TCREUR_Public/110311.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, March 11, 2011, Vol. 12, No. 50

                            Headlines



A Z E R B A I J A N

* Moody's Gives Positive Outlook on Azerbaijan's 'Ba1' Bond Rating


F R A N C E

REXEL SA: Moody's Upgrades Corporate Family Rating to 'Ba3'


G E R M A N Y

COMMERZBANK AG: Preparing for EUR7-Bil. Capital Increase


G R E E C E

* Moody's Downgrades City of Athens' Issuer Ratings to 'B1'


I C E L A N D

KAUPTHING BANK: Tchenguiz Brothers Arrested in Collapse Probe


I R E L A N D

ANGLO IRISH: AIB May Face Paper Losses on Deposit Book Purchase
EIRCOM GROUP: Union Warns Members of Takeover if Rescue Plan Fails
IRISH NATIONWIDE: IL&P May Face Paper Losses on Deposit Purchase


N E T H E R L A N D S

NXP BV: Moody's Assigns 'B3' Rating to US$500 Mil. Senior Loan


R U S S I A

HOME CREDIT: S&P Affirms 'B+/B' Counterparty Credit Ratings


T U R K E Y

AKBANK TAS: Moody's Assigns 'Ba1' Senior Unsecured Debt Rating


U N I T E D   K I N G D O M

AEOLUS CDO: S&P Cuts Ratings on Class C Notes to 'CCC (sf)'
ARIA MANAGED: Moody's Lifts Rating on Class N-4U7 Notes to Caa2
BURBERRY GROUP: Former Headquarters Sold Out of Administration
EDWARDS LTD: Moody's Assigns 'B3' Rating to US$280-Mil. Loans
MODEC: In Talks to Rescue Firm After Administration, Founder Says

MOTO HOSPITALITY: S&P Assigns 'CCC+' Corporate Credit Rating
NORTHERN ROCK: Likely to Remain Lossmaking in 2011
POLYGON INVESTMENT: Completes Liquidation of Global Opport.  Fund
ROCK GROUP: Administrators Sell Haymarket Building in London
SARUM WHOLESALE: Goes Into Administration, Axes 23 Jobs

SKYKON CAMPBELTOWN: Two Firms Bid for Machrihanish Factory
SMITHS OF PETERHEAD: Stops Job Cuts, Gets Offers


X X X X X X X X

* EUROPE: Banks to Face More Difficult Stress Tests This Year
* BOOK REVIEW: Performance Evaluation of Hedge Funds




                            *********


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A Z E R B A I J A N
===================


* Moody's Gives Positive Outlook on Azerbaijan's 'Ba1' Bond Rating
------------------------------------------------------------------
Moody's Investors Service has changed the outlook on Azerbaijan's
Ba1 government bond ratings to positive from stable.
This rating action was taken as a result of (i) significant
improvements in the government's fiscal and external positions,
reflected in the rapid accumulation of financial assets in the
State Oil Fund of Azerbaijan ; and (ii) ongoing government efforts
to invest in the non-oil sector.

Concurrently, Moody's has changed the outlook on Azerbaijan's Baa2
foreign and A3 local-currency debt ceilings and its Ba2/Baa1
foreign and local-currency deposit ceilings to positive from
stable.

                        Ratings Rationale

Moody's improved outlook on Azerbaijan's government bond ratings
reflects significant improvements in the country's fiscal and
external accounts, which have strengthened due to the recovery in
oil prices in 2010 and the prudent management of the revenues from
those increases.  The government registered a fiscal surplus of
14% of GDP in its consolidated budget, while the current account
surplus was 30% of GDP in 2010.  Most of the surpluses were saved
in SOFAZ, whose assets grew by US$8 billion to US$23 billion
between the end of 2009 and the end of 2010, in addition to which
the Central Bank's foreign reserves increased by US$1.6 billion to
US$7 billion.

The government's investments in the non-oil sector are also
beginning to yield benefits.  Non-oil sector growth increased by
7.9% in 2010, compared with 3.2% in 2009.  The government actively
supports the private sector with its Enterprise Fund, which
invested US$125 million in over 100 companies in 2010.  However,
the outlook for non-oil growth in Azerbaijan will depend on
further progress towards liberalising the economic structure as
well as the extent of the government's investment capital.

            Potential Triggers for a Downgrade/Upgrade

Positive pressure would be exerted on Azerbaijan's sovereign bond
ratings if the government's attempts to diversify the economy away
from the energy sector leads to higher sustained non-oil sector
growth.  The ratings will also experience upward pressure if the
government and the central bank continue to build larger foreign-
currency reserves to cushion against any external or political
shocks and continue to invest those assets conservatively.

Downward rating pressure on Azerbaijan's sovereign bond ratings
might occur if there is significant deterioration in the domestic
or regional political environment, or a prolonged period of fiscal
deterioration.  However, Moody's considers a prolonged period of
fiscal deterioration as a low-probability event, given the
government's very high financial strength.  Similarly, the
probability of a domestic political shock is low, because
government revenues will likely remain high and social policies
redistributive.  Geopolitical risks related to the unresolved
conflict with Armenia over the Nagorno-Karabakh region are another
consideration that constrains the ratings.

Moody's most recent rating action on Azerbaijan was implemented on
June 19, 2009, when the rating agency changed the outlooks on the
country's sovereign bond ratings and on its local and foreign-
currency ceilings to stable from positive.


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F R A N C E
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REXEL SA: Moody's Upgrades Corporate Family Rating to 'Ba3'
-----------------------------------------------------------
Moody's Investors Service has upgraded Rexel SA's Corporate Family
Rating to Ba3 from B1 and Probability of Default Rating to Ba3
from B1.  Concurrently, Moody's upgraded to Ba3 from B1 the rating
on Rexel's EUR650 million senior unsecured Notes (due in 2016).
The short-term rating of the company's EUR500 million commercial
paper programme remains NP.  The outlook on all ratings is stable.

                        Ratings Rationale

"The upgrade to Ba3 reflects Moody's recognition of the company's
improved operating performance and solid cash generation resulting
in deleveraging throughout 2010", said Douglas Crawford, Moody's
lead analyst for Rexel."  The upgrade also assumes that the
company will maintain these current financial metrics."

The Ba3 CFR reflects Rexel's investment grade business risk
profile as a leading global distributor of low voltage electrical
products with a substantial revenue base.  The company's business
profile is further supported by strong market positions in various
European countries, with either number one or two market rankings
in most Western European and North American countries.

The ratings also reflect the company's high leverage, and
uncertainty about the pace at which credit metrics might improve
given the global macroeconomic uncertainties prevailing and the
late-cycle nature of the industry in which Rexel operates.
However, the rating also incorporates the positive steps taken by
Rexel to improve its margins, as evidenced in 2010 results; as
well as its debt reduction and the strong intention to reduce
leverage over the medium term.

In 2010, the company's reported revenue increased 6%, mainly as a
result of FX gains but also due to organic growth, which has
accelerated in all regions in 2H2010.  This, combined with
improved purchasing conditions in Europe and a better channel mix
in North America as well as significant cost-cutting translated
into a 31% increase in reported EBITA.  Moreover free cash flow as
reported by the company before interest and tax of EUR570 million
was higher than Moody's expected.  Net debt/EBITDA (as adjusted by
Moody's) fell from 5.3x to 4.4x and is now within the parameters
previously outlined to upgrade the rating.

Moody's expects that these positive trends will continue through
2011, leading to steady deleveraging through growth in EBITDA.
However, Moody's believes that free cash flow generation in 2011
will be lower than in 2010, mainly because of the resumption of
dividend payments as leverage is below restricted payment covenant
levels.  Moody's also anticipates that much of Rexel's free cash
flow may be applied to ongoing bolt-on M&A activity rather than
further debt reduction.

The stable outlook reflects Moody's expectations that the current
trends in Rexel's markets remain favorable and assumes that the
group will maintain adequate liquidity going forward, underpinned
by EUR685 million of undrawn credit facilities and EUR246 million
cash and equivalents on balance sheet net of overdrafts.  The
stable outlook also reflects Moody's expectation that the company
will refrain from any material share repurchases and/or
acquisition activity over the medium-term.

Positive rating pressure could develop if market conditions lead
to net leverage (as adjusted by Moody's) falling below 4x while
maintaining RCF/net debt well above 15%.  Negative rating pressure
could quickly materialize if net leverage (as adjusted by Moody's)
rises to over 4.5x or RCF/net debt falls towards 10%.  Also, a
large debt-financed acquisition or material share repurchases
could impact the company's rating given current macroeconomic
uncertainties.

Moody's assigned Rexel's ratings by evaluating factors that the
rating agency believes are relevant to the credit profile of the
issuer, such as: (i) the business risk and competitive position of
Rexel; (ii) the capital structure and financial risk profile of
the company; (iii) the projected performance of the company over
the short to medium term; and (iv) management's track record and
tolerance for risk.  Having compared Rexel's attributes with those
of other issuers both within and outside of its core industry,
Moody's believes the company's ratings to be comparable to those
of other issuers of similar credit risk.

Rexel is a leading global distributor of low voltage products.
For 2010, it reported total sales and EBITA of EUR11.9 billion and
EUR616 million respectively.  Although Rexel is listed, with a
market capitalization of EUR4.5 billion, about 72% is owned by a
group of private equity sponsors, predominantly Clayton Dubilier &
Rice, Eurazeo and Merrill Lynch Global Private Equity.  A
shareholders' agreement (that expires in 2012) allows these three
parties together to appoint eight members of Rexel's Supervisory
Board.


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G E R M A N Y
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COMMERZBANK AG: Preparing for EUR7-Bil. Capital Increase
--------------------------------------------------------
Bloomberg News, citing Financial Times Deutschland, reports that
Commerzbank AG is testing the market's appetite for a possible
capital increase of as much as EUR7 billion (US$9.7 billion) in
May or June to help repay government aid.

Separately, the lender said it sold EUR1.25 billion of
subordinated notes as it prepares for new capital rules, Bloomberg
relates.

As reported by the Troubled Company Reporter-Europe on Feb. 25,
2011, the Financial Times said Commerzbank received more than
EUR16 billion of hybrid capital from the government, which also
took a 25% equity stake in a 2009 bail-out in return for a further
EUR1.8 billion, according to the FT.  The bank, which has a market
capitalization of EUR8.3 billion, needed support after acquiring
troubled rival Dresdner Bank, the FT disclosed.

Headquartered in Frankfurt am Main, Germany, Commerzbank AG --
http://www.commerzbank.com/-- is the parent company of a
financial services group active around the world.  The group's
operating business is organized into six segments providing each
other with mutually beneficial synergies: Private and Business
Customers, Mittelstandsbank, Central and Eastern Europe,
Corporates & Markets, Commercial Real Estate and Public Finance
and Treasury.


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G R E E C E
===========


* Moody's Downgrades City of Athens' Issuer Ratings to 'B1'
-----------------------------------------------------------
Moody's Investors Service has downgraded the issuer rating of the
City of Athens by three notches to B1 from Ba1.  The rating action
concludes the review for downgrade initiated on 16 December 2010.
The rating outlook is now negative.

                        Ratings Rationale

The rating action on the City of Athens follows Moody's recent
downgrade of the Government of Greece to B1 from Ba1, with a
negative outlook.  Moreover, the rating action on Athens reflects
the ongoing uncertainties regarding the impact of local government
reforms on the city's finances and the challenges in adjusting
swiftly to what is likely to be reductions in government transfers
and service charges given a weakening economy.

"Greek municipalities, including the City of Athens, are unlikely
to possess sufficient financial flexibility to enable their credit
quality to be stronger than that of the sovereign," explained
Gianfilippo Carboni, an analyst within Moody's sub-sovereign
group.  The rating agency also recognizes Athens' reliance on
central government transfers in order to fund its operations and
capital investments, and the high level of integration of its
local economic base with that of the national economy.

Moody's will continue to monitor the impact of significant
national austerity measures on the city's finances.  This includes
those related to the Kallikrates reform, which intends to improve
local transparency and accountability, whilst introducing
significant changes in the funding and responsibilities of Greek
municipalities during a time of pronounced governmental austerity
and weakening economic conditions.  "In the near to medium term,
the scope of government reforms is likely to pose financial
challenges to Athens' administration.  The impact is difficult to
assess given uncertainties regarding the timing and the specific
mechanisms of its implementation," said Mr. Carboni.

The rating agency points out that the city is expected to record
worse-than-forecasted results in 2010, due to higher cuts in
government transfers and lower service charges.  Cost-cutting
measures have only partially compensated for falling revenue
during the year.  From 2011 onwards, the rating agency says that
the city's financial performance remains unpredictable and will
depend on the response of the new municipal government, elected in
January 2011, to ongoing challenges associated with the
implementation of local government reforms and its ability to
achieve structural savings to compensate for likely reductions in
revenues.

Moody's last rating action on the City of Athens was implemented
on Dec. 16, 2010, when the rating agency placed the Ba1 issuer
rating of the City of Athens on review for possible downgrade.

As the capital city of Greece, Athens plays a key role as the
financial, economic and political hub of the country.  It accounts
for almost 50% of national GDP and has a total population of
745,000.


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I C E L A N D
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KAUPTHING BANK: Tchenguiz Brothers Arrested in Collapse Probe
-------------------------------------------------------------
Lindsay Fortado and Omar Valdimarsson at Bloomberg News report
that U.K. real estate investors Vincent and Robert Tchenguiz were
among nine men arrested as part of a fraud investigation by
authorities in the U.K. and Iceland into the collapse of Kaupthing
Bank hf.

According to Bloomberg, the searches and arrests in London on
Tuesday involved 135 police officers and SFO investigators.
Bloomberg relates that the agency said investigators from the
Icelandic Special Prosecutor's Office are in the U.K. to assist
and members of the SFO are in Reykjavik to attend searches there.

The SFO is investigating Kaupthing's "decision-making processes,
which appear to have allowed substantial value to be extracted
from the bank in the weeks and days prior to its collapse," the
agency, as cited by Bloomberg, said in December 2009 when it
opened an investigation into possible fraud at the lender.
Kaupthing was the last of Iceland's three biggest banks to
collapse in 2008, Bloomberg recounts.

In 2008, lending to Robert Tchenguiz and "related parties"
corresponded to more than 25% of Kaupthing's equity, Bloomberg
says, citing Icelandic parliament-appointed Special Investigative
Commission.  Mr. Tchenguiz, Kaupthing's biggest retail borrower,
was also a board member in Exista hf, one of the former owners of
the bank, Bloomberg notes.

The SFO, Bloomberg says, is also probing whether Kaupthing made
misrepresentations to attract U.K. investors, particularly its
efforts to attract British investors to a high-yield deposit
account called Kaupthing Edge.  According to Bloomberg, the SFO
said that more than 30,000 people and companies in the U.K.
invested in Kaupthing Edge.  Iceland took control of Kaupthing
when the bank wasn't able to get enough short-term funding,
Bloomberg discloses.

                       About Kaupthing Bank

Headquartered in Reykjavik, Kaupthing Bank --
http://www.kaupthing.com/-- is Iceland's largest bank and among
the Nordic region's 10 largest banking groups.  With operations in
more than a dozen countries, the bank offers a range of services
including retail banking, corporate finance, asset management,
brokerage, private banking, treasury, and private wealth
management.  Kaupthing was created by the 2003 merger of
Bunadarbanki and Kaupthing Bank.  In October 2008, the Icelandic
government assumed control of Kaupthing Bank after taking similar
measures with rivals Landsbanki and Glitnir.

As reported by the Troubled Company Reporter-Europe, on Nov. 30,
2008, Olafur Gardasson, assistant for Kaupthing Bank hf., filed a
petition under Chapter 15 of title 11 of the United States Code in
the United States Bankruptcy Court for the Southern District of
New York commencing the Debtor's Chapter 15 case ancillary to the
Icelandic Proceeding and seeking recognition for the Icelandic
Proceeding as a "foreign main proceeding" under the Bankruptcy
Code and relief in aid of the Icelandic Proceeding.


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I R E L A N D
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ANGLO IRISH: AIB May Face Paper Losses on Deposit Book Purchase
---------------------------------------------------------------
John McManus at The Irish Times reports that AIB may already be
facing paper losses on the purchase of deposit books from Anglo
Irish Bank.

The deposits were backed by bonds issued by the National Asset
Management Agency (Nama), the price of which has been cut by the
European Central Bank (ECB) since the deposits transferred on Feb.
25, according to The Irish Times.

The Irish Times says there is no liquid market for the bonds,
which were issued to the banks in exchange for land and
development loans, but they can be used as collateral to borrow
funds from the ECB.  The ECB last week cut the value it puts on
the Nama bonds from 98.5% of face value to 95% of face value, The
Irish Times recounts.

AIB, which is owned by the State bought Nama bonds with a face
value of EUR12.2 billion from Anglo Irish which were valued at
EUR12 billion based on the then ECB valuation of 98.5%, The Irish
Times discloses.  They would be valued at EUR11.6 billion, a fall
of EUR400 million based on a valuation of 95%, The Irish Times
states.

Anglo Irish Bank Corp PLC -- http://www.angloirishbank.com/--
operates in three core areas: business lending, treasury and
private banking.  The Bank's non-retail business is made up of
more than 11,000 commercial depositors spanning commercial
entities, charities, public sector bodies, pension funds, credit
unions and other non-bank financial institutions.  The Company's
retail deposits comprise demand, notice and fixed term deposit
accounts from personal savers with maturities of up to two years.
Non-retail deposits are sourced from commercial entities,
charities, public sector bodies, pension funds, credit unions and
other non-bank financial institutions.  In addition, at Sept. 30,
2008, its non-retail deposits included deposits from Irish
Life Assurance plc.  The Private Bank offers tailored products and
solutions for high net worth clients and operates the Bank's
lending business in Ireland and the United Kingdom.

                        *     *     *

As reported by the Troubled Company Reporter-Europe on March 8,
2011, Moody's Investors Service downgraded the bank deposit
ratings of Anglo Irish Bank Corporation Limited and Irish
Nationwide Building Society to Caa1/Not-Prime, from Baa3/P-3 (on
review for possible downgrade), the same level as the unguaranteed
senior unsecured debt ratings of the two institutions.  The Caa1
long-term bank deposit ratings remain on review for possible
downgrade, in line with the review on the unguaranteed senior
unsecured debt ratings.  S&P said there is no rating impact on the
stand-alone bank financial strength ratings, on the senior
unsecured and subordinated debt ratings, and on the government-
guaranteed debt ratings.


EIRCOM GROUP: Union Warns Members of Takeover if Rescue Plan Fails
------------------------------------------------------------------
Ciaran Hancock at The Irish Times reports that Eircom workers were
told by their union leaders that the group could be taken over by
its lenders if they do not agree to implement the EUR92 million in
labor savings outlined last week in its rescue plan.

According to The Irish Times, the warning came from the
Communications Workers' Union (CWU), which represents the majority
of Eircom's 7,170-strong workforce.

The Irish Times relates that the CWU leadership said it had been
made clear to the union that Eircom's shareholders -- Singapore
STT and the employee Esot -- would only invest in the business if
they were confident of making a return on their money.  It has
been suggested that STT and the Esot might invest up to EUR300
million in Eircom as part of the restructuring of the business,
according to The Irish Times.  It was agreed in principle by
management and unions last week and involves achieving cost
savings of EUR92 million by 2013, The Irish Times recounts.

"In a nutshell, the choice for our members is to let the situation
continue to deteriorate and take our chances with the bankers and
the bondholders, or accept a difficult agreement that gives us
hope for the future," The Irish Times quotes the CWU as saying.

The CWU's national executive met on Tuesday with branch delegates
in the Gresham Hotel in Dublin to discuss the rescue plan, The
Irish Times recounts.  A series of information meetings for
members is to be held over the next week or so, The Irish Times
discloses.  It kicks off with a meeting in Croke Park on March 10
for Dublin-based members working at Eircom, The Irish Times says.
Meetings are also planned for Portlaoise, Waterford, Cork,
Limerick, Galway and Sligo, and conclude in Kells on March 16,
according to The Irish Times.

Ballot papers will be circulated on March 15 and workers will have
until March 30 to cast votes, The Irish Times says.  The CWU's
national executive has unanimously recommended the proposed
agreement, The Irish Times notes.

Eircom wants the restructuring measures fully implemented by
July 1, The Irish Times states.

As reported by the Troubled Company Reporter-Europe, The Irish
Times said that in November 2010, Eircom signaled that it could
breach its banking covenants within 12 months.  Ratings agency
Moody's suggested a breach could come by the end of June, The
Irish Times noted.

Headquartered in Dublin, Ireland, Eircom Group --
http://www.eircom.ie/-- is an Irish telecommunications company,
and former state-owned incumbent.  It is currently the largest
telecommunications operator in the Republic of Ireland and
operates primarily on the island of Ireland, with a point of
presence in Great Britain.


IRISH NATIONWIDE: IL&P May Face Paper Losses on Deposit Purchase
----------------------------------------------------------------
John McManus at The Irish Times reports that Irish Life &
Permanent may already be facing paper losses on the purchase of
deposit books from Irish Nationwide Building Society.

The deposits were backed by bonds issued by the National Asset
Management Agency (Nama), the price of which has been cut by the
European Central Bank (ECB) since the deposits transferred on Feb.
25, according to The Irish Times.

The Irish Times says there is no liquid market for the bonds,
which were issued to the banks in exchange for land and
development loans, but they can be used as collateral to borrow
funds from the ECB.  The ECB last week cut the value it puts on
the Nama bonds from 98.5% of face value to 95% of face value, The
Irish Times recounts.

IL&P bought Nama bonds and other bonds from Irish Nationwide with
a face value of EUR3.7 billion, The Irish Times discloses.
Applying the lower of the ECB valuations to the bonds would imply
a paper loss in the region of EUR125 million, The Irish Times
notes.

The price change could have similar consequences for the value of
the EUR11 billion of Nama bonds already held by AIB, which it
received as payment for approximately EUR20 billion of land and
development loans transferred to Nama, The Irish Times states.

Irish Nationwide Building Society, headquartered in Dublin, had
total assets of EUR14.4 billion at year-end 2008.

                          *     *     *

As reported by the Troubled Company Reporter-Europe on March 8,
2011, Moody's Investors Service downgraded the bank deposit
ratings of Anglo Irish Bank Corporation Limited and Irish
Nationwide Building Society to Caa1/Not-Prime, from Baa3/P-3 (on
review for possible downgrade), the same level as the unguaranteed
senior unsecured debt ratings of the two institutions.  The Caa1
long-term bank deposit ratings remain on review for possible
downgrade, in line with the review on the unguaranteed senior
unsecured debt ratings.  S&P said there is no rating impact on the
stand-alone bank financial strength ratings, on the senior
unsecured and subordinated debt ratings, and on the government-
guaranteed debt ratings.

Irish Nationwide Building society continues to carry Moody's
Investors Service's 'E' bank financial strength rating and 'C'
subordinated debt rating with negative outlook.

Irish Nationwide also carries Fitch's 'E' bank financial strength
rating and 'C' subordinated debt rating.  The individual rating
was upgraded from 'F' in September 2010.  Fitch said the
upgrade of INBS's Individual Rating to 'E' recognized the
government's injection of EUR2.7 billion capital into the society,
but also acknowledged that the society was still likely to require
further external support.


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N E T H E R L A N D S
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NXP BV: Moody's Assigns 'B3' Rating to US$500 Mil. Senior Loan
--------------------------------------------------------------
Moody's Investors Service has assigned a B3 (LGD4, 54%) rating to
the US$500 million senior secured credit facility due 2017 that
was signed on 4 March 2011 by NXP B.V. and NXP Funding LLC and is
guaranteed by NXP Semiconductors Netherlands B.V, NXP B.V. and NXP
Funding LLC.  The corporate family rating of NXP B.V. remains at
B3 with a stable outlook.  The credit facility will rank pari
passu with existing senior secured debt.

                        Ratings Rationale

NXP's corporate family rating of B3 reflects its highly levered
capital structure as a result of the initial LBO, debt maturities
looming in 2013 and a track record of volatile profit performance.
Moody's notes that the proceeds from the credit facility will be
largely used to refinance the outstanding debt with the same
ranking maturing in 2013 and 2014 and thus enhancing the maturity
profile of the company.

These factors are mitigated by good progress on management's
redesign program which should make the company more resilient to
demand volatility in future.  In recent months, the first benefits
from this program have enhanced the earnings and cash flow
improvements on the back of a recovering semiconductor industry.

Assignments:

Issuer: NXP B.V.

  -- US$500M Senior Secured Bank Credit Facility Mar 4, 2017,
     Assigned B3

  -- US$500M Senior Secured Bank Credit Facility Mar 4, 2017,
     Assigned a range of LGD4, 54 %

                What Could Change the Rating -- Up

Moody's would consider a further ratings upgrade if NXP was able
to establish a track record of material free cash flow generation
and sustain a gross debt/LTM EBITDA ratio below 4x (per LTM
09/2010: 4.9x).  Further measures to reduce debt and extend the
maturity profile would exert positive pressure on the ratings.

               What Could Change the Rating -- Down

Rating pressure would develop if NXP experienced a return to
significant annual cash burn or declining semiconductor volumes,
depressing its profitability such that its debt/EBITDA ratio rises
above 6x.

The last rating action on NXP was implemented on Nov. 25, 2010,
when Moody's upgraded NXP's corporate family rating to B3 from
Caa1 and changed the outlook to stable from positive.


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R U S S I A
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HOME CREDIT: S&P Affirms 'B+/B' Counterparty Credit Ratings
-----------------------------------------------------------
Standard & Poor's Ratings Services said it affirmed its 'B+/B'
long- and short-term counterparty credit ratings on Russia-based
Home Credit and Finance Bank LLC.  The outlook is stable.

"The ratings on HCFB continue to be constrained by the bank's
focus on the consumer finance market, which S&P regards as
inherently high risk, as well as its high reliance on wholesale
funding, and aggressive dividend policy," said Standard & Poor's
credit analyst Victor Nikolskiy.

S&P considers these negative factors to be partly offset by the
bank's adequate credit risk management, and still adequate
capitalization.

The ratings reflect HCFB's stand-alone credit profile and do not
include any uplift for extraordinary external support.  HCFB is
owned by PPF Group N.V.  (PPF; not rated), a private investment
conglomerate based in the Czech Republic.

S&P estimate that HCFB's risk-adjusted capital ratio--a Standard &
Poor's measure of capitalization--stood at 7.2% on Dec. 31, 2010.
S&P views this as only adequate.  In its calculation, S&P
subtracted RUR13.2 billion in dividends paid on March 5, 2011,
from the capital available at year-end 2010.

S&P also consider the bank's dividend policy to be aggressive,
given that it distributed almost 40% of the available capital on
Dec. 31, 2010, as dividends.  S&P understands that HCFB intends to
maintain somewhat higher debt levels than in previous years.

Despite improved credit market conditions and increasing deposits,
S&P believes HCFB's refinancing risk is high.  Debt repayments,
including put options, until the end of 2011 amount to RUB24
billion (US$850 million), which was about 35% of its liabilities
on Dec. 31, 2010.

A significant portion of dividend payments now stays with the bank
as a liability, so this dividend distribution does not create an
immediate call on liquidity.

"The stable outlook reflects the stabilizing operating conditions
in Russia, which S&P think have reduced pressures on the bank's
liquidity and asset quality," said Mr. Nikolskiy.

In addition, S&P expects a sustained level of adequate operating
profitability.

S&P could consider a positive rating action if HCFB successfully
and materially continues to improve its asset quality, strengthens
capitalization to what S&P regards as strong, and achieves a more
diversified funding profile together with reduced refinancing
risk.

S&P could lower the ratings if HCFB's funding and liquidity were
to weaken or if asset quality were to significantly deteriorate.


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T U R K E Y
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AKBANK TAS: Moody's Assigns 'Ba1' Senior Unsecured Debt Rating
--------------------------------------------------------------
Moody's Investors Service has assigned a definitive Ba1 foreign-
currency senior unsecured debt rating to the Eurobond issuance by
Akbank T.A.S.  The outlook on the rating is positive.

                        Ratings Rationale

The debt issuance is being offered under Rule 144A -- DTC,
Regulation S.  The terms and conditions of the notes include
(amongst other things) a negative pledge and a cross-default
clause.  The notes will be unconditional, unsubordinated and
unsecured obligations and will rank pari passu with all Akbank's
other senior unsecured obligations.  The rating of the notes is in
line with Akbank's senior unsecured foreign-currency debt rating.
Any subsequent foreign-currency senior unsecured bonds issued by
Akbank would also be rated Ba1.

Moody's foreign currency debt ratings are subject to the foreign
currency bond ceiling.  As a result, even though Akbank's global
local currency deposit rating of Baa1 is higher than the foreign
currency bond ceiling for Turkey, Akbank's foreign currency senior
unsecured debt rating is constrained by and thus equal to this
ceiling.

Moody's previous rating action on Akbank was implemented on
Feb. 22, 2011 when Moody's assigned a (P) Ba1 foreign-currency
senior unsecured debt rating with a positive outlook to Akbank.

Akbank is headquartered in Istanbul, Turkey, and at the end of
December 2010 had total assets of US$77.1 billion.


===========================
U N I T E D   K I N G D O M
===========================


AEOLUS CDO: S&P Cuts Ratings on Class C Notes to 'CCC (sf)'
-----------------------------------------------------------
Standard & Poor's Ratings Services lowered its credit ratings on
class A, B, and C notes in Aeolus CDO Ltd.'s Colonnade I
collateralized debt obligation transaction.  At the same time, S&P
affirmed its ratings on the class D and E notes.

The rating actions follow S&P's assessment of developments in the
transaction S&P has observed since its last review in May 2010.
These include deterioration in the credit quality of the
transaction's underlying portfolio and a continued decline in the
transaction's par value tests.

Colonnade I is a hybrid CDO of structured finance assets that
closed in September 2006.  The structure includes a super senior
credit default swap, whereby the issuer acts as credit protection
seller and Morgan Stanley Capital Services as credit protection
buyer.  The reference portfolio underlying the credit default swap
comprises mainly European subprime residential mortgage-backed
securities, European commercial mortgage-backed securities, and
corporate CDOs.  Aeolus CDO invested the issuance proceeds from
the sale of Colonnade I's notes in a 'AAAm' rated money market
fund.

S&P notes that there has been a default of two reference assets
with a total notional amount of EUR11.3 million (representing
about 3% of the current reference portfolio amount).  According to
S&P's understanding of the transaction documents, this allows the
credit protection buyer to call a credit event under the terms of
the swap.  From the information the trustee has provided to us, no
credit event has been called to date.

When a credit event is called, the issuer makes cash settlement
payments to the swap counterparty from amounts it holds in the
money market fund, thereby reducing the amounts ultimately
available to repay noteholders.

Besides the two defaulted assets, S&P notes that a further
EUR49.6 million of reference assets are currently rated within the
'CCC' rating category, according to S&P's analysis.  This
represents about 13.6% of the reference portfolio notional amount.

As per the latest available trustee report of December 2010, all
of the transaction's par value ratios have continued to decline.
For example, the senior par value test, which covers classes A and
B, has fallen to 95.96% from 98.76% between March and December
2010.

According to the transaction documents, a breach of the par value
ratio tests requires the portfolio administrator to use available
interest and principal proceeds--after payment of senior expenses
and interest on the class A and B notes--to reduce the size of the
liabilities in order of their seniority (starting with the super
senior swap).  As a result, the class C, D, and E notes continued
to defer their interest payments.

S&P also note that, according to the transaction documents, a
termination of the CDS may occur if the result of the class A par
value ratio, which is not published in the transaction reports,
falls to 100% or lower.  A termination of the CDS agreement in
turn constitutes a mandatory note redemption event, whereby
payments to the credit protection buyer will be made senior to
payments to the noteholders.  According to the information S&P has
received from the trustee, the result of this test is currently
102.4%.

As a result of these developments, in S&P's opinion the existing
ratings on the class A, B, and C notes are no longer commensurate
with the available credit enhancement, nor do they currently
reflect appropriately the possibility of a CDS termination and the
potential nonpayment that might follow a CDS termination.  S&P has
therefore lowered the ratings on these notes.  S&P is affirming
the ratings on the class C and D notes at 'CCC- (sf)' indicating
that, in S&P's view, these notes remain vulnerable to nonpayment.

                          Ratings List

                         Aeolus CDO Ltd.
     EUR126 Million Secured Credit-Linked Floating-Rate Notes
                          (Colonnade I)

                        Ratings Lowered

                               Rating
                               ------
              Class     To                 From
              -----     --                 ----
              A         B (sf)             BBB- (sf)
              B         B- (sf)            BB (sf)
              C         CCC (sf)           B (sf)

                        Ratings Affirmed

                       Class     Rating
                       -----     ------
                       D         CCC- (sf)
                       E         CCC- (sf)


ARIA MANAGED: Moody's Lifts Rating on Class N-4U7 Notes to Caa2
---------------------------------------------------------------
Moody's Investors Service has taken these rating actions on notes
issued by the Aria Managed CDO I vehicles, collateralized debt
obligation transactions referencing two managed portfolios of
corporate entities.

Issuer: ARIA MANAGED CDO I (Jersey)

  -- GBP200M P-2G7a Notes, Upgraded to A1 (sf); previously on Jul
     23, 2010 Upgraded to A3 (sf)

  -- US$17M A-1U7 Notes, Upgraded to A1 (sf); previously on Jul
     23, 2010 Upgraded to Baa1 (sf)

  -- US$85.4M B-1U7 Notes, Upgraded to Baa3 (sf); previously on
     Jul 23, 2010 Upgraded to B1 (sf)

  -- US$22.5M C-2U7 Notes, Upgraded to B1 (sf); previously on Jul
     23, 2010 Upgraded to Caa1 (sf)

  -- US$3M M-4U7 Notes, Upgraded to B1 (sf); previously on Jul 23,
     2010 Upgraded to Caa1 (sf)

  -- US$15M N-4U7 Notes, Upgraded to Caa2 (sf); previously on Mar
     25, 2009 Downgraded to Ca (sf)

Issuer: ARIA MANAGED CDO I (Cayman)

  -- EUR12.9M A-1E7K Notes, Upgraded to A1 (sf); previously on Jul
     23, 2010 Upgraded to Baa1 (sf)

  -- SwFr8.1M A-1C7 Notes, Upgraded to A1 (sf); previously on Jul
     23, 2010 Upgraded to Baa1 (sf)

  -- US$2M A-1U7 Notes, Upgraded to A1 (sf); previously on Jul 23,
     2010 Upgraded to Baa1 (sf)

  -- US$15.4M B-1U7 Notes, Upgraded to Baa3 (sf); previously on
     Jul 23, 2010 Upgraded to B1 (sf)

  -- SwFr42.9M B-1C7 Notes, Upgraded to Baa3 (sf); previously on
     Jul 23, 2010 Upgraded to B1 (sf)

  -- EUR18.6M B-1E7K Notes, Upgraded to Baa3 (sf); previously on
     Jul 23, 2010 Upgraded to B1 (sf)

  -- GBP0.4M B-1G7 Notes, Upgraded to Baa3 (sf); previously on Jul
     23, 2010 Upgraded to B1 (sf)

  -- SwFr7.4M C-1C7 Notes, Upgraded to Ba3 (sf); previously on Jul
     23, 2010 Upgraded to B3 (sf)

Issuer: ARIA MANAGED CDO I (Ireland)

  -- EUR12.9M A-1E7K Notes, Upgraded to A1 (sf); previously on Jul
     23, 2010 Upgraded to Baa1 (sf)

  -- SwFr8.1M A-1C7 Notes, Upgraded to A1 (sf); previously on Jul
     23, 2010 Upgraded to Baa1 (sf)

  -- GBP206.19M P-2G7 Notes, Upgraded to A1 (sf); previously on
     Jul 23, 2010 Upgraded to A3 (sf)

  -- SwFr42.9M B-1C7 Notes, Upgraded to Baa3 (sf); previously on
     Jul 23, 2010 Upgraded to B1 (sf)

  -- EUR18.6M B-1E7K Notes, Upgraded to Baa3 (sf); previously on
     Jul 23, 2010 Upgraded to B1 (sf)

  -- GBP0.4M B-1G7 Notes, Upgraded to Baa3 (sf); previously on Jul
     23, 2010 Upgraded to B1 (sf)

  -- US$2.5M B-2U7 Notes, Upgraded to Ba1 (sf); previously on Jul
     23, 2010 Upgraded to B1 (sf)

  -- SwFr7.4M C-1C7 Notes, Upgraded to Ba3 (sf); previously on Jul
     23, 2010 Upgraded to B3 (sf)

  -- US$2.5M C-2U7N Notes, Upgraded to B1 (sf); previously on Jul
     23, 2010 Upgraded to Caa1 (sf)

  -- US$10.5M C-1E7 Notes, Upgraded to B1 (sf); previously on Jul
     23, 2010 Upgraded to Caa1 (sf)

                        Ratings Rationale

Moody's explained that the rating actions taken are the result of
the improvement in the credit quality of the reference portfolio
and the shorter time to maturity (October 2011) which reduces the
credit risk exposure of the tranches.  The 10 year weighted
average rating factor of the first portfolio, adjusted with
forward looking measures, has improved from 859 to 815 since July
2010, equivalent to an average rating of the current portfolio of
Ba1.  The 10 year weighted average rating factor of the second
portfolio, adjusted with forward looking measures, has improved
from 826 to 783 since July 2010, equivalent to an average rating
of the current portfolio of Ba1.  The rated tranches are
referencing two portfolios: tranches B-2U7, C-1E7, C-2U7, C-2U7N
and M-4U7 reference the first portfolio and all other tranches are
referencing the second portfolio.  In both portfolios the Banking,
Automotive and Capital Equipment industry sectors are the most
represented, weighting 14.7%, 9.4% and 6.6% of the portfolio
notional in the first portfolio and 14.2%, 10.8% and 6.6% of the
portfolio notional in the second portfolio.

Moody's also performed sensitivity analysis consisting in modeling
Moody's market implied rating in place of the corporate
fundamental rating to derive the default probability of each
corporate name in the reference portfolio.  Moody's market implied
ratings are derived from observable CDS spread on each corporate
name and mapped to Moody's rating scale.  The gap between a Market
implied rating and a Moody's corporate fundamental rating is an
indicator of the extent of the divergence of credit view between
Moody's and the market on each referenced name in the CSO
portfolio.  Those runs generated results that were not more than 2
notches lower than the those modeled under the base case run.

Additionally Moody's performed a further sensitivity analysis by
defaulting all reference entities currently rated Caa1 and below
and it was concluded that rated tranches, except for the tranche
N-4U7, would be able to withstand losses and maintain a positive
subordination.  Those runs generated results that were not more
than 6 notches lower than those modeled under the base case run.

In addition to the quantitative factors that are explicitly
modeled, qualitative factors are part of rating committee
considerations.  These qualitative factors include the structural
protections in each transaction, the recent deal performance in
the current market environment, the legal environment, and
specific documentation features.  All information available to
rating committees, including macroeconomic forecasts, input from
other Moody's analytical groups, market factors, and judgments
regarding the nature and severity of credit stress on the
transactions, may influence the final rating decision.

Moody's analysis of corporate CSOs is subject to uncertainties,
the primary sources of which includes complexity, governance and
leverage.  Although the CDOROM model capture many of the dynamics
of the Corporate CSO structure, it remains a simplification of the
complex reality.  Of greatest concern are (a) variations over time
in default rates for instruments with a given rating, (b)
variations in recovery rates for instruments with particular
seniority/security characteristics and (c) uncertainty about the
default and recovery correlations characteristics of the reference
pool.  Similarly on the legal/structural side, the legal analysis
although typically based in part on opinions (and sometimes
interpretations) of legal experts at the time of issuance, is
still subject to potential changes in law, case law and the
interpretations of courts and (in some cases) regulatory
authorities.  Although the impact of these decisions is mitigated
by structural constraints, anticipating the quality of these
decisions necessarily introduces some level of uncertainty in
Moody's assumptions.  Given the tranched nature of Corporate CSO
liabilities, rating transitions in the reference pool may have
leveraged rating implications for the ratings of the Corporate CSO
liabilities, thus leading to a high degree of volatility.  All
else being equal, the volatility is likely to be higher for more
junior or thinner liabilities.  The base case scenario modeled
fits into the central macroeconomic scenario predicted by Moody's
of a sluggish recovery scenario of the corporate universe.  Should
macroeconomics conditions evolves towards a more severe scenario
such as a double dip recession, the CSO rating will likely be
downgraded to an extent depending on the expected severity of the
worsening conditions.


BURBERRY GROUP: Former Headquarters Sold Out of Administration
--------------------------------------------------------------
PropertyWeek reports that the Haymarket former headquarters of
Burberry Group plc has been sold by administrators for around
GBP20 million to Cheval Properties.

The report relates that the property was previously owned by a
joint venture between entrepreneur Paul Kemsley and HBOS, now part
of Lloyds Banking Group.

The joint venture was put into administration in 2008.  It is only
the second time the Grade II listed building has been sold in the
past 100 years, according to PropertyWeek.

"In an international real estate market starved of good quality
stock, the Haymarket building offers the rare combination of a
vacant freehold property benefiting from fantastic development
potential, located within the West End of London.  We believe the
sale reflects continued demand for quality assets within good
locations, in particular those which have potential for enhanced
value through redevelopment," PropertyWeek quotes Peter Spratt,
partner and joint administrator at PwC, as saying.

Jones Lang LaSalle was the selling agent, PropertyWeek adds.

Burberry Group plc -- http://www.burberryplc.com/-- is a holding
company.  It designs, sources, manufactures and distributes luxury
men's, women's and children's clothing and non-apparel accessories
globally through its own retail stores, concessions, online and to
wholesale customers and franchisees.  Burberry also licenses third
parties to manufacture and distribute products using the Burberry
trademarks.  The Company's non-apparel offerings include handbags,
soft accessories, such as scarves, small leather goods, shoes,
belts and jewellery.  As of March 31, 2009, its retail outlets
included 119 mainline stores, 253 concessions within department
stores and 47 outlets, and wholesale outlets included sales to
prestige department stores and specialty retailers worldwide, as
well as sales to its franchisees who operate 81 Burberry stores.
Its licensing included royalty income received from Burberry's
partners in Japan and from global licensees for fragrance,
eyewear, timepieces and children's wear.


EDWARDS LTD: Moody's Assigns 'B3' Rating to US$280-Mil. Loans
-------------------------------------------------------------
Moody's Investor's Service assigned a definitive B3 rating to the
US$280 million New First Lien Term Loans borrowed by Edwards
(Cayman Islands II) Ltd, Cayman Islands after review of the final
documentation.  At the same time the rating agency downgraded to
B3 from B2 the rating of the company's Existing Term Loans.  These
rating actions conclude the review for possible downgrade
initiated on 9 February.  The rating outlook for Edwards (Cayman
Islands II) Limited is stable.

Issuer: Edwards (Cayman Island II) Limited

  -- US$414.95M Senior Secured Bank Credit Facility, Downgraded to
     B3 from B2

  -- US$280M Senior Secured Bank Credit Facility, Assigned B3

  -- Outlook, Changed To Stable From Rating Under Review

                        Ratings Rationale

The B2 Corporate Family Rating reflects (i) Edwards Group's
leading market positions and strong competitive position, (ii)
continuous initiatives to innovate products and reduce costs
including the transition of most of the manufacturing operations
to low cost countries as well as (iii) Moody's expectation for a
sustainable improvement in key credit metrics during the economic
recovery despite the company's exposure to volatile end markets.
However, these factors are balanced by (i) the relatively low
product diversity, (ii) high dependency on cyclical swings, and
(iii) the shift in the company's financial policy towards more
shareholder orientation.

The B3 rating for the company's Term Loans reflects the structural
positioning of these instruments in the group's debt structure as
well as a material volume increase in this class of debt.  As a
result of the refinancing of the Second Lien debt by an increase
in (First Lien) Term Loans, the relative positioning of these
instruments is weakened since only GBP4 million lease rejection
claims have a weaker position in the waterfall, while the
superpriority revolver, trade claims and secured loans at the
operating entities in Korea and the Czech Republic are considered
to have a stronger position.

The stable outlook balances the positive trend in the underlying
operating performance with the negative effect resulting from the
change in financial policy.  In Moody's assessment, Edwards will
be able to keep a minimum cash cushion of US$100 million and
should be able to swiftly increase its cash position on the back
of a currently benign economic environment and as a result of
efficiency measures taken.  One important consideration in this
respect is the absence of any financial covenants in the legal
documentation of the credit facilities which provides the company
with flexibility to deal with cyclical swings.  With regard to the
revolver Moody's notes that this facility matures in May 2013 and
that a stable B2 Corporate Family Rating would require a timely
extension or replacement not less than 12 months before maturity.

Upside rating pressure could build again if the company is able to
(i) to rebuild a solid liquidity cushion sufficient to comfortably
cover cyclical swings in free cash flow generation as well as (ii)
sustain current profitability levels with reported operating
margins in the medium to high teens, which the group is expected
to achieve in 2011 supported by currently favorable industry
conditions and targeted growth initiatives and cost savings and
efficiency improvements resulting from its ongoing restructuring
program.  The latter should allow the group to further improve
cash generation and cash coverage ratios, as indicated by FFO /
Debt above 10% and a positive free cash flow supporting a
reduction in leverage.

Downward rating pressure would arise if (i) Edwards were unable to
sustain its current profitability metrics, as indicated by
reported operating profit margin; (ii) operating profit interest
coverage as reported failed to show a continuing upward slope from
the current level of 3.7x (October 2009 - September 2010) or (iii)
the group was unable to retain its cash position at a minimum
level of US$100 million.  Also, indications that leverage could
exceed 5.5x Net debt / EBITDA or interest cover fall materially
below 2x EBITA could trigger a downward migration.

Edwards Group Limited, headquartered in Crawley / United Kingdom,
formerly known as BOC Edwards, is a spin-off from Linde which sold
the company following the takeover of BOC in May 2007.  The
current major shareholders are CCMP Capital and Unitas Capital.
The company has a global leading position in the manufacturing of
highly engineered vacuum and abatement systems.  The company
produces over 5,000 products ranging from simple vacuum gauges to
complex vacuum solutions for silicon semiconductor and flat panel
display processing serving approximately 750 Semiconductor, 500
Emerging Technologies and 20,000 General Vacuum customers.  During
the first nine months of 2010 Edwards generated revenues of GBP464
million (approximately US$711 million) from continuing operations.
Edwards (Cayman Islands II) Ltd, Cayman Islands, is a sub-holding
of the group, indirectly 100 % owned by Edwards Group Limited.


MODEC: In Talks to Rescue Firm After Administration, Founder Says
-----------------------------------------------------------------
Conventry Observer reports that Modec founder Lord Jamie Borwick
said that talks were taking place to rescue the company after it
went into administration.  The report relates that Mr. Borwick
said he was hopeful a new buyer could be found and revealed
discussions with companies about a potential purchase were on-
going.

As reported in the Troubled Company Reporter-Europe on March 8,
2011, Birmingham Post said that Modec has fallen into
administration with the loss of 26 jobs.  The report related that
the firm has called in Zolfo Cooper after experiencing "severe
cashflow difficulties."  Modec had been in talks with its American
partner Navistar on a takeover deal, but the transaction fell
through around ten days ago leaving the firm with no option but to
call in the administrators, according to Birmingham Post.

Ryan Grant, a partner at Zolfo Cooper, said: "At present, we're
examining all possible options for the future of the business,"
according to PrintWeek.

Conventry Observer notes that Modec was still trading this week,
and Lord Borwick was bullish about the company's prospects despite
the economic climate, which he said had led businesses to become
"too cautious".

Headquartered in Coventry, Modec is a West Midlands electric
vehicle firm.  It employs 53 staff.


MOTO HOSPITALITY: S&P Assigns 'CCC+' Corporate Credit Rating
------------------------------------------------------------
Standard & Poor's Ratings Services said that it assigned its
'CCC+' corporate credit rating to U.K. motorway service area
operator Moto Hospitality Ltd.  At the same time, the rating was
placed on CreditWatch with positive implications.

In addition, S&P assigned its preliminary 'CCC+' issue rating to
the proposed GBP170 million second-lien notes to be issued by
subsidiary Moto Funding PLC.  The preliminary recovery rating on
the proposed notes is '6', indicating S&P's expectation of
negligible (0%-10%) recovery prospects in the event of a payment
default.

The preliminary issue and recovery ratings on the proposed bond
are based on preliminary information and are subject to the
successful issuance of this instrument and S&P's satisfactory
review of the final documentation.  In the event of any changes to
the amount, terms, or conditions of the bond issue, the issue and
recovery ratings may be subject to further review.

"The CreditWatch positive placement indicates the likelihood of us
raising the corporate credit rating to 'B' if the bond issuance is
successfully completed under the preliminary terms and conditions
that S&P has reviewed," said Standard & Poor's credit analyst Olli
Rouhiainen.  "To raise the ratings, S&P would also anticipate Moto
refinancing all existing bank debt with longer term maturities.
The refining process should be aided by the 30 million equity
injection by Moto's shareholders."

In S&P's view, if the pending refinancing is successful, it is
likely to improve Moto's debt maturity profile and liquidity
position.  This would lead us to raise the corporate credit rating
on the company to 'B'.  S&P aim to review the CreditWatch
placement on completion of the pending bond and loan issues or, if
these issues are delayed, over the next three months.  S&P could
take a negative rating action on Moto should the company be unable
to secure refinancing in the coming months due to the upcoming
maturities.  Currently, further positive rating actions appear
limited due to the high leverage.

Other than liquidity risks, declining consumer discretionary
spending, or a drop in operating margin due to cost pressures
constitutes a principal risk to the group's creditworthiness.  S&P
believes that an operating margin contraction of between 50 to 100
basis points over the short to medium term would likely jeopardize
the positive rating momentum that S&P currently associate with the
pending refinancing.  Similarly, a sales decline is likely to lead
to a review of the ratings.  This is because such events would
bring the coverage of cash interest by EBITDA to below 1.5x--a
level S&P considers appropriate for the 'B' rating.


NORTHERN ROCK: Likely to Remain Lossmaking in 2011
--------------------------------------------------
Patrick Jenkins and Mark Wembridge at The Financial Times report
that Northern Rock, the nationalized bank whose 2007 collapse
marked the start of the financial crisis in Britain, is likely to
remain lossmaking in 2011, potentially hampering efforts to sell
it back into the private sector.

According to the FT, the lender announced on Wednesday it made a
full-year pre-tax loss of GBP223.5 million, making a sale via a
stock market flotation particularly awkward.

The FT relates that Ron Sandler, the bank's executive chairman,
insisted a sale was still on the cards.  "Businesses are sold when
they are lossmaking," Mr. Sandler told the FT.  Morgan Stanley is
examining options for the privatization of Northern Rock, the FT
discloses.

The FT says the government will be hoping that Northern Rock,
which held GBP16.7 billion of retail deposits at the end of 2010,
could attract bids in the region of GBP1.4 billion, in line with
the taxpayer capital injected into it, though following the 2010
losses that equity is now less than GBP1.2 billion.

The bulk of the state assistance injected into Northern Rock --
set up with about GBP50 billion of legacy assets -- resides within
the bad bank, the FT notes.  Northern Rock's underlying business
suffered from its cautious balance sheet set-up, the FT recounts.
The bank that once thrived -- then failed -- as a result of
massive lending financed by wholesale borrowing is now entirely
dependent on customer deposits for its finances, the FT states.

                      About Northern Rock

Headquartered in Newcastle upon Tyne, England, Northern Rock plc
-- http://www.northernrock.co.uk/-- deals with mortgages, savings
accounts, loans and insurance.  The company also promotes secured
loans to its existing mortgage customers.  The company had more
than US$200 billion in assets at the end of June 2007.

                           *     *     *

As reported by the Troubled Company Reporter-Europe on Nov. 12,
2010, Standard & Poor's Ratings Services lowered its rating on the
GBP200 million 7.053% callable perpetual Tier One Notes issued by
Northern Rock (Asset Management) PLC (A/Stable/A-1) to 'C' from
'B'.


POLYGON INVESTMENT: Completes Liquidation of Global Opport.  Fund
-----------------------------------------------------------------
Reuters reports that Polygon Investment Partners LLP has completed
the liquidation of its Global Opportunities fund with a 72 cents
on the dollar offer to investors wanting to pull out.  Reuters
says the Global Opportunities Master fund, which tumbled 48% in
2008's market chaos, has slowly been winding down and returning
cash to investors as it sells off a rump of illiquid assets.

The pricing of the remaining illiquid assets, contained in a
recent letter to investors seen by Reuters, lets Polygon shut down
the fund, though investors have also been given the option of
continuing to invest in the assets via its Recovery fund.
Reuters, citing unnamed source familiar with the matter, relates
that more than half of investors whose investment guidelines don't
prevent them from investing in illiquid assets chose to roll over
their money into the Recovery fund.

Earlier this year Polygon, which managed $8.5 billion before
credit crisis losses helped push assets down as low as $3 billion,
hired its first ever chief executive, Reuters adds.

As reported in the Troubled Company Reporter-Europe on Oct. 11,
2010, Bloomberg News said Polygon Investment Partners LLP, run by
Reade Griffith and Paddy Dear, will return all investors' money in
its Global Opportunities fund by March 31.  Investors, including
UBS AG, dropped a petition that in August last year asked a Cayman
Islands court to appoint an independent liquidator for the fund,
Bloomberg said, citing an Oct. 4, 2011, letter signed by Messrs.
Griffith and Dear that was sent to clients.

The Polygon Global Opportunities Master Fund, which manage about
US$8 billion at its peak, has returned about 60% of its assets to
investors since being shut in late 2008, Bloomberg related.  It
lost almost half its assets as convertible bonds, loans and stocks
tumbled in the wake of Lehman Brothers Holdings Inc.'s bankruptcy,
Bloomberg disclosed.

According to Bloomberg, about half of the current US$1.2 billion
in the fund is in easier-to-sell assets that will be liquidated
between now and the end of the first quarter.  The remainder is in
more illiquid assets that will be sold by auction by the beginning
of 2011, according to the letter, Bloomberg notes.  Investors will
have the option of getting all their money back, or keeping their
stake in the harder-to-sell investments, which will be put into a
new fund managed by the Polygon team, Bloomberg states.

Polygon Investment Partners LLP is based in London.


ROCK GROUP: Administrators Sell Haymarket Building in London
------------------------------------------------------------
PropertyEU reports that the administrators of Rock Group Plc have
confirmed the sale of a Grade II listed building in Haymarket,
London to a client of Cheval Properties for an undisclosed figure.
The report relates that Paul Kemsley's Rock Group, which purchased
the building in 2007, was placed into administration in 2009.

"In an international real estate market starved of good quality
stock, the Haymarket building offers the rare combination of a
vacant freehold property benefiting from fantastic development
potential, located within the West End of London," PropertyEU
quotes Peter Spratt, partner and joint administrator at
PricewaterhouseCoopers, as saying.

Jones Lang LaSalle advised the seller, PropertyEU adds.

Headquartered in Warwick, England, The Rock Group Plc --
http://www.rockdirect.com/-- is manufacturer and retailer of high
performance laptop computers aimed at the gaming sector.  It has a
turnover of around GBP5 million and employs approximately 25
staff.


SARUM WHOLESALE: Goes Into Administration, Axes 23 Jobs
-------------------------------------------------------
DIY Week reports that Sarum Wholesale Hardware has gone into
administration, after trading at a loss for several months.  The
report relates that the business closed its doors on Tuesday,
March 1, and has made all 23 members of staff redundant.

Jon Mouland, Sarum Wholesale head of buying, explained that the
company simply couldn't get enough stock to generate the cash
needed to pay the overheads, according to DIY Week.   "Suppliers'
credit limits have been restricted, and our customers haven't been
paying us very quickly.  We've found the last six months very
difficult and we have been trading at a loss, so we decided to
shut the doors straight away on March 1, make everybody redundant
and sell off all the stock.  If we'd left it another six months
there might not have been anything left," DIY Week quotes Mr.
Mouland as saying.  Mr. Mouland said the decision to close was
made very quickly, to take advantage of the low amount currently
owed to creditors, the report adds.

DIY Week notes that Sarum Wholesale has appointed Philip Gorman of
Hazlewoods LLP in Gloucester as administrator.  The report notes
that all stock and property is to be sold, with creditors expected
to be paid in full.

The company has also employed a debt collecting agency to round up
any money currently owed, DIY Week says.

Mr. Mouland is now focused on selling the stock and paying
creditors and the phone lines at the company's office in Salisbury
are still up and running, the report adds.

Sarum Wholesale Hardware supply hardware/garden and DIY retailers
from its warehouse located in Downton, near Salisbury.


SKYKON CAMPBELTOWN: Two Firms Bid for Machrihanish Factory
----------------------------------------------------------
The Press and Journal reports that Scottish and Southern Energy
(SSE) and Marsh Wind Technology hope their bid to buy the Skykon
factory at Machrihanish, Campbeltown, which employs 130 people,
will be accepted in the next few weeks.

The joint venture, Wind Towers Ltd, has secured preferred bidder
status from administrators Andrew Davison and Colin Dempster of
Ernst and Young, according to The Press and Journal.  The report
relates that in addition to producing onshore wind turbine towers,
construction is nearly complete which will allow the plant to
build turbine towers for offshore windfarms.

This will enable Skykon to participate in the next phase of
offshore wind developments, the report notes.

Skykon Campbeltown makes wind turbine parts.

                             *     *     *

As reported in the Troubled Company Reporter-Latin America on
January 7, 2011, Skykon Campbeltown went into administration.  The
Press Association said that Skykon Campbeltown suffered when its
Denmark-based parent company Skykon suspended payments to
creditors in October.  Around 130 people work at Skykon's factory
in Machrihanish, Argyll, the report related.


SMITHS OF PETERHEAD: Stops Job Cuts, Gets Offers
------------------------------------------------
Stornoway Gazette reports that Smiths of Peterhead spokesman for
the administrators, Begbies Traynor, said that there have been no
more redundancies since Feb. 10 when nine were made redundant out
of a total of 49.

The unnamed spokesman said that there have been sufficient offers
of interest received for the business as a going concern to make
them confident that a sale will be concluded soon, according to
Stornoway Gazette.

As reported in the Troubled Company Reporter-Europe on Feb. 10,
2011, Business7 said that Smiths of Peterhead has been put into
administration after failing to settle a tax bill.  The company
has appointed Begbies Traynor to handle the process.  The business
was unable to agree to a repayment plan with Her Majesty's Revenue
and Customs for a debt of more than GBP120,000 which covered two
years of tax payments, according to Business7.

Smiths of Peterhead makes woolen fabric and knitwear yarns with
its client list including high end fashion houses such as Prada,
Gucci and Ralph Lauren.  The business was founded in by Thomas and
Joshua Smith and traded as Thomas Smith & Co until 2005.


===============
X X X X X X X X
===============


* EUROPE: Banks to Face More Difficult Stress Tests This Year
-------------------------------------------------------------
James Wilson at The Financial Times reports that European banks
are likely to need a core tier one capital ratio of 5% to pass
stress tests next month.

According to the FT, the ratio would be more difficult for banks
to achieve than the measure applied in a widely criticized stress
test exercise last year that failed to quell market fears about
the health of Europe's banks.

Core tier one capital is considered the best form of bank capital
to absorb potential losses and its ratio to a bank's risk-weighted
assets is one of the most important measures of an institution's
financial strength, the FT notes.

This year's tests may still be muddied because definitions of what
counts as core bank capital vary from country to country, the FT
states.  According to the FT, regulators have not yet decided how
to treat national differences, according to people familiar with
the discussions of the European Banking Authority, which will run
the tests.

A 5% threshold would be "a good prediction", a person familiar
with talks told the FT.

Some 88 banks across Europe face the tests as European authorities
attempt to show that most banks have enough capital while prodding
weaker banks to raise money, in the face of lingering market
doubts about how Europe is confronting its financial crisis, the
FT discloses.

Andrea Enria, the chairman of the EBA, on Wednesday defended the
rigor of this year's planned tests after draft documents sent to
banks in recent days showed that some parameters would be less
rigorous than in 2010, the FT relates.

The scenario was "more severe than last year," Mr. Enria, as cited
by the FT, said.  "You need to look at the whole package."
According to the FT, he said the EBA would set "a more stringent
capital benchmark".

Banks' test results will also face "peer review" by the EBA and
selected regulators before publication, the FT discloses.

The EBA said final scenarios facing banks would be published on
March 18, the FT notes.


* BOOK REVIEW: Performance Evaluation of Hedge Funds
----------------------------------------------------
Edited by Greg N. Gregoriou, Fabrice Rouah, and Komlan Sedzro
Publisher: Beard Books
Hardcover: 203 pages
Listprice: US$59.95
Review by Henry Berry

Hedge funds can be traced back to 1949 when Alfred Winslow Jones
formed the first one to "hedge" his investments in the stock
market by betting that some stocks would go up and others down.
However, it has only been within the past decade that hedge funds
have exploded in growth.  The rise of global markets and the
uncertainties that have arisen from the valuation of different
currencies have given a boost to hedge funds.  In 1998, there
were approximately 3,500 hedge funds, managing capital of about
US$150 billion.  By mid-2006, 9,000 hedge funds were managing
US$1.2 trillion in assets.

Despite their growing prominence in the investment community,
hedge funds are only vaguely understood by most people.
Performance Evaluation of Hedge Funds addresses this shortcoming.
The book describes the structure, workings, purpose, and goals of
hedge funds.  While hedge funds are loosely defined as "funds with
no rules," the editors define these funds more usefully as
"privately pooled investments, usually structured as a partnership
between the fund managers and the investors."  The authors then
expand upon this definition by explaining what sorts of
investments hedge funds are, the work of the managers, and the
reasons investors join a hedge fund and what they are looking for
in doing so.

For example, hedge funds are characterized as an "important avenue
for investors opting to diversify their traditional portfolios and
better control risk" -- an apt characterization considering their
tremendous growth over the last decade.  The qualifications to
join a hedge fund generally include a net worth in excess of
US$1 million; thus, funds are for high net-worth individuals and
institutional investors such as foundations, life insurance
companies, endowments, and investment banks.  However, there are
many individuals with net worths below US$1 million that take part
in hedge funds by pooling funds in financial entities that are
then eligible for a hedge fund.

This book discusses why hedge funds have become "notorious as
speculating vehicles," in part because of highly publicized
incidents, both pro and con.  For example, George Soros made
$1 billion in 1992 by betting against the British pound.
Conversely, the hedge fund Long-Term Capital Management (LTCP)
imploded in 1998, with losses totaling US$4.6 billion.
Nonetheless, these are the exceptions rather than the rule, and
the editors offer statistics, studies, and other research showing
that the "volatility of hedge funds is closer to that of bonds
than mutual funds or equities."

After clarifying what hedge funds are and are not, the book
explains how to analyze hedge fund performance and select a
successful hedge fund.  It is here that the book has its greatest
utility, and the text is supplemented with graphs, tables, and
formulas.

The analysis makes one thing clear: for some investors, hedge
funds are an investment worth considering.  Most have a
demonstrable record of investment performance and the risk is low,
contrary to common perception. Investors who have the necessary
capital to invest in a hedge fund or readers who aspire to join
that select club will want to absorb the research, information,
analyses, commentary, and guidance of this unique book.

Greg N. Gregoriou teaches at U. S. and Canadian universities and
does research for large corporations.  Fabrice Rouah also teaches
at the university level and does financial research.  Komlan
Sedzro is a professor of finance at the University of Quebec and
an advisor to the Montreal Derivatives Exchange.


                            *********

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
conferences@bankrupt.com

Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals.  All titles are
available at your local bookstore or through Amazon.com.  Go to
http://www.bankrupt.com/booksto order any title today.


                            *********


S U B S C R I P T I O N   I N F O R M A T I O N

Troubled Company Reporter-Europe is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA.
Valerie U. Pascual, Marites O. Claro, Rousel Elaine T. Fernandez,
Joy A. Agravante, Psyche A. Castillon, Julie Anne G. Lopez,
Ivy B. Magdadaro, Frauline S. Abangan and Peter A. Chapman,
Editors.

Copyright 2011.  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.

The TCR Europe subscription rate is US$625 per half-year,
delivered via e-mail.  Additional e-mail subscriptions for members
of the same firm for the term of the initial subscription or
balance thereof are US$25 each.  For subscription information,
contact Christopher Beard at 240/629-3300.


                 * * * End of Transmission * * *