TCREUR_Public/100625.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

            Friday, June 25, 2010, Vol. 11, No. 124



ARCANDOR AG: Berggruen-Highstreet Talks Over Karstadt Positive
COGNIS GMBH: BASF Inks EUR3.1 Billion Takeover Deal
COGNIS GMBH: Moody's Reviews 'B3' Corporate Family Rating
COGNIS GMBH: Fitch Puts 'B' Long-Term IDR on Watch Positive
COGNIS GMBH: S&P Raises Long-Term Corporate Credit Rating to 'B'

FLEET STREET: S&P Cuts Ratings on Four Classes of Notes to 'D'
PRIME 2006-1: Fitch Cuts Ratings on Two Classes of Notes to CC


YIOULA GLASSWORKS: S&P Junks Corporate Credit Rating From 'B-'

* GREECE: Majority of Greeks Expect Bankruptcy, Poll Shows
* Moody's Reviews Operational Risks in Greek SF Transactions


KANIZSA CENTRAL: Hotel Central Put Up for Sale

* HUNGARY: Electronic Administration of Bankruptcy Delayed


ALLIED IRISH: PKO's Bid for Zachodni May Hit Polish Zloty
MENTON CDO: Moody's Withdraws C Ratings on Six Classes of Notes


BANCA POPOLARE: Fitch Downgrades Ratings on Tier II Notes to 'BB+'
FIAT SPA: Pomigliano Plant Investment Plan Still Uncertain


* LATVIA: New Insolvency Law Will Affect Lending Environment


ABN AMRO: Fitch Expects to Downgrade Individual Rating to 'D'
AEGON NV: Mulls Sale of UK Life Reinsurance Business
NEW WORLD: S&P Affirms 'BB-' Long-Term Corporate Credit Rating


SONGA OFFSHORE: Moody's Gives Negative Outlook; Keeps 'B2' Rating


* PORTUGAL: Corporate Bankruptcies Up Nearly 10% to 1,836
* PORTUGAL: ECB Funding of Banks More Than Doubled in May 2010


NEW FORWARDING: Moody's Assigns 'B1' Rating with Stable Outlook
NOVATEK OAO: S&P Raises Corporate Credit Rating From 'BB+'

* Fitch Assigns 'BB-' Rating on Republic of Karelia's Bonds


AYT KUTXA: Fitch Cuts Rating on Class C ISIN ES0370154017 to 'B'

* SPAIN: Banks Face Liquidity Problems, Freemarket Report Says

U N I T E D   K I N G D O M

MONEY PARTNERS: Moody's Junks Ratings on Three Classes of Notes
MOORGATE FUNDING: S&P Assigns 'BB' Rating on Class E Notes
MOTHERWELL CONTROL: To Face Fines Over Buncefield Oil Depot Fire
SPWEC LTD: Faces Liquidation Following Insolvency Service Probe
ST. MARGARET'S: Faces Closure as Parents' Rescue Bid Fails

* UK: Ailing Construction Sector Seeking Supply Chain Finance


* EUROPE: Banks Must Not Rely on State Support for Too Long
* EUROPE: Won't Allow Bankruptcy of Euro States, Trichet Says

* BOOK REVIEW: The Executive Guide to Corporate Bankruptcy



ARCANDOR AG: Berggruen-Highstreet Talks Over Karstadt Positive
Nicolas Berggruen and property owner Highstreet are yet to reach a
final agreement on issues surrounding Karstadt properties but
recent discussions have been "very constructive and productive,"
Natali Schwab and William Launder at Dow Jones Newswires report,
citing a person familiar with the matter.

According to Dow Jones, another person familiar with the matter
said the situation looks more positive than before.

Dow Jones relates the discussions began Wednesday, focusing on
restraining rent increases for Karstadt in coming years, with
Highstreet potentially taking an equity stake in return.

The parties have until July 16 to negotiate a deal, otherwise
Karstadt, a unit of Arcandor AG, risks being shuttered by
insolvency proceedings.

Dow Jones recalls Mr. Berggruen won a months-long bidding process
to acquire Karstadt earlier this month, beating out Highstreet and
another buyout fund, Triton.

As reported by the Troubled Company Reporter-Europe on June 22,
2010, Dow Jones said Mr. Berggruen's takeover plan for Karstadt
includes a 10% share of Karstadt's return on equity in the form of
warrants for its Highstreet real estate property owners in
exchange for agreeing to lower rents.  Dow Jones disclosed Mr.
Berggruen additionally wants to amend Karstadt's master lease
agreement, which would give him the freedom to separate some
segments, such as sporting goods, into individual units.

                        About Arcandor AG

Germany-based Arcandor AG (FRA:ARO) --
formerly KarstadtQuelle AG, is a tourism and retail group.  Its
three core business areas are tourism, mail order services and
department store retail.  The Company's business areas are covered
by its three operating segments: Thomas Cook, Primondo and
Karstadt.  Thomas Cook Group plc is a tour operator with
operations in Europe and North America, set up as a result of a
merger between MyTravel and Thomas Cook AG.  It also operates the
e-commerce platform, Thomas Cook, supporting travel services.
Primondo has a portfolio of European universal and specialty mail
order companies, including the core brand Quelle.  Karstadt
operates a range of department stores, such as cosmopolitan
stores, including KaDeWe (Kaufhaus des Westens), Karstadt
Oberpollinger and Alsterhaus; Karstadt brand department stores;
Karstadt sports department stores, offering sports goods in a
variety of retail outlets, and a portal, that offers
online shopping, among others.

As reported by the Troubled Company Reporter-Europe, a local court
in Essen formally opened insolvency proceedings for Arcandor on
September 1, 2009.  The proceedings started for the Arcandor
holding company and for 14 units, including the Karstadt
department-store chain and Primondo mail-order division.

Arcandor filed for bankruptcy protection after the German
government turned down its request for loan guarantees.  On
June 8, 2009, the government rejected two applications for help by
the company, which employs 43,000 people.  The retailer sought
loan guarantees of EUR650 million (US$904 million) from Germany's
Economy Fund program.  It also sought a further EUR437 million
from a state-owned bank.

COGNIS GMBH: BASF Inks EUR3.1 Billion Takeover Deal
Daniel Schafer at The Financial Times reports that BASF on
Wednesday sealed a EUR3.1 billion (US$3.8 billion) deal to take
over Cognis.

According to the FT, BASF said it had reached an agreement with
Cognis's owners -- US investment bank Goldman Sachs and British
private equity group Permira -- to buy the company for an equity
purchasing price of EUR700 million.  Including Cognis's high debt
load and the speciality chemicals maker's pension obligations, the
deal values the company at EUR3.1 billion, the FT notes.

The FT says the deal will be financed purely with cash, helped by
the issuance of commercial paper.

Headquartered in Monheim, Germany, Cognis GmbH -- is a specialty chemical company.  The
company operates through three business units: Care Chemicals,
Nutrition and Health, and Functional Products.  Among Cognis'
products are environmentally friendly inks and coatings, synthetic
lubricants, oilfield chemicals, fatty acids, and dietary
supplements.  Once a subsidiary of chemicals giant Henkel, Cognis
is now owned by an investment group led by Permira and Goldman

                           *     *     *

As reported by the Troubled Company Reporter-Europe on May 31,
2010, Fitch Ratings revised Germany-based chemicals company Cognis
GmbH's Outlook to Stable from Negative.  Its Long-term Issuer
Default Rating has been affirmed at 'B'.  The instrument rating
actions applicable to Cognis and related entities are:

Cognis GmbH

  -- Super senior secured revolving credit facility: affirmed at
     'BB'; 'RR1'

  -- Senior secured floating-rate notes and loans: upgraded to
     'BB-' from 'B+'; Recovery Rating revised to 'RR2' from 'RR3'

  -- High-yield notes: affirmed at 'CCC'; 'RR6'

Cognis Holding GmbH

  -- PIK loans: affirmed at 'CC'; 'RR6'

As reported by the Troubled Company Reporter-Europe on May 21,
2010, Moody's Investors Services changed the outlook on all
ratings of Cognis GmbH to Positive from Stable.  All ratings of
the group remain unchanged.  The last rating action was on June
17, 2009, when Cognis was downgraded from B2 to B3.

COGNIS GMBH: Moody's Reviews 'B3' Corporate Family Rating
Moody's Investors has placed the B3 Corporate Family Rating and
all other associated debt ratings of Cognis GmbH under review for
possible upgrade.  This follows the announcements by Cognis and
BASF SE (rated A1/review for possible downgrade) of the agreement
by Cognis to be acquired by BASF and the expectation that Cognis'
debt will be redeemed in conjunction with the closing.

On 23 June 2010, BASF announced that it had signed an agreement
with Permira, Goldman Sachs Capital Partners and SV Life Sciences
to acquire Cognis for total consideration of EUR3.1 billion.
Moody's notes that the proposed transaction is subject to
regulatory approval.  In conjunction with announcing the
transaction, BASF has indicated its intention to redeem Cognis'
outstanding rated debt obligations at closing.  The review will
therefore monitor progress toward completing the transaction and
the steps being undertaken by BASF toward that objective.

The last rating action was on 19th May 2010, when Moody's changed
the outlook on Cognis' ratings to positive from stable.

Cognis GmbH, headquartered in Monheim, Germany, is a global
specialty chemicals producer with leading market positions in
natural-oil based chemicals.  Cognis reported revenues of
EUR2,584 million and a recurring EBITDA of EUR364 million for the
fiscal year ended 31st December 2009.

COGNIS GMBH: Fitch Puts 'B' Long-Term IDR on Watch Positive
Fitch Ratings has affirmed BASF SE's Long-term Issuer Default
Rating and senior unsecured rating at 'A+' respectively.  This
follows the announcement of its EUR3.1 billion acquisition of
German specialty chemicals producer Cognis GmbH.  Fitch has
simultaneously placed Cognis and related entities on Rating Watch

The Negative Outlook on BASF reflects Fitch's view that the
acquisition reduces the headroom under BASF's debt protection
measures at the current rating level.  Excluding potential
synergies from the transaction, Fitch estimates that BASF's funds
from operations net adjusted leverage, based on pro-forma numbers,
will gradually decrease to around 1.5x at mid-cycle (2012), which
Fitch views as still high for the rating.  The acquisition will
include Cognis' net debt and pension liabilities.

On balance, Fitch recognizes the positive impact of the
transaction on BASF's business profile and competitive position in
the specialty chemicals sector.  The acquisition is in line with
BASF's stated strategy of reducing portfolio cyclicality in its
chemicals business.  Upon completion, Cognis will be integrated
into BASF's performance products division.

Fitch will continue to closely monitor BASF's actions with regard
to shareholder distributions and acquisitions.  Any further
weakening in BASF's credit metrics and financial flexibility
through the business cycle could trigger a one-notch rating

BASF's ratings continue to reflect its strong business profile,
integrated production assets and size, which together afford it
significant economies of scale and cost efficiencies.  Fitch also
recognizes BASF's strong FY09 performance despite challenging
market conditions.

The RWP reflects Fitch's expectations that Cognis' ratings will
benefit from being part of the wider BASF group.  Fitch aims to
resolve the RWP on Cognis upon closing of the transaction, which
is expected to occur by November 2010.  The RWP on the instrument
ratings does not take into account the prepayment options under
Cognis' debt.  Fitch understands that BASF intends to refinance
Cognis' outstanding financial debt upon the completion of the


  -- Long-term IDR affirmed at 'A+'; Outlook Negative
  -- Senior unsecured rating affirmed at 'A+'
  -- Short-term IDR affirmed at 'F1'

Cognis GmbH

  -- Long-term Issuer IDR: 'B' placed on RWP

  -- Super senior secured revolving credit facility: 'BB' placed
     on RWP; Recovery Rating is 'RR1'

  -- Senior secured floating-rate notes and loans: 'BB-' placed on
     RWP; Recovery Rating is 'RR2'

  -- High-yield notes: 'CCC' placed on RWP; Recovery Rating is

Cognis Holding GmbH

  -- PIK loans: 'CC' placed on RWP; Recovery Rating is 'RR6'

COGNIS GMBH: S&P Raises Long-Term Corporate Credit Rating to 'B'
Standard & Poor's Ratings Services said that it raised the long-
term corporate credit rating on Germany-based specialty chemicals
producer Cognis GmbH to 'B' from 'B-', and placed it on
CreditWatch with positive implications.

At the same time, S&P upgraded the issue rating on Cognis'
EUR1.65 billion equivalent senior secured debt to 'B' from 'B-'.
The recovery rating on this issue is unchanged at '4', indicating
S&P's expectation of average (30%-50%) recovery in the event of a
payment default.

S&P also upgraded the issue rating on Cognis' EUR250 million
revolving credit facility to 'BB-' from 'B+'.  The recovery rating
is unchanged at '1', indicating S&P's expectation of very high
(90%-100%) recovery in the event of a payment default.

In addition, S&P upgraded the issue rating on Cognis'
EUR345 million senior notes due 2014 to 'CCC+' from 'CCC'.  The
recovery rating is unchanged at '6', indicating negligible
recovery (0%-10%) in the event of a payment default.

"The CreditWatch placement follows the announcement that global
integrated chemicals company BASF SE (A/Stable/A-1) has agreed to
acquire 100% of the shares of Cognis Holding GmbH for a
consideration of EUR3.1 billion (including debt)," said Standard &
Poor's credit analyst Paul Watters.  The transaction is subject to
closing conditions, including regulatory approval, and is due to
be formally completed by November 2010 at the latest.  According
to BASF, the acquisition will be debt and cash funded, and all
Cognis' outstanding debt will be refinanced on completion.

The upgrade takes account of the continued strength of Cognis'
operational performance in the second quarter of 2010, which S&P
anticipate will be broadly similar to the robust outcome in the
first quarter of 2010.  This suggests that the full-year result
will be higher than the result S&P previously factored into its
credit assessment, resulting in a material improvement in Cognis'
credit metrics, although in its opinion, its stand-alone financial
profile would remain highly leveraged.

S&P anticipates that S&P will resolve the CreditWatch listing and
align the rating on Cognis with that on BASF once the transaction
closes.  BASF expects to obtain regulatory and other approvals by
November 2010 at the latest.  Although S&P does not foresee any
obstacles to this, S&P could remove Cognis from CreditWatch
positive and assign a stable outlook if the acquisition did not
proceed for any reason.

FLEET STREET: S&P Cuts Ratings on Four Classes of Notes to 'D'
Standard & Poor's Ratings Services lowered to 'D' its ratings on
all the notes issued by Fleet Street Finance Two PLC to reflect
its methodology for restructured transactions.  S&P then raised
the ratings to reflect its opinion of the ability of the issuer to
meet its principal obligations by the new final maturity date,
2017, and its interest obligations on a timely basis until

Certain structural changes are behind the rating actions, namely:

* The extension of the notes' tenor to 2017 from 2014;

* The arrangement to fund a reserve to support timely interest
  payments to the class A notes after 2014 (original coupon only);

* The absence in the extended period of liquidity arrangements
  that would otherwise seek to ensure timely payment of interest
  under the junior notes.

Fleet Street Finance Two closed in October 2006 and is secured by
a KarstadtQuelle group sale and lease-back portfolio comprising
mostly department stores located across Germany.

The key tenant, Karstadt Warenhaus GmbH, which accounted for
around 97% of rental income at closing, filed for insolvency in
2009, after which the borrower proposed a restructuring of the
debt.  In February 2010, the bondholders and mezzanine lenders
agreed to this proposal.

S&P's ratings address timely payment of interest under the notes
until their legal maturity date, which is now July 2017.  The
ratings also address ultimate payment of principal no later than
the new legal maturity date.  S&P's ratings do not address timely
payment of the step-up margin.

A liquidity facility is in place that seeks to protect timely
payment of interest for all notes until the expected maturity date
in 2014, although an appraisal reduction mechanism could reduce

However, the new structure does not provide for a liquidity
facility in the extended period.  Instead, the cash manager will
be required to use excess cash to build up a liquidity reserve of
EUR78 million.  This will be available to fund interest on the
class A notes only, and at the original coupon, not the step-up
margin.  S&P has given limited credit to this support for the
class A notes because the reserve relies on an insolvent tenant --
Karstadt -- to fund it.  Even following a successful purchase of
the tenant's shares, S&P's stress scenarios would generally assume
a default of an unrated tenant.

In line with S&P's methodology, its rating analysis on this
transaction assumes the tenant might be liquidated at any time.
S&P's analysis of loan creditworthiness therefore takes into
account its view of the likely level of recoveries following the
insolvency of Karstadt.

Immediate disposals of the underlying properties would, in S&P's
view, likely result in higher recoveries than the most recent
valuation of EUR713 million.  S&P notes at the same time that the
vacant possession value -- which S&P considers a distressed
valuation -- may affect the marketability of the properties in a
disposal scenario.

Finally, S&P understands that an offer to purchase Karstadt has
been accepted and a purchase agreement has been signed.  It is
subject to a number of conditions precedent (including agreeing a
lower rent and other property concessions with the borrower as
well as receiving antitrust approval from the German antitrust
body).  S&P understands that the restructuring may evolve further
but S&P's rating actions consider only the restructuring that is
currently in place.

S&P will soon publish a more detailed discussion of its
surveillance analysis of the restructured transaction.

                           Ratings List

                   Fleet Street Finance Two PLC
  EUR1.192 Billion Commercial Mortgage-Backed Floating-Rate Notes

                         Ratings Lowered

                Class         To             From
                -----         --             ----
                A             D              BBB
                B             D              BB
                C             D              CCC
                D             D              CCC-

                          Ratings Raised

                Class         To             From
                -----         --             ----
                A             BBB            D
                B             BB             D
                C             CCC            D
                D             CCC-           D

PRIME 2006-1: Fitch Cuts Ratings on Two Classes of Notes to CC
Fitch Ratings has downgraded PRIME 2006-1 Funding Limited
Partnership's notes, due August 2015, as detailed below following
overall portfolio deterioration.

  -- EUR106,599,814.88 Class A notes (ISIN: XS0278567994):
     downgraded to 'BB' from 'BBB-'; Outlook Negative; Loss
     Severity Rating is 'LS-3';

  -- EUR15,000,000 Class B notes (ISIN: XS0278569776): downgraded
     to 'B' from 'BB', Outlook Negative, Loss Severity Rating is

  -- EUR20,000,000 Class C notes (ISIN: XS0278570519): downgraded
     to 'CCC' from 'B', assigned Recovery Rating 'RR5';

  -- EUR13,900,000 Class D notes (ISIN: XS0278571756): downgraded
     to 'CC' from 'CCC', Recovery Rating revised to 'RR6' from

  -- EUR13,000,000 Class E notes (ISIN: XS0278572135): downgraded
     to 'CC' from 'CCC'; Recovery Rating revised to 'RR6' from

The transaction is a cash securitization of subordinated loans to
German medium-sized enterprises.  Currently, approximately three-
quarters of the loans feature a loss participation mechanism, and
the remainder incorporates a deferral option for fixed annual
interest.  The portfolio companies were selected by the
originating banks HSH Nordbank AG ('A'/Rating Watch
Negative/'F1'), Landesbank Baden-Wuerttemberg ('A+'/Outlook
Stable/'F1+') and Haspa Beteiligungsgesellschaft fuer den
Mittelstand mbH.

Since the transaction closed in December 2006, there have been two
insolvencies amounting to EUR12.5m or 6.4% of the initial
portfolio notional, both occurring after March 2009.  The
portfolio has further shrunk following two early terminations with
full repayment amounting to EUR8.5m or 4.3% of the initial pool

Fitch believes that despite the low level of defaults in the
portfolio so far, as compared to other German mezzanine SME CLOs,
the pool has significantly deteriorated since the review in March
2009.  This deterioration is evidenced by the obligors' lower
internal ratings assigned by the originating banks, by the
companies' worsened financial position detailed in the latest
investor report as of November 2009 and the extensive information
provided by Altium MitKap AG, the portfolio manager, in a
discussion with Fitch in May 2010 and in a June 2010 conference
call with investors.  Four companies which Fitch considers to have
a high risk of default account for EUR25.5m or 14.5% of the
current non-defaulted portfolio notional.  There are a few more
companies whose financial position has also significantly
deteriorated.  In Fitch's analysis, this has led to increased
default expectations for the portfolio of 20%-25% over the
remaining term of 3.2 years to scheduled maturity.  Moreover,
Fitch expects weaker borrowers to have difficulties re-financing
loans at maturity.  Due to the subordinated nature of the
securitized loan instruments, Fitch expects no recoveries.

The transaction employs a principal deficiency ledger mechanism to
trap excess spread in case of defaults.  Current balance of the
principal deficiency ledger is EUR8m.  Given high levels of excess
spread (EUR4.5m on the August 2009 payment date), the PDL balance
could potentially be reduced to zero over the next two annual
payment dates in the absence of further defaults or interest
deferrals in the portfolio.

Using the agency's interest rate and default timing stresses in
the proprietary cash flow model, Fitch has calculated the extent
to which each rated class of notes can withstand future defaults.
Due to the excess spread trapping mechanism via the PDL, the notes
can absorb more defaults than indicated by their subordination.
Classes A, B, C, D, and E notes can withstand up to 39.1%, 32.9%,
24.6%, 18.5% and 12.7% of future defaults, respectively.  Compared
to Fitch's default expectation of 20%-25% for the portfolio over
the remaining term, the default on class D and E notes appears
probable and the default of class C notes is a real possibility.

Fitch also notes the high single obligor concentration within the
transaction.  The portfolio currently contains 25 performing
obligors compared with 29 obligors initially.  The largest
exposure accounts for 8.5% of the non-defaulted portfolio amount
and the top five obligors for 42.7%, making this transaction the
most concentrated among German mezzanine SME CLOs.  Based on the
credit enhancement and excess spread available, class E or D notes
could absorb the default of the top obligor, class C notes the two
largest obligors, class B the four largest obligors and class A
the five largest obligors.

The Negative Outlooks reflect Fitch's concern over further
deterioration in the portfolio and potential interest deferrals or
participation of the securitized instruments in the companies'
losses as a result of the challenging economic environment in

The Recovery Ratings for class D and E notes have been revised
downwards, as the agency expects lower recoveries in the range of
0%-10% on these notes in the case of default.

Fitch has assigned an Issuer Report Grade of two stars ("basic")
to the publicly available reports on the transaction.  The
reporting is accurate and timely.  It contains detailed
information on the priority of payments, cumulative default
figures, various stratifications and on all portfolio companies,
including select financial ratios.  However, there are only two
investor reports per year.  Additionally, the reports lack
information on the rating triggers that mitigate counterparty


YIOULA GLASSWORKS: S&P Junks Corporate Credit Rating From 'B-'
Standard & Poor's Ratings Services said that it lowered its long-
term corporate credit rating on Greece-based glass container
manufacturer Yioula Glassworks S.A. to 'CCC+' from 'B-'.  At the
same time, S&P lowered the company's senior unsecured debt rating
to 'CCC' from 'CCC+'.  The outlook is negative.

"The rating action reflects S&P's view of the rising liquidity
pressures that Yioula faces as a result of large short-term debt
maturities," said Standard & Poor's credit analyst Izabela
Listowska.  "This pressure is exacerbated by the company's
constrained free cash flow generation -- caused by continued weak
demand in its core markets -- and covenant risks from the start of
2011, when the company's covenant waivers expire."

Yioula significantly reduced its capital spending and overall
production output in 2009, which resulted in much lower reported
negative free cash flow (about negative EUR3 million compared with
negative EUR23 million in 2008).  S&P views positively
management's publicly stated commitment to keep capital spending
to a minimum in 2010.  Nevertheless, currently weak demand,
aggravated by liquidity constraints afflicting small to midsize
customers, is a concern, particularly when the timing of an
eventual improvement remains uncertain.  In 2009, Yioula's revenue
and EBITDA declined year on year by 20% and 25%, respectively,
which largely reflected a contraction in demand for glass
containers.  Although the pace of decline slowed in first quarter
2010, S&P believes that demand prospects remain weak, which is
consistent with the weak economic outlook for its core markets in
the Balkan region.

For 2010, S&P expects sluggish demand and efforts to expand
regionally, bringing increased competition and higher
transportation costs, to weigh on the company's operating margins.
Furthermore, the ratings are constrained by Yioula's highly
leveraged capital structure, narrow scope of operations, and
exposure to changes in input prices and foreign currencies.  S&P
considers these weaknesses to be partly offset by Yioula's
dominant positions in highly consolidated markets, a diversified
and fairly stable customer base, and good, albeit weakening,
operating margins.

"The outlook is negative because it reflects S&P's concerns about
a further deterioration in Yioula's liquidity position as a result
of difficult credit markets and near-term operational challenges,"
said Ms. Listowska.  "S&P could lower the ratings in the near term
if S&P believes that Yioula will fail in refinancing or renewing
its short-term debt maturities."

* GREECE: Majority of Greeks Expect Bankruptcy, Poll Shows
Maria Petrakis at Bloomberg News reports that an opinion poll
showed that a majority of Greeks believe the country could go

According to Bloomberg, of 2,100 people surveyed by MRB for Mega
TV, 52.6% said there is a chance of bankruptcy, while 38.8%
rejected the possibility.  That compared with 34.5% who said a
default was possible in December 2009, Bloomberg discloses.

Bloomberg notes nine in 10 Greeks consider the economy to be in a
bad or very bad situation, with 73.5% saying it's headed in the
wrong direction.

                          *     *     *

As reported by the Troubled Company Reporter-Europe on June 16,
2010, Moody's Investors Service downgraded Greece's government
bond ratings by four notches to Ba1 from A3, reflecting its view
of the country's medium-term credit fundamentals.  The rating
action concludes the review for possible downgrade, which Moody's
initiated on April 22, 2010.  Moody's also downgraded Greece's
short-term issuer rating to Not-Prime from Prime-1.  Greece's
country ceilings for bonds and bank deposits are unaffected by the
review and remain at Aaa (in line with the Eurozone's rating).
The outlook on all ratings is stable.

"The Ba1 rating reflects Moody's analysis of the balance of the
strengths and risks associated with the Eurozone/IMF support
package.  The package effectively eliminates any near-term risk of
a liquidity-driven default and encourages the implementation of a
credible, feasible, and incentive-compatible set of structural
reforms, which have a high likelihood of stabilizing debt service
requirements at manageable levels," said Sarah Carlson, Vice
President-Senior Analyst in Moody's Sovereign Risk Group and lead
analyst for Greece.  "Nevertheless, the macroeconomic and
implementation risks associated with the program are substantial
and more consistent with a Ba1 rating."

Moody's believes that the Eurozone/IMF support package has
sheltered the Greek government from the markets while it enacts
the very ambitious fiscal austerity measures and structural
economic reforms stipulated by the package.  These have the
potential to restore market confidence, depending on the
effectiveness of the government's execution, and place the country
on a more stable debt trajectory.  The rating agency's base-case
scenario envisions Greece implementing the policy changes it needs
to stabilize its debt-to-GDP ratio at around 150% by 2013, and
reduce its debt burden, defined as the interest payment/revenues
ratio, gradually thereafter (expected at 20% in 2014).  Should the
economy respond positively to the competitiveness-enhancing
structural reforms, debt stabilization could be achieved earlier.

"There is considerable uncertainty surrounding the timing and
impact of these measures on the country's economic growth,
particularly in a less supportive global economic environment,"
said Ms. Carlson.  "This uncertainty represents a risk that leads
Moody's to believe that Greece's creditworthiness is now
consistent with a Ba1 rating, a rating which incorporates a
greater, albeit, low risk of default."

Moody's outlook on Greece's ratings is stable, reflecting the
substantial probability that the rating will not change over the
next 12 to 18 months.  The key factors that will influence the
rating agency's view will be the performance of the Greek economy,
especially that of GDP and tax revenues.  Information on these
developments will take some time to accumulate and may prove to be
either credit positive or negative.

Moody's previous rating action on Greece was implemented on
April 22, 2010, when the rating agency downgraded Greece's rating
to A3 and placed it under review for further downgrade.

* Moody's Reviews Operational Risks in Greek SF Transactions
Moody's Investors Service said that it is reviewing the increased
operational risk inherent in Greek structured finance
transactions, in light of the recent downgrade of Greece's
government bond rating to Ba1 and the associated downgrade of nine
Greek banks.  The rating agency will take these factors into
account in its ongoing review for possible downgrade of 27
structured finance transactions backed by Greek pools.  Moody's
expects to conclude the review of the senior ratings of existing
Greek ABS/RMBS and CDO transactions in the near future.

Moody's analysis of Greek structured finance transactions is based
on these:

* an assessment of the available credit enhancement given the
  expectations around the asset pool performance, considering a
  variety of loss scenarios;

* the exposure of the transactions to the banks providing
  operational services, swaps and liquidity.

                  Operational Risk and Liquidity

Given the recent downgrades of Greek banks, operational risk
exposure and liquidity are central considerations in the ultimate
rating levels achievable by Greek structured finance transactions.
The rating agency believes that in certain situations this risk is
more significant than the potential losses in the collateral

Structured finance notes may be exposed to the risk of a payment
disruption if the key transaction parties fail to perform their
roles.  Moody's will consider the impact of the weakened financial
strength of the Greek banks on the operational aspects of all
Greek structured finance transactions.  Specifically, the focus
will be on the identity of the various counterparties (both Greek
and non-Greek banks) that hold key roles in each transaction (as
servicer, cash manager, account bank, servicer, paying agent or
swap counterparty) as well as on the efficiency of structural
features in the current Greek banking environment, in order to
determine the degree of linkage between the structured finance
ratings and the sponsors' ratings.

Certain structural features are implemented in securitization
transactions to reduce the linkage between the structured finance
ratings and the credit quality of the key parties to the
transaction, in order to ensure the timely payment of interest
even upon default of the transaction sponsor.  Moody's views on
operational risk are described in detail in a report entitled
"Global Structured Finance Operational Risk Request for Comment"
(published on May 6 2010).  The particularly systemic nature of
the challenges facing Greek banks presents a unique context for
the consideration of operational risk mitigants for Greek
structured finance transactions.  As a result, Moody's is
concerned that some of the de-linkage features that are
traditionally incorporated in the Greek structured finance
transactions may not sufficiently mitigate operational risk.  For
example, the appointment of a back-up servicer also domiciled in
Greece would not completely remove operational risk.

Moody's notes that certain Greek transactions benefit from a
combination of structural elements that are designed to facilitate
timely interest payments in the event of a servicing disruption,
even when an immediate transfer of the servicing is not possible.
Those transactions benefit from substantial dedicated liquidity
reserves that reside with Prime-1 rated banks which are accessible
by an independent and highly rated cash manager.  This cash
manager is responsible to pay senior expenses, swap amounts (if
any) and interest on the notes for a minimum period of six months;
in the case the servicer report is not produced on time, the cash
manager is able to make senior payments based on estimates.

Moody's believes that transactions, serviced by Greek banks which
are rated as low as Ba1, could achieve senior ratings in the low
single-A range if specific operational risk mitigants are in place
to ensure timely payment of interest on the Notes.  This assumes
that the credit enhancement is sufficient to support an extreme
loss scenario consistent with a single-A rating.  In the absence
of these mitigants the transaction senior ratings are likely to be
positioned in the Baa range.  The Greek transactions serviced by
subsidiaries of non-Greek banks would be assessed on a case-by
case depending on Moody's assessment of the credit quality of the
Greek subsidiaries.

           Credit Impact of Asset Pool Performance

In order for Greek transactions to maintain ratings that are
higher than the Greek government's Ba1 rating, the credit
enhancement available to the notes must be sufficient to withstand
severe collateral losses in stressed scenarios, including those
related to a potential government and banking crisis.  In these
worst case scenarios, Moody's will consider loss assumptions of 25
to 30 percent (depending on LTV) for RMBS, 40 percent for consumer
loans ABS, 45 to 50 percent for SME ABS and 50 percent for CDO
transactions.  These stress levels are consistent with single-A
rating ranges on the structured transactions, given the
operational risk constraints described above.


KANIZSA CENTRAL: Hotel Central Put Up for Sale
Nagykanizsa's Hotel Central is being put up for sale as part of
the ongoing liquidation proceedings of the hotel's operator,
Kanizsa Central Kft.,, citing, reports.

According to the report, Kerszi Zrt, who is in charge of the
liquidation, is hoping to sell the hotel for HUF390 million
(EUR1.4 million) and is asking an additional HUF42.5 million
(EUR151,000) for the various furnishings.

Kanizsa Central Kft. is headquartered in Hungary.

* HUNGARY: Electronic Administration of Bankruptcy Delayed
MTI-Econews reports that parliament adopted on Monday by a vote of
313-48 with no abstentions a proposal to postpone to January 1,
2011, from July 1, 2010, the date on which an amendment of
Hungary's bankruptcy act comes into effect stipulating that
written communication between courts and parties involved in
bankruptcy procedures must take place electronically.

According to the report, Fidesz MP Zsolt Horvath, who submitted
the proposal, said that the delay was necessary because courts are
not prepared for the switch to electronic written communication.


ALLIED IRISH: PKO's Bid for Zachodni May Hit Polish Zloty
Piotr Skolimowski at Bloomberg News reports that BNP Paribas SA
wrote in a note to clients Wednesday that PKO Bank Polski SA's bid
for a majority stake in Bank Zachodni WBK SA may be a "substantial
negative factor" for the Polish zloty if the deal goes through.

The transaction would mean that the zloty would face "significant
outflow" in the coming months as the Polish bank would have to pay
for the stake in euros, Bloomberg says, citing emerging- market
strategists led by Shahin Vallee in London.  Bloomberg relates the
zloty weakened 0.6 percent to 4.0798 per euro as of 4:44 p.m. in
Warsaw on Wednesday, June 23.

AS reported by the Troubled Company Reporter-Europe on June 24,
2010, The Financial Times said the Polish government on Tuesday
supported a potential bid from state-owned PKO for Bank Zachodni
WBK, which is being put up for sale by Ireland's troubled Allied
Irish Bank.  The FT disclosed Poland's treasury ministry said it
may defer a dividend payment to enable PKO, which is 51% state
owned to buy BZ WBK.  The FT said the 70% stake in BZ WBK owned by
AIB is thought to be worth about PLN11 billion (US$3.4 billion).
AIB is being forced to sell off its Polish affiliate in order to
meet capital targets after receiving aid from the Irish
government, according to the FT.

Allied Irish Banks, p.l.c., together with its subsidiaries -- conducts retail and commercial banking
business in Ireland.  It also provides corporate lending and
capital markets activities from its head office at Bankcentre and
from Dublin's International Financial Services Centre.  The Group
also has overseas branches in the United States, Germany, France
and Australia, among other locations.  The business of AIB Group
is conducted through four operating divisions: AIB Bank Republic
of Ireland division, Capital Markets division, AIB Bank UK
division, and Central & Eastern Europe division.  In February
2008, the Group acquired the AmCredit mortgage business in the
Baltic states of Latvia, Lithuania and Estonia.  In September
2008, the Group also acquired a 49.99% shareholding in BACB.

                           *     *     *

As reported by the Troubled Company Reporter-Europe on Dec. 10,
2009, Fitch Ratings affirmed Allied Irish Banks plc's individual
Rating at 'D/E'.

MENTON CDO: Moody's Withdraws C Ratings on Six Classes of Notes
Moody's Investors Service took these rating actions on notes
issued by Menton CDO III p.l.c., a synthetic CDO backed by a
portfolio of structured finance securities.

  -- US$54,000,000 Class A-1 Secured Floating Rate Notes due 2057,
     Withdrawn; previously on Mar 28, 2008 Downgraded to C

  -- US$15,000,000 Class A-2 Secured Floating Rate Notes due 2057,
     Withdrawn; previously on Mar 28, 2008 Downgraded to C

  -- US$37,000,000 Class B Secured Floating Rate Notes due 2057,
     Withdrawn; previously on Feb 22, 2008 Downgraded to C

  -- US$30,000,000 Class C Secured Floating Rate Notes due 2057,
     Withdrawn; previously on Feb 22, 2008 Downgraded to C

  -- US$27,700,000 Class D Secured Floating Rate Notes due 2057,
     Withdrawn; previously on Feb 22, 2008 Downgraded to C

  -- US$19,800,000 Class E Secured Floating Rate Notes due 2057,
     Withdrawn; previously on Feb 22, 2008 Downgraded to C


BANCA POPOLARE: Fitch Downgrades Ratings on Tier II Notes to 'BB+'
Fitch Ratings has downgraded Italy-based Banca Popolare
dell'Etruria e del Lazio's Long-term Issuer Default Rating to
'BBB' from 'BBB+' and downgraded its Short-term IDR to 'F3' from
'F2'.  The Outlook on the Long-term IDR is Negative.  Fitch has
also downgraded the bank's upper tier II notes to 'BB+' from 'BBB-
'.  The agency has affirmed BPEL's Individual Rating at 'C',
Support Rating at '3' and Support Rating Floor at 'BB'.

The downgrade reflects the sharp deterioration in the bank's asset
quality in 2009 and Q110, which has led to sizeable loan
impairment charges and, as a result, operating losses for both
periods.  These charges were higher, in 2009, as a proportion of
pre-impairment operating profit, than at other banks rated by
Fitch despite a general rising trend.  Fitch expects loan
impairment charges to remain high for the whole of 2010,
reflecting the sluggish recovery of the Italian economy.  The
Negative Outlook on the Long-term IDR reflects the expectation
that operating profitability at the bank will continue to be
impacted by the challenging macro economic situation in Italy,
with high impairment charges, higher funding costs and more
volatile non-interest revenue.  The bank is nonetheless
increasingly concentrating on cost control, and operating expenses
only increased by 1% in 2009.

At end-March 2010, gross impaired loans accounted for a high
10.59% of total loans and, at the same date, the coverage ratio
for these loans (impairments for doubtful and watch-list
loans/total doubtful and watch list loans) fell to 42%, leaving a
greater proportion of equity at risk from further deterioration.
However, part of the decrease can be ascribed to the changing mix
between the higher risk doubtful loans (2009: coverage 57%; 2008:
61%) and watch list loans (2009: 15%; 2008: 11%).

BPEL's ratings continue to take its strong franchise in its home
region into account, the adequate diversification of its loan
book, its reduced and now modest appetite for market risk, and
funding stability.  The ratio of loans/total funding from
customers (deposits and retail long-term borrowing) at end-2009
was 100%.  Its liquidity is adequate and sustained by about EUR1bn
of securities eligible for refinancing operations with the
European Central Bank.

Although BPELs current capitalization is considered acceptable by
Fitch, with a Fitch eligible capital ratio of 8.2% at end-2009, it
has to be viewed in conjunction with deteriorating asset quality.

BPEL, founded in 1882, is a small cooperative bank (banca
popolare) based in the Province of Arezzo in Tuscany, and has a
presence in central Italy.  BPEL is listed on the Milan Stock

FIAT SPA: Pomigliano Plant Investment Plan Still Uncertain
Guy Dinmore at The Financial Times reports that Fiat's failure to
win a convincing endorsement from workers voting on changes to
work practices at its Pomigliano D'Arco plant near Naples has
raised doubts over whether the carmaker will go ahead with its
EUR700 million (US$856 million) investment.

Citing the results of Tuesday's ballot reported by Italian media,
the FT says 62% of workers have voted in favor of the proposed
accord while 36% were against.  The FT relates analysts said Fiat
had sought a more convincing majority, with Corriere della Sera, a
major daily, reporting that Fiat had hoped for some 80% in favor.

According to the FT, a Fiat spokesman said a strong presence not
in favor would make it "very difficult" for Fiat to go ahead with
its development plans for Pomigliano.  The spokesman, as cited by
the FT, said Fiat still wanted to try to "save" the plant which
has been almost idle for two years.

The FT recounts that in a brief statement, Fiat said it would be
impossible to find an agreement with Fiom, the main leftwing metal
workers' union opposed to the proposals.  The FT notes Fiat said
it would hold talks with the other unions that had accepted
management's demands as a condition for transferring production
from Poland of the Panda model.

Fiom made clear ahead of the vote that regardless of the result it
would not accept the accord reached by Fiat and the other unions,
the FT discloses.

On June 18, 2010, the Troubled Company Reporter-Europe, citing the
FT, reported that Fiom leaders said Fiat's demands, including
possible sanctions against absenteeism and strikers, broke
existing labor contracts and were unconstitutional.

                          About Fiat SpA

Headquartered in Turin, Italy, Fiat SpA (BIT:F) -- is principally engaged in the design,
manufacture and sale of automobiles, trucks, wheel loaders,
excavators, telehandlers, tractors and combine harvesters.
Through its subsidiaries, Fiat operates mainly in five business
areas: Automobiles, including sectors led by Maserati SpA, Ferrari
SpA and Fiat Group Automobiles SpA, which design, produce and sell
cars under the Fiat, Alfa Romeo, Lancia, Fiat Professional,
Abarth, Ferrari and Maserati brands; Agricultural and Construction
Equipment, which is led by Case New Holland Global NV; Trucks and
Commercial Vehicles, which is led by Iveco SpA; Components and
Production Systems, which includes the sectors led by Magneti
Marelli Holding SpA, Teksid SpA, Comau SpA and Fiat Powertrain
Technologies SpA, and Other Businesses, which includes the sectors
led by Fiat Services SpA, a publishing house Editrice La Stampa
SpA and an advertising agency Publikompass SpA.  With operations
in over 190 countries, the Group has 203 plants, 118 research
centers, 633 companies and more than 198,000 employees.

                           *     *     *

As reported by the Troubled Company Reporter-Europe on April 27,
2010, Standard & Poor's Ratings Services said that it placed its
'BB+' long-term corporate credit rating on Italian industrial
group Fiat SpA on CreditWatch with negative implications.  At the
same time, the 'B' short-term credit rating on Fiat was affirmed.
In addition, S&P placed the 'BB+' long-term rating on Fiat's
subsidiary CNH Global N.V. on CreditWatch with developing

"The CreditWatch placement reflects S&P's view that Fiat's credit
quality could weaken due to increased business risk as a
consequence of the proposed demerger of CNH, Iveco SpA (not
rated), and the industrial and marine divisions of Fiat Powertrain
Technologies into the newly created entity Fiat Industrial SpA,"
said Standard & Poor's credit analyst Barbara Castellano.


* LATVIA: New Insolvency Law Will Affect Lending Environment
Nina Kolyako at Baltic Course reports that The Latvian Commercial
Banks Association's head Teodors Tverijons said that the
Insolvency Law that the Saeima passed on June 17 will destroy the
lending environment in Latvia.

According to the report, Mr. Tverijons stressed that if the
lending environment is damaged, this will affect everyone,
including lending to small and medium-sized businesses.

The report relates the Saeima on June 17 passed the new Insolvency
Law in the final reading with a view to helping troubled borrowers
honor their obligations.  The report says the law concerns legal
entities as well as natural persons, but the insolvency process
will not be possible against legal entities representing the state
or local governments.  The insolvency process will be launched if
the debtor, a limited liability company or a joint-stock company
fails to settle one or more debts, with the basic loan amount of
up to LVL3,000, in three weeks after the lender has warned the
company that it will claim the company be ruled insolvent, and the
company's liabilities not settled or contested after these three
weeks, the report discloses.  Other insolvency indications include
unpaid wages to the company's employees, social insurance payments
missing for two months, the report notes.  Insolvency process
could also be invoked if auditors establish that the debtors'
assets are not sufficient to pay all justified creditor claims,
the report states.  The new law will come into effect on
November 1, 2010, the report says.


ABN AMRO: Fitch Expects to Downgrade Individual Rating to 'D'
Fitch Ratings says that it anticipates affirming ABN AMRO Bank
N.V.'s Long-term and Short-term Issuer Default Ratings, its
Support and Support Rating Floor on completion of its merger with
Fortis Bank (Nederland), which is due to occur on 1 July 2010.
However, the Individual Rating of ABN AMRO is expected to be
downgraded to 'D' from 'C/D'.  Fitch expects to withdraw all of
FBN's ratings as this legal entity will cease to exist following
the completion of the merger.

The ratings post merger will continue to be at their Support
Rating Floor, reflecting the agency's opinion that in case of
need, the bank will continue to receive required support from the
Dutch State ('AAA'/Stable/'F1+').  The Dutch state will continue
to own 100% of the ordinary share capital of the merged entity.

The rating action on ABN AMRO's Individual Rating reflects the
restructuring which is taking place at the bank and which will
continue to impinge on management in their effort to combine the
various departments and risk management tools of the two entities.
The merger costs are large and will negatively affect overall
results, mostly in 2010, but also partly in 2011 and 2012.
However, Fitch understands that the expected benefits from the
merger in terms of cost reductions (EUR 1.1bn pre tax per year as
of end-2012), should translate into greater operating

Asset quality is expected to remain good at the merged bank,
despite the challenging economic environment.  It is too early to
estimate the impact of the merger of the two portfolios on
industrial concentrations but these are not expected to be unduly
high.  There is some exposure to the higher-risk shipping and
leveraged loans sectors, but these are being carefully managed and
so far have not resulted in higher-than-expected impairment
charges.  Over half of the loan portfolio will consist of well
performing domestic retail mortgages.

Operational risk, on the other hand, will remain a key risk facing
the bank for the short-to medium-term, as technical completion of
various projects required by the merger is not planned until end-
2012.  Furthermore, ABN AMRO will remain exposed to some risk
relating to businesses it has de-merged from and handed over to
The Royal Bank of Scotland as well as those sold to Deutsche Bank
under its European Community remedy plan.

ABN AMRO has received capital from the Dutch State in various
forms, including the latest round in December 2009, to deal with
the restructuring and integration as well as the associated costs
and risks.  Capitalization is currently deemed adequate for the
bank's risk profile.

The merged bank will be the third-largest bank in the Netherlands
by total assets after Rabobank and ING Bank, with a franchise in
the Netherlands ranging between the largest, in terms of
corporates and private banking, and the third-largest, in terms of
mass retail banking, depending on product and client type.

If the merger is completed as expected, Fitch would take these
rating actions


  -- Long-term IDR: to be affirmed at 'A+'; Outlook Stable

  -- Short-term IDR: to be affirmed at 'F1+'

  -- Support Rating: to be affirmed at'1'

  -- Support Rating Floor: to be affirmed at 'A+'

  -- Individual Rating: to be downgraded to 'D'; from 'C/D'

  -- Long-term Senior unsecured notes: to be affirmed at 'A+'

  -- Short-term Senior unsecured notes: to be affirmed at 'F1+'

  -- Subordinated debt: to be affirmed at 'A'

  -- Commercial paper: to be affirmed at 'F1+'

  -- Non-innovative hybrid debt (XS0246487457): 'B', to remain on
     Rating Watch Negative (RWN)

  -- Upper tier 2 debt (XS0244754254): 'B+', to remain on RWN

  -- 'AAA' government-guaranteed debt and covered bonds would not
     be affected by this rating action.


  -- Long-term IDR: to be affirmed at 'A+'; Outlook Stable

  -- Short-term IDR: to be affirmed at 'F1+'

  -- Individual rating: to be affirmed at 'D'

  -- Support Rating: to be affirmed at '1'

  -- Support Rating Floor: to be affirmed at 'A+'

  -- Long-term Senior unsecured notes: to be affirmed at 'A+'

  -- Short-term Senior unsecured notes: to be affirmed at 'F1+'

  -- Subordinated debt: to be affirmed at 'A'

  -- Commercial paper: to be affirmed at 'F1+'

  -- Hybrid Tier 1 issued through Fortis Capital Company Ltd.:
     'B', to remain on Rating Watch Negative

  -- 'AAA' government-guaranteed debt would not be affected by
     this rating action.

Fitch expects to subsequently withdraw all of FBN's ratings as
this legal entity will cease to exist following the completion of
the merger.  All rated debt will become rated debt of ABN AMRO.

AEGON NV: Mulls Sale of UK Life Reinsurance Business
Paul J. Davies at The Financial Times reports Aegon Chief
Executive Alex Wynaendts said on Tuesday that the group will look
to sell its EUR2-billion life reinsurance business and cut costs
in its UK arm by one-quarter as it accelerates its restructuring.

According to the FT, the group is looking to invest more capital
in higher-growth markets such as central and eastern Europe, and
parts of Latin America and Asia, although its priority is to repay
EUR2 billion it still owes to the Dutch government.

The FT notes Aegon, which received EUR3 billion in capital
injections during the financial crisis, has released EUR5 billion
of capital from sales and cost cutting over the past two years,
but needs European Commission approval before it can repay the

Mr. Wynaendts, as cited by the FT, said that Aegon's UK arm would
quit the bulk-annuity business, which pays out pensions to
retirees from large corporate schemes, and would refocus on
annuities and other retirement products for individuals and on
workplace pensions and benefits.

                           About AEGON

As an international life insurance, pension and investment company
based in The Hague, AEGON has businesses in over twenty markets in
the Americas, Europe and Asia.  AEGON companies employ
approximately 29,000 people and have over 40 million customers
across the globe.

NEW WORLD: S&P Affirms 'BB-' Long-Term Corporate Credit Rating
Standard & Poor's Ratings Services said that it revised to stable
from negative the outlook on The Netherlands-headquartered New
World Resources N.V., a holding company for Czech Republic-based
coal mining company OKD, a.s. and coke producer OKK Koksovny, a.s.
At the same time, S&P affirmed the 'BB-' long-term corporate
credit rating on the company, the 'BB-' issue rating on the
EUR500 million senior secured bond due 2018, and the 'B' issue
rating on the EUR268 million senior unsecured bond issued by NWR
due 2015.

"The outlook revision reflects S&P's opinion that conditions in
the steel industry are gradually rebounding, providing greater
certainty of demand for coking coal and coke," said Standard &
Poor's credit analyst Paulina Grabowiec.

This is illustrated by notably higher prices for coking coal
agreed by NWR for the year to March 30, 2011, and the 37% year-on-
year improvement in the total volume of coal and coke sold in the
first quarter of calendar 2010.  In S&P's view, this improvement
is likely to be reflected in an increase in NWR's earnings in
2010.  S&P also take a positive view of the company's disposal of
its noncore subsidiary, NWR Energy, for approximately
EUR131 million.

However, S&P also believe that greater certainty of cash flow
generation could lead NWR to return to its past ambitious growth
strategies.  In S&P's view, such a move could include acquisitions
in the Central and Eastern European region; investments in Poland-
based projects, such as the Debiensko mine; or a resumption of
dividends.  In S&P's opinion, if such spending were to occur, it
would need to be supported by healthy ongoing cash flow generation
in order for NWR to maintain leverage metrics that S&P considers
commensurate with the current rating.  S&P anticipates that NWR's
capital expenditure will be about EUR185 million in 2010, and that
the company may generate broadly neutral free operating cash flow
in 2010.

The stable outlook reflects S&P's belief that NWR will generate
healthy cash flows in 2010, and that its credit metrics will
remain commensurate with the 'BB-' rating, notably FFO to adjusted
debt of 25% and debt to EBITDA of less than 4x over the cycle.

However, downward rating pressure could develop if NWR's return to
an ambitious growth strategy were not fully supported by its cash
flow generation, or if the outlook for coal and coke markets were
to weaken.  A renewed aggressive financial policy, including debt-
financed acquisitions or higher capex or dividends that would
compromise NWR's financial flexibility, could also have a negative
impact on the rating.

S&P does not currently foresee an upside rating potential in the
near term due to the company's exposure to the cyclical and
volatile steel sector, and its limited diversity.  The ratings are
further constrained by NWR's ambitious investment plans and
expansionary regional strategy over the medium term, and its
shareholder-friendly financial policies.


SONGA OFFSHORE: Moody's Gives Negative Outlook; Keeps 'B2' Rating
Moody's Investors Service changed the ratings outlook of Songa
Offshore SE to negative from stable.  It also affirmed Songa's B2
corporate family rating and probability of default rating, and
withdrew the P(Caa1) ratings on the US$200 million senior
unsecured Notes due 2017 that have not yet been issued.

The negative outlook reflects Moody's view that the consequences
of the Macondo oil spill, and the moratorium imposed by the US
government on deepwater drilling through November 2010, will
negatively impact Songa's operations.  Although Songa has no
vessels operating in the Gulf of Mexico, it is not immune from
what will be lasting consequences for the global oil drilling

Furthermore, Songa recently announced its investment into
Deepwater Driller, the owner of a newbuild 6th (ultra)deepwater
rig.  The move comes at a difficult time and will require further
investment to gain majority control.  Additional uncertainty
arises regarding the ability to contract the vessel at reasonable
dayrates upon completion of construction in 2011.

In the near term, Songa may suffer from a more competitive
environment as rigs currently operating in the Gulf of Mexico are
re-deployed elsewhere, resulting in likely softening of dayrates
and/or lower utilization as Songa looks to recontract its fleet.
Although Songa benefits from having half of its fleet licensed to
operate in the more highly regulated North Sea, the Norwegian
Government has also indicated that it will not open new deepwater
areas for drilling until an investigation sheds further light on
the Macondo incident.

As these investigations reach conclusions, and also as governments
and the industry reconsider liabilities and appropriate risk
sharing, Moody's expects that the costs for Songa -- as for all
oil drilling companies - could rise materially to comply with new
regulations.  Companies such as Songa that have earlier generation
rigs may also face increased scrutiny and potentially capex to
meet tighter regulatory standards.

In March 2010, the company purchased a 31% share in Deepwater
Driller -- owner of a 6th Generation ultra-deepwater rig currently
under construction with expected delivery in April 2011.  Songa
will assume construction supervision and has entered into Put /
Call options with co-owners to sell an additional 20% to Songa
subject to achieving take-out financing and securing a contract
satisfying certain conditions.

The move into deepwater comes at a time of increasing uncertainty
regarding future deepwater drilling markets and a substantial
amount of newbuilds entering the market in 2011.  Songa may find
it more difficult than previously anticipated to secure financing
as well as contracting for the vessel at reasonable day-rates.
The move also introduces additional risks to the company's profile
given that it is Songa's first investment into deepwater, and also
with some residual construction risk.

However, Moody's also acknowledges the positive steps that Songa
has taken since the B2 CFR was assigned in January 2010.
Following the delay of the US$200m bond, the company has raised
$146m new equity, debt has been reduced by $181m to $706m, with
adjusted leverage falling to 1.7x.  Also, leverage appears low, EV
/ Ebitda is also around 3x.  Liquidity remains reasonable despite
the delays in bond issuance since most of new equity was used to
pay down the revolver.

The last credit rating announcement for Songa was on 27 January
2010, when a B2 CFR was assigned with a stable outlook, and a
P(Caa1) rating was assigned to the proposed US$200 million senior
unsecured Notes due 2017.

Listed on the Norwegian stock exchange, but headquartered in
Cyprus, Songa is an oilfield services company focused on midwater
exploration and production drilling.  Songa reported revenue of
about US$785 million for 2009.


* PORTUGAL: Corporate Bankruptcies Up Nearly 10% to 1,836
Maria Joao Espadinha at Diario de Noticias reports that 1,836
companies went into bankruptcy in Portugal since the beginning of
the year, a nearly 10% increase when compared to the previous

According to the report, the economic crisis and the difficulty of
obtaining credit from banks are forcing many companies to close
their doors.

Citing data provided by the Trade Information Institute to Diario
de Noticias, the report says on average, there were 11.2
insolvencies per day.  The number of insolvencies, which at the
end of the first quarter was just over 1,000, has seen a 50%
increase when compared to June 2008, the report notes.

The commerce, construction and textile sectors have been affected
the most.  In the commerce sector, 448 companies went into
bankruptcy in the first half of the year, while in the
construction sector, 351 companies shut down this year.

* PORTUGAL: ECB Funding of Banks More Than Doubled in May 2010
David Oakley at The Financial Times reports that the funding of
Portuguese banks from the European Central Bank more than doubled
last month, as financial institutions struggled to access
international capital markets.

Portuguese banks borrowed EUR35.8 billion from the ECB in May
compared with EUR17.7 billion in April, the FT says, citing the
Bank of Portugal.

According to the FT, the country was also forced to pay extremely
high yields to sell five-year bonds as investors demanded big
premiums amid the continuing worries over high debt levels in the
eurozone.  The FT says it was forced to pay average yields of
4.657%, almost 1 percentage point more than the 3.701% paid at an
auction at the end of May.

"These yields are not sustainable.  Portugal will have to access
the emergency stability fund if they continue to rise at this
rate," the FT quoted a banker as saying.


NEW FORWARDING: Moody's Assigns 'B1' Rating with Stable Outlook
Moody's Investors Service has assigned a (P)B1, LGD5/74% rating
with stable outlook to a proposed 5-year RUB3 billion bond to be
issued by New Forwarding Company.  NFC is a Russian subsidiary of
Cyprus-domiciled Globaltrans Investment PLC, which is in its turn
a subsidiary of Transportation Investments Holding Ltd.  TIHL,
domiciled in Cyprus as well, and its subsidiaries form National
Transportation Group operating mainly in Russia; TIHL's/N-Trans'
Corporate Family Rating is Ba3 with stable outlook.

The bond is to be issued to refinance some of NFC's foreign
currency denominated liabilities and for general corporate

NFC's obligations arising from and with respect to the proposed
bond will be guaranteed under a suretyship provided by
Globaltrans.  The Bonds Suretyship will be governed by the Russian
law and is limited to RUB8 billion.  Moody's acknowledges a legal
opinion on the Bonds Suretyship stating that it is very unlikely
that any claim , which a bondholder would have the right to bring
against NFC, will not be covered by the Bonds Suretyship.  Moody's
notes that, under the Bonds Suretyship, Globaltrans will have a
few days to satisfy the respective claims submitted by

The (P)B1 bond rating is based on (i) N-Trans' Ba3 CFR with stable
outlook and (ii) Moody's view of Globaltrans as N-Trans' key
subsidiary, the creditworthiness of which is comparable to that of
N-Trans.  Moody's notes that Globaltrans represents N-Trans' rail-
based transportation business line accounting for around 76% of N-
Trans' total revenue, 68% of total EBITDA, 45% of total assets net
of cash and 55% of total cash and cash equivalents of the group.
Moody's expects Globaltrans to follow the same Ba3 CFR ratings
guidelines that are applied by Moody's to N-Trans (please see
Moody's credit opinion on TIHL/N-Trans published on 26 May 2010
for the ratings guidelines).  If Globaltrans' standalone credit
quality were to deteriorate compared to that of N-Trans, this
could pressure the bond rating.

At the same time, the rating of the bond has been notched down by
one notch reflecting a significant amount of secured debt within
N-Trans ranking ahead of the unsecured bond.  Given the
significant amount of secured debt, Moody's assumes that trade
debtors of N-Trans would be treated similar to the treatment of
secured debt holders, with trade debt ranked ahead of the proposed

Moody's issues provisional ratings in advance of the final issue
of securities, and these ratings only represent Moody's
preliminary opinion.  Upon a conclusive review of the transaction,
and the confirmation of the issue amount and the final capital
structure, Moody's will assign a definitive rating to the
securities.  A definitive rating may differ from a provisional

The last rating action on N-Trans was implemented on 17 May 2010,
when Moody's changed the outlook on the group's Ba3 rating to
stable from negative.

N-Trans' ratings were assigned by evaluating factors Moody's
believe relevant to its credit profile, including i) the business
risk and market position within key business segments; ii)
management's strategy, iii) the financial profile, and iv) the
2009 performance assessment and projections over the near to
intermediate term.  These attributes were compared against other
companies both within and outside of N-Trans' key business
segments and N-Trans' ratings were believed to be comparable to
those of other issuers of similar credit risk.

Cyprus-based TIHL and its subsidiaries form N-Trans, one of the
largest private rail transportation businesses and port terminal
operators focusing on Russia.  N-Trans' key business segments
(rail transportation services and port terminal operations)
consolidated under two Cyprus-domiciled subsidiaries --
Globaltrans and Global Ports Investments PLC3), respectively.  N-
Trans' 2009 revenue is estimated at around US$1.5 billion, with
Globaltrans' contribution of 76% and Global Ports' share of 18%.

NOVATEK OAO: S&P Raises Corporate Credit Rating From 'BB+'
Standard & Poor's Ratings Services said that it had raised its
long-term corporate credit rating on OAO NOVATEK, Russia's largest
independent natural gas producer, to 'BBB-' from 'BB+'.  At the
same time the Russian national scale rating was affirmed at
'ruAA+'.  The outlook is stable.

At the same time S&P assigned a 'BBB-' issue rating and an 'ruAA+'
Russian national scale rating to a proposed RUR10 billion bond
issue by the company.

The upgrade reflects NOVATEK's very healthy credit metrics --
despite large growth-oriented capital spending and acquisitions in
2008 and 2009 -- and its high profitability, supported by the
still-improving fundamentals of Russia's gas industry, a
profitable condensate business, and efficient low-cost operations.
The upgrade also reflects NOVATEK's positive record of co-
operation with state-controlled Russian gas distribution monopoly
OAO Gazprom (BBB/Negative/A-3).  The company's total debt on
March, 31, 2010, was Russian ruble (RUB) 33.6 billion.

NOVATEK's production continued to increase in 2009, thanks to new
contracts with large domestic customers such as Inter RAO, despite
the financial downturn that negatively affected many of its
domestic peers and despite the fact that Gazprom had to cut its
export sales and faced substantial production declines.  In the
first quarter of 2010 production stood at above 10 billion cubic
meters, up 18% compared with the corresponding period of 2009.
NOVATEK's EBITDA was RUB13.6 billion, with a high 48.5% margin on
sales.  Recent strong performance was mostly thanks to increased
production.  Free operating cash flow was a high RUB7 billion and
credit ratios remained very strong with FFO to debt and debt to
EBITDA at above 100% and below 1x, respectively.

The stable outlook reflects S&P's expectation that NOVATEK's
operating cash flow should continue to benefit from increasing
domestic gas realizations, high liquid petrol product prices, and
a competitive cost structure.

* Fitch Assigns 'BB-' Rating on Republic of Karelia's Bonds
Fitch Ratings has assigned the Republic of Karelia's upcoming
RUB2bn domestic bond issue, due 18 June 2015, an expected Long-
term local currency rating 'BB-' and National Long-term rating of

The final ratings are contingent upon the receipt of final
documents conforming to information already received.

The Republic has Long-term local and foreign currency ratings of
'BB-', respectively, and a National Long-term rating of 'A+(rus)'.
The Long-term ratings have Stable Outlooks.  The Republic's Short-
term foreign currency rating is 'B'.

The Republic of Karelia is located in the northwest of the Russian
Federation and accounts for 0.4% of Russia's GDP and around 0.5%
of its population.


AYT KUTXA: Fitch Cuts Rating on Class C ISIN ES0370154017 to 'B'
Fitch Ratings has taken rating action on two Spanish RMBS
transactions, AyT Kutxa Hipotecario I FTA and AyT Kutxa
Hipotecario II FTA, which contain loans originated by Caja de
Ahorros Monte de Piedad de Gipuzkoa y San Sebastian.

Fitch downgraded Kutxa II's class B and C notes and revised the
Outlooks to Negative on class A to reflect the performance of the
pool to date in comparison with the agency's initial expectations.
Rising levels of defaults have resulted in substantial reserve
fund draws which have significantly reduced the credit support on
the notes.  In Fitch's view these are expected to continue until
recoveries are generated.  Given the current difficult housing
market in Spain, Fitch does not expect substantial recoveries to
be generated in the near future, without the properties being
subjected to a significant downward revaluation.

The affirmation of Kutxa I's reflects the better performance of
this pool, although the revision of the Outlook on class B and C
notes to Stable and to Negative, respectively, reflects Fitch's
expectation of increased pressure deriving from defaults,
particularly as the pool's characteristics are not dissimilar to
Kuxta II's.

Both transactions share high weighted average original loan-to-
value (WAOLTV) of 81.9% at issuance and at 84% and regional risk
concentration in the Pais Vasco, Madrid, and Cataluna regions.
The exposure to high WAOLTV is, in Fitch's opinion, a source of
concern because these loans carry a higher potential risk of
losses.  Fitch expects house price declines in Spain of 25%-30%
and this has been taken into account in the review of these

As of the April 2010 interest payment date loans in arrears by
more than three months stood at 0.46% and at 0.88% of the current
outstanding balance, for Kuxta I and Kuxta II respectively.
Defaults, for the same quarter, were at 0.11% and 1.93% of the
initial pool balance in Kutxa I and Kutxa II respectively.

Both transactions feature a provisioning mechanism through which
available excess spread is used to write off defaults, defined as
loans in arrears by more than 18 months.

The net excess spread available in Kutxa I has been declining over
the last three IPDs due to the increase in new quarterly defaults.
In Fitch's opinion the tightening of the excess revenue may lead
to reserve fund draws in the near future.  This is reflected in
the revision of the Outlook to Negative on the most junior

Kutxa II has not been generating enough excess spread to cover for
new defaults, leading to several reserve fund draws.  As of the
last IPD the reserve fund stood at 0.75% of the initial note
balance (compared to 2.3% at issuance).  The downgrade of the
ratings on the class B and C notes and the change in Outlooks
reflect Fitch's concern about the pool's ability to generate
enough cash to cover new potential defaults and the speed and
level of any future recoveries.  Fitch expects further reserve
fund draws to occur as more arrears translate into default.

AyT Kutxa Hipotecario I, FTA

  -- Class A (SIN ES0370153001): affirmed at 'AAA'; Outlook
     Stable; assigned Loss Severity rating of 'LS-1'

  -- Class B (ISIN ES0370153019): affirmed at 'A'; Outlook revised
     to Stable from Positive; assigned 'LS-2'

  -- Class C (ISIN ES0370153027): affirmed at 'BBB'; Outlook
     revised to Negative from Stable; assigned 'LS-3'

AyT Kutxa Hipotecario II, FTA

  -- Class A (SIN ES0370154009): affirmed at 'AAA'; Outlook
     revised to Negative from Stable; assigned 'LS-1'

  -- Class B (ISIN ES0370154025): downgraded to 'BBB' from 'A';
     Outlook Negative; assigned 'LS-3'

  -- Class C (ISIN ES0370154017): downgraded to 'B' from 'BBB';
     Outlook Negative; assigned 'LS-3'

* SPAIN: Banks Face Liquidity Problems, Freemarket Report Says
Freemarket, a Madrid-based consultancy, estimated in a report
that the Spanish financial system needed injections of EUR295
billion, based on estimated final loan losses of EUR201 billion --
although these figures would be partly offset by available bank
reserves and capital and bad debt provisions already made, Victor
Mallet writes for The Financial Times.

The FT says Spanish lenders in need of wholesale financing remain
dependent on the European Central Bank, from which they borrowed a
record EUR85.6 billion last month.

"At present, wholesale markets are closed to Spanish financial
institutions, which depend purely on the liquidity facilities
supplied by the ECB in order to avoid insolvency," the Freemarket
report said, according to the FT.

U N I T E D   K I N G D O M

MONEY PARTNERS: Moody's Junks Ratings on Three Classes of Notes
Moody's Investors Service has downgraded the ratings of 13 classes
of notes issued by Money Partners Securities 3 Plc and Money
Partners Securities 4 Plc.  The 25 affected tranches, listed
below, were all placed on review in June 2009 due to worse than
expected collateral performance.  The rating actions conclude the
review and take into account the increased loss expectations for
the two mortgage portfolios.

                      Transaction Overview

Money Partners 3 closed in May 2006 and the current pool factor is
approximately 46%.  The assets supporting the notes are first-lien
and second-lien mortgage loans secured by residential properties
located in England, Wales and Scotland.  Second-lien loans
correspond to 11% of the current portfolio balance.  The weighted
average LTV at closing was approximately 75.7% while the current
weighted average LTV is approximately 75.2%.  The reserve fund is
equal to GBP 7.3 million, corresponding to 50% of its target
level.  The reserve fund, if replenished to its target level, will
no longer amortize due to a breach of a non-curable performance
condition (cumulative losses have exceeded 1.25% of the original
balance).  In the recent quarters there has been sufficient excess
spread to cover losses and to partially replenish the reserve

Money Partners 4 closed in November 2006 and the current pool
factor is approximately 53%.  The assets supporting the notes are
first-lien and second-lien mortgage loans secured by residential
properties located in England, Wales and Scotland.  Second-lien
loans correspond to 16% of the current portfolio.  The weighted
average LTV at closing was approximately 75.4% while the current
weighted average LTV is approximately 74.3%.  The reserve fund is
equal to GBP 9.4 million, corresponding to 75% of its target
level.  The reserve fund, if replenished to its target level, will
no longer amortize due to a breach of a non-curable performance
condition (cumulative losses have exceeded 1.25% of the original
balance).  Over the past three quarters there has been sufficient
excess spread to cover the losses and to partially replenish the
reserve fund level.

                  Servicing and Cash Management

Homeloan Management Limited (servicer quality rating of SQ2+) is
the day-to-day servicer in both transactions, while the special
servicing and cash management are performed by Kensington Mortgage
Company Limited.  Following a review of Homeloan Management
Limited and Kensington Mortgage Company Limited servicing
operations, Moody's is satisfied with the ability of the servicer
and the special servicer to perform its duties considering current
resources, systems and procedures.

Both transactions benefit from back-up servicing and back-up cash
management arrangements.  Western Mortgage Services Limited, which
is owned by Co-Operative Bank Plc (A2/Prime-1), is the back-up
servicer and Homeloan Management Limited is the back-up cash
manager in both Money Partners 3 and 4.

                 Revised Performance Expectations

The loans in arrears by more than 90 days (including outstanding
repossessions) amount to approximately 31.9% and 34.3% of the
current portfolio balance in Money Partners 3 and 4, respectively.
The cumulative losses realized since closing amount to 3.50% of
the closing pool balance in Money Partners 3 and 3.74% in Money
Partners 4.  The severity of losses experienced in the last
quarter amounts to 27% and 44% for first-lien loans and 120% and
160% for second-lien loans in Money Partners 3 and 4 respectively.

Moody's has assessed updated loan-by-loan information of the
outstanding portfolio to determine the increase in credit support
needed and the volatility of future losses.  As a consequence,
Moody's has revised its Milan Aaa CE to 32.5% for Money Partners 3
and 34% for Money Partners 4.  The current available credit
enhancement (excluding excess spread) for Class A2 in Money
Partners 3 amounts to 36.7% while the credit enhancement for Class
A1 in Money Partners 4 equals 34.9%.

Considering the current amount of realized losses, and completing
a roll-rate and severity analysis for the non-defaulted portion of
the portfolio, Moody's has also revised upwards its loss
expectations for both transactions.  For Money Partners 3 the
total expected loss (inclusive of the losses already occurred) has
been increased from 5.2% to 7.5% of the closing portfolio balance,
while for Money Partners 4 the expected loss assumptions have been
increased from 5.3% to 8.0% of the closing portfolio balance.

The loss expectation and the Milan Aaa CE are the two key
parameters used by Moody's to calibrate the loss distribution
curve, which is one of the inputs into Moody's RMBS cash-flow
model.  Moody's has also factored into its analysis the negative
sector outlook for UK non-conforming RMBS.  The sector outlook
reflects these expectations of key macro-economic indicators: GDP
to grow by 1.2% in 2010 and by 2.1% in 2011, unemployment to
stabilise at 7.8% in 2010 and fall to 7.4% in 2011, house price
growth to be relatively muted and personal insolvencies likely to
remain elevated.

                      List of Affected Notes

The classes of notes affected by the rating actions are detailed

Money Partners 3:

  -- Class A2a, Confirmed at Aaa; previously on Jun 26, 2009 Aaa
     Placed Under Review for Possible Downgrade

  -- Class A2a I/O 2011, Confirmed at Aaa; previously on Jun 26,
     2009 Aaa Placed Under Review for Possible Downgrade

  -- Class A2b, Confirmed at Aaa; previously on Jun 26, 2009 Aaa
     Placed Under Review for Possible Downgrade

  -- Class A2b I/O 2011, Confirmed at Aaa; previously on Jun 26,
     2009 Aaa Placed Under Review for Possible Downgrade

  -- Class A2c, Confirmed at Aaa; previously on Jun 26, 2009 Aaa
     Placed Under Review for Possible Downgrade

  -- Class A2c I/O 2011, Confirmed at Aaa; previously on Jun 26,
     2009 Aaa Placed Under Review for Possible Downgrade

  -- Class M1a, Confirmed at Aa2; previously on Jun 26, 2009 Aa2
     Placed Under Review for Possible Downgrade

  -- Class M1b, Confirmed at Aa2; previously on Jun 26, 2009 Aa2
     Placed Under Review for Possible Downgrade

  -- Class M2a, Downgraded to Baa2; previously on Jun 26, 2009 A2
     Placed Under Review for Possible Downgrade

  -- Class M2b, Downgraded to Baa2; previously on Jun 26, 2009 A2
     Placed Under Review for Possible Downgrade

  -- Class B1a, Downgraded to B1; previously on Jun 26, 2009 Ba1
     Placed Under Review for Possible Downgrade

  -- Class B1b, Downgraded to B1; previously on Jun 26, 2009 Ba1
     Placed Under Review for Possible Downgrade

  -- Class B2a, Downgraded to Caa3; previously on Jun 26, 2009 B3
     Placed Under Review for Possible Downgrade

  -- Class B2b, Downgraded to Caa3; previously on Jun 26, 2009 B3
     Placed Under Review for Possible Downgrade

Money Partners 4:

  -- Class A1a, Confirmed at Aaa; previously on Jun 26, 2009 Aaa
     Placed Under Review for Possible Downgrade

  -- Class A1a I/O 2012, Confirmed at Aaa; previously on Jun 26,
     2009 Aaa Placed Under Review for Possible Downgrade

  -- Class A1b, Confirmed at Aaa; previously on Jun 26, 2009 Aaa
     Placed Under Review for Possible Downgrade

  -- Class A1b I/O 2012, Confirmed at Aaa; previously on Jun 26,
     2009 Aaa Placed Under Review for Possible Downgrade

  -- Class M1a, Downgraded to Aa3; previously on Jun 26, 2009 Aa2
     Placed Under Review for Possible Downgrade

  -- Class M1b, Downgraded to Aa3; previously on Jun 26, 2009 Aa2
     Placed Under Review for Possible Downgrade

  -- Class M2a, Downgraded to Baa2; previously on Jun 26, 2009 A3
     Placed Under Review for Possible Downgrade

  -- Class M2b, Downgraded to Baa2; previously on Jun 26, 2009 A3
     Placed Under Review for Possible Downgrade

  -- Class B1a, Downgraded to Ba2; previously on Jun 26, 2009 Ba1
     Placed Under Review for Possible Downgrade

  -- Class B1b, Downgraded to Ba2; previously on Jun 26, 2009 Ba1
     Placed Under Review for Possible Downgrade

  -- Class B2, Downgraded to Caa1; previously on Jun 26, 2009 B3
     Placed Under Review for Possible Downgrade

MOORGATE FUNDING: S&P Assigns 'BB' Rating on Class E Notes
Standard & Poor's Ratings Services assigned preliminary credit
ratings to Moorgate Funding Ltd.'s up to GBP720 million mortgage-
backed floating-rate series 2010-1 notes.  At the same time,
Moorgate Funding will issue subordinated unrated class Z notes and
residual certificates.

The portfolio comprises buy-to-let, self-certified, and
nonconforming mortgages.  With some exceptions, the portfolio
backing the Moorgate series 2010-1 issuance will be the same as
that which collateralized the recently redeemed Moorgate Funding
series 2009-1 transaction.

S&P's ratings are based on its reviews of the payment structure
and cash flow mechanics of the transaction, the portfolio
collateral, and a cash flow analysis to verify that the notes will
be repaid under stress test scenarios.

This will be Moorgate Funding's second securitization.  S&P
expects to rate the notes on a segregated basis, i.e., the rating
on each series is independent from the rating on each previous and
subsequent series.  At closing, Moorgate series 2010-1 will be the
sole outstanding issuance from Moorgate Funding.

                           Ratings List

               Moorgate Funding Ltd. (Series 2010-1)
     Up to GBP720 Million Mortgage-Backed Floating-Rate Notes
                           Series 2010-1

                          Prelim.          amount
            Class         Rating           (mil. EUR)
            -----         -------          ----------
            A             AAA               TBD
            B             AA                TBD
            C             A                 TBD
            D             BBB               TBD
            E             BB                TBD
            Z             NR                TBD

                      TBD -- To be determined.
                          NR -- Not rated.

MOTHERWELL CONTROL: To Face Fines Over Buncefield Oil Depot Fire
---------------------------------------------------------------- reports that Motherwell Control Systems 2003 Ltd,
which is in voluntary liquidation, faces potentially unlimited
fines after it was found guilty of health and safety breaches over
the Buncefield oil depot fire.

According to the report, the company was convicted of failing to
protect workers and the public.

Sentencing is due to take place next month, the report discloses.

Merseyside-based Motherwell Control Systems 2003 Ltd. manufactures
custody transfer tank gauges, tank gauging systems, pressure and
vacuum relief valves and storage tank fittings. It has served the
oil and petrochemical industries in the UK and worldwide since

SPWEC LTD: Faces Liquidation Following Insolvency Service Probe
A company involved in the misselling of solar powered energy
products (solar panel hot water systems, wind turbines etc) has
been ordered into liquidation following an Insolvency Service
investigation on behalf of the Government.

Company Investigations of the Insolvency Service found that
between April 2009 and January 2010 Rochdale-based SPWEC Limited
(Solar Power Wind Energy Company) used local and national
newspapers and magazines to promote its products to new customers.
SPWEC's marketing material and Web site promoted itself as a
"large provider of quality products in the renewable energy
sector" offering "high quality renewable energy systems at an
affordable cost."

Commenting on the case Alex Deane of The Insolvency Service's,
Company Investigations said: "At a time when we are all looking
for greener energy products, it is particularly regrettable that a
business like SPWEC should use dishonest practices to exploit that
demand for its own ends.  The public should rest assured that the
Insolvency service works hard to remove such companies from the
business environment.  The action taken on this matter sends a
clear and simple message to company directors that if you run a
company that deliberately sets out to cheat customers you will be
closed down and further action may be taken against you

Customers of SPWEC were required to pay a minimum deposit of 500
with the full balancing payment due 10 days before the agreed
installation date.  SPWEC's terms and conditions stated each
customer would be entitled to a "full and frank" refund if SPWEC
failed to install the goods within three days of the agreed
installation date.

The investigation found that SPWEC took deposits and payments from
customers totaling more than GBP62,000.  However, the company
failed to supply the purchased goods to the majority of its
customers and further failed to install the goods supplied to at
least six of its customers.  SPWEC was wound up on the grounds
that it was trading to the detriment of the public and in
particular that:

    * The prices quoted in advertisements for the supply and
      installation of goods was deliberately low to entice
      customers to place orders.

    * SPWEC had set prices and taken orders for goods it had not

    * SPWEC sought payments for goods that it had not even sourced
      and could not, therefore, honour the agreed installation

    * Customers were deliberately misled about the availability of
      Government grants and the obtaining of planning permission;

    * SPWEC failed to respond to customer emails and telephone

    * SPWEC failed to comply with its own terms and conditions,
      failing to make any refund payments; and

    * SPWEC took unauthorized payments from some customers credit

The Court also heard that the company had failed to keep proper
accounting records; failed to co-operate fully with the
investigation and operated with a serious lack of transparency as
to who controlled the company.

ST. MARGARET'S: Faces Closure as Parents' Rescue Bid Fails
BBC News reports that a campaign by parents of children at St.
Margaret's school to rescue it from closure failed.

BBC relates the parents tried to raise GBP2.5 million over just a
few weeks after the school went into administration earlier this
month.  According to BBC, the pensions of teachers are directly
affected and some parents have lost up to GBP21,000 in fees paid
in advance.

As reported by the Troubled Company Reporter-Europe on June 14,
2010, Blair Nimmo of KPMG was appointed Provisional Liquidator of
St Margaret's School (Edinburgh) Limited and of its 100%
subsidiary St Hilary's House Limited on June 10, 2010.

The Edinburgh-based School, which has charitable status and was
incorporated in 1960, provides private education for girls at
nursery, primary and secondary level (from 18 months to 18-years-
old) and for boys at nursery and primary level (from 18 months to

St. Hilary's provides boarding facilities during term and operates
as a hotel and youth hostel during the School holidays.  The
School has been affected by a sustained decline in pupil numbers
over recent years and despite actions taken by the Board of
Governors, the School could not continue to operate viably.

At the time of the Provisional Liquidator's appointment the School
and nursery comprised 397 pupils and 143 staff (69 teaching and 74
non-teaching).  The School and nursery will continue to operate
and provide its services under the Provisional Liquidator's
supervision through to the end of term (June 29, 2010).  The
School and nursery will close on June 29, 2010.

* UK: Ailing Construction Sector Seeking Supply Chain Finance
Ed Hammond at The Financial Times reports that leading UK
construction groups are turning to banks to help ease the pressure
on their supply chains, as companies in the sector fall victim to
the dual strains of weak demand and constricted lending.

The FT relates lenders have seen an uptake of so-called supply
chain finance, where the creditworthiness of the lead contractor
is used to bridge the invoicing gap and allow quick payments to
the smaller firms that provide it with goods and services.
According to the FT, the system allows larger builders, where cash
flow tends to be less of an issue due to upfront payments from
clients, to qualify for prompt-payment, usually meaning a discount
of about 10%, some of which is passed on to the bank in fees.

The FT recounts since the start of the recession, the building
sector has been the largest single contributor to UK insolvencies.
During the first three months of the year 674 construction firms
collapsed and there is an expectation that things will get worse
as work flows begin to stabilize, the FT discloses.  In
consequence, there has been a growing urgency among smaller, more
vulnerable companies to find ways of stabilizing cash flow, the FT

The FT relates the Construction Products Association, the
industry's main trade body, which has been lobbying the government
to introduce measures that would give building companies better
access to finance, said it welcomed anything that improved supply
chain liquidity.

The FT notes Jonathan Hook, at PwC, said the early payment would
not necessarily mitigate against insolvency if the smaller
suppliers were struggling on jobs for other contractors.


* EUROPE: Banks Must Not Rely on State Support for Too Long
----------------------------------------------------------- reports that banks throughout Europe are being
warned that they cannot rely on state support for too long if
European economies are to fully recover.  The report relates EU
Commissioner Joaquin Almunia said that for competition to return
to the economy, banks must finance themselves on the markets.

* EUROPE: Won't Allow Bankruptcy of Euro States, Trichet Says
Rainer Buergin at Bloomberg News, citing Welt am Sonntag
newspaper, reports that European Central Bank President Jean-
Claude Trichet said Europe will not allow member states of the
euro region to go bankrupt.

According to Bloomberg, Mr. Trichet told the newspaper in an
interview that the ECB's May 9 decision to buy government bonds
from countries including Greece, Portugal and Ireland was
justified because the situation was "too dramatic" and Europe was
"at the epicenter of the crisis."

* BOOK REVIEW: The Executive Guide to Corporate Bankruptcy
Authors: Thomas J. Salerno; Craig D. Hansen; Jordan A. Kroop
Publisher: Beard Books
Hardcover: 728 pages
List Price: US$174.95

The newly revised edition of The Executive Guide To Corporate
Bankruptcy is perfectly timed.  As the global economy continues to
deteriorate, more and more companies are sinking into insolvency
with executives at their helm who need a crash course in
bankruptcy realities.  This excellent book will quickly get both
the seasoned executive and the uninitiated lawyer up to speed on
the bankruptcy process.

Salerno, Kroop and Hansen understand that the reorganization
process can be intimidating, puzzling, and generally unpleasant.
They penetrate the opaque gloom that some lawyers tend to
perpetuate.  Each chapter of this book addresses a different
aspect of the reorganization process, beginning with an overview
of the origins and purpose of US bankruptcy laws and ending with a
debunking of common myths about reorganization.  In between, they
discuss each chapter of the bankruptcy code; discussing the gamut
from liquidations through Chapter 11 sales and full-blown
reorganizations.  The authors' ability to distill the bankruptcy
code's complex language into comprehensible and manageable blocks
of information makes the book extremely readable.

The Executive Guide is full of pragmatic advice.  After laying out
the essential elements and key players in the restructuring
process, the authors get down to the nitty gritty of navigating a
distressed company through reorganization.  They realistically
assess the challenges that an executive should expect to face in
Chapter 11.  They discuss how to assuage and balance the concerns
of employees and key vendors, address the inevitable creditor
dissatisfaction with executive compensation, deal with members of
their professional team and work effectively as an executive whose
actions will be constantly scrutinized and second-guessed.  The
authors also provide the cautionary note that "executives
preparing to embark on a reorganization are usually too
preoccupied with business emergencies to think about the personal
toll that the process will exact."

One common flaw in books that try to be accessible while dealing
with technical topics is that they fall short in providing the
reader with a substantive understanding of the subject matter.
The Executive Guide to Corporate Bankruptcy avoids this pitfall.
The book's fourth and fifth chapters provide in-depth analysis of
the strategic decisions and steps that should be taken during the
restructuring process.  The authors explain the importance that
venue can have a case, the intricacies of first day motions and
how to prepare for confirmation.  There is a detailed discussion
of the sale of assets during the course of a Chapter 11
restructuring and the importance of making sure that major
constituencies are a part of the decision-making process.  They
also walk the reader through the specifics of a plan of a
reorganization, explaining the dynamics of the negotiation
process, especially how to understand and appreciate the needs of
your constituents and how to get a plan confirmed.

The icing on the cake for this book is the excellent appendix.
The final section of the book includes a user-friendly glossary of
commonly used bankruptcy terms and a reorganization timeline.  It
also includes sample documents such as debtor-in-possession (DIP)
financing agreements, operating reports, first day motions and
orders, management severance agreements, and more.  The summary of
management incentive stock plans implemented in recent
restructuring transactions is particularly informative.

This is a terrific book.  While geared to the non-lawyer
executive, it will also be a useful resource for any lawyer who
wants to gain practical familiarity with the bankruptcy process.
This should be a best seller in today's environment, though it may
need to be delivered to most executives in a brown paper wrapper.


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
Thursday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged.  Send announcements to

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  Go to 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.  Joy A. Agravante, Valerie U. Pascual, Marites O.
Claro, Rousel Elaine T. Fernandez, Frauline S. Abangan and Peter
A. Chapman, Editors.

Copyright 2010.  All rights reserved.  ISSN 1529-2754.

This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.

Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.

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of the same firm for the term of the initial subscription or
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contact Christopher Beard at 240/629-3300.

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