downgraded to C from B3; previously on 9 October
2009 Placed Under Review for Possible Downgrade;
-- Class E, Downgraded to C from Ca; previously on 9 October
2009 Placed Under Review for Possible Downgrade;
-- Class X, Downgraded to C from Ca; previously on 9 October
2009 Placed Under Review for Possible Downgrade.
The ratings of the German Mortgage Early Repayment Certificates
and the Italian Mortgage Early Repayment Certificates were not
affected by this rating action.
The rating action concludes the review for possible downgrade,
which was initiated on October 9, 2009. The downgrades were
prompted by worse-than-expected collateral performance.
The transaction is backed by mortgage loans originated by Deutsche
Bank in Germany and Italy and was closed and initially rated in
July 2007. The provisioning mechanism for defaulted loans in the
Italian sub-pool has led to reserve fund drawings on the interest
payment dates from August 2008 through February 2009 and unpaid
principal deficiency ledgers starting in February 2009. According
to this mechanism, the equivalent of the loan amount of defaulted
loans (loans classified as defaulted ("credito in sofferenza") in
accordance with the Bank of Italy Instructions or under which
there are 12 or more delinquent monthly installments) is credited
to the PDL and leads to trapping of available excess spread and,
if excess spread is insufficient, to drawings of the reserve fund.
Since the last review on January 30, 2009, delinquencies and
defaults have increased steeply in the transaction. Both sub-
pools have experienced far higher delinquencies than Moody's
initial assumptions. Terminated loans in the German sub-pool rose
to 14.6% from 8.4% of current balance between November 2008 and
February 2010. In the Italian sub-pool, cumulative defaulted
loans increased to 9.9% of original balance from 2.2% during the
same time frame. Moody's notes that during the latest reporting
period there were about EUR3.7 million of new Italian defaulted
loans reported, which was the second highest quarterly amount of
new defaulted loans reported since closing. As of February 2010,
for the German sub-pool arrears 30+ days (including terminated
loans) were equal to 22.8% of current balance while for the
Italian sub-pool loans of an amount equal to 26.8% of current
balance were in arrears (including defaulted loans).
Moody's notes that the transaction has used all of its reserve
fund and as of the last payment date, Class C has an unpaid PDL of
EUR336,719, while Class D has an unpaid PDL of EUR6.3 million and
Class E has an unpaid PDL of EUR4.2 million. As a result of these
existing unpaid PDL, Class D did not receive interest payments for
the first time in February 2010. Class E and Class X had already
not received interest on previous payment dates.
Besides the defaulted loans from the Italian sub-pool, losses from
the German sub-pool will also be credited to the PDL once the
foreclosure process in respect of the relevant receivable is
completed. In August 2009 and February 2010, initial losses have
been realized on the German sub-pool. So far the aggregate amount
of these losses is EUR58,801. Based on the significant amount of
outstanding German loans that are already terminated and the high
amount of new defaulted loans reported for the Italian sub-pool in
recent quarters, Moody's expects a further increase in the balance
of unpaid PDL.
During the review process, Moody's assessed loan-by-loan
information for both the Italian and the German sub-pools. Based
on this information, Moody's has determined an updated MILAN AaaCE
number for the combined pool of 28.6%. The initial MILAN AaaCE at
closing was approximately 14.2%, while it was increased to 18.6%
in January 2009.
In addition to the loan-by-loan information, Moody's was provided
with roll rates for delinquent loans in the Italian sub-pool.
Initial results of property sales in the German sub-pool were also
provided. Based on a roll rate analysis for the two sub-pools,
Moody's has increased its cumulative default assumption for both
sub-pools. As a result of the updated cumulative default
assumptions as well as an updated recovery rate assumption for the
German sub-pool, the expected loss assumption for the combined
portfolio was revised to 9% of the original portfolio balance.
The loss assumption was increased to 4.4% in January 2009 while
the initial assumption at closing of the transaction was about
1.9%.
Moody's has also factored into its analysis the negative sector
outlook for German and Italian RMBS. The sector outlook reflects
these expectations of key macro-economic indicators: German GDP to
grow by 1.2% in 2010 and by 2.3% in 2011, Italian GDP to grow by
0.9% in 2010 and 1.3% in 2011; German unemployment to increase to
8.6% in 2010 from 8.1% in 2009, Italian unemployment to increase
to 9.4% in 2010 from 8% in 2009.
Moody's ratings address the expected loss posed to investors by
the legal final maturity of the notes. Moody's ratings address
only the credit risks associated with the transaction. Other non-
credit risks have not been addressed, but may have a significant
effect on yield to investors.
Moody's will continue to monitor the performance of this RMBS
transaction closely.
GLOBAL GARDEN: Lenders Take Over Business; 3i's Stake Wiped Out
---------------------------------------------------------------
Martin Arnold and Anousha Sakoui at The Financial Times report
that lenders seized the equity of Italian lawnmower maker Global
Garden Products, one of 3i Group's companies.
The FT relates Global Garden Products said on Monday that it had
reached a deal with lenders -- including Credit Agricole, Halcyon,
Intesa Sanpaolo, Lloyds, Nordea, SEB, BNP Paribas and Royal Bank
of Scotland -- for them to take it over and wipe out 3i's stake.
The FT says lenders agreed to nearly halve Global Garden Products'
debt, from EUR487.7 million to EUR257.1 million. Senior lenders
wrote off 40% of their debt and second lien debt holders wrote off
EUR43 million of claims, the FT notes. Together they will own
85%, the FT states.
According to the FT, Global Garden Products is 3i's biggest loss
from a single buy-out deal. 3i invested EUR260 million (GBP181
million) of equity when it bought the maker of Mountfield, Stiga,
Alpina and Castelgarden brands of lawnmowers, chainsaws and other
powered garden tools for EUR730 million in October 2007, the FT
recalls.
===================
K A Z A K H S T A N
===================
BANK CENTERCREDIT: Fitch Affirms Individual Rating at 'D/E'
-----------------------------------------------------------
Fitch Ratings has affirmed Kazakhstan-based Bank CenterCredit's
ratings, including its Long-term Issuer Default Rating of 'B' with
a Stable Outlook.
The rating affirmation follows the 25 February announcement by
South Korea's Kookmin Bank ('A+'/F1/ Stable/Individual 'B/C') that
it has increased its stake in BCC's total share capital to 42%
from 30%, and that the International Finance Corporation has
acquired a 10% stake. While Fitch views the capital injection and
the increased foreign shareholder participation as positive, the
expectation that the transaction would be completed was already
factored into the bank's ratings. In the agency's view, moderate
financial support for BCC from Kookmin is possible, in case of
need, but Kookmin's gradual approach to its acquisition of BCC,
its apparent keenness to avoid consolidation of BCC at least in
the near term and the limited integration between the two banks
(notwithstanding substantial management oversight from Kookmin)
mean that support cannot be relied upon in all circumstances.
Kookmin now holds a 29.6% stake in BCC's ordinary share capital,
with its remaining stake comprising preference shares, which,
Fitch has been informed are convertible into ordinary shares at
the decision of BCC's board of directors. The IFC has a put
option to sell its stake to Kookmin from February 2013. Should
Kookmin purchase the IFC's stake and be able to convert the
preference shares, it would consolidate a controlling stake in
BCC, which would likely result in a multi-notch upgrade of BCC.
However, Fitch notes the long time frame for the completion of the
acquisition, the absence of any statement from Kookmin in respect
to its intention to consolidate a majority stake and uncertainty
as regards provision of support for BCC while Kookmin remains a
minority shareholder. Should Kookmin increase operational
integration between the banks, take on non-equity funding exposure
to BCC (no material amounts provided to date) or make statements
in respect to its intention to support and/or ultimately acquire
BCC, this might generate limited rating upside for BCC prior to
the completion of the acquisition.
BCC's ratings and Outlook reflect its considerable loss absorption
capacity compared to current asset quality metrics and potential
further loan impairment recognition, as well as its currently
strong liquidity and moderate large ticket debt repayments in the
near- to medium-term. On January 22, 2010, Fitch revised BCC's
rating Outlook to Stable from Evolving, reflecting the improvement
in loss absorption capacity, still moderate reported levels of
non-performing loans and the improved outlook for the Kazakh
economy.
BCC is the fourth-largest bank in Kazakhstan with 10% of assets
and 14.8% of retail deposits at end- 2009. Kookmin will now have
two out of six seats on BCC's BoD, while the IFC will have the
right to nominate one member. The stake of the chairman of the
board of directors, Bakhytbek Bayseitov, and senior management in
total share capital has decreased to 34.7% (42.7% in ordinary
shares) from 53.2% (all ordinary) as a result of the recent
transaction, and they will continue to nominate three members of
the board.
The rating actions are:
-- Long-term foreign currency IDR: affirmed at 'B'; Outlook
Stable
-- Short-term foreign currency IDR: affirmed at 'B'
-- Support Rating: affirmed at '5'
-- Individual Rating: affirmed at 'D/E';
-- Senior unsecured debt: affirmed at 'B'; Recovery Rating at
'RR4'
In Fitch's rating criteria, a bank's standalone risk is reflected
in Fitch's Individual ratings and the prospect of external support
is reflected in Fitch's Support ratings. Collectively these
ratings drive Fitch's Long- and Short-term IDRs.
===================
L U X E M B O U R G
===================
EUROMAX IV: S&P Cuts Ratings on Four Classes of Notes to 'CCC-'
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its credit ratings on
nine classes of notes issued by EUROMAX IV MBS S.A.
The rating actions follow an event of default that the issuer
reported on Feb. 24, 2010, under the conditions of its notes. S&P
understands that the event of default was triggered when the event
of default overcollateralization ratio fell below its trigger
level of 100%.
The EOD OC Ratio measures the ratio of the adjusted total
principal balance of assets in the portfolio to the total
outstanding amount of the three class A1 notes and the class A2
notes.
S&P notes that recent falls in the EOD OC Ratio have largely been
the result of downward adjustments to the balance of certain lower
rated assets in the portfolio that the collateral administrator
applies when calculating the ratio. The adjustments used are
prescribed in the transaction documents.
In September 2009, S&P published its surveillance methodology for
cash flow transactions subject to an event of default. The
article describes the criteria that S&P apply for transactions
such as EUROMAX IV MBS, where the senior class of noteholders has
the right to instruct the trustee to enforce security over the
portfolio collateral after an event of default.
Consistent with its criteria, S&P lowered its rating on the class
A1 notes to 'BB', to reflect the increased risk in the transaction
following the event of default. At the same time, S&P lowered its
ratings on the other classes of notes to levels that reflect its
opinion of the risk of the notes to nonpayment of interest and
principal.
Ratings List
EUROMAX IV MBS S.A.
EUR206.45 Million Secured Floating-Rate Notes
Ratings Lowered
Rating
------
Class To From
----- -- ----
A1 single BB A-
A1 delayed BB A-
A1 fltg BB A-
A2 B BBB
B CCC BB
C CCC- BB-
D CCC- CCC+
F1 Combo CCC- CCC
F2 Combo CCC- BB-
=====================
N E T H E R L A N D S
=====================
AMSTEL CORPORATE: S&P Downgrades Rating on Class E Notes to 'B-'
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its credit ratings on
four classes of Amstel Corporate Loan Offering 2007-1 B.V.'s
outstanding EUR4.67 billion asset-backed floating-rate notes. S&P
also affirmed and removed from CreditWatch negative its ratings on
two classes. The downgraded classes account for EUR769 million.
These rating actions follow S&P's analysis of the effect that its
updated corporate collateralized debt obligation criteria have on
these ratings.
On Sept. 17, 2009, S&P placed on CreditWatch negative its ratings
on 1,626 European cash flow, hybrid, and synthetic CDO
transactions, in tandem with the publication of its updated
criteria.
In its review, S&P considered both the updated criteria and its
assessment of any credit deterioration or improvement the tranches
have experienced since its last review. S&P's assessment
indicated there was sufficient credit enhancement to support the
stressed scenario loss for classes A1 and C at the current rating
levels. Accordingly, S&P affirmed and removed from CreditWatch
negative S&P's ratings on these notes.
However, current credit enhancement levels for classes A2, B, D,
and E proved insufficient in S&P's view to support their current
ratings and S&P consequently lowered its ratings on these classes
of notes.
Ratings List
Amstel Corporate Loan Offering 2007-1 B.V.
EUR10 Billion Senior CDS And Credit-Linked Floating-Rate Notes
Ratings Lowered and Removed From Creditwatch Negative
Rating
------
Class To From
----- -- ----
A2 AA+ AAA/Watch Neg
B AA- AA/Watch Neg
D BBB- BBB/Watch Neg
E B- BB/Watch Neg
Ratings Affirmed and Removed From Creditwatch Negative
Rating
------
Class To From
----- -- ----
A1 AAA AAA/Watch Neg
C A A/Watch Neg
AMSTEL CORPORATE: S&P Affirms Rating on Class E Notes at 'BB'
-------------------------------------------------------------
Standard & Poor's Ratings Services affirmed and removed from
CreditWatch negative its credit ratings on four classes of Amstel
Corporate Loan Offering 2005-1 B.V.'s EUR4.23 billion asset-backed
floating-rate notes and two classes of Amstel Corporate Loan
Offering 2005-2 B.V.'s EUR170 million asset-backed floating-rate
notes.
S&P has affirmed and removed from CreditWatch negative its ratings
on these tranches following its analysis of the effect that its
updated corporate collateralized debt obligation criteria have on
these ratings.
On Sept. 17, S&P placed on CreditWatch negative its ratings on
1,626 European cash flow, hybrid, and synthetic CDO transactions,
in tandem with the publication of its updated criteria.
In its review, S&P considered both the updated criteria and its
assessment of any credit deterioration or improvement the tranches
have experienced since its last review. S&P's assessment
indicated there was sufficient credit enhancement to support the
stressed scenario loss at the current rating levels. Accordingly,
S&P affirmed and removed from CreditWatch negative its ratings on
these notes.
Ratings List
Ratings Affirmed and Removed From Creditwatch Negative
Amstel Corporate Loan Offering 2005-1 B.V.
EUR4.23 Billion Asset-Backed Floating-Rate Notes (2005-1)
Rating
------
Class To From
----- -- ----
A+ AAA AAA/Watch Neg
A AAA AAA/Watch Neg
B AA AA/Watch Neg
C A A/Watch Neg
Amstel Corporate Loan Offering 2005-2 B.V.
EUR170 Million Asset-Backed Floating-Rate Notes (2005-2)
Rating
------
Class To From
----- -- ----
D BBB BBB/Watch Neg
E BB BB/Watch Neg
DSB BANK: Former CFO Cleared of Wrongdoing in Bankruptcy Probe
--------------------------------------------------------------
Maarten van Tartwijk at Dow Jones Newswires reports that an
independent committee cleared ABN Amro Holding NV's chief
executive officer Gerrit Zalm of wrongdoing during his previous
stint at DSB Bank.
Dow Jones says Mr. Zalm's position at ABN AMro was at risk, due to
his previous job as chief financial officer at DSB Bank, which
went bankrupt in October following a run on deposits.
Dow Jones relates Mr. Zalm and other former board members of DSB
Bank are being investigated by an independent committee for any
knowledge of possible malpractices at the company and alleged
negligence to correct them.
According to Dow Jones, the committee said Monday that there
wasn't any reason to question Mr. Zalm's expertise and reliability
and that a decision by the Dutch Central Bank to keep him in his
job was justified.
DSB Bank -- http://www.dsbbank.com/-- is a fully licensed bank in
the Netherlands, providing mortgages, consumer loans, savings and
insurance products to retail clients. The bank has a leading
market share in the Dutch market for consumer loans. DSB Bank
also has operations in Belgium and Germany. DSB Bank, established
in 1975, is privately owned by Dirk Scheringa, currently CEO of
DSB Bank, Chairman of the Executive Management Board.
Mr. Scheringa is also 100% owner of AZ Alkmaar football club,
which plays in the Dutch Premier League and president of the
Scheringa Museum for Magic Realism, an international collection of
more than 500 works of art.
NIBC BANK: Moody's Confirms Perpetual Debt Securities at 'Ba1'
--------------------------------------------------------------
Moody's Investors Service confirmed its ratings on NIBC Bank
hybrid securities which are in line with its revised Guidelines
for Rating Bank Hybrids and Subordinated Debt published in
November 2009. Moody's confirmed NIBC Bank's perpetual debt
securities cumulative -- through Alternative Coupon Settlement
Mechanism -- at Ba1. This concludes the review for possible
downgrade that began on November 18, 2009. The outlook on all
long-term ratings' as well as on the Bank Financial Strength
Rating for NIBC Bank remains negative.
Prior to the global financial crisis, Moody's had incorporated
into its ratings an assumption that support provided by national
governments and central banks to shore up a troubled bank would,
to some extent, benefit the subordinated debt holders as well as
the senior creditors. The systemic support for these instruments
has not been forthcoming in many cases. The revised methodology
largely removes previous assumptions of systemic support,
resulting in the rating action. In addition, the revised
methodology generally widens the notching on a hybrid's rating
that is based on the instrument's features.
Rating Action in Detail
The starting point in Moody's revised approach to rating hybrid
securities is the Adjusted Baseline Credit Assessment. The
Adjusted BCA reflects the bank's standalone credit strength,
including parental and/or cooperative support, if applicable. The
Adjusted BCA excludes systemic support.
The Adjusted BCA is Baa2 for NIBC Bank is the same as the BCA
since no parental and/or cooperative support are applicable. The
adjusted BCA is also the same as the long-term deposit and debt
rating since NIBC Bank does not benefit from systemic support
under Moody's analysis. Moody's new methodology on hybrids
therefore does not have any impact on NIBC Bank's hybrid
securities' ratings.
The perpetual debt securities issued by NIBC Bank were confirmed
at Ba1. The two notches differential with the Adjusted BCA
reflects the instrument's deeply subordinated claim in liquidation
and coupon deferral mechanism, which is optional subject to a
dividend pusher. Moody's adds that unpaid coupons are cumulative
and must be settled through an alternative coupon settlement
mechanism. The outlook on the perpetual debt securities is
negative.
These ratings have been confirmed and assigned a negative outlook:
- NIBC Bank N.V -- US$128 million 5.817 % Perpetual Debt
Securities (ISIN: US62914EAA29) at Ba1
- NIBC Bank N.V -- US$149 million 7.625% Fixed Rate Preferred
Securities (ISIN XS0269908074) at Ba1
- NIBC Bank N.V -- US$100 million Perpetual Debt Securities
(ISIN XS0215294512) at Ba1
- NIBC Bank N.V -- EUR 50 million Perpetual Debt Securities
(ISIN XS0249580357) at Ba1
Previous Rating Actions and Moody's Methodologies
Moody's published on February 25, 2010 a press release correcting
the misclassification of two securities issued by NIBC Bank. The
securities, initially rated as junior subordinated securities,
were reclassified as preferred stocks and rated Ba1.
The previous rating action on NIBC Bank was on November 18, 2009,
when Moody's placed NIBC's Bank Ba1 preferred securities and Baa3
junior subordinated ratings on review for possible downgrade.
Headquartered in The Hague, The Netherlands, NIBC Bank had total
assets of EUR29.7 billion and reported shareholders' equity
(including minority interests) of EUR1.6 billion as of June 30,
2009.
SENSATA TECHNOLGIES: Modifies Dutch Auction Tender Offer for Notes
------------------------------------------------------------------
Sensata Technologies B.V. disclosed the commencement of a cash
tender offer to purchase the maximum aggregate principal amount of
its 8% Senior Notes due 2014, its 9% Senior Subordinated Notes due
2016 and its 11.25% Senior Subordinated Notes due 2014 that it can
purchase for US$350,000,000 at a purchase price per US$1,000
principal amount with respect to the Dollar Notes and per EUR1,000
with respect to the Euro Notes determined in accordance with a
modified Dutch auction procedure on the terms and conditions set
forth in the Offer to Purchase dated February 26, 2010. The
Tender Offer will be subject to satisfaction or waiver of certain
conditions, including Sensata's ultimate parent company, which is
currently undertaking a financing transaction, having received
sufficient net proceeds to make the payments contemplated by the
Tender Offer.
The Dollar Notes and the Euro Notes are referred to as the
"Notes." The Notes and other information relating to the Tender
Offer are listed in the table below.
Total
Consideration
Outstanding Early (Acceptable Bid
CUSIP/ISIN Principal Participation Price Range)
Series of Notes No(s). Amount Payment (1) (1)(2)
8% Senior Notes US$900.00 -
due 2014 81725W AC7 US$340,006,000 US$30.00 US$1,000.00
9% Senior
Subordinated
Notes due
2016 XS0252692412 EUR177,315,000 EUR30.00 EUR875.00 -
XS0252692925 EUR975.00
XS0286076442
11.25% Senior
Subordinated
Notes due
2014 XS0378671878 EUR137,000,000 EUR30.00 EUR956.25 -
XS0378671282 EUR1,056.25
XS0416176757
(1) Per US$1,000 principal amount of Dollar Notes and EUR1,000 principal
amount of Euro Notes, as the case may be, that are accepted for
purchase.
(2) Includes the applicable Early Participation Payment referred to below.
The total consideration payable pursuant to the Tender Offer per
US$1,000 principal amount of Dollar Notes or EUR1,000 principal
amount of Euro Notes validly tendered and accepted for purchase by
Sensata will be determined based on a formula consisting of a base
price plus a clearing premium. The base price (including the
Early Participation Payment) will be equal to (i) US$900.00 for
the Dollar Notes, (ii) EUR875.00 for the 9% Notes and (iii)
EUR956.25 for the 11.25% Notes. The clearing premium will be
determined by consideration of the "bid price" specified by each
holder that tenders Notes into the Tender Offer, which represents
the minimum consideration such holder is willing to receive for
those Notes. Each bid price must fall within the acceptable bid
price range specified in the table above.
The clearing premium applicable to Notes of all series will be the
lowest single premium at which Sensata will be able to spend the
Maximum Payment Amount by accepting all validly tendered Notes
with bid premiums (the amount by which each bid price exceeds the
base price) equal to or lower than the clearing premium. If the
aggregate amount of Notes validly tendered (and not withdrawn) at
or below the clearing premium would cause Sensata to spend more
than the Maximum Payment Amount, then holders of the Notes
tendered at the clearing premium will be subject to proration as
described in the Offer to Purchase.
Provisions Subject to the Tender Offer
Sensata will pay accrued and unpaid interest on all Notes tendered
and accepted for payment in the Tender Offer from the last
interest payment date to, but not including, the date on which the
Notes are purchased.
Each holder of Notes who validly tenders (and does not withdraw)
his or her Notes on or prior to 5:00 P.M., New York City time, on
March 11, 2010, unless such time and date is extended by Sensata
(the "Early Participation Date"), will receive an early
participation payment of US$30.00 per US$1,000 principal amount of
Dollar Notes or EUR30.00 for each EUR1,000 principal amount of
Euro Notes in the Tender Offer (the "Early Participation
Payment"). Holders tendering their Notes in the Tender Offer
after the Early Participation Date will not be eligible to receive
the Early Participation Payment.
The Tender Offer is scheduled to expire at 11:59 p.m., New York
City time, on March 25, 2010, unless such time and date is
extended or earlier terminated by Sensata (the "Expiration Date").
Tendered Notes may be withdrawn at any time on or prior to
5:00 p.m., New York City time, on March 11, 2010, unless such time
and date is extended by Sensata (the "Withdrawal Date"). Holders
of Notes who tender their Notes after the Withdrawal Date, but on
or prior to the Expiration Date, may not withdraw the Notes
tendered.
The Tender Offer is conditioned upon the satisfaction or waiver of
certain conditions as described in the Offer to Purchase. Subject
to applicable law, Sensata may also terminate the Tender Offer at
any time prior to the applicable Expiration Date in its sole
discretion.
About Sensata Technologies
Almelo, Netherlands-based Sensata Technologies B.V. --
http://www.sensata.com/-- supplies sensing, electrical
protection, control and power management solutions. Owned by
affiliates of Bain Capital Partners, LLC, a global private
investment firm, and its co-investors, Sensata employs
approximately 9,500 people in nine countries. Sensata's products
improve safety, efficiency and comfort for millions of people
every day in automotive, appliance, aircraft, industrial,
military, heavy vehicle, heating, air-conditioning, data,
telecommunications, recreational vehicle and marine applications.
* * *
As reported by the Troubled Company Reporter on December 7, 2009,
Moody's Investors Service has upgraded Sensata Technologies B.V.'s
Corporate Family and Probability of Default ratings to Caa1 from
Caa2, as well as the company's senior secured credit facility to
B2, senior unsecured notes to Caa2, and senior subordinated notes
to Caa3. In a related rating action, Moody's affirmed the
company's Speculative Grade Liquidity rating at SGL-3. The
outlook is positive.
===========
R U S S I A
===========
ALLIANCE OIL: Fitch Withdraws 'B' Foreign Currency Rating
---------------------------------------------------------
Fitch Ratings has withdrawn Alliance Oil Company Ltd.'s expected
senior unsecured foreign currency rating of 'B' and Recovery
Rating of 'RR4' for the proposed eurobond issue following the
company's announcement that it will not proceed with the proposed
bond offering.
Fitch assigned Alliance Oil Long-term foreign and local currency
Issuer Default Ratings of 'B', Short-term foreign and local
currency IDRs of 'B' and a National Long-term rating of 'BBB(rus)'
on February 10, 2010.
Alliance Oil is one of Russia's second tier integrated oil
companies producing approximately 44,000 barrels of oil per day in
2009 primarily in the Volga Urals with a growing presence in
Timano-Pechora. The company also has a refining capacity of
70,000 barrels per day at its Khabarovsk refinery located in
Russia's Far East.
BANK SOCIETE: Moody's Changes Outlook on 'D-' BFSR to Positive
---------------------------------------------------------------
Moody's Investors Service has taken a number of rating actions on
four Russian subsidiaries of Societe Generale Group (rated
Aa2/Prime-1/C+ with negative outlook) following the parent bank's
announcement on 18 February 2010 of its integration plan for its
Russian business units. The rating actions are:
- Rosbank: The bank financial strength rating of D was
confirmed, the bank's long-term and short-term global local
and foreign currency deposit ratings of Baa3/Prime-3 and its
local currency senior unsecured debt rating of Baa3 were also
confirmed. The BFSR carries a stable outlook, while the
outlook on the bank's long-term deposit and debt ratings is
now positive. Concurrently, Moody's Interfax Rating Agency
confirmed Rosbank's Aaa.ru long-term national scale rating
and the Aaa.ru NSR of the bank's local currency senior
unsecured debt. The NSR carries no specific outlook.
- Bank Societe Generale Vostok (BSGV): The outlook on the bank's
D- BFSR was changed to positive from stable, the bank's long-
term and short-term global local and foreign currency deposit
ratings of Baa2/Prime-2 were affirmed with stable outlook.
Concurrently, Moody's Interfax Rating Agency affirmed BSGV's
Aaa.ru long-term NSR. The NSR carries no specific outlook.
- Bank DeltaCredit (DeltaCredit): The BFSR of D and the
Baa2/Prime-2 long-term and short-term local and foreign
currency deposit ratings remained unchanged; however, Moody's
changed to negative from stable the outlook on the bank's Baa2
long-term local and foreign currency deposit ratings. The
bank's Aaa.ru NSR remains unchanged. The NSR carries no
specific outlook.
- Rusfinance: The BFSR of E+ remains unchanged, the bank's long-
term and short-term global local and foreign currency deposit
ratings of Baa3/Prime-3 were affirmed. The outlook on BFSR
and long-term global scale ratings remains stable.
Concurrently, Moody's Interfax Rating Agency affirmed
Rusfinance's Aaa.ru long-term NSR. The NSR carries no
specific outlook.
According to Moody's, these rating actions have been driven by
these considerations.
Rosbank
With regard to Rosbank's stand-alone strength, Moody's notes that
the integration plan envisages a material capital injection to the
bank scheduled for completion in the coming months, which aims to
boost the bank's capitalization cushion and will enable the entity
resulting from the merger of Rosbank and BSGV to become a 100%
parent of two other subsidiaries of Societe Generale in Russia --
Rusfinance and DeltaCredit. Moody's believe that the
consolidation of Rusfinance and DeltaCredit, as well as the merger
with BSGV, will help to improve Rosbank's market franchise and
enhance operating efficiency.
From the parental support perspective, Moody's believes the
announcement and the role dedicated to Rosbank in this process
underlines the strategic fit of Rosbank with its majority
shareholder -- Societe Generale Group -- and therefore the rating
agency notes that the probability of support from Societe Generale
to Rosbank, as defined in accordance with Moody's Joint-Default
Analysis Methodology, is likely to increase in the coming twelve
to eighteen months as the integration process develops. Based on
these considerations, Moody's assigns a positive outlook on
Rosbank's supported deposit and debt ratings.
Moody's previous rating action on Rosbank was on November 19,
2009, when the rating agency placed on review for possible
downgrade the bank's D BFSR, its Baa3/Prime-3 long-term and short-
term global local and foreign currency deposit ratings and Baa3
local currency senior unsecured debt rating. Concurrently,
Moody's Interfax Rating Agency placed on review for possible
downgrade Rosbank's Aaa.ru long-term national scale issuer rating
(NSR) and the Aaa.ru NSR of the bank's local currency senior
unsecured debt.
BSGV
The change in outlook of BSGV's BFSR to positive from stable
reflects Moody's expectations of additional benefits BSGV will
receive on a stand-alone basis following the merger with Rosbank
-- reflected in improving operating efficiency, decrease of
single-name client concentrations and access to wider office
coverage and clientele. At the same time, the announcement does
not trigger reassessment of the high level of support currently
incorporated into the global scale deposit ratings of BSGV in
accordance with Moody's Joint-Default Analysis Methodology.
Moody's previous rating action on BSGV was on April 14, 2009 when
the rating agency left unchanged BSGV's D- BFSR. The global
local-currency deposit ratings were not affected at Baa2/Prime-2;
the foreign currency deposit ratings were also not affected at
Baa2/Prime-2. The NSR was affirmed at Aaa.ru. The outlook on all
of the bank's global scale ratings remained stable.
DeltaCredit
For DeltaCredit, Moody's notes that the integration process is
unlikely to have any material effect on DeltaCredit's stand-alone
credit strength, therefore, DeltaCredit's BFSR remains unchanged.
At the same time, this integration is likely to change the support
uplift applied by Moody's in arriving at DeltaCredit's deposit
ratings in accordance with the rating agency's Joint-Default
Analysis Methodology because the support will potentially stem
from the new entity resulting from the merger of Rosbank and BSGV,
as opposed to direct support from Societe Generale currently.
This change of DeltaCredit's shareholder structure will pressure
the bank's supported deposit ratings when the merger process is
finalised. Although Moody's believes that parental support will
continue to stem from Societe Generale Group going forward, the
rating agency notes that after the integration this support will
most likely be provided by the new parent, which potentially will
be financially weaker than Societe Generale. Therefore, the
rating agency assigns a negative outlook on DeltaCredit's long-
term deposit ratings.
Moody's previous rating action on DeltaCredit was on April 14,
2009, when the rating agency downgraded the bank's global long-
term local and foreign currency deposit ratings to Baa2 from Baa1.
DeltaCredit's D BFSR, Prime-2 short-term foreign currency deposit
rating and Aaa.ru long-term NSR were not affected by that rating
action. Moody's had assigned a stable outlook on all of the
bank's global scale ratings.
Rusfinance
For Rusfinance, Moody's notes that the integration process is
unlikely to have any material effect on Rusfinance's stand-alone
credit strength, therefore, Rusfinance's BFSR of E+ remains
unchanged. Concurrently, this integration is likely to have no
impact on the bank's Baa3/Prime-3 global scale and Aaa.ru NSR.
Moody's believes that parental support will continue to stem from
Societe Generale Group going forward, while also understanding
that after the integration this support will most likely be
provided by the new entity resulting from the merger of Rosbank
and BSGV, which potentially will be financially weaker than
Societe Generale. However, in accordance with Moody's Joint-
Default Analysis Methodology, global scale ratings of Rusfinance
have low sensitivity to the change of the support provider from
Societe Generale to Rosbank.
Moody's previous rating action on Rusfinance was on April 14,
2009, when the rating agency downgraded the bank's global local
and foreign currency deposit ratings to Baa3/Prime-3 from
Baa2/Prime-2. Rusfinance's E+ BFSR and Aaa.ru long-term NSR were
not affected by that rating action. Moody's had assigned a stable
outlook on all of the bank's global scale ratings.
Headquartered in Moscow, Russia, Rosbank reported -- at June 30,
2009 -- total consolidated assets of US$15.9 billion, total
shareholders' equity of US$1.291 billion and a net loss of
US$254.5 million for the first six months of 2009.
Headquartered in Moscow, Russia, BSGV reported -- at September 30,
2009 -- unaudited total assets of US$5.6 billion, total
shareholders' equity of US$537 million, and unaudited IFRS net
loss of US$12 million for the first nine months of 2009.
Headquartered in Moscow, Russia, DeltaCredit reported -- at
September 30, 2009 -- total assets of US$1.839 million, total
shareholders' equity of US$204 million, and net income of US$44
million for the first nine months of 2009.
Headquartered in Samara, Russia, Rusfinance reported -- at
December 31, 2009 -- unaudited total assets of US$2.5 billion,
total shareholders' equity of US$530 million, and unaudited IFRS
net income of US$63 million in 2009.
ROSBANK: Moody's Confirms 'D' Bank Financial Strength Rating
------------------------------------------------------------
Moody's Investors Service has taken a number of rating actions on
four Russian subsidiaries of Societe Generale Group (rated
Aa2/Prime-1/C+ with negative outlook) following the parent bank's
announcement on 18 February 2010 of its integration plan for its
Russian business units. The rating actions are:
- Rosbank: The bank financial strength rating of D was
confirmed, the bank's long-term and short-term global local
and foreign currency deposit ratings of Baa3/Prime-3 and its
local currency senior unsecured debt rating of Baa3 were also
confirmed. The BFSR carries a stable outlook, while the
outlook on the bank's long-term deposit and debt ratings is
now positive. Concurrently, Moody's Interfax Rating Agency
confirmed Rosbank's Aaa.ru long-term national scale rating
and the Aaa.ru NSR of the bank's local currency senior
unsecured debt. The NSR carries no specific outlook.
- Bank Societe Generale Vostok (BSGV): The outlook on the bank's
D- BFSR was changed to positive from stable, the bank's long-
term and short-term global local and foreign currency deposit
ratings of Baa2/Prime-2 were affirmed with stable outlook.
Concurrently, Moody's Interfax Rating Agency affirmed BSGV's
Aaa.ru long-term NSR. The NSR carries no specific outlook.
- Bank DeltaCredit (DeltaCredit): The BFSR of D and the
Baa2/Prime-2 long-term and short-term local and foreign
currency deposit ratings remained unchanged; however, Moody's
changed to negative from stable the outlook on the bank's Baa2
long-term local and foreign currency deposit ratings. The
bank's Aaa.ru NSR remains unchanged. The NSR carries no
specific outlook.
- Rusfinance: The BFSR of E+ remains unchanged, the bank's long-
term and short-term global local and foreign currency deposit
ratings of Baa3/Prime-3 were affirmed. The outlook on BFSR
and long-term global scale ratings remains stable.
Concurrently, Moody's Interfax Rating Agency affirmed
Rusfinance's Aaa.ru long-term NSR. The NSR carries no
specific outlook.
According to Moody's, these rating actions have been driven by
these considerations.
Rosbank
With regard to Rosbank's stand-alone strength, Moody's notes that
the integration plan envisages a material capital injection to the
bank scheduled for completion in the coming months, which aims to
boost the bank's capitalization cushion and will enable the entity
resulting from the merger of Rosbank and BSGV to become a 100%
parent of two other subsidiaries of Societe Generale in Russia --
Rusfinance and DeltaCredit. Moody's believe that the
consolidation of Rusfinance and DeltaCredit, as well as the merger
with BSGV, will help to improve Rosbank's market franchise and
enhance operating efficiency.
From the parental support perspective, Moody's believes the
announcement and the role dedicated to Rosbank in this process
underlines the strategic fit of Rosbank with its majority
shareholder -- Societe Generale Group -- and therefore the rating
agency notes that the probability of support from Societe Generale
to Rosbank, as defined in accordance with Moody's Joint-Default
Analysis Methodology, is likely to increase in the coming twelve
to eighteen months as the integration process develops. Based on
these considerations, Moody's assigns a positive outlook on
Rosbank's supported deposit and debt ratings.
Moody's previous rating action on Rosbank was on November 19,
2009, when the rating agency placed on review for possible
downgrade the bank's D BFSR, its Baa3/Prime-3 long-term and short-
term global local and foreign currency deposit ratings and Baa3
local currency senior unsecured debt rating. Concurrently,
Moody's Interfax Rating Agency placed on review for possible
downgrade Rosbank's Aaa.ru long-term national scale issuer rating
(NSR) and the Aaa.ru NSR of the bank's local currency senior
unsecured debt.
BSGV
The change in outlook of BSGV's BFSR to positive from stable
reflects Moody's expectations of additional benefits BSGV will
receive on a stand-alone basis following the merger with Rosbank
-- reflected in improving operating efficiency, decrease of
single-name client concentrations and access to wider office
coverage and clientele. At the same time, the announcement does
not trigger reassessment of the high level of support currently
incorporated into the global scale deposit ratings of BSGV in
accordance with Moody's Joint-Default Analysis Methodology.
Moody's previous rating action on BSGV was on April 14, 2009 when
the rating agency left unchanged BSGV's D- BFSR. The global
local-currency deposit ratings were not affected at Baa2/Prime-2;
the foreign currency deposit ratings were also not affected at
Baa2/Prime-2. The NSR was affirmed at Aaa.ru. The outlook on all
of the bank's global scale ratings remained stable.
DeltaCredit
For DeltaCredit, Moody's notes that the integration process is
unlikely to have any material effect on DeltaCredit's stand-alone
credit strength, therefore, DeltaCredit's BFSR remains unchanged.
At the same time, this integration is likely to change the support
uplift applied by Moody's in arriving at DeltaCredit's deposit
ratings in accordance with the rating agency's Joint-Default
Analysis Methodology because the support will potentially stem
from the new entity resulting from the merger of Rosbank and BSGV,
as opposed to direct support from Societe Generale currently.
This change of DeltaCredit's shareholder structure will pressure
the bank's supported deposit ratings when the merger process is
finalised. Although Moody's believes that parental support will
continue to stem from Societe Generale Group going forward, the
rating agency notes that after the integration this support will
most likely be provided by the new parent, which potentially will
be financially weaker than Societe Generale. Therefore, the
rating agency assigns a negative outlook on DeltaCredit's long-
term deposit ratings.
Moody's previous rating action on DeltaCredit was on April 14,
2009, when the rating agency downgraded the bank's global long-
term local and foreign currency deposit ratings to Baa2 from Baa1.
DeltaCredit's D BFSR, Prime-2 short-term foreign currency deposit
rating and Aaa.ru long-term NSR were not affected by that rating
action. Moody's had assigned a stable outlook on all of the
bank's global scale ratings.
Rusfinance
For Rusfinance, Moody's notes that the integration process is
unlikely to have any material effect on Rusfinance's stand-alone
credit strength, therefore, Rusfinance's BFSR of E+ remains
unchanged. Concurrently, this integration is likely to have no
impact on the bank's Baa3/Prime-3 global scale and Aaa.ru NSR.
Moody's believes that parental support will continue to stem from
Societe Generale Group going forward, while also understanding
that after the integration this support will most likely be
provided by the new entity resulting from the merger of Rosbank
and BSGV, which potentially will be financially weaker than
Societe Generale. However, in accordance with Moody's Joint-
Default Analysis Methodology, global scale ratings of Rusfinance
have low sensitivity to the change of the support provider from
Societe Generale to Rosbank.
Moody's previous rating action on Rusfinance was on April 14,
2009, when the rating agency downgraded the bank's global local
and foreign currency deposit ratings to Baa3/Prime-3 from
Baa2/Prime-2. Rusfinance's E+ BFSR and Aaa.ru long-term NSR were
not affected by that rating action. Moody's had assigned a stable
outlook on all of the bank's global scale ratings.
Headquartered in Moscow, Russia, Rosbank reported -- at June 30,
2009 -- total consolidated assets of US$15.9 billion, total
shareholders' equity of US$1.291 billion and a net loss of
US$254.5 million for the first six months of 2009.
Headquartered in Moscow, Russia, BSGV reported -- at September 30,
2009 -- unaudited total assets of US$5.6 billion, total
shareholders' equity of US$537 million, and unaudited IFRS net
loss of US$12 million for the first nine months of 2009.
Headquartered in Moscow, Russia, DeltaCredit reported -- at
September 30, 2009 -- total assets of US$1.839 million, total
shareholders' equity of US$204 million, and net income of US$44
million for the first nine months of 2009.
Headquartered in Samara, Russia, Rusfinance reported -- at
December 31, 2009 -- unaudited total assets of US$2.5 billion,
total shareholders' equity of US$530 million, and unaudited IFRS
net income of US$63 million in 2009.
=============================
S L O V A K R E P U B L I C
=============================
SKYEUROPE AIRLINES: Creditor Claims Reach EUR123 Million
--------------------------------------------------------
TASR reports that 70 of SkyEurope Airlines' 3,400 creditors met
Monday in Bratislava.
According to the report, the total amount of acknowledged
financial claims has reached EUR123 million, with unacknowledged
claims totaling an additional EUR57 million.
The property that remained when the low-cost airline entered
bankruptcy at the end of August 2009 has been calculated at only
EUR5.7 million, the report notes.
"The value of the property may not be realistic and may fall, as
the company called E-Clear, on which SkyEurope had a claim, has
declared bankruptcy," the report quoted SkyEurope bankruptcy
trustee Lubomir Bugan as saying.
Citing Juraj Bizon from law office Bizon & Partners, which is
among the creditors, the report says the trustee has to pay the
airline's former employees first and only then can he begin to
satisfy creditors' claims.
The report relates that at the meeting, creditors backed Mr. Bugan
as bankruptcy trustee and set up a five-member committee of
creditors made up of Bratislava and Vienna airports, Slovakia's
Tax Directorate, social insurer Socialna Poistovna and Flight
Operational Services.
As reported by the Troubled Company Reporter-Europe on Aug. 31,
2009, the airline filed for bankruptcy protection due to the lack
of sufficient interim funding to finance ongoing operations.
SkyEurope Airlines -- http://www.skyeurope.com/-- was a low-cost
airline headquartered in Bratislava. The airline operated short-
haul scheduled and charter passenger services.
=========
S P A I N
=========
AYT CAJA: Fitch Affirms Rating on Class D Notes at 'B+'
-------------------------------------------------------
Fitch Ratings has affirmed all four note classes issued by AyT
Caja Murcia Financiacion I, FTA following its recent review of the
transaction's performance. The transaction was originated by Caja
de Ahorros de Murcia (rated 'A+'/'F1'/Outlook Stable) at the end
of 2008 with an asset pool backed by mixed auto and consumer loans
granted to individuals.
The rating actions are:
-- EUR197.1 million class A: affirmed at 'AAA'; Outlook Stable;
assigned Loss Severity (LS) rating 'LS-1'
-- EUR13.1 million class B: affirmed at 'A'; Outlook revised to
Positive from Stable; assigned 'LS-3'
-- EUR11.7 million class C: affirmed at 'BBB-'; Outlook Stable;
assigned 'LS-3'
-- EUR8.1 million class D: affirmed at 'B+'; Outlook Stable;
assigned 'LS-3'
The rating affirmation reflects transaction performance generally
in line with Fitch's expectations. The transaction breached its
early amortization trigger -- the 90+ day delinquency rate above a
required 0.29% level in July 2009, and since then has amortized by
approximately 36% in January 2010. All delinquency buckets have
exhibited a stable trend with the 90+ day delinquency currently at
1%.
Given its 12 month default definition and short performance
history, the pool has only incurred 0.01% defaults as of January
2010, a level which Fitch believes will most likely increase in
the future given its lack of seasonality. The potential losses
will be covered by both the available reserve and the guaranteed
excess spread via the swap.
FTPYME TDA: Moody's Junks Rating on Class C Notes From 'Ba1'
------------------------------------------------------------
Moody's Investors Service has taken these rating actions on the
long-term credit ratings of these notes issued by FTPYME TDA 7,
FTA:
-- EUR130.4 million Class A1: Confirmed at Aaa; previously on
March 23 2009 placed under review for possible downgrade.
-- EUR 20.2 million Class B: Downgraded to Baa3 from A2;
previously on March 23 2009 placed under review for possible
downgrade.
-- EUR11.2 million Class C: Downgraded to Caa1 from Ba1;
previously on March 23 2009 placed under review for possible
downgrade.
Moody's initially assigned definitive ratings in December 2007.
The Aaa rating of Class A2(CA) notes were not placed under review
for downgrade given they benefit from a guarantee from the Kingdom
of Spain (Aaa).
The rating action concludes the review for downgrade, which was
initiated on March 23, 2009 as a result of Moody's revision of its
methodology for SME granular portfolios in EMEA (published on
March 17, 2009).
As a result of its revised methodology, Moody's has reviewed its
assumptions for FTPYME TDA 7, FTA's collateral portfolio, taking
into account anticipation of performance deterioration of the pool
in the current down cycle and the exposure of the transaction to
the real estate sector (either through security in the form of a
mortgage or debtors operating in the real estate sector). The
deterioration of the Spanish economy has been reflected in Moody's
negative sector outlook for the Spanish SME securitization
transactions. Since January 2009, this transaction has been
performing in line with the Spanish SME index published by
Moody's. The reserve fund, which was drawn in Q3 2009, was fully
replenished in Q4 2009, and delinquencies of more than 90 days on
current balance decreased to 1.74% in December 2009 from 3.23% in
September 2009.
As a result of the above, Moody's has revised its assumption of
the default probability of the SME debtors to an equivalent rating
in the single B-range for debtors operating in the real estate
sector, and in the low Ba-range for non-real-estate debtors.
Also, the loans to micro SMEs and self employed individuals (60%
at closing) have been further notched down. Additionally, loans
in arrears have been notched down depending on their delinquency
status, and performing loans not in the building and real estate
sector with relatively long seasoning have been notched up
depending on their actual seasoning.
At the same time, Moody's estimated the remaining weighted-average
life of the portfolio to four years (assuming a 5% CPR). These
revised assumptions have translated into a cumulative mean default
assumption for this transaction of 18% of the current portfolio
balance (corresponding to 12.04% of the original pool balance).
Moody's original mean default assumption was 6.63% of original
portfolio balance, with a coefficient of variation of 50%.
Because of the relatively low effective number of borrowers in the
portfolio (283), Moody's used a Monte Carlo simulation to
determine the probability function of the defaults with a
resulting coefficient of variation of 41.6%. The average recovery
rate assumption was updated at 60% (stochastic recovery rate)
compared with 55% assumed at closing based on actual recoveries
observed so far in the transaction and collateralization level.
The prepayment rate is assumed to be 5%, which is comparable to
recently observed levels for CPR values.
In summary, Moody's concluded that the negative effects of the
revised default assumptions were not fully offset by the increased
credit support available for the outstanding Class B and C notes.
The Class A2(CA) notes benefit from a guarantee from the Kingdom
of Spain (Aaa) for interest and principal payments. Moody's has
determined that the expected loss associated with Class A2(CA)
without the Kingdom of Spain guarantee, which was consistent with
Aaa at closing, is still consistent with a Aaa rating.
FTPYME TDA 7, FTA is a securitization fund, which purchased a pool
of loans granted to Spanish SMEs originated by Banco Guipuzcoano.
In December 2007, the portfolio consisted of 1,345 loans. The
loans were originated between 2004 and 2007, with a weighted-
average seasoning of 1.25 years and a weighted average remaining
term of 11.4 years. The concentration in the "Building and Real
Estate sector" has increased to 37% of the portfolio as of
December 2009 from 34% of the portfolio at closing (according to
Moody's industry classification), while the number of borrower
stood at 871. The geographic breakdown of the pool has not
significantly changed since closing, with concentrations in the
Basque Country (35.5%), Madrid (24%) and Catalonia (10.7%).
On February 25, 2010, Moody's withdrew the rating of Banco
Guipuzcoano (formerly Baa1/ P-2). The ratings have been withdrawn
following Banco Guipuzcoano's request and Moody's consideration
that it lacks adequate information to maintain the ratings based
solely on publicly available data.
Moody's tested various scenarios related to potential commingling
risk in the transaction in the context of this review. Moody's
also considered that the liquidity ensured by the reserve fund,
which is currently at its target level amount of 5.77%, was
consistent with the revised ratings. The notes may suffer further
rating pressure in the future if the reserve fund is significantly
depleted.
Moody's ratings address the expected loss posed to investors by
the legal final maturity of the notes. Moody's ratings address
only the credit risks associated with the transaction. Other non-
credit risks have not been addressed, but may have a significant
effect on yield to investors.
FTPYME TDA: Moody's Downgrades Rating on 3SA Notes to 'Ba3'
-----------------------------------------------------------
Moody's Investors Service has taken these actions on the long-term
credit ratings of these notes issued by FTPYME TDA Banca March,
FTA:
-- EUR17.8 million series 3SA notes due 2036, downgraded to Ba3,
previously Baa3 and placed under review for downgrade on 23
March 2009.
Moody's initially assigned definitive ratings in October 2004.
The rating action concludes the rating review resulting from
Moody's revision of its methodology for granular SME portfolios in
Europe, the Middle East and Africa. This revised methodology was
introduced on March 17, 2009, and the affected transactions had
been subsequently placed on review for possible downgrade on
March 23, 2009.
As a result of its revised methodology, Moody's has reviewed its
assumptions for FTPYME TDA Banca March's collateral portfolio,
taking into account anticipation of performance deterioration in
the current down cycle, and the exposure of the transaction to the
real estate sector (either through security in the form of a
mortgage or debtors operating in the real estate sector). The
deterioration of the Spanish economy has been reflected in the
Moody's negative sector outlook on the Spanish SME securitization
transactions. To date, this transaction has been performing in
line with the Spanish SME index. The 90 days cumulative
delinquency rate as of December 2009 is 2.49% of original
portfolio balance.
As a result of the above, Moody's has revised its assumption of
the default probability of the SME debtors to an equivalent rating
in the single B-range for the debtors operating in the real estate
sector, and in the low Ba-range for the non-real-estate debtors.
At the same time, Moody's estimated the remaining weighted average
life of the portfolio to 4.3 years. As a consequence, these
revised assumptions have translated into an increase of the
cumulative mean default assumption for the current portfolio equal
to 13.26%. This implies a revised cumulative mean default
calculation for the entire transaction since closing equal to
7.60% of original portfolio balance. Moody's original mean
default assumption was 5.0% of original balance, with a
coefficient of variation of 25%. Given the lack of granularity of
the portfolio with an effective number of borrowers around 79 and
the top 5 debtors representing 16.20% of the current pool balance,
the rating agency used a Montecarlo distribution to model gross
defaults, with a mean of 13.26% and a coefficient of variation of
50%. Stochastic recoveries were modeled, assuming a mean equal to
60%, while a fixed 35% recovery rate was tested at closing. The
constant prepayment rate assumption has been maintained at 10%
(similar assumption as of closing).
In addition, Moody's considered the high concentration per debtor
in the current securitized portfolio with the top 1 debtor
representing 7.3%, top 5 16.20% and top 35 representing 50% of the
total pool. Moody's assumed a stressed default probability
assumption for the large borrowers representing more than 2% of
the current pool balance (top 5 borrowers) equivalent to a Caa1
rating in absence of detailed information on these large
borrowers. The revised default assumption together with the high
debtor concentration were not fully offset by the increased credit
support available for the outstanding series 3SA notes (9.30% of
reserve fund + 60 bps of excess spread guarantee by the swap)
which was downgraded to Ba3.
FTPYME TDA Banca March is a securitization fund, which purchased a
pool of loans granted to Spanish SMEs by Banca March. At closing,
in October 2004, the portfolio consisted of 1,102 loans. The
loans were originated between 1994 and 2004, with a weighted
average seasoning of 2.83 years and a weighted average remaining
term of 9.10 years. Geographically, the pool was concentrated in
Balearic Islands (63%), Canary Islands (28%) and Analusia (4%).
At closing, the concentration in the real estate sector was around
27% of the original pool balance according to Moody's industry
sector.
As of November 2009, the number of loans in the portfolio amounted
to 337, the weighted average seasoning is 8 years and the
remaining term was 8 years. The concentration levels per industry
are similar to the levels at closing and the concentration to real
estate sector equal to 28.5% of the current portfolio balance.
The pool factor was 20%.
Moody's ratings address the expected loss posed to investors by
the legal final maturity of the notes. Moody's ratings address
only the credit risks associated with the transaction. Other non-
credit risks have not been addressed, but may have a significant
effect on yield to investors.
Moody's is closely monitoring the transaction.
PYMES BANESTO: Moody's Junks Rating on Class C Notes From 'Baa3'
----------------------------------------------------------------
Moody's Investors Service has downgraded the long-term credit
ratings of these notes issued by Pymes Banesto 2, FTA:
-- Class A2 notes, Downgraded to A2 from Aaa, previously placed
under review for downgrade in March 18, 2009
-- Class B notes, Downgraded to B1 from A1, previously placed
under review for downgrade on March 18, 2009
-- Class C notes, Downgraded to Caa3 from Baa3, previously
placed under review for downgrade on March 18, 2009
Moody's initially assigned definitive ratings on November 17,
2006.
The rating action concludes the rating review that was initiated
on March 18 following Pymes Banesto 2's worse-than-expected
collateral performance. During the review process, Moody's
applied its revised methodology for granular SME portfolios in
Europe, Middle East and Africa (EMEA). This revised methodology
was introduced on March 17, 2009.
Moody's has reviewed its assumptions for Pymes Banesto 2's
collateral portfolio, taking into account both actual and
anticipated performance deterioration in the current down cycle,
and the exposure of the transaction to the real estate sector
(either through security in the form of a mortgage or debtors
operating in these markets). The deterioration of the Spanish
economy has been reflected in Moody's negative sector outlook on
Spanish SME securitization transactions. To date, this
transaction has been performing in line with the Spanish SME
index. As of December 2009, the outstanding 90+ delinquency rate
is at 2.26% of current balance and the cumulative defaults (more
than 12 months in arrears) stand at 0.63% of original balance plus
replenishments. At the same time, the reserve fund level stood at
EUR20.25 million or 81% of its target amount of EUR25 million.
Moody's has revised its assumption of the default probability of
the SME debtors to an equivalent rating in the single B range for
the debtors operating in the real estate sector, and in the low Ba
range for the non-real-estate debtors. Debtors with no
information of their industry sector available (approximately 2.4%
of the current pool), were allocated to the single B range. In
addition, Moody's made PD adjustments to reflect the size of the
debtors' companies. For the few instances when loan-level data
did not reveal the company size, Moody's notched down its rating
proxy to reflect additional default risk associated with micro-
SMEs (approximately 9.8% of the current pool). Additionally,
loans in arrears have been notched down depending on the length of
time the loans have been in arrears, while performing loans
outside the building and real estate sector with relatively long
seasoning have been notched up depending on their actual
seasoning.
Moody's estimates that the remaining weighted-average life of the
portfolio is equal to 3.8 years. As a consequence, these revised
assumptions have translated into an increase of the cumulative
mean default assumption of 11.5% of the current outstanding
portfolio. When converting this number into a cumulative mean
default rate of original balance plus replenishments, the revised
expected cumulative default rate is 5.7% compared to the initial
assumption of 2.25%. Given the high granularity of the
outstanding portfolio (effective number of borrowers was 1,680 as
of December 2009) and the lack of any major sector concentrations,
Moody's has applied the normal inverse distribution to derive the
probabilities of its default scenarios and reduced the original
volatility of 50% to 42%. Stochastic recoveries were modelled
assuming a 45% mean recovery rate and a 20% standard deviation.
This compares to an initial assumption at closing of 42.5% fixed
recovery rate. The constant prepayment rate Moody's used in its
cash flow model was decreased to 5% and aligned to the average CPR
observed so far. This compares to 15% assumed at close. Moody's
tested various sensitivities around these assumptions in order to
determine its final view on the ratings.
Moody's concluded that the negative effects of the revised default
assumption could not be offset by the increase in credit
enhancement. This resulted in the downgrade of all notes placed
under review for possible downgrade in March 2009 issued by Pymes
Banesto 2, FTA.
Pymes Banesto 2, FTA is a securitization fund, which purchased a
pool of loans granted to Spanish SMEs and individuals originated
by Banco Espanol de Credito S.A. In November 2006, the portfolio
consisted of 14,308 loans and 11,730 debtors. The revolving
period ended in April 2008. Currently, these numbers stand at
7,912 loans and 6,942 borrowers. The original portfolio of loans
was originated between 2000 and 2006, with a weighted-average
seasoning of 1.8 years and a weighted-average remaining term of
5.6 years. Geographically, the pool was well diversified with the
highest exposures in Valencia (16%), Catalonia (14.3%) and Madrid
(12.5%). At close, the concentration in the building and real
estate sector was 21% of the initial portfolio amount, which is
lower than the sector-average concentration in the SME ABS
portfolios. In the updated December 2009 portfolio, the
concentration in the building and real estate sector was
approximately 26% of the current balance. The pool factor was 39%
as of December 2009.
Moody's ratings address the expected loss posed to investors by
the legal final maturity of the notes. Moody's ratings address
only the credit risks associated with the transaction. Other non-
credit risks have not been addressed, but may have a significant
effect on yield to investors.
Moody's is closely monitoring the transaction.
=============
U K R A I N E
=============
BANK FINANCE: Moody's Upgrades Global Deposit Ratings to 'Caa1'
---------------------------------------------------------------
Moody's Investors Service has upgraded these ratings of Bank
Finance and Credit: long-term global scale local and foreign
currency deposit ratings to Caa1 from Caa2, foreign currency debt
rating to Caa1 from Caa2 and National Scale Rating to Ba2.ua from
B3.ua. F&C's Non Prime short-term global scale local and foreign
currency deposit ratings and the bank's Bank Financial Strength
Rating of E were affirmed. All of the bank's ratings now carry a
stable outlook, except for the NSR which carries no specific
outlook.
This rating action concludes the review with direction uncertain
that Moody's initiated on March 24, 2009. The review was
originally prompted by F&C's default on repayment of US$70 million
of syndicated debt which triggered a downgrade of the bank ratings
after which the ratings were left under review with direction
uncertain.
The conclusion of the review takes into account these developments
since the review was initiated: (i) improvements in F&C's
liquidity position following the extension of maturing Eurobonds
and funding from the National Bank of Ukraine (NBU), (ii) somewhat
improved capitalization of the bank and (iii) still on-going
negotiations with wholesale creditors, as the bank has not yet
reached an agreement with syndicated loan creditors and with some
other wholesale creditors.
In terms of liquidity, Moody's notes that immediate liquidity
pressure from deposit outflows have eased and the bank's deposit
dynamics is now positive as customer funds increased by 8% in H2
2009. Furthermore, F&C reached an agreement with Eurobond
creditors to extend the maturity of US$100 million of Eurobonds
until January 2014, and also secured extension of the NBU
refinancing facility of UAH6.4 billion (US$808 million) until
July 2015. These developments render the bank's liquidity
position more comfortable in the medium term.
In terms of capitalization, the rating agency observes that the
bank increased its Tier 1 capital by UAH400 million (around
US$50 million) in September 2009 via a capital injection and by
attracting US$7.94 million of subordinated debt. Moody's expects
this capital increase to be sufficient for the bank to comply with
the minimum regulatory requirements of the NBU in the short term,
although the rating agency does not regard this increase as being
large enough to fully absorb potential credit losses on the loan
portfolio. The level of loan loss reserves currently created by
the bank is lower than that of its peers, and Moody's believes
that the bank's capital cushion is likely to be significantly
eroded in 2010 due to high level of loan losses. Therefore, the
rating agency gives only a limited credit to the recent capital
increase by the bank.
At the same time, Moody's notes that F&C has not yet reached an
agreement with its creditors on the restructuring terms of the
US$70 million syndicated loan on which it defaulted in March 2009,
which continues to expose the bank to liquidity and legal risks.
Moody's previous rating action on F&C was on March 24, 2009, when
the rating agency downgraded the long-term local currency and
foreign currency bank deposit ratings to Caa2 from B1/B2 and its
National Scale Rating (NSR) to B3.ua from Aa3.ua and placed all
ratings on review with direction uncertain.
Headquartered in Kyiv, Ukraine, Bank Finance and Credit reported
total IFRS assets of UAH18.3 billion (US$2.4 billion) and a net
loss of UAH26.3 million (US$3.4 million) as at 31 December 2008.
NADRA BANK: May Face Liquidation After Failing to Secure Funds
--------------------------------------------------------------
Kateryna Choursina at Bloomberg News, citing Ekonomicheskie
Izvestia, reports that Ukraine's central bank may liquidate VAT
Nadra Bank after potential investor failed to provide funds to
save the lender.
According to Bloomberg, the newspaper said Ukrainian billionaire
Dmitry Firtash, who wanted to buy a stake in Nadra, failed to
provide a first installment of UAH1.5 billion (US$188 million) by
March 1.
Nadra KB VAT (Commercial Bank Nadra OJSC) --
http://www.nadra.com.ua/-- is a Ukraine-based nation-wide
universal commercial bank. It provides financial services to
three client segments: individuals, small and medium-sized
enterprises and corporate clients. Its customer services platform
comprises a network of branches located in all Ukrainian major
cities, numerous Automated Teller Machines (ATM) and Point of Sale
terminals, as well as an electronic contact center. Nadra KB VAT
has in its offer micro-loans, credit lines, overdrafts, personal
and corporate credit and debit cards, current accounts, time
deposits, cash management services, deposit taking, cash
management and account services, corporate cards and securities
transactions.
NADRA BANK: Moody's Confirms 'Caa2' Long-Term Local Ratings
-----------------------------------------------------------
Moody's Investors Service has confirmed the Caa2 long-term local
and foreign currency deposit ratings and B3.ua National Scale
Rating of Bank Nadra, concludes the review for possible downgrade
on these ratings initiated on January 22, 2009. Bank Nadra's E
bank financial strength rating and C foreign currency senior
unsecured debt rating -- which had not been on review -- remain
unchanged with a stable outlook. The outlook on the bank's
deposit ratings is now negative; the outlook on the BFSR and debt
rating is stable.
Bank Nadra has been under the temporary administration of the
Ukrainian central bank (National Bank of Ukraine or NBU) with a
payment moratorium since Q1 2009 following the bank's substantial
liquidity and asset quality problems.
Moody's notes that, as it has not been provided information by
Bank Nadra, the analysis carried out and conclusions reached in
taking this rating action have been based on publicly available
information only. The rating action takes into account the
material risks to the viability of the bank's franchise as well as
the uncertainty as regards when the bank's future prospects will
become clear.
Moody's understands that the NBU has agreed that the current
shareholder of Bank Nadra will recapitalize the bank in the amount
of UAH6 billion in several tranches during 2010-2011. If these
plans fail, the bank will likely be liquidated and its deposits
transferred to other banks. Conversely, if the bank is adequately
recapitalized, this may have positive rating implications.
The previous rating action on Bank Nadra was implemented on
June 26, 2009, when Moody's downgraded the bank's long-term
foreign currency senior unsecured debt rating to C from Caa2, with
a stable outlook. The rating agency also left the BFSR of E, the
deposit ratings of Caa2/Not Prime and the NSR of B3.ua unchanged
and kept the deposit ratings and the NSR on review for possible
downgrade.
Headquartered in Kiev, Ukraine, Bank Nadra reported assets of
total assets of UAH24.8 billion (US$3.1 billion) and total equity
of UAH475 million (US$59.3 million) according to Ukrainian
Accounting Standards at year-end 2009.
TRANSBANK AKB: Faces Liquidation After Search for Investor Fails
----------------------------------------------------------------
Daryna Krasnolutska at Bloomberg News reports that Ukraine's
central bank said it will liquidate AKB Transbank after imposing
temporary administration on the institution almost a year ago and
failing to find an investor for it.
Bloomberg relates the Kiev-based Natsionalnyi Bank Ukrainy said in
a statement on its Web site that it made the decision to end the
bank's operations Monday.
Oleksandr Andriychuk was appointed to supervise the liquidation,
Bloomberg says citing the statement.
Transbank is the 16th lender the central bank said it intends to
liquidate, Bloomberg notes.
===========================
U N I T E D K I N G D O M
===========================
ALBA 2005-1: S&P Puts BB+ Rating on Class E Notes on Watch Neg.
---------------------------------------------------------------
Standard & Poor's Ratings Services placed on CreditWatch negative
its credit ratings on ALBA 2005-1 PLC's class C, D, and E notes.
All other notes remain unaffected.
The CreditWatch placements are due to;
* The issuer drawing on its reserve fund on the past three
interest payment dates (currently 65% of its required amount);
and
* S&P's credit analysis of the pool, which showed that its
weighted-average foreclosure frequency and weighted-
average loss severity have increased over time.
The increase in S&P's WALS is mainly driven by house price
depreciation and its affect on loan-to-value ratios. S&P also
notes that although 120+ day delinquencies have decreased in
recent quarters, they were 13.8% in November 2009. In its
analysis, S&P assumed that most of these loans were defaulted.
S&P expects to resolve the CreditWatch placements after the
February interest payment date, and when S&P has received updated
loan level information. S&P will re-run its credit analysis and
run its cash flow stresses. S&P will also consider the reserve
fund level, severe delinquencies and repossessions.
ALBA 2005-1 is a U.K. nonconforming transaction that closed in
November 2005. The collateral consists of first-ranking mortgages
secured over residential properties in England, Wales, Northern
Ireland, and Scotland.
Ratings List
ALBA 2005-1 PLC
GBP301 Million Mortgage-Backed Floating-Rate Notes
Ratings Placed on CreditWatch Negative
Rating
------
Class To From
----- -- ----
C A+/Watch Neg A+
D BBB+/Watch Neg BBB+
E BB+/Watch Neg BB+
ALLIANCE & LEICESTER: Moody's Reviews Subordinated Debt Ratings
---------------------------------------------------------------
Moody's Investors Service has put on review for upgrade all the
subordinated debt ratings of Alliance & Leicester which range from
B1 to Baa3; A&L's BFSR of E+ and its senior debt ratings of Aa3/P-
1 are unchanged. The outlook on the senior long term ratings
remains negative.
The rating action follows the announcement by A&L of its intention
to transfer all of its business to its immediate parent, Santander
UK plc. As part of this transfer, Santander UK will assume
substantially all of A&L's debt and deposit liabilities: 1) A&L's
senior debt and deposits, lower tier 2, upper tier 2, and
cumulative tier 1 securities will be transferred to Santander UK
under a scheme allowed by Part VII of the Financial Services and
Markets Act 2000, and 2) A&L's non-cumulative preference share
holders will be offered an exchange under a "scheme of
arrangement" for similar preference shares issued by Santander UK.
Both of these transactions are subject to FSA support and court
approvals.
Marjan Riggi, Moody's analyst for Santander UK, commented that
this transaction represents one of the final steps toward the full
integration of Santander UK businesses. The integration of
Bradford & Bingley and rebranding of Abbey and B&B branches into
Santander UK were already completed in January 2010, with plans
for the full re-branding of A&L branches in Q4 2010 well under
way. The assumption of A&L's liabilities and assets by Santander
UK will facilitate the full integration and re-branding of A&L by
creating one single legal entity for Santander UK's banking
business.
Moody's expects to align the ratings of A&L to that of existing
Santander UK's ratings once the Part VII transfer and the exchange
of non-cumulative preference shares (target completion April 2010)
are legally completed and effective. The Aa3 senior debt ratings
of A&L currently benefit from a cross guarantee from Santander UK
(rated Aa3). At the completion date of Part VII transfer, the
cross guarantee will cease to exist as all of A&L's senior debt
will also be assumed by Santander UK and thus its rating will be
aligned to that of Santander UK. At that time, since A&L will no
longer be a separate legal banking entity, Moody's will be
withdrawing its BFSR.
The last rating action on A&L was on August 26, 2009, when the
bank's senior debt ratings were confirmed at Aa3 and the outlook
on its BFSR was changed to positive.
Santander UK plc had unaudited consolidated assets of
GBP281 billion as of end June 2009 and is headquartered in London,
UK. Alliance & Leicester had unaudited consolidated assets of
GBP65 billion as of end June 2009 and is headquartered in London,
UK.
CATALYST HEALTHCARE: S&P Affirms 'BB+' Long-Term Debt Ratings
-------------------------------------------------------------
Standard & Poor's Ratings Services said it affirmed its 'BB+'
long-term ratings on the debt issued by U.K.-based special-purpose
vehicle Catalyst Healthcare (Manchester) Financing PLC and removed
them from CreditWatch where they were placed with negative
implications on June 19, 2009. The outlook is stable.
The debt comprises a GBP175 million senior secured European
Investment Bank (AAA/Stable/A-1+) loan due in 2037 and
GBP218.05 million of variable-rate bonds (including GBP38 million
of variation bonds) due in 2040. The loan and the bonds are
insured by Ambac Assurance U.K. Ltd. (CC/Developing/--) under an
unconditional and irrevocable guarantee of scheduled interest and
principal payments. Under S&P's criteria, a rating on monoline-
insured debt reflects the higher of the rating on the monoline and
that on the underlying debt.
Therefore, the long-term debt rating on the loan and the bonds
reflects the underlying rating.
The recovery rating is unchanged at '2', reflecting S&P's
expectation of substantial (70%-90%) recovery of principal in the
event of a payment default in the absence of the guarantee.
The Issuer onlent the proceeds of the bonds to Catalyst Healthcare
(Manchester) Ltd. (ProjectCo) to finance the design, construction,
and refurbishment of facilities for the Central Manchester and
Manchester Children's University Hospitals National Health Service
Trust (the Trust) under a private-finance initiative.
"The rating actions reflect S&P's assessment that the project's
financial profile has stabilized somewhat," said Standard & Poor's
credit analyst Ekaterina Lebedeva. "Our view is based on the
project's forecast minimum debt-service cover ratio of 1.18x and
1.28x on average in the revised January 2010 financial model. The
DSCR indicates the availability of cash to meet interest and
mandatory principal obligations. The revised DSCRs reflect a
financial performance that is better than S&P previously
expected."
The improvement in the project's financial profile stems mainly
from higher expected retail-price index (RPI) levels. ProjectCo's
revised financial model is based on an assumed RPI of 4.2% for the
year-ending March 31, 2011. Assuming a stable RPI in subsequent
years, ProjectCo expects the minimum average DSCR to rapidly
improve to more than 1.20x. The new model also includes the
increased margin on the EIB loan of 0.85%, which was triggered
when Ambac was downgraded to below 'BB+' in 2009.
The project remains well hedged against long-term inflation
trends. Although S&P expects the project's DSCRs to improve over
the next 12 months, they may again diverge from expected levels in
the future during periods of significant RPI volatility.
In 2008, the Trust issued warning notices to ProjectCo in
connection with hard facilities-management services, which
triggered a distribution covenant that resulted in the project
retaining about GBP28 million in cash in addition to minimum
reserve requirements. Hard FM services have since stabilized and
the Trust has now formally lifted these warning notices.
Consequently, S&P expects all the unrestricted cash to be
distributed in April 2010.
The outlook is stable because S&P is of the view that the
project's financial profile has stabilized somewhat, reflected in
the revised forecast minimum DSCR of 1.18x.
"S&P would consider revising the outlook to positive or raising
the ratings if the project's financial profile continues to
strengthen on a sustainable basis and demonstrates sufficient
resilience to RPI volatility, the operational performance
continues to improve in line with S&P's expectations, and the
relationship between the parties has improved," said Ms. Lebedeva.
"However, S&P would consider revising the outlook to negative or
lowering the ratings if the project's financial profile were to
deteriorate, reflected in DSCRs of less than 1.10x, or if S&P was
to perceive a significant weakening of operational performance."
GALA CORAL: Lenders In Talks to Improve Debt Restructuring Terms
----------------------------------------------------------------
Anousha Sakoui at The Financial Times reports that lenders to Gala
Coral are in talks to improve the terms of a restructuring of its
GBP2.5 billion debts.
As reported by the Troubled Company Reporter-Europe on Feb. 18,
2010, the FT said key lenders to Gala Coral have tentatively
agreed to a GBP175 million capital infusion for the gambling group
as part of a debt restructuring. The FT disclosed that under the
terms being discussed, the mezzanine lenders, of which the biggest
are Apollo Management, Cerberus and Goldman Sachs, would
underwrite a GBP175 million injection that will help the company
repay its senior debts.
According to the FT, people familiar with the situation said the
total cash infusion could rise to as much as GBP200 million.
The two sides hope to agree on a deal this week, and Gala's banks
could be briefed on the terms at a meeting to be scheduled for as
soon as today, the FT states.
The plan, under which mezzanine creditors would swap their GBP540
million of debt claims for 100% of Gala's equity, still requires
approval from a majority of both the senior and the mezzanine
creditors, the FT says.
The FT notes the person said if shareholders reject the plan, the
mezzanine creditors could look to take control of the company via
a pre-packaged administration.
Gala Coral Group Ltd. -- http://www.galacoral.co.uk/-- is a
gaming company in the UK, with operations encompassing bingo,
casinos, and sports betting. It runs more than 150 bingo halls
throughout the country, as well as some 30 casinos. The company
is also a bookmarker with nearly 1,600 betting shops and online
betting sites. Gala Coral Group was formed in 2005 when Gala
Group acquired Coral Eurobet. The company is jointly owned by
private equity firms Cinven Group, Candover Investments, and
Permira.
HARRY NEAL: In Liquidation; 120 Jobs Affected
---------------------------------------------
Sophie Griffiths at Building reports that Harry Neal Ltd. has gone
into liquidation, resulting in the loss of 120 jobs.
According to the report, Harry Neal, which had debts of around
GBP12 million, went into liquidation after it failed to be bought
by one of four firms looking to make an offer.
The report relates the company's directors have appointed
liquidators UHY Hacker Young.
Harry Neal Ltd. was founded in 1886 and focused largely on
refurbishment work for historic buildings in London, such as
Somerset House and Garrick Club, according to Building. The
company had a GBP40 million turnover in 2008.
MANCHESTER UNITED: Financiers Mull Billion-Pound Takeover
---------------------------------------------------------
John Sinnott at BBC Sport reports that a group of financiers --
dubbed the "Red Knights" -- has met to discuss a billion-pound
takeover of Manchester United.
United are owned by the Glazer family, but the club's high level
of debt -- now at GBP716.5 million -- has prompted much unease,
BBC Sport notes.
According to BBC Sport, Goldman Sachs economist Jim O'Neill, who
was acting in a personal capacity, lawyer Mark Rawlinson and
financier Keith Harris were at the meeting.
A spokesman for the Glazers told BBC Sport, "United is not for
sale."
The "Red Knights" group also accepts that any takeover would have
to be agreed by the Glazers, but that the club's American owners
cannot prevent them from putting forward a proposal, BBC Sport
discloses.
The financiers are also understood to want supporters to play a
key role in their campaign, BBC Sport says.
United Supporters' Trust (Must) is also running a vocal campaign
to bring about a change of ownership, BBC Sport states.
Manchester United Limited -- http://www.manutd.com/-- operates
Manchester United Football Club, one of the most popular and
successful soccer teams in the world. Man U is currently the top
soccer team the UK's Premier League, boasting 18 championships and
11 FA Cup titles. Manchester United generates revenue primarily
through ticket sales at venerable Old Trafford stadium, as well as
through broadcasting rights and sales of Red Devils merchandise.
Man U was founded as Newton Heath in 1878 before changing its name
in 1902. It is owned by American tycoon Malcolm Glazer, whose
holdings include the Tampa Bay Buccaneers NFL team and a majority
stake in Zapata.
READER'S DIGEST: Committee Hired BDO UK as Pension Advisor
----------------------------------------------------------
The Official Committee of Unsecured Creditors of The Reader's
Digest Association, Inc., and its Debtor-subsidiaries sought the
Court's permission to retain BDO (U.K.), LLP, as special UK
pension advisor, nunc pro tunc to September 14, 2009.
Daniel Pevonka, on behalf of R.R. Donnelley & Sons Company and
chairperson of the Creditors' Committee, relates that a non-debtor
foreign affiliate of the Debtors, The Reader's Digest Association
Limited, has potential liabilities arising out of a pension
scheme, whereby employees of RDA UK became entitled to pension
benefits and RDA UK agreed to meet the balance of the cost of
providing the benefits after taking into account the employees'
own contributions.
Subsequent to the Petition Date, the Pensions Regulator in the
United Kingdom commenced an investigation as to whether it should
exercise its moral hazard powers against the Debtors in an attempt
to hold the Debtors responsible for the Pension Scheme Liability,
Mr. Pevonka relates. He notes that the Creditors' Committee had
requested that BDO UK apply its specialized knowledge and
experience to assist the Creditors Committee in evaluating and
quantifying the potential responsibility of the Debtors for the
Pension Scheme Liability.
In performing its services, BDO UK's activities were and will be
limited to reviewing and analyzing information provided by, and
conferring with, the Debtors' UK financial advisors, the Debtors,
RDA UK or the Pensions Regulator, and reviewing and analyzing the
terms of any proposed settlement of the Pension Scheme liabilities
and reporting its findings to the Creditors Committee, Mr. Pevonka
tells the Court.
BDO UK will be paid at its customary hourly billing rates:
Partners GBP520 to GBP645
Directors GBP413 to GBP498
Senior Managers GBP413 to GBP498
Managers GBP322 to GBP379
Seniors GBP193 to GBP240
Staffs GBP88 to GBP175
Richard Farr, a partner at BDO UK, assures the Court that his firm
is a "disinterested person" as defined in Section 101(14) of the
Bankruptcy Code.
A hearing will be held on March 8, 2010, to consider the
application. Objections are due March 3.
About The Reader's Digest Association
RDA is a global multi-brand media and marketing company that
educates, entertains and connects audiences around the world. The
company builds multi-platform communities based on branded
content. With offices in 44 countries, it markets books,
magazines, and music, video and educational products reaching a
customer base of 130 million in 78 countries. It publishes 94
magazines, including 50 editions of Reader's Digest, the world's
largest-circulation magazine, operates 65 branded Web sites
generating 22 million unique visitors per month, and sells
40 million books, music and video products across the world each
year. Its global headquarters are in Pleasantville, N.Y.
Reader's Digest said that as of June 30, 2009, it had total assets
of US$2.2 billion against total debts of US$3.4 billion.
Reader's Digest, together with its 47 affiliates, filed for
Chapter 11 on August 24 (Bankr. S.D.N.Y. Case No. 09-23529).
Kirkland & Ellis LLP has been engaged as general restructuring
counsel. Mallet-Prevost, Colt & Mosle LLP has been tapped as
conflicts counsel. Ernst & Young LLP is auditor. Miller Buckfire
& Co, LLC, is financial advisor. AlixPartners, LLC, is
restructuring consultant. Kurtzman Carson Consultants is notice
and claims agent.
The Official Committee of Unsecured Creditors is tapping BDO
Seidman, LLP, as financial advisor, Trenwith Securities, LLP, as
investment banker and Otterbourg, Steindler, Houston & Rosen,
P.C., as counsel.
Bankruptcy Creditors' Service, Inc., publishes Reader's Digest
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by Reader's Digest and its affiliates
(http://bankrupt.com/newsstand/or 215/945-7000)
SANDWELL COMMERCIAL: S&P Cuts Rating on Class E Notes to 'B'
------------------------------------------------------------
Standard & Poor's Ratings Services lowered its credit ratings on
all of Sandwell Commercial Finance No. 2 PLC's classes of notes.
At the same time, S&P removed the class B to E notes from
CreditWatch negative.
Citigroup Global Markets Ltd. arranged this transaction for West
Bromwich Building Society, which originated and has continued to
service the securitized loan pool. Since closing in 2005, the
loan pool reduced to GBP249 million in December 2009 from
GBP350 million. Loans with an aggregated amount of GBP109 million
were substituted, and the substitution period will expire in June
2010.
As of December 2009, the loan pool included 159 loans secured on
mainly commercial real estate across the U.K., with highest
concentration in London (31%) and southeast England (13%).
Approximately 39% of properties are retail, 24% are offices, 13%
are warehouses/light industrial, and 13% residential properties.
Loan concentration has slightly decreased since closing with the
10 largest positions representing 27% (2005: 32%). The 20 largest
positions represented 42% of the loan pool.
As of December 2009, the servicer reported low payment arrears
equivalent to 0.09% of the loan amount outstanding. S&P
understands that currently, three loans with an aggregated amount
of GBP2.2 million (0.9%) are subject to enforcement procedures.
The transaction features a first-loss reserve, which was
GBP7.0 million in October 2009. The issuer applies all funds it
receives pro rata, as long as these criteria are met (otherwise
sequentially):
* Loans with arrears of more than 2.5% represent no more than 4%
of the loan pool;
* No amounts are recorded on principal deficiency ledgers;
* Reserve fund is fully funded;
* No drawing were made under the liquidity facility;
* Minimum subordination is maintained for class A notes (25%),
class B notes (18.5%), class C notes (12.5%), and class D notes
(4.9%).
The downgrades reflect S&P's view of the reduced creditworthiness
of the underlying loan portfolio resulting in a relatively higher
risk of losses to junior notes. This is mainly due to following
factors:
The continuing weak economic environment in the U.K. is, in S&P's
opinion, likely to increase the risk of tenant defaults. One
hundred thirty-six out of 169 properties are let to single tenants
including a wide range of national retailers, public institutions
and local occupiers. S&P expects vacancies to increase and rental
cash flows to deteriorate, which will affect the borrowers'
ability to service their debt.
Except for some properties in London, the commercial portfolio is
mainly located in secondary and tertiary locations, which in S&P's
view were severely affected by recent market value declines across
the U.K. commercial real estate sector. In S&P's opinion, it is
likely that for loans originated at the peak of the market, loan-
to-value (LTV) ratios would increase if based on current values.
Therefore, S&P believes that the risk to refinance a loan at
maturity or to recover outstanding debt following a default has
increased.
Of the loans, 34% are fully exposed, and 26% are partly exposed,
to interest rate risk; only 40% have interest rates fixed for the
full term of the loan. S&P believes that currently, low interest
rates (a weighted-average loan interest rate of 4.52% including
margin) continue to support interest rate cover ratios. However,
in S&P's opinion, some of the loans have a relatively weak yield
on debt ratio (calculated as the reported net rent divided by debt
outstanding). This is shown by the fact that approximately 56% of
loans show a yield on debt ratio of 8% and below.
Ratings List
Sandwell Commercial Finance No. 2 PLC
GBP350 Million Commercial Mortgage-Backed Floating-Rate Notes
Ratings Lowered
Ratings
-------
Class To From
----- -- ----
A AA- AAA
Ratings Lowered and Removed From Creditwatch Negative
Ratings
-------
Class To From
----- -- ----
B A- AA/Watch Neg
C BBB- A/Watch Neg
D BB- BBB/Watch Neg
E B BB/Watch Neg
SANDWELL COMMERCIAL: S&P Lowers Rating on Class E Notes to 'B'
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its credit ratings on
Sandwell Commercial Finance No. 1 PLC's class C, D, and E notes
and affirmed its credit ratings on classes A and B. At the same
time, S&P removed classes B to E from CreditWatch negative.
Citigroup Global Markets Ltd. arranged the transaction on behalf
of West Bromwich Building Society, which originated and has
continued to service the securitized loan pool. The loan pool has
reduced to GBP118 million in January 2010, from GBP250 million at
closing in 2004. Loans with an aggregated amount of GBP73 million
were substituted before the substitution period ended in 2009.
As of October 2009, the loan pool included 84 loans secured on
mainly commercial real estate across the U.K. with the highest
concentration in southeast England and London (29%) and northwest
England (13%). Approximately 36% of properties are office
properties, 34% are retail, and 22% are warehouses/light
industrial. Loan concentration has increased since closing; the
10 largest positions represent 37% (2004: 27%) and the 20 largest
represent 56% (2004: 44%).
As of January 2010, the servicer reported payment arrears
equivalent to 4.0% of the loan amount outstanding in relation to
three loans. S&P understand that one loan (the largest) has
defaulted, which has resulted in a principal loss of GBP 1.1
million. The transaction features a first-loss reserve, which due
to the crystallized loss has reduced to GBP2.2 million (from
GBP3.75 million in October 2009).
The issuer applies all funds that it receives to the notes
sequentially, which will change to pro rata subject to these
conditions:
* Loans with arrears of more than 2.5% represent no more than 4%
of the pool;
* No amounts are recorded on principal deficiency ledgers;
* The reserve fund is fully funded;
* No drawings were made under the liquidity facility; and
* Minimum subordination is maintained for the class A (36%), B
(22%), C (12%), and D notes (4%).
The downgrades reflect S&P's view of the reduced creditworthiness
of the underlying loan portfolio, resulting in relatively higher
risk of losses to the junior notes. This is mainly due to these
factors:
The continuing weak economic environment in the U.K. is in S&P's
opinion likely to increase the risk of tenant defaults. Out of 98
properties, 83 are let to single tenants including a wide range of
national retailers, public institutions, and local occupiers. S&P
therefore expect vacancies to increase, which would have an effect
on the borrowers' ability to service their debt.
The property portfolio is mainly located in secondary and tertiary
locations, which in S&P's view were severely affected by recent
market value declines across the U.K.'s commercial real estate
sector. In S&P's opinion, it is likely that for loans originated
at the peak of the market, loan-to-value ratios would increase if
based on current values. Therefore, S&P believes that the risk to
refinance a loan at maturity or to recover outstanding debt
following a default has increased.
Of the loans, 38% are fully and 28% are partly exposed to interest
rate risk, and only 34% have interest rates fixed for the full
term of the loan. S&P believes that currently low interest rates
(a weighted-average loan interest rate of 4.37% including margin)
continue to support interest rate cover ratios. However, in S&P's
opinion some of the loans have a relatively weak yield-on-debt
ratio (calculated as the reported net rent divided by the debt
outstanding); approximately 31% of loans show a yield-on-debt
ratio of 8% or lower.
Ratings List
Sandwell Commercial Finance No. 1 PLC
GBP250 Million Commercial Mortgage-Backed Floating-Rate Notes
Ratings Lowered and Removed From CreditWatch Negative
Rating
------
Class To From
----- -- ----
C BBB A/Watch Neg
D BB BBB/Watch Neg
E B BB/Watch Neg
Rating Affirmed
Class Rating
----- ------
A AAA
Rating Removed From CreditWatch Negative And Affirmed
Rating
------
Class To From
----- -- ----
B AA AA/Watch Neg
STERLINGMAX I: S&P Downgrades Rating on Class D Notes to 'B'
------------------------------------------------------------
Standard & Poor's Ratings Services lowered its credit ratings on
STERLINGMAX I MBS Ltd.'s class A1, A2, B, C, and D notes. At the
same time, S&P removed the ratings on the class B, C, and D notes
from CreditWatch negative.
The rating actions reflect S&P's assessment of a deterioration in
the credit quality of the underlying portfolio.
Of the assets in the underlying portfolio, about 36% are currently
rated below investment-grade (i.e., below 'BBB-'), compared with
none at closing; this includes adjustments to ratings on assets on
CreditWatch negative as described below. There are currently no
assets in the underlying portfolio that S&P consider as defaulted
in S&P's analysis (i.e., assets rated 'CC' and 'D').
S&P's analysis shows that about 14% of the portfolio is currently
on CreditWatch negative. On April 6, 2009, S&P published revised
assumptions governing structured finance assets with ratings on
CreditWatch held within collateralized debt obligation
transactions.
Under these revised assumptions, S&P adjusted downward ratings on
CreditWatch negative by at least three notches.
In addition, from the trustee's latest available information of
February 2010, S&P notes that the transaction is failing its
weighted-average spread test. The reported weighted-average
spread is about half its covenanted level.
At the same time, the transaction is failing its
overcollateralization test, which the transaction documents
require the parties to calculate using the combined balance of
classes A1, A2, B, C, and D. From the trustee's information, S&P
sees that the failure of the overcollateralization test is due to
reductions that the transaction documents require parties to apply
to the principal balance of assets rated 'B+' and lower.
According to these documents, failure of the overcollateralization
test requires the issuer to pay down the notes sequentially --
starting with the class A1 notes -- to bring the test back into
compliance.
S&P also notes that according to the transaction documents, an
event of default under the notes occurs if the adjusted portfolio
balance is lower than the combined principal amount outstanding of
the class A-1 and A-2 notes. Using the data from the latest
available trustee report of February 2010, according to S&P's
calculations there is an ?8.8 million (or about 8%) buffer before
an event of default is triggered. From the trustee's information,
S&P see that the portfolio balance is reduced due to adjustments
that according to the transaction documents are required to be
made to the principal balance of assets rated 'B+' and lower.
According to S&P's analysis of the underlying portfolio, about 16%
of assets are currently rated 'B+' or lower, compared with none at
closing.
If an event of default occurs, the trustee may declare the notes
immediately due and payable. Following note acceleration,
portfolio liquidation can occur. From the transaction documents,
S&P note that the class A1 noteholders have the voting rights
regarding note acceleration and portfolio liquidation.
As a result of these developments, S&P lowered its ratings on the
class A1, A2, B, C, and D notes.
STERLINGMAX I MBS is a largely U.K. cash flow CDO of residential
and commercial mortgage-backed securities and commercial asset-
backed securities, which closed in November 2003.
Ratings List
STERLINGMAX I MBS Ltd.
GBP150 Million Secured Floating-Rate and Residual Notes
Ratings Lowered
Rating
------
Class To From
----- -- ----
A-1 AA AAA
A-2 A AAA
Ratings Lowered and Removed From Creditwatch Negative
Rating
------
Class To From
----- -- ----
B BBB AA/Watch Neg
C BB A/Watch Neg
D B BBB/Watch Neg
ULTRALASE: Senior Lenders Take Over Business in Pre-Pack Deal
-------------------------------------------------------------
AltAssets reports that Ultralase, one of 3i Group's companies, has
gone into administration and been taken over by its senior
lenders.
According to AltAssets, the business was allowed to write off
junior debts to survive, in a process known as "prepack"
administration. Ultralase is now owned by Barclays and Bank of
Ireland, AltAssets says.
AltAssets recalls 3i acquired the company from Corporacion
Dermoestetica in 2008 for GBP174.5 million (EUR192.6 million).
Martin Arnold and Anousha Sakoui at The Financial Times report
administrators at KPMG were appointed to the holding company for
Ultralase, Ultralase Finance Ltd, on February 18. 3i invested
about GBP100 million of equity in the Leeds-based company with
plans to roll-out more clinics, the FT discloses.
The economic downturn hit demand for laser eye surgery, a luxury
that some consumers have put off until the economic uncertainty
clears, the FT relates.
Ultralase operates 17 laser eye clinics across the UK, according
to the FT.
WESTERN CIVIL: Creditors Call for Probe Into Collapse
-----------------------------------------------------
Yorkshire Evening Post reports that creditors of a Western Civil
Engineers Ltd., which went into liquidation earlier this month,
are calling for a full investigation into the running of the firm.
The report relates that at a meeting in Leeds, liquidators
revealed the extent of the company's debts. Creditors called for
a thorough investigation into how the firm, which was more than
GBP900,000 in the black less than six months ago, could collapse
owing GBP1.5 million.
Creditors have concerns over the way the company, which employed
seven people, has been run, the report says.
The report notes joint liquidator Paul Whitwam of BWC Business
Solutions in Leeds said there had been a number of unhappy
creditors at the meeting -- and said there would be a full
investigation into the running of Western.
Western Civil Engineers Ltd. worked on a number of high-profile
projects, including the building of new student accommodation in
Leeds and Sheffield, according to Yorkshire Evening Post.
===============
X X X X X X X X
===============
* Support for Eurozone Members in Financial Distress, Says S&P
--------------------------------------------------------------
In a new Credit FAQ report published Feb. 25, titled "S&P
Discusses Issues Of Support For Eurozone Members Experiencing
Financial Distress", Standard & Poor's Ratings Services addresses,
from a sovereign credit ratings perspective, the issue of support
for European Economic and Monetary Union (EMU) member states. The
report notes that a strong, well-defined, and timely policy
response from a government experiencing financial distress remains
the most important factor influencing sovereign creditworthiness.
"Third-party financial support can provide the breathing space in
which to implement a policy response, but we do not believe it is
a decisive factor in sovereign rating trends. In our view, the
macroeconomic policy tools and ultimate responsibility for
correcting imbalances generally remain with the sovereign state,"
Standard & Poor's credit analyst Trevor Cullinan said.
"Success in this regard depends on the political willingness and
ability of the individual government to implement policies
consistent with stabilizing its credit standing."
Standard & Poor's states in the report that its base case does not
assume any sovereign leaving the Eurozone in the medium term. "If
a sovereign left the EMU from a position of financial weakness and
did not redenominate its debt, its new currency would likely
depreciate substantially," Mr. Cullinan said. "We expect this
would make its stock of now foreign currency euro-denominated debt
more expensive in local currency terms, and would likely cause its
entire stock of debt to incur higher interest rates due to the
untested nature of the new arrangements, thus adding to fiscal
pressures."
In the absence of extensive capital controls, external liquidity
could also be expected to weaken significantly as private sector
borrowers could lose access to foreign funding.
On the issue of European Central Bank (ECB) funding support, the
report notes that even if a Eurozone sovereign were to lose
eligibility for ECB funding, Standard & Poor's would not expect
this would have an impact on the sovereign credit rating.
Although Standard & Poor's believes market confidence would
undoubtedly be hit, as long as the withdrawal of eligibility at
the ECB window did not come as a surprise, it expects it would be
discounted by the market before the withdrawal occurs.
The questions contained in the Credit FAQ are as follows:
-- How would Standard & Poor's view bilateral or
multilateral financial support provided to a Eurozone
government?
-- Does Standard & Poor's expect an EMU sovereign to
default?
-- Does Standard & Poor's expect any sovereign to leave the
Eurozone in the medium term?
-- What does Standard & Poor's expect the European Central
Bank (ECB) might do for an EMU member state experiencing
financial distress?
-- What does Standard & Poor's expect the European Community
(EC) might do for an EMU member state experiencing
financial distress?
-- So what form could financial support for a member state
take?
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than US$3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
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related conferences are encouraged. Send announcements to
conferences@bankrupt.com
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/booksto order any title today.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter -- Europe is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick,
Maryland USA. Valerie C. Udtuhan, Marites O. Claro, Rousel Elaine
C. Tumanda-Fernandez, Joy A. Agravante and Peter A. Chapman,
Editors.
Copyright 2010. All rights reserved. ISSN 1529-2754.
This material is copyrighted and any commercial use, resale or
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Information contained herein is obtained from sources believed to
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