/raid1/www/Hosts/bankrupt/TCREUR_Public/110706.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
Wednesday, July 6, 2011, Vol. 12, No. 132
Headlines
D E N M A R K
DLR KREDIT: Moody's Cuts Rating on Tier 1 Hybrid Rating to 'Ba1'
* DENMARK: May Broaden Terms of Insolvent Bank Merger Bill
G E R M A N Y
BAYERISCHE LANDESBANK: Moody's Retains 'Caa1/Caa2' Hybrid Ratings
DECO 17: Moody's Downgrades Rating on Class C Notes to 'B3'
IKB DEUTSCHE: Fitch Withdraws 'E' Individual Rating
* GERMANY: Prepares for Unlikely Greek Insolvency, Schaeuble Says
G R E E C E
EPIHIRO PLC: Moody's Downgrades Rating on Class A Notes to 'Ba3'
* GREECE: Debt Rollover Plan May Prompt Selective Default Rating
* GREECE: German Banks Agree to Debt Rollover Plan
I R E L A N D
ALLIED IRISH: Completes Acquisition of EBS Building Society
ALLIED IRISH: To Raise EUR5 Billion Capital from NPRFC
ALLIED IRISH: Has Settlement With Aurelius, Minister of Finance
ALLIED IRISH: DBRS Downgrades Subordinated Debt Rating to 'D'
ALLIED IRISH: Sells Canadian Operations to Raymond James Financial
ANGLO IRISH BANK: DBRS Downgrades Senior Debt Rating to 'CCC'
EATON VANCE: Moody's Lifts Ratings on Two Classes of Notes to 'B1'
VOICE PROVINCIAL: Dublin Court Bans Founder From Directorship
* IRELAND: Over 1,000 Firms Declared Insolvent in 1st Half of 2011
I T A L Y
BERICA 6: Fitch Puts 'BB+'-Rated Class C Notes on Watch Negative
SEAT PAGINE: Agrees Loan Contract Changes with Senior Creditor
K A Z A K H S T A N
KAZPOST JSC: S&P Affirms Long-term Issuer Credit Rating at 'BB'
N E T H E R L A N D S
GRESHAM CAPITAL: Moody's Upgrades Rating on Class D Notes to 'Ba1'
OPERA FINANCE: Fitch Cuts Rating on Two Classes of Notes to 'CC'
RBS CAPITAL: S&P Lowers Ratings on Hybrid Instruments to 'C'
P O L A N D
GETIN NOBLE: Fitch Says Parent's Division Won't Affect Ratings
TU EUROPA: Fitch Affirms IFS Rating at 'BB'; Outlook Stable
R U S S I A
EUROSIA DRILLING: Fitch Assigns Final 'BB' Rating to RUB5BB Bonds
OTP BANK: Moody's Upgrades BFSR to D-; Outlook Stable
S P A I N
BANKIA: Launches Deeply Discounted Stock Listing to Raise Funds
BBVA CONSUMO 2: Fitch Affirms Rating on Class C Notes at 'Bsf'
CAIXABANK - CEDULAS: Moody's Assigns Rating to Covered Bonds
SANTANDER FINANCIACION: S&P Cuts Rating on Class D Notes to 'D'
T U R K E Y
GLOBAL YATIRIM: Fitch Affirms 'B-' Issuer Default Ratings
U N I T E D K I N G D O M
ALPHA CAPITAL: Court Closes Six Unscrupulous Land Banking Firms
ASA GLOBAL: High Court Orders Closure of Six Land Banking Firms
COUNTYROUTE PLC: S&P Lowers Senior Secured Debt Rating to 'BB'
EMI GROUP: Rival May Be Next Owner
GREENACRE GLOBAL: Court Orders Closure of Six Land Banking Firms
HMV GROUP: Profits Down to GBP2.6 Million
HOMECALL PLUS: Wigan Entrepreneur Rescues Firm From Liquidation
LAPLAND NEW FOREST: Creditors Get Nothing Back From Park Collapse
NORTHERN ROCK: Paragon Joins Bidding Race
PERSEUS PLC: S&P Lowers Rating on Class D Notes to 'D'
PRINSTON ESTATES: Court Closes Six Unscrupulous Land Banking Firms
RAINFORD GOLF: Enters Into Company Voluntary Arrangement
RANK GROUP: S&P Puts 'B+' Long-term CCR on Watch Developing
SESSIONS OF YORK: Paragon Print Set to Leave York After Buyout
STOWFORD PLACE: High Court Orders Closure of Land Banking Firms
TALENTNATION PLC: Appeals Provisional Liquidation Decision
TENDERLEAN LIMITED: Goes Into Administration, Cuts 40 Jobs
TJ HUGHES: 400+ Midland Workers Faces Race to Save Jobs
VINCI TRADING: Court Orders Closure of Six Land Banking Firms
* UK: Suppliers Need Protection vs. Retailers in Administration
* UK: Landlords to Lose Nearly GBP400 Million as Retailers Fall
* UK: More Leading High-Street Retailers Set to Fail, R3 Says
X X X X X X X X
* EUROPE: One in Six Banks to Fail Stress Test
*********
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D E N M A R K
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DLR KREDIT: Moody's Cuts Rating on Tier 1 Hybrid Rating to 'Ba1'
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Moody's Investors Service has downgraded DLR Kredit A/S's issuer
rating by one notch to Baa1 from A3 and the Tier 1 hybrid rating
to Ba1(hyb) from Baa3(hyb), following the rating agency's
assessment of weakened financial strength of DLR's regional and
local owner banks. The outlook on both ratings is negative.
Note that this press release does not deal with the possible
implications for DLR's mortgage and covered bond ratings, which
are addressed in a separate press release.
RATINGS RATIONALE
The rating actions primarily reflect Moody's assessment of the
weakened financial strength of DLR's approximately 90 regional and
local owner banks, which originate DLR's loans and provide asset-
quality guarantees covering over 90% of DLR's loan book.
To date, five of DLR's owner banks have failed and been taken over
by the Danish Financial Stability company (the latest, Fjordbank
Mors, was resolved under Bank Package III). In Moody's opinion,
the protracted economic downturn (Denmark re-entered recession in
Q1 2011) has weakened the financial strength of DLR's owners and
their ability to honor their guarantees, if needed.
The rating action also reflects Moody's concerns that, given these
pressures and wider refinancing pressures on the Danish financial
sector, the institution may be unable to refinance DKK7.5 billion
of maturing government guaranteed debt in 2012 and 2013 other than
at significantly elevated interest rates. Over 2012 and 2013,
Danish financial institutions have to refinance in aggregate
around DKK160 billion of government-guaranteed debt, which may
result in overcrowding of the Danish debt capital market and, in
turn, significantly increased funding costs and risks across the
financial sector. This would exert further pressure on DLR's
already modest profitability.
The negative outlook on the issuer rating reflects Moody's
concerns that the owner banks' credit strength will weaken further
in the coming 1-2 years as well as the likely ongoing funding
pressures at the institution.
Although it remains relatively low, DLR's problem loan ratio
(defined as the share of gross loans subject to individual
impairment) deteriorated to 1.1% at year-end 2010 from 0.4% in
2007. Moody's expects further deterioration as Moody's
expectations for the performance of Danish property prices and
agriculture -- specifically pig meat production, which constitutes
19% of DLR's loan portfolio -- continue to be negative. Many of
DLR's agricultural clients receive additional finance from the
banking sector. As specifically smaller banks continue to be in
distress, Moody's expects this will negatively impact these
clients' financial situation, and will therefore over time put
further pressure on DLR's asset quality.
Moody's positively notes that the Danish mortgage bond market
remains largely unaffected by the economic downturn allowing
Danish mortgage credit institutions to issue mortgage bonds
continuously in the market.
However, further pressure on the already modest profitability
margins of the Danish mortgage sector, including that of DLR, can
derive from increases in the need for over-collateralization
funded at elevated interest rates if property prices decrease,
which Moody's considers more probable as interest rates increase
going forward. This is because the Danish mortgage sector has
become increasingly reliant on newer style covered bonds (SDOs &
SDROs). These bonds require that loan-to-value (LTV) ratio limits
are maintained for the lifetime of the loan, as opposed to
traditional mortgage bonds (ROs) where the LTV ratio limit only
needs to be maintained at the point of origination.
PREVIOUS RATING ACTION & METHODOLOGIES USED
The principal methodologies used in rating DLR Kredit A/S are
"Moody's Approach to Rating Financial Entities Specialised in
Issuing Covered Bonds", and "Analysing the Credit Risks of Finance
Companies".
Headquartered in Copenhagen, Denmark, DLR Kredit reported total
assets of DKK 137billion (EUR18 billion) at end-March 2011.
* DENMARK: May Broaden Terms of Insolvent Bank Merger Bill
----------------------------------------------------------
Tasneem Brogger at Bloomberg News, citing news service
FinansWatch, reports that Denmark may broaden the terms of a bill
designed to encourage healthy banks to purchase lenders facing
insolvency.
According to Bloomberg, Economy Minister Brian Mikkelsen, as cited
by FinansWatch, said the government wants a more "flexible" bill
after it was unable to find buyers for Fjordbank Mors A/S before
the bank sought resolution.
Denmark this year introduced a bill allowing lenders to tap the
Depositor Guarantee Scheme for funds to encourage consolidation in
the country's financial industry, Bloomberg recounts.
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G E R M A N Y
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BAYERISCHE LANDESBANK: Moody's Retains 'Caa1/Caa2' Hybrid Ratings
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Moody's Investors Service has initiated, or continued, reviews for
downgrade on 12 German banks to reflect (i) its concerns that the
relatively high systemic support assumptions factored into the
long-term debt ratings of Germany's public-sector banks may be
challenged in the context of weakening political will to support
bank bail outs; and (ii) to a lesser extent, Moody's observation
that some of Germany's savings banks have been reluctant to
support their larger Landesbanken, which in turn exerts pressure
on current cooperative support assumptions:
- The senior debt and deposit ratings of 10 public-sector banks
and the Prime-1 short-term ratings of four of those banks were
placed on review for downgrade.
- The senior debt and deposit ratings of WestLB were placed on
review direction uncertain.
- The review for possible downgrade of the senior debt and deposit
ratings of Bayerische Landesbank, initiated on March 25, 2011,
was continued.
- Additionally, the senior subordinated debt ratings of seven of
the banks and the hybrid security ratings of three of the banks
were placed on review for downgrade. In one case, the senior
subordinated debt rating was placed on review for upgrade and
for one bank the senior subordinated debt rating was affirmed.
Looked at together, systemic, cooperative and regional government
support assumptions factored into long-term debt ratings currently
result in a high six notches of rating uplift (on average) from
the standalone financial strength ratings of German Landesbanken.
The rating agency expects that in most cases the long-term debt
ratings could be lowered by one or two notches; three-notch
downgrades are less likely.
The group of 12 banks affected by today's rating reviews comprises
all of the nine German Landesbanken, two subsidiaries of
Norddeutsche Landesbank Girozentrale (NORD/LB) and DekaBank
Deutsche Girozentrale (DekaBank). The review for downgrade of the
Prime-1 short-term ratings affects BayernLB, HSH Nordbank (HSH),
Landesbank Saar (SaarLB) and WestLB, and is driven by the
possibility that these banks' long-term senior debt and deposit
ratings might be downgraded to or below the A3 level. Accordingly,
the revised ratings might become more compatible with Prime-2
rather than Prime-1 ratings. At the same time, the rating agency
affirmed the Prime-1 short-term ratings of the other eight banks
that are subject to the review.
The ratings of grandfathered debt and ratings backed by the
Federal Republic of Germany (Aaa stable) remain unaffected.
RATINGS RATIONALE
"The relatively high systemic support assumptions factored into
the long-term debt ratings of Germany's public-sector banks are
increasingly challenged by the weakening political will to support
bank bail outs," says Katharina Barten, a Moody's Vice President
and Senior Credit Officer. The rating agency is also concerned
that continued difficulties of several Landesbanken to obtain
approval from the European Commission (EC) for state aid raises
questions about the likelihood of the viability of future support.
In addition to a reassessment of systemic support, this review
will incorporate a reassessment of the probabilities for
cooperative and regional government support that also benefits
these banks' long-term debt ratings. The rating agency has
observed in several recent cases reluctance of Germany's savings
banks to support their larger Landesbanken which raises questions
about Moody's current cooperative support assumptions. Taken
together, support assumptions factored into long-term debt ratings
result in a high six notches of rating uplift (on average) from
the standalone financial strength ratings.
For the reassessment of future systemic support, Moody's will
factor in (i) a bank's size and interconnectedness; (ii) its
franchise value and viability of the business model and, in that
context, (iii) its assessment of the likelihood of a bank
receiving approval for state aid from the EC. For the reassessment
of cooperative support, Moody's will take into account the track
record of support from regional savings banks and the materiality
of the ownership stakes of the savings banks in the respective
Landesbanken. In Moody's view, mainly those banks that are fully
owned by the Sparkassen-Finanzgruppe ("S-Finanzgruppe", C+/A2
stable, Aa2 stable) will continue to benefit from a very high
probability of cooperative support. Moody's considers that the
willingness of regional governments to support their Landesbanken
is less questionable; however, some federal states might face
rising pressure to pursue a focused path of austerity. In these
cases, those regional governments' support capacities may be
limited and Moody's may therefore revise the respective current
support assumptions.
BANKS AFFECTED
A. BANKS THAT REQUIRED SUPPORT -- under more rating pressure than
others
For the four Landesbanken that needed support during the crisis
(BayernLB, HSH, Landesbank Baden-Wuerttemberg (LBBW) and WestLB),
Moody's takes the view that -- partly because they have been
supported once -- these banks would face major obstacles from the
European Commission (EC), if they once more require approval for
(renewed) state aid. The difficulty of the three pending state-aid
cases passing the Commission's stringent requirements plays an
increasing role in how the agency assesses future systemic and
regional government support. For these four banks, the level of
cooperative support that can be expected in the future will also
be subject to a reassessment, which may have an impact on the
final rating outcome.
As a result of these considerations, the ratings of this group of
banks will likely be subject to a more far-reaching revision of
support probabilities, which may result in downgrades of more than
one notch. That said, downgrades by more than two notches (if any)
will be the exception.
It should be noted that the review of WestLB's long-term debt
ratings, for which the direction of the review is uncertain, is
unique in so far as Moody's will take into account (i) the limited
lifetime of the bank (since it is being unwound); and (ii) the
potential that senior debt holders may benefit from credit
enhancement. As announced by the bank on June 24, 2011, this may
be achieved through a transfer of some of WestLB's assets and
liabilities into either a newly created bank, or the asset
unwinding vehicle, EAA Erste Abwicklungsanstalt (Aa1, stable). The
transition risk for WestLB's ratings, in either direction, remains
high.
B. SMALLER INSTITUTIONS -- less systemically important, therefore
under high rating pressure
Moody's considers the smaller institutions in the group of public-
sector banks -- such as BremerLB, Deutsche Hypothekenbank AG,
NordLB Lux and SaarLB -- to be less systemically important than
others. Although they would likely still receive support from
their public-sector owners and/or from their parent bank (as
applicable), Moody's considers the probability of them receiving
systemic support to be less likely. In some cases, the austerity
pressure faced by the respective stake-holding federal states may
also limit the regional government support that can be expected,
going forward.
As a result of these considerations, this group of banks is
subject to revisions to support probabilities that may result in
downgrades of more than one notch. Downgrades by more than two
notches are less likely.
C. LARGER BANKS THAT DID NOT REQUIRE SUPPORT -- facing less rating
pressure
The larger banks that did not require outside assistance during
the crisis -- DekaBank, Helaba, LB Berlin and Nord/LB -- are
somewhat more robust and, at the same time, appear to be more
reliably supported than others by their public-sector owners.
Additionally, Moody's considers these four banks to be more firmly
embedded in the S-Finanzgruppe than several other members.
That said, Moody's takes the view that weakening systemic support
affects all German public-sector banks and the review will
therefore focus on the likelihood of systemic support for these
four banks. As a result, this group faces less rating pressure
than other Landesbanken, and downgrades exceeding one notch are
therefore less likely.
STANDALONE FINANCIAL STRENGTH RATINGS
STANDALONE FINANCIAL STRENGTH RATINGS
During the review period, Moody's plans to revisit those
standalone financial strength ratings that carry a negative
outlook or, in one case, a developing outlook. The banks affected
are HSH (A3 negative, E+/B1 developing), LBBW (Aa2 negative, C-
/Baa2 negative), NORD/LB (Aa2 negative, C-/Baa1 negative),
Deutsche Hypothekenbank AG (A1 negative, D+/Ba1 negative), and
BremerLB (Aa2 negative, C/A3 negative). Any repositioning or
affirmation of these ratings may be communicated during the review
process.
LIST OF AFFECTED BANKS AND RATINGS
Bayerische Landesbank
- A1 senior debt, deposit and issuer ratings: review for downgrade
initiated on March 25, 2011 extended
- Prime-1 short-term rating: on review for downgrade
- Baa3 senior subordinated debt rating: on review for downgrade
- Caa1(hyb)/Caa2(hyb) hybrid ratings: unaffected
Bremer Landesbank Kreditanstalt Oldenburg GZ
- Aa2 senior debt, deposit and issuer ratings: on review for
downgrade
- Prime-1 short-term rating: affirmed
- A3 senior subordinated debt rating: on review for downgrade
DekaBank Deutsche Girozentrale
- Aa2 senior debt and deposit ratings: on review for downgrade
- Prime-1 short-term rating: affirmed
- A3 senior subordinated debt rating: affirmed
Deutsche Hypothekenbank AG
- A1 senior debt and deposit ratings: on review for downgrade
- Prime-1 short-term rating: affirmed
- Baa1 senior subordinated debt rating: on review for downgrade
- Baa3(hyb) hybrid rating: on review for downgrade
HSH Nordbank
- A3 senior debt, deposit and issuer ratings: on review for
downgrade
- Prime-1 short-term rating: on review for downgrade
- Ba3 senior subordinated debt rating: on review for downgrade
- Caa1(hyb) hybrid rating: unaffected
Landesbank Baden-Wuerttemberg
- Aa2 senior debt and deposit ratings: on review for downgrade
- Prime-1 short-term rating: affirmed
- Baa1 senior subordinated debt rating: on review for downgrade
- Caa1(hyb) hybrid rating: unaffected
Landesbank Berlin AG
- A1 senior debt, deposit and issuer ratings: on review for
downgrade
- Prime-1 short-term rating: affirmed
- Baa2 senior subordinated debt rating: on review for upgrade
Landesbank Hessen-Thueringen GZ
- Aa2 senior debt, deposit and issuer ratings: on review for
downgrade
- Prime-1 short-term rating: affirmed
- Baa1 senior subordinated debt rating: on review for downgrade
- Baa2(hyb)/Ba1(hyb) ratings for Upper Tier 2/ Tier 1 hybrid
instruments: on review for downgrade
Landesbank Saar
- A1 senior debt and deposit ratings: on review for downgrade
- Prime-1 short-term rating: on review for downgrade
Norddeutsche Landesbank Girozentrale
- Aa2 senior debt, deposit and issuer ratings: on review for
downgrade
- Prime-1 short-term rating: affirmed
- A3 senior subordinated debt rating: on review for downgrade
- Baa2(hyb) rating for Tier 1 hybrid instruments: on review for
downgrade
Norddeutsche Landesbank Luxembourg S.A.
- Aa3 senior debt and deposit ratings: on review for downgrade
- Prime-1 short-term rating: affirmed
WestLB
- A3 senior debt and deposit ratings: on review, direction
uncertain
- Prime-1 short-term rating: on review for downgrade
- B3(hyb)/Caa1(hyb) ratings for Upper Tier 2/ Tier 1 hybrid
instruments: unaffected
PREVIOUS RATING ACTIONS AND PRINCIPAL METHODOLOGIES
The principal methodologies used were "Bank Financial Strength
Ratings: Global Methodology" published in February 2007, and
"Incorporation of Joint-Default Analysis into Moody's Bank
Ratings: A Refined Methodology", published in March 2007.
DECO 17: Moody's Downgrades Rating on Class C Notes to 'B3'
-----------------------------------------------------------
Moody's Investors Service has taken rating action on these classes
of Notes issued by Deco 17 -- Pan Europe 7 Limited (amounts
reflect initial outstanding):
-- EUR104.6M Class C Notes, Downgraded to B3 (sf); previously
on Dec 7, 2009 Downgraded to Ba3 (sf)
At the same time, the ratings of these classes were affirmed:
-- EUR750M Class A1 Notes, Affirmed at Aaa (sf); previously on
Dec 21, 2007 Assigned Aaa (sf)
-- EUR212M Class A2 Notes, Affirmed at Aa3 (sf); previously on
Dec 7, 2009 Downgraded to Aa3 (sf)
-- EUR88M Class B Notes, Affirmed at Baa2 (sf); previously on
Dec 7, 2009 Downgraded to Baa2 (sf)
Moody's does not rate the Class X, D, E, F, G and V Notes issued
by Deco 17 -- Pan Europe 7 Limited. The rating action takes into
account Moody's updated central scenarios as described in Moody's
Special Report "EMEA CMBS: 2011 Central Scenarios".
RATINGS RATIONALE
The key parameters in Moody's analysis are the default probability
of the securitized loans (both during the term and at maturity) as
well as Moody's value assessment for the properties securing these
loans. Moody's derives from those parameters a loss expectation
for the securitized pool. Based on Moody's revised assessment of
the parameters, the loss expectation for the pool has increased
since the last review in December 2009.
The rating downgrade of the Class C Notes is mainly due to (i)
Moody's re-assessment of the refinancing risk of the loans; and
(ii) a review of the expected property values which back the loans
in the pool.
The rating affirmation of the Class A1, A2 and B Notes is driven
by (i) their current credit enhancement levels and (ii) the
continued good performance of the top three (multi-family) loans
(54% of the current pool balance).
In Moody's view the re-assessment is justified by (i) the
continuing upward yield pressure for average/ secondary properties
in the German market, (ii) the dormant refinancing market,
especially for highly leveraged properties, and (iii) existing
significant uncertainty with respect to the path and timing for a
recovery of the lending market.
Moody's analysis reflects a forward-looking view of the likely
range of collateral performance over the medium term. From time to
time, Moody's may, if warranted, change these expectations.
Performance that falls outside an acceptable range of the key
parameters may indicate that the collateral's credit quality is
stronger or weaker than Moody's had anticipated during the current
review. Even so, deviation from the expected range will not
necessarily result in a rating action. There may be mitigating or
offsetting factors to an improvement or decline in collateral
performance, such as increased subordination levels due to
amortization and loan re- prepayments or a decline in
subordination due to realized losses.
Primary sources of assumption uncertainty are the current stressed
macro-economic environment and continued weakness in the
occupational and lending markets. Moody's anticipates (i) delayed
recovery in the lending market persisting through 2012, while
remaining subject to strict underwriting criteria and heavily
dependent on the underlying property quality, (ii) values will
overall stabilize but with a strong differentiation between prime
and secondary properties, and (iii) occupational markets will
remain under pressure in the short term and will only slowly
recover in the medium term in line with the anticipated economic
recovery. Overall, Moody's central global scenario remains
'hooked-shaped' for 2011; Moody's expects sluggish recovery in
most of the world's largest economies, returning to trend growth
rate with elevated fiscal deficits and persistent unemployment
levels.
MOODY'S PORTFOLIO ANALYSIS
Since closing of the transaction, minor (partial) prepayments
occurred (1% of the initial pool balance) due to (i) asset
disposals in the case of three loans (WGN MF, WBN MF and NILEG
MF), (ii) loan restructuring in the case of one loan (Elbblick
Loan), (iii) exercising of the annual voluntary prepayment options
in the case of the LWB Loan; and (iv) repayment at maturity of the
Allokton Loan (0.5% of the initial pool balance). Together with
the limited scheduled and soft amortization on the loans, the
prepayment proceeds have only marginally increased the
subordination available to Moody's rated classes. The loans are
secured against first ranking mortgages secured by properties all
located in Germany. The main property types are multi-family (76%
by value) and retail (16% by value). At closing, the mortgages
associated with the three multifamily loans (WGN MF, WBN MF and
NILEG MF) were only partially registered. According to the
Servicer, the loans are now compliant with the respective facility
agreements. Moody's took this into account in its recovery costs
assumptions in case of a work-out scenario.
As per the latest available investor report from April 2011, all
of the loans in the portfolio are performing. However, one loan,
the Elbblick Loan (6.3% of the current portfolio) secured by a
portfolio of 58 mainly retail properties in Germany remains on the
servicer's watchlist due to a continued breach of its ICR
covenant. According to the Servicer, the cash flow reported by the
borrower has materially reduced between Q1 2009 and Q1 2011,
leading to a 12-month projected whole loan ICR of 0.92x and A-loan
ICR of 1.20x. Furthermore, due to a revaluation in October 2010
the reported underwriter's (U/W) loan-to-value ratio (LTV)
increased to 134.5% as per latest IPD from 84% since closing. As a
result, an (EUR59.6 million) appraisal reduction occurred. In
Moody's opinion, this loan has a very high probability of default
during the remaining term until loan maturity in May 2013.
The majority of the current pool balance consist of loans secured
by multi-family loans (67% of the current pool balance). The top
three (multi-family) loans (LWB, WGN MF and WBN MF) have not been
revalued since closing and as per April IPD have a reported U/W
whole LTV including prior ranks of 48.6%, 76.1% and 79.9%,
respectively. Overall, the net cash flows were relatively stable
compared to Moody's previous review in 2009. It is noteworthy that
for most of these loans the vacancy levels increased over the same
period. However, these loans continued to perform in line with
expectation.
Based on its property value assessment, Moody's estimates that the
pool's current weighted-average (WA) securitized LTV ratio is
approximately 88% compared to the reported U/W LTV of 70.5%. Based
on Moody's current market values, the LTVs for the securitized
loans range between 125% (Mayne Loan) and 53% (LWB Loan). As six
loans (WGN MF, WBN MF, Mayne, AFI, Elbblick and NILEG MF) have
additional debt in the form of B-notes (amounting to EUR216.8
million on aggregate) and three loans (WGN, WBN and NILEG) have
prior-ranking debt (amounting to EUR80.6 million on aggregate),
the Moody's current whole loan leverage including prior-ranking
debt is 100% on average. For the top three loans Moody's assumes a
LTV of 53%, 87% and 92%, respectively, while for the remaining
loans on whole loan basis a WA LTV of 133% is assumed, reflecting
the bifurcated quality of the pool.
Refinancing Risk: The transaction exposure to loans maturing in
the short-term (2011, 2012 and 2013) is relatively high (currently
25% by current pool balance). From the current portfolio, 10%
(Rockpoint and Faktor) and 15% (Mayne and Elbblick) will mature in
2012 and 2013, respectively. The remaining loans (75% of the
current portfolio) including the three largest loans mature in
2014. Moody's expects property values in the Continental European
markets (especially for secondary properties) to slowly recover
and the CRE lending markets to remain subdued for a protracted
period. As such, most loans will remain highly leveraged at their
respective maturity dates. Consequently, for all loans, the
default risk at maturity has increased compared to Moody's
previous review in 2009. However, for the LWB loan the default
risk at maturity remains relatively lower due to the low expected
leverage in 2014 (53%).
Expected Loss Exposure: Moody's notes the bifurcated nature of the
loan pool and anticipates significant losses on the pool stemming
from 1) the higher expected default risk of the loans, 2) the
recent performance of the secondary commercial property markets in
Germany and 3) Moody's opinion about future property value
performance and the likely work-out strategies for defaulted
loans.
In Moody's opinion, the subordination of the Class A1, A2 and
Class B Notes provide sufficient protection against the
aforementioned expected losses. However, as a result of less
subordination and the likelihood of higher than expected losses on
the portfolio, the Class C Notes was downgraded. In addition,
Moody's deems the rating of the Class C Notes more sensitive
should the performance of the loans deteriorate resulting in
actual loan defaults during term or at maturity.
RATING METHODOLOGY
The principal methodology used in this rating was "Moody's
Approach to Real Estate Analysis for CMBS in EMEA: Portfolio
Analysis (MORE Portfolio)" published April 2006. Other methodology
and factors considered can be found in "Update on Moody's Real
Estate Analysis for CMBS Transactions in EMEA" published June
2005.
Moody's Investors Service did not receive or take into account a
third party due diligence report on the underlying assets or
financial instruments related to the monitoring of this
transaction in the past six months. Moody's does not have access
to the underlying portfolio information relating to the non
recoverable costs.
The updated assessment is a result of Moody's on-going
surveillance of commercial mortgage backed securities
transactions. Moody's prior review is summarized in a Press
Release dated December 7, 2009. The last Performance Overview for
this transaction was published on May 19, 2011.
IKB DEUTSCHE: Fitch Withdraws 'E' Individual Rating
---------------------------------------------------
Fitch Ratings has maintained German-based IKB Deutsche
Industriebank AG's Long-term 'BBB-' Issuer Default Rating and
Short-term 'F3' IDR on Rating Watch Negative and simultaneously
withdrawn the ratings. The Individual Rating has been affirmed at
'E' and withdrawn.
The ratings have been withdrawn as the agency will no longer have
sufficient information to maintain the ratings following the
issuer's decision to stop participating in the rating process.
Fitch will no longer provide rating or analytical coverage for
IKB. However, Fitch will continue to rate the notes guaranteed by
the German government's Financial Market Stabilisation Fund
(SoFFin) based on the irrevocable guarantee of the 'AAA'-rated
Federal Republic of Germany, which at present total EUR8.6bn.
IKB's Long-term IDR and senior debt ratings reflect the high level
of sovereign support arising from the funding guarantees provided
by SoFFin. The RWN reflects Fitch's expectation that the
authorities' propensity to support will recede in line with the
scheduled expiration of these guarantees by 2015. The reduction of
SoFFin's coverage may encourage other critical funding providers
to cut their exposure to IKB.
Fitch also considers that the enactment of the German bank
resolution regime in January 2011, in conjunction with IKB's weak
standalone profile and uncertain recovery prospects, exposes the
bank, and particularly its subordinated lower Tier 2 debt holders,
to an increased resolution risk. Fitch also notes that IKB's
owner, Lone Star (not rated), is currently trying to sell the
bank, and that a sale to a highly-rated institution, although not
Fitch's base case, cannot be ruled out at this stage.
Fitch previously noted that it expected to resolve the RWN on all
ratings once it had more clarity regarding the level of support
that may realistically be available to the various classes of
debt. Fitch considers that no material changes have occurred since
then that may change its rating rationale.
The affirmation of the Individual Rating reflects uncertain
recovery prospects. Despite the restructuring progress achieved,
Fitch believes it will be challenging to restore a viable
standalone business model before state support is withdrawn,
specifically the restoration of a sustainable funding profile that
is not reliant on external support.
The rating actions are:
IKB AG:
-- Long-term IDR: 'BBB-', maintained on RWN and withdrawn
-- Short-term IDR: 'F3', maintained on RWN and withdrawn
-- Individual Rating: affirmed at 'E' and withdrawn
-- Support Rating: '2', maintained on RWN and withdrawn
-- Support Rating Floor: 'BBB-', maintained on RWN and
withdrawn
-- Senior unsecured debt: 'BBB-', maintained on RWN and
withdrawn
-- Subordinated lower Tier 2 debt: 'B+', maintained on RWN and
withdrawn
-- SoFFin-guaranteed notes: affirmed at 'AAA'
These ratings have all been affirmed at 'C' / 'RR6' and withdrawn:
-- IKB Funding Trust I's EUR75m perpetual trust preferred
securities (ISIN: DE0008592759)
-- IKB Funding Trust II's EUR400m perpetual trust preferred
securities (ISIN: XS0194701487)
-- Hybrid Raising GmbH's EUR200m perpetual silent
participations (ISIN: DE000A0AMCG6)
-- Capital Raising GmbH's EUR200m perpetual silent
participations (ISIN: DE0007490724)
-- Propart Funding Ltd's EUR150m profit participation
certificates due 2015 (ISIN: DE000A0GF758)
In Fitch's rating criteria, a bank's standalone risk is reflected
in Fitch's Individual Ratings and the prospect of external support
is reflected in Fitch's Support Ratings. Collectively these
ratings drive Fitch's Long- and Short-term IDRs.
* GERMANY: Prepares for Unlikely Greek Insolvency, Schaeuble Says
-----------------------------------------------------------------
Dow Jones Newswires reports that Germany is preparing for the
unlikely chance that Greece will become insolvent, German Finance
Minister Wolfgang Schaeuble said Saturday in a preview of an
interview to be published in German magazine Der Spiegel.
Dow Jones Newswires relates that Mr. Schaeuble said Germany would
act to prevent any "uncontrollable effects" from an insolvency,
but further warned that such an event could have dramatic
consequences for the economy, banks and the financial system.
Mr. Schaeuble, according to Dow Jones, applauded an agreement
reached last week for private German banks to aid Greece, likely
by rolling over existing debt into bonds with longer maturities,
"a success."
Mr. Schaeuble told Der Spiegel that Europe must be better prepared
than before to help Greece generate economic growth. "Therein lie
considerable tasks and chances for the German economy,"
Mr. Schaeuble said, Dow Jones relates.
===========
G R E E C E
===========
EPIHIRO PLC: Moody's Downgrades Rating on Class A Notes to 'Ba3'
----------------------------------------------------------------
Moody's Investors Service has downgraded to Ba3 (sf) from Ba1 (sf)
the ratings of two structured finance transactions originated by
Alpha Bank AE (B3, Non-Prime): Katanalotika Plc and Epihiro Plc.
In addition, Moody's placed on review for downgrade the rating of
another transaction originated by Alpha Bank, Irida Plc.
RATINGS RATIONALE
The downgrades follow transaction document amendments that result
in higher linkage between the rating of the notes in the affected
transactions and those of Alpha Bank AE. Through amendments that
were executed on June 21, 2011: (i) the reserve account held with
the issuer account at Citibank N.A. (A1, Prime-1).has been moved
back to Alpha Bank AE and (ii) the daily cash-sweep from the
collection account at Alpha Bank AE to the issuer account has been
terminated.
Moody's placed on review the Ba1 (sf) ratings of the notes in
Irida Plc. following the communication by Alpha Bank AE that this
transaction would be subject to similar amendments in the upcoming
months.
Moody's rating approach has considered a similar probability of
default for the bank and for the notes in the two downgraded
transactions. However, the ratings of the notes are three notches
above the bank's rating, as they reflect a lower expected loss on
the notes resulting from their senior secured position. In
particular, Moody's has considered the large amount of credit
enhancement (40% to 50%) that supports the rated notes in the two
transactions, mostly as a result of the subordination of junior
notes.
The considerations described in this press release complement the
applicable principal methodologies for each transaction. To
identify the primary methodology for each of the asset classes of
the affected transactions, please refer to the index of
methodologies under the research and ratings tab on Moodys.com.
Issuer: IRIDA PLC
A Note, Ba1 (sf) Placed Under Review for Possible Downgrade;
previously on Jun 10, 2011 Confirmed at Ba1 (sf)
Issuer: KATANALOTIKA PLC
A Note, Downgraded to Ba3 (sf); previously on May 13, 2011
Downgraded to Ba1 (sf) and Placed Under Review for Possible
Downgrade
Issuer: EPIHIRO PLC (Athena Project)
Class A Asset Backed Floating Rate Notes due January 2035 Notes,
Downgraded to Ba3 (sf); previously on May 13, 2011 Downgraded to
Ba1 (sf) and Placed Under Review for Possible Downgrade
* GREECE: Debt Rollover Plan May Prompt Selective Default Rating
----------------------------------------------------------------
Boris Groendahl and James G. Neuger at Bloomberg News report that
Standard & Poor's on Monday said a rollover plan serving as the
basis for talks between investors and governments would qualify as
a distressed exchange and prompt a "selective default" grade.
According to Bloomberg, that may leave the bondholders unwilling
to complete the transaction and the European Central Bank unable
to accept Greek government debt as collateral, impairing the
lifeline it has provided the country's banks.
The S&P statement came less than 48 hours after euro-area finance
ministers authorized an EUR8.7 billion (US$12.6 billion) loan
payout to Greece by mid-July and said they would aim to complete
talks with banks on maintaining their Greek debt holdings within
weeks, Bloomberg relates. The International Monetary Fund
indicated it would deliver its EUR3.3 billion share of the
payment, Bloomberg notes.
The prospect of a default rating adds to policy makers' concerns
that Greek officials may fail to enact the EUR78 billion of
austerity measures that lawmakers passed last week as a condition
of receiving further aid.
Finance ministers from the 17 euro countries meet on July 11 to
work on Greece's next rescue, which Austria last week said may add
as much as EUR85 billion to the bill for keeping the country
financially sound, Bloomberg discloses.
Bloomberg says Greece must roll over about EUR4 billion of bills
maturing between July 15 and July 22, plus about EUR3 billion of
coupon payments in the month, according to Bloomberg calculations.
A bigger test looms Aug. 20 when EUR6.6 billion of bonds fall due,
Bloomberg states.
Bloomberg notes that Standard & Poor's said its default rating may
be temporary and that it would assign a new grade after the
exchange.
Even if S&P or other rating companies determined that the rollover
plan constituted a default, the ruling wouldn't necessarily
trigger credit swaps insuring Greek debt, according to Bloomberg.
That decision may be made by the determinations committee of the
International Swaps & Derivatives Association, Bloomberg says.
S&P, as cited by Bloomberg, said would assign a "D" rating to the
maturing Greek government bonds "upon their refinancing in 2011."
All debt issues would then "likely" be rated at the same level as
the new Greek rating afterwards, Bloomberg discloses.
* GREECE: German Banks Agree to Debt Rollover Plan
--------------------------------------------------
Aaron Kirchfeld at Bloomberg News reports that Germany's biggest
banks and insurers and the government agreed on a draft proposal
to roll over Greek debt holdings before a meeting with Finance
Minister Wolfgang Schaeuble on June 30.
According to Bloomberg, people familiar with the plan said that
the firms will commit to providing financing for a Greek aid
package. Bloomberg relates that the people said the draft left
open how much debt would be rolled over and under what conditions.
German and French lenders are the biggest foreign holders of Greek
debt and their participation would help the European Union meet a
goal of getting banks to roll over at least EUR30 billion (US$43.3
billion) of bonds, Bloomberg states.
The people, as cited by Bloomberg, said that the German proposal
may not address potential sticking points such as the maturity of
the new Greek bonds, whether investors would face writedowns on
their current holdings, and how rating companies would view a
rollover.
Bloomberg notes that the people said Germany's banks and insurers
hold Greek sovereign debt expiring by 2014 of about EUR2 billion
and EUR4 billion expiring by 2020. The people said that German
firms and the Finance Ministry are discussing the idea of rolling
over bonds maturing until 2020, and not just those running through
2014, as had been first envisaged, Bloomberg relates.
=============
I R E L A N D
=============
ALLIED IRISH: Completes Acquisition of EBS Building Society
-----------------------------------------------------------
Allied Irish Banks, p.l.c., completed the acquisition of EBS
Building Society and the formation of one of two pillar banks in
Ireland.
David Hodgkinson, executive chairman of AIB said, "This is a very
significant development for the Irish banking sector and a major
step in its repair. The combination of AIB and EBS marks the
beginning of a reshaped and revitalized banking sector which will
be focused on supporting economic growth and meeting the financial
needs of the Irish people. Customers can be assured that, on
completion of the planned recapitalization, the new bank will be
very strongly capitalized and its capital will be put to work in
the rebuilding of the Irish economy. "
EBS, which will now be called EBS Limited, will operate as a
standalone, separately branded subsidiary of AIB with its own
branch network.
The Executive Directors of EBS Limited are Fergus Murphy and Emer
Finnan. Non Executive Directors are Philip Williamson and Jim
Ruane. They will be joined by Catherine Woods, AIB Non Executive
Director and Senior Executives from AIB - Bernard Byrne, Eamonn
Hackett and Denis O'Callaghan.
Fergus Murphy, EBS Chief Executive will initially report to the
Executive Chairman of AIB and will join the AIB Executive
Committee. Certain functions within EBS will have dual reporting
lines within EBS and to functions within AIB.
Every account in EBS Building Society will become an account of
the same amount with the new EBS entity and the terms and
conditions will remain unchanged, including share accounts.
Depositors and borrowers of EBS can continue to carry out their
business in the normal way. No action is required on the part of
customers.
The EUR100,000 Deposit Guarantee Scheme protection continues to
apply to EBS customers and AIB customers on a separate basis. For
example, an EBS customer will be protected for up to EUR100,000 of
deposits in EBS and up to EUR100,000 of deposits in AIB.
Customers above EUR100,000 continue to be covered by the Eligible
Liabilities Guarantee Scheme. Products held by the same customer
in either institution will be treated as totally separate.
Neither entity (AIB or EBS) will have rights over a customer's
product holding in the separate institution.
Customers who have enquiries on the completion of this acquisition
can contact the Company on the Company's customer contact number
1850 654 321 Monday to Friday 9.00am to 6.00pm.
About Allied Irish Banks, p.l.c.
Allied Irish Banks, p.l.c. -- http://www.aibgroup.com/-- is a
major commercial bank based in Ireland. It has an extensive
branch network across the country, a head office in Dublin and a
capital markets operation based in the International Financial
Services Centre in Dublin. AIB also has retail and corporate
businesses in the UK, offices in Europe and a subsidiary company
in the Isle of Man and Jersey (Channel Islands).
Since the onset of the global and Irish financial crisis, AIB's
relationship with the Irish Government has changed significantly.
As at Dec. 31, 2010, the Government, through the National Pension
Reserve Fund Commission, held 49.9% of the ordinary shares of the
Company (the share of the voting rights at shareholders' general
meetings), 10,489,899,564 convertible non-voting shares and 3.5
billion 2009 Preference Shares. On April 8, 2011, the NPRFC
converted the total outstanding amount of CNV shares into
10,489,899,564 ordinary shares of AIB, thereby increasing its
holding to 92.8% of the ordinary share capital.
In addition to its shareholders' interests, the Government's
relationship with AIB is reflected through formal and informal
oversight by the Minister and the Department of Finance and the
Central Bank of Ireland, representation on the Board of Directors
(three non-executive directors are Government nominees),
participation in NAMA, and otherwise.
As reported by the TCR on May 31, 2011, KPMG, in Dublin, Ireland,
noted that there are a number of material economic, political and
market risks and uncertainties that impact the Irish banking
system, including the Company's continued ability to access
funding from the Eurosystem and the Irish Central Bank to meet its
liquidity requirements, that raise substantial doubt about the
Company's ability to continue as a going concern.
The Company reported a net loss of EUR10.16 billion on
EUR1.84 billion of interest income for 2010, compared with a net
loss of EUR2.33 billion on US$2.87 billion of interest income for
2009.
The Company's balance sheet at Dec. 31, 2010, showed
EUR145.2 billion in total assets, EUR140.9 billion in total
liabilities, and stockholders' equity of EUR4.3 billion.
ALLIED IRISH: To Raise EUR5 Billion Capital from NPRFC
------------------------------------------------------
Allied Irish Banks, p.l.c., announced that it has concluded
discussions with the Government and has agreed the final terms of
its capital raising transaction, pursuant to which it proposes to
raise EUR5 billion of equity share capital from the National
Pensions Reserve Fund Commission and up to EUR1.6 billion by the
issue of contingent capital notes to the Minister for Finance.
On May 26, 2011, AIB announced that it had signed an agreement
with, amongst others, the Minister to acquire Educational Building
Society, subject to receipt of all regulatory approvals required.
As announced by AIB earlier, completion of the acquisition of EBS
by AIB has now taken place. The Minister has stated that the
merger of AIB and EBS will form one of the two pillars of Irish
banking.
On March 31, 2011, the Central Bank of Ireland prescribed a
minimum capital target for certain Irish credit institutions of
10.5% Core Tier 1 Capital under a base scenario and 6% Core Tier 1
Capital under a given stress scenario, plus allowing for an
additional protective buffer. As a result, AIB is required to
increase its Core Tier 1 Capital by c.EUR13.3 billion, and EBS is
required to increase its Core Tier 1 Capital by c.EUR1.5 billion.
These capital increases are to be completed by July 31, 2011.
Following completion of the EBS merger, it is expected that AIB
will be required to raise a total of c.EUR14.8 billion of Core
Tier 1 Capital, of which c.EUR1.6 billion may be in the form of
contingent capital.
The Capital Raising will comprise an equity placing of ordinary
share capital of EUR5 billion to the NPRFC and an issue of up to
EUR1.6 billion of contingent capital convertible notes to the
Minister. The Placing will comprise an issue of new Ordinary
Shares for cash at a price of EUR0.01 per share. The Contingent
Capital Notes Issue will comprise an issue of contingent capital
notes for cash. The Contingent Capital Notes will be subordinated
tier 2 capital instruments with a five year and one day maturity
denominated in units of EUR1,000, issued at par with an aggregate
principal amount of up to EUR1.6 billion. In certain
circumstances, including if AIB's Core Tier 1 Capital ratio falls,
or is likely in the opinion of the Central Bank to fall, below
8.25%, the Contingent Capital Notes will convert immediately and
mandatorily in their entirety into ordinary shares at a conversion
price of EUR0.01 per Ordinary Share. The Contingent Capital Notes
carry a fixed annual mandatory interest rate of 10% of the
principal amount, but this may be increased by the Minister up to
a maximum amount of 18% per annum if the Contingent Capital Notes
are to be sold by the Minister.
It has been indicated to AIB by the Minister that it is his
intention that any portion of the PCAR Requirement that has not
been satisfied by the Capital Raising, other capital generating
exercises undertaken by AIB and EBS and any further burden-sharing
with the Group's subordinated debt holders, will be satisfied by
way of a capital contribution to be made by the State to AIB once
the Minister is satisfied that an appropriate level of burden-
sharing has been achieved with the Group's subordinated debt
holders. It is expected that the Capital Contribution would be
given to AIB by the State for no consideration and accordingly no
new Ordinary Shares will be issued by AIB to the State in return
for the Capital Contribution.
The proceeds of the Placing, the Contingent Capital Notes Issue
and the Capital Contribution will be used to fund the day-to-day
operations of the Group.
By strengthening the Group's capital position, the Capital Raising
and the Capital Contribution should facilitate the objective of
providing for a sustainable future as a systemically important
pillar bank, continuing to support customers, and contributing to
economic recovery. AIB's continued listing on the Enterprise
Securities Market of the Irish Stock Exchange enables Shareholders
to continue to trade their shares, ensures that AIB remains
subject to market oversight, disclosure and reporting obligations
and facilitates AIB's wish to maintain investor relationships and
market analyst coverage.
The Placing and the Contingent Capital Notes Issue will have a
significant positive impact on the Group's capital ratios, further
details of which are set out in the circular referred to below to
be dispatched to Shareholders shortly in connection with the
Capital Raising. The Capital Contribution will also have a
positive impact on the Group's capital ratios.
To avoid any potential conflict of interest, the three Directors
appointed by the Government, Mr. Declan Collier, Mr. Dick Spring
and Dr Michael Somers, have not taken part in the Board's decision
to proceed with the Placing and the Contingent Capital Notes
Issue.
AIB's Board of Directors acknowledges the continued support of the
Minister and the Irish State.
Circular and Shareholder Meeting
To implement the Capital Raising, AIB will dispatch a circular to
Shareholders, including a notice to convene an EGM to be held at
10.00 a.m. on Tuesday, July 25, 2011, at Bankcentre, Ballsbridge,
Dublin 4, to consider, and if thought fit, pass necessary
shareholder resolutions.
AIB's Annual General Meeting will also be held on Tuesday,
July 26, 2011, commencing at 12 noon at Bankcentre, Ballsbridge,
Dublin 4. A separate circular will be dispatched to Shareholders
shortly, including a notice to convene the AGM, to consider, and
if thought fit, pass the shareholder resolutions to be proposed at
the AGM.
Pursuant to the Placing, AIB will issue 500,000,000,000 new
Ordinary Shares to the NPRFC. Upon completion of the Placing, and
following a further allotment of new Ordinary Shares to the NPRFC
in lieu of part of the 2011 annual cash dividend on the 2009
Preference Shares that was deferred on May 13, 2011, the NPRFC
will hold c.99.8% of the enlarged total issued ordinary share
capital of AIB. AIB will at that time have 513,491,220,350
Ordinary Shares in issue, however, it is possible that the total
number of Ordinary Shares in issue may decrease by 36,212,608 if a
5% increment, that is prescribed by the terms of the 2009
Preference Shares due to the deferral of part of the 2011 annual
dividend, is waived.
About Allied Irish Banks, p.l.c.
Allied Irish Banks, p.l.c. -- http://www.aibgroup.com/-- is a
major commercial bank based in Ireland. It has an extensive
branch network across the country, a head office in Dublin and a
capital markets operation based in the International Financial
Services Centre in Dublin. AIB also has retail and corporate
businesses in the UK, offices in Europe and a subsidiary company
in the Isle of Man and Jersey (Channel Islands).
Since the onset of the global and Irish financial crisis, AIB's
relationship with the Irish Government has changed significantly.
As at Dec. 31, 2010, the Government, through the National Pension
Reserve Fund Commission, held 49.9% of the ordinary shares of the
Company (the share of the voting rights at shareholders' general
meetings), 10,489,899,564 convertible non-voting shares and 3.5
billion 2009 Preference Shares. On April 8, 2011, the NPRFC
converted the total outstanding amount of CNV shares into
10,489,899,564 ordinary shares of AIB, thereby increasing its
holding to 92.8% of the ordinary share capital.
In addition to its shareholders' interests, the Government's
relationship with AIB is reflected through formal and informal
oversight by the Minister and the Department of Finance and the
Central Bank of Ireland, representation on the Board of Directors
(three non-executive directors are Government nominees),
participation in NAMA, and otherwise.
As reported by the TCR on May 31, 2011, KPMG, in Dublin, Ireland,
noted that there are a number of material economic, political and
market risks and uncertainties that impact the Irish banking
system, including the Company's continued ability to access
funding from the Eurosystem and the Irish Central Bank to meet its
liquidity requirements, that raise substantial doubt about the
Company's ability to continue as a going concern.
The Company reported a net loss of EUR10.16 billion on
EUR1.84 billion of interest income for 2010, compared with a net
loss of EUR2.33 billion on US$2.87 billion of interest income for
2009.
The Company's balance sheet at Dec. 31, 2010, showed
EUR145.2 billion in total assets, EUR140.9 billion in total
liabilities, and stockholders' equity of EUR4.3 billion.
ALLIED IRISH: Has Settlement With Aurelius, Minister of Finance
---------------------------------------------------------------
Allied Irish Banks p.l.c. announced a settlement of the
proceedings before the High Court of Ireland involving Aurelius
Capital Master Ltd and the Minister for Finance of Ireland. The
Court has declared that the subordinated liabilities order issued
by the Court on April 14, 2011, under the Credit Institutions
(Stabilisation) Act 2010 in respect of (i) AIB's GBP368,253,000
12.5 per cent. Subordinated Notes due June 25, 2019, and (ii)
AIB's EUR868,518,000 12.5 per cent. Subordinated Notes due 2015 is
effective as of April 22, 2011, to amend the terms of the
Subordinated Liabilities as follows:
(i) any interest that may fall due on those liabilities will
only be payable at the option of AIB; and
(ii) the maturity date of each such liability has been extended
to June 25, 2035.
Further to AIB's announcement of June 22, 2011, and in accordance
with the amendments effected by the SLO, no payment of interest
which would otherwise have been due on June 25, 2011, will be made
by AIB in relation to the GBP368,253,000 12.5 per cent.
Subordinated Notes due June 25, 2019.
AIB notes that the SLO is now effective as from April 22, 2011, in
respect of all 18 series of Notes which were the subject of the
Tender and Consent Memorandum dated May 13, 2011, issued by AIB.
About Allied Irish Banks, p.l.c.
Allied Irish Banks, p.l.c. -- http://www.aibgroup.com/-- is a
major commercial bank based in Ireland. It has an extensive
branch network across the country, a head office in Dublin and a
capital markets operation based in the International Financial
Services Centre in Dublin. AIB also has retail and corporate
businesses in the UK, offices in Europe and a subsidiary company
in the Isle of Man and Jersey (Channel Islands).
Since the onset of the global and Irish financial crisis, AIB's
relationship with the Irish Government has changed significantly.
As at Dec. 31, 2010, the Government, through the National Pension
Reserve Fund Commission, held 49.9% of the ordinary shares of the
Company (the share of the voting rights at shareholders' general
meetings), 10,489,899,564 convertible non-voting shares and 3.5
billion 2009 Preference Shares. On April 8, 2011, the NPRFC
converted the total outstanding amount of CNV shares into
10,489,899,564 ordinary shares of AIB, thereby increasing its
holding to 92.8% of the ordinary share capital.
In addition to its shareholders' interests, the Government's
relationship with AIB is reflected through formal and informal
oversight by the Minister and the Department of Finance and the
Central Bank of Ireland, representation on the Board of Directors
(three non-executive directors are Government nominees),
participation in NAMA, and otherwise.
As reported by the TCR on May 31, 2011, KPMG, in Dublin, Ireland,
noted that there are a number of material economic, political and
market risks and uncertainties that impact the Irish banking
system, including the Company's continued ability to access
funding from the Eurosystem and the Irish Central Bank to meet its
liquidity requirements, that raise substantial doubt about the
Company's ability to continue as a going concern.
The Company reported a net loss of EUR10.16 billion on
EUR1.84 billion of interest income for 2010, compared with a net
loss of EUR2.33 billion on US$2.87 billion of interest income for
2009.
The Company's balance sheet at Dec. 31, 2010, showed
EUR145.2 billion in total assets, EUR140.9 billion in total
liabilities, and stockholders' equity of EUR4.3 billion.
ALLIED IRISH: DBRS Downgrades Subordinated Debt Rating to 'D'
-------------------------------------------------------------
DBRS Inc. has downgraded the ratings of certain subordinated debt
issued by Allied Irish Banks p.l.c. to "D" from "C". The
downgrade follows the execution of the Group's note purchase
offer.
Almost all of these instruments have been extinguished. The
default status for the purchased and now-extinguished notes
reflect DBRS's view that bondholders were offered limited options,
which is considered a default under DBRS policy, as discussed in
DBRS's press release dated May 19, 2011.
For AIB's GBP 500 million Dated Subordinated Debt due 2025 and its
EUR 500 million Dated Subordinated Debt due 2017, which are still
outstanding due to the lack of consent for a clean up call, DBRS
has downgraded their ratings to 'D'. The downgrade reflects
DBRS's expectations that the interest payments of these
outstanding subordinated instruments will be halted on the next
payment date, as allowed by the Irish High Court. Further, the
downgrade considers the extension of the final maturity dates,
which are now extended to 2035. Given that bondholders are
unlikely to receive interest as agreed upon and that the expected
maturity has been extended, DBRS views these actions as
disadvantageous to bondholders, which is considered a default
under DBRS policy.
However, the rating of AIB's GBP368.253 million Dated Subordinated
Debt due 2019, which is still outstanding, is unchanged at 'C',
Under Review with Negative Implications. This rating considers
that these notes have not yet been amended by AIB pursuant to the
Subordinated Liabilities Order from the Irish High Court as a
challenge in respect to these notes is ongoing before this Court.
ALLIED IRISH: Sells Canadian Operations to Raymond James Financial
------------------------------------------------------------------
BreakingNews.ie reports that Allied Irish Banks plc has sold its
Canadian operations to Raymond James Financial for an undisclosed
figure.
According to BreakingNews.ie, the division is based in Toronto and
has about C$650 million Canadian dollars (EUR465 million) in
loans.
The sale means AIB will divest loans from its balance sheet,
rather than getting money in for the bank, BreakingNews.ie notes.
About Allied Irish Banks, p.l.c.
Allied Irish Banks, p.l.c. -- http://www.aibgroup.com/-- is a
major commercial bank based in Ireland. It has an extensive
branch network across the country, a head office in Dublin and a
capital markets operation based in the International Financial
Services Centre in Dublin. AIB also has retail and corporate
businesses in the UK, offices in Europe and a subsidiary company
in the Isle of Man and Jersey (Channel Islands).
Since the onset of the global and Irish financial crisis, AIB's
relationship with the Irish Government has changed significantly.
As at Dec. 31, 2010, the Government, through the National Pension
Reserve Fund Commission ("NPRFC"), held 49.9% of the ordinary
shares of the Company (the share of the voting rights at
shareholders' general meetings), 10,489,899,564 convertible non-
voting ("CNV") shares and 3.5 billion 2009 Preference Shares. On
April 8, 2011, the NPRFC converted the total outstanding amount of
CNV shares into 10,489,899,564 ordinary shares of AIB, thereby
increasing its holding to 92.8% of the ordinary share capital.
In addition to its shareholders' interests, the Government's
relationship with AIB is reflected through formal and informal
oversight by the Minister and the Department of Finance and the
Central Bank of Ireland, representation on the Board of Directors
(three non-executive directors are Government nominees),
participation in NAMA, and otherwise.
As reported by the TCR on May 31, 2011, KPMG, in Dublin, Ireland,
noted that there are a number of material economic, political and
market risks and uncertainties that impact the Irish banking
system, including the Company's continued ability to access
funding from the Eurosystem and the Irish Central Bank to meet its
liquidity requirements, that raise substantial doubt about the
Company's ability to continue as a going concern.
The Company reported a net loss of EUR10.16 billion on
EUR1.84 billion of interest income for 2010, compared with a net
loss of EUR2.33 billion on US$2.87 billion of interest income for
2009.
The Company's balance sheet at Dec. 31, 2010, showed
EUR145.2 billion in total assets, EUR140.9 billion in total
liabilities, and stockholders' equity of EUR4.3 billion.
ANGLO IRISH BANK: DBRS Downgrades Senior Debt Rating to 'CCC'
-------------------------------------------------------------
DBRS Inc. has downgraded the non-guaranteed senior debt and
deposit ratings of Anglo Irish Bank Corporation Limited, including
its Issuer Rating, to CCC from B (low). All non-government
guaranteed ratings remain Under Review with Negative Implications,
where they were placed on September 10, 2010. The rating action
does not impact the various Government guaranteed debt and
deposits rating of Anglo Irish which remain at 'A' with a Negative
trend.
As noted in DBRS's press release on April 4, 2011, DBRS viewed
non-guaranteed senior bondholders of Anglo Irish at an increased
risk of adverse actions given the state of the Irish banking
system and the wind-down mode of Anglo Irish. The rating action
reflects the recent statements by the Minister for Finance which,
in DBRS's opinion, firmly underline the Government's intent to
pursue burden sharing by senior bondholders of what the Irish
Government defines as 'non-going concern' banks, such as Anglo
Irish. As such, DBRS sees the probability of adverse actions
towards senior bondholders as significantly increased.
DBRS notes that the Irish Government has stated that it will only
pursue such actions should it receive approval from the European
Central Bank. However, at this time the ECB and other E.U.
members have been firm in their position that no such actions be
taken towards senior bondholders of banks.
The non-government guaranteed ratings remain Under Review with
Negative Implications reflecting the lack of specific details of
any potential forthcoming legislation or liability management
exercises. DBRS will review the terms of any offer to non-
guaranteed senior bondholders; however, DBRS considers it likely
that any offer will be disadvantageous and coercive to
bondholders. As such, DBRS would view such an offer as tantamount
to a default.
EATON VANCE: Moody's Lifts Ratings on Two Classes of Notes to 'B1'
------------------------------------------------------------------
Moody's Investors Service has upgraded the ratings of these notes
issued by Eaton Vance CDO X PLC:
Issuer: Eaton Vance CDO X PLC
-- EUR18,000,000 Class B-1 Second Priority Secured Floating
Rate Notes due 2027, Upgraded to Aa1 (sf); previously on Jun
22, 2011 Aa3 (sf) Placed Under Review for Possible Upgrade
-- US$23,400,000 Class B-2 Second Priority Secured Floating
Rate Notes due 2027, Upgraded to Aa1 (sf); previously on Jun
22, 2011 Aa3 (sf) Placed Under Review for Possible Upgrade
-- EUR14,750,000 Class C-1 Third Priority Deferrable Secured
Floating Rate Notes due 2027, Upgraded to A1 (sf);
previously on Jun 22, 2011 Baa3 (sf) Placed Under Review for
Possible Upgrade
-- US$19,175,000 Class C-2 Third Priority Deferrable Secured
Floating Rate Notes due 2027, Upgraded to A1 (sf);
previously on Jun 22, 2011 Baa3 (sf) Placed Under Review for
Possible Upgrade
-- EUR17,750,000 Class D-1 Fourth Priority Deferrable Secured
Floating Rate Notes due 2027, Upgraded to Ba1 (sf);
previously on Jun 22, 2011 B2 (sf) Placed Under Review for
Possible Upgrade
-- US$23,075,000 Class D-2 Fourth Priority Deferrable Secured
Floating Rate Notes due 2027, Upgraded to Ba1 (sf);
previously on Jun 22, 2011 B2 (sf) Placed Under Review for
Possible Upgrade
-- EUR10,000,000 Class E-1 Fifth Priority Deferrable Secured
Floating Rate Notes due 2027, Upgraded to B1 (sf);
previously on Jun 22, 2011 Caa3 (sf) Placed Under Review for
Possible Upgrade
-- US$13,000,000 Class E-2 Fifth Priority Deferrable Secured
Floating Rate Notes due 2027, Upgraded to B1 (sf);
previously on Jun 22, 2011 Caa3 (sf) Placed Under Review for
Possible Upgrade
RATINGS RATIONALE:
Eaton Vance CDO X PLC, issued in March 2007, is a multi currency
Collateralised Loan Obligation backed by a portfolio of mostly
high yield US and European loans. The portfolio is managed by
Eaton Vance Management and has approximately 2.5 years of
reinvestment period remaining. The portfolio is predominantly
exposed to European and US senior secured loans (89.7%) as well as
second lien loans (5.9%) and CLO securities (2.4%). The underlying
assets are denominated in US$(50.3%), EUR (38.7%) and GBP (11%).
According to Moody's, the rating actions taken on the notes are
primarily a result of applying Moody's revised CLO assumptions
described in "Moody's Approach to Rating Collateralized Loan
Obligations" published in June 2011. The actions also reflect
consideration of credit improvement of the underlying portfolio
and an increase in the transaction's overcollateralization ratios
since the rating action in September 2009.
The actions reflect key changes to the modeling assumptions, which
incorporate (1) a removal of the temporary 30% default probability
macro stress implemented in February 2009, (2) increased BET
liability stress factors and increased recovery rate assumptions
as well as (3) a change in the recovery rate framework to fixed
recovery rates assumptions. Additional changes to the modeling
assumptions include ( (1) standardizing the modeling of collateral
amortization profile and (2) changing certain credit estimate
stresses aimed at addressing time lags in receiving information
required for credit estimate updates.
Improvement in the credit quality is observed through a better the
average credit rating of the portfolio (as measured by the
weighted average rating factor "WARF") and a decrease in the
proportion of securities from issuers rated Caa1 and below. In
particular, as of the latest trustee report dated May 2011, the
WARF is currently 2469 compared to 2841 in the August 2009 report,
and securities rated Caa1 or lower make up approximately 8.2% of
the underlying portfolio versus 11.5% in August 2009. The decrease
in reported WARF understates the actual credit quality improvement
because of the technical transition related to rating factors of
European corporate credit estimates, as announced in the press
release published by Moody's on September 1, 2010.
Additionally, defaulted securities total about EUR1.4 million of
the underlying portfolio compared to EUR17.46 million in August
2009. The OC ratios of the rated notes have also improved. The
reported class A/B, class C, class D and class E OC ratios have
increased, in absolute terms, by 5.52%, 4.98%, 4.45% and 4.20%
respectively. All OC tests are in compliance.
Due to the impact of revised and updated key assumptions
referenced in "Moody's Approach to Rating Collateralized Loan
Obligations" published in June 2011, key model inputs used by
Moody's in its analysis, such as par, WARF, diversity score, and
weighted average recovery rate, may be different from the
trustee's reported numbers. In its base case, Moody's analyzed the
underlying collateral pool to have a performing par and principal
proceeds balance of approximately EUR440.47 million, defaulted par
of EUR6.46 million, a weighted average default probability of
28.09% (consistent with a WARF of 2809) and a diversity score of
72.
The default probability is derived from the credit quality of the
collateral pool and Moody's expectation of the remaining life of
the collateral pool. The average recovery rate to be realized on
future defaults is based primarily on the seniority of the assets
in the collateral pool. For a Aaa liability target rating, Moody's
assumed that 92% of the portfolio exposed to senior secured
corporate assets would recover 50% upon default, while the
remaining corporate assets would recover 10%. In each case,
historical and market performance trends and collateral manager
latitude for trading the collateral are also factors. These
default and recovery properties of the collateral pool are
incorporated in cash flow model analysis where they are subject to
stresses as a function of the target rating of each CLO liability
being reviewed.
The deal is allowed to reinvest and the manager has the ability to
deteriorate the collateral quality metrics' existing cushions
against the covenant levels. Moody's analyzed the impact of
assuming weighted average spread and weighted average rating
factor levels consistent with the covenanted values.
Moody's notes that this transaction is subject to a high level of
macroeconomic uncertainty, as evidenced by 1) uncertainties of
credit conditions in the general economy and 2) the large
concentration of speculative-grade debt maturing between 2012 and
2014 which may create challenges for issuers to refinance. CDO
notes' performance may also be impacted by 1) the manager's
investment strategy and behavior and 2) divergence in legal
interpretation of CDO documentation by different transactional
parties due to embedded ambiguities.
Sources of additional performance uncertainties are:
1) Recovery of defaulted assets: Market value fluctuations in
defaulted assets reported by the trustee and those assumed to
be defaulted by Moody's may create volatility in the deal's
overcollateralization levels. Further, the timing of recoveries
and the manager's decision to work out versus sell defaulted
assets create additional uncertainties. Moody's analyzed
defaulted recoveries assuming the lower of the market price and
the recovery rate in order to account for potential volatility
in market prices.
2) Weighted average life: The notes' ratings are sensitive to the
weighted average life assumption of the portfolio, which may be
extended due to the manager's decision to reinvest into new
issue loans or other loans with longer maturities and/or
participate in amend-to-extend offerings. Moody's tested for a
possible extension of the actual weighted average life in its
analysis.
The principal methodology used in this rating was "Moody's
Approach to Rating Collateralized Loan Obligations" published in
June 2011. Other methodologies and factors that may have been
considered in the process of rating this issuer can also be found
on Moody's website.
Moody's modeled the transaction using the Binomial Expansion
Technique, as described in Section 2.3.2.1 of the "Moody's
Approach to Rating Collateralized Loan Obligations" published in
June 2011.
The cash flow model used for this transaction, whose description
can be found in the methodology listed above, is Moody's EMEA
Cash-Flow model.
In addition to the quantitative factors that are explicitly
modeled, qualitative factors are part of the 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, specific
documentation features, the collateral manager's track record, and
the potential for selection bias in the portfolio. 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 also notes that around 28% of the collateral pool consists
of debt obligations whose credit quality has been assessed through
Moody's credit estimates.
Moody's Investors Service did not receive or take into account a
third party due diligence report on the underlying assets or
financial instruments related to the monitoring of this
transaction in the past six months.
VOICE PROVINCIAL: Dublin Court Bans Founder From Directorship
-------------------------------------------------------------
Irish Times reports that the High Court has banned John Sheils,
the founder Voice Provincial Newspapers, from holding company
directorships for five years unless certain capital requirements
are met.
Mr. Justice Daniel O'Keeffe made the order against Mr. Sheils, who
set up Voice Provincial Newspapers in 2006, after finding he had
not acted in a responsible manner in his role as a director of the
firm, Irish Times relates.
According to the report, the company's liquidator, Kieran Wallace
of KPMG, sought the order against Mr. Sheils on grounds including
the company's failure to keep statutory books, accounts and
records; failure to take minutes of any board meetings; failure to
prepare annual accounts; and failure to appoint a second director
to the company for a period of more than 12 months.
The company, which employed 31 people and published 10 regional
title, ceased publication in December 2008 and went into
liquidation in February 2009 as a result of a slump in advertising
revenues, Irish Times discloses.
* IRELAND: Over 1,000 Firms Declared Insolvent in 1st Half of 2011
------------------------------------------------------------------
RTE.ie reports that new figures show that just over 1,000
companies were declared insolvent in the first half of this year,
or eight Irish companies every working day. This compared with
907 in the first half of 2010, the report notes.
According to the report, Vision-net.ie said there was a 31%
increase in company dissolutions from the same period last year,
with receiverships up 39% and examinerships down 43%.
RTE.ie relates that the company said this suggests that the
appetite to save struggling companies, particularly in terms of
investment of money and time, has diminished.
Vision-net also carried out credit rating stress tests on a wide
sample of 66,701 private limited companies which have filed
accounts since the start of the year, RTE.ie reports.
Vision-net, as cited by RTE.ie, said the results of these tests
show that 32,000 companies, or almost half of those surveyed, are
struggling with debt and at risk of failure.
=========
I T A L Y
=========
BERICA 6: Fitch Puts 'BB+'-Rated Class C Notes on Watch Negative
----------------------------------------------------------------
Fitch Ratings has placed all tranches of Berica 6 Residential MBS
Srl on Rating Watch Negative. The agency has also affirmed Berica
8 Residential MBS Srl's class A notes:
Berica 6 Residential MBS Srl:
-- Class A2 (ISIN IT0004013790): 'AAAsf'; placed on RWN; Loss
Severity Rating 'LS-1';
-- Class B (ISIN IT0004013808): 'Asf'; placed on RWN; Loss
Severity Rating 'LS-3';
-- Class C (ISIN IT0004013816): 'BB+sf'; placed on RWN; Loss
Severity Rating 'LS-4';
Berica 8 Residential MBS Srl:
-- Class A (ISIN IT0004511439): affirmed at 'AAAsf'; Outlook
Stable; LS-1
Berica 6 and Berica 8 are the sixth and eighth MBS deals
originated by Banca Popolare di Vicenza banking Group (BPVi, rated
'BBB+'/Stable/'F2').
The RWN on Berica 6 reflects the Fitch's concern over the quality
of the assets in the portfolio, as well as the insufficient levels
of credit enhancement necessary to maintain the current ratings of
the notes given the rapidly deteriorating performance of the
underlying loans. At present, the cash reserve remains below its
target level, which has led to a reduction in the credit
enhancement levels available to the most junior notes. In Fitch's
view, the use of the reserve fund poses a potential liquidity risk
for Berica 6's notes. The affirmation of Berica 8 reflects the
stable performance of the underlying assets in this transaction to
date.
As of the January 2010 interest payment date, BPVi repurchased
EUR51.9 million of defaulted loans, which resulted in a
replenishment of the reserve fund. However, the weaker asset
quality of the loans has meant that issuer has been unable to
generate sufficient excess spread necessary to provision for
defaults, and has therefore been utilizing the cash reserve. Fitch
notes that unlike more seasoned Berica deals, the default
definition in Berica 6 and Berica 8 includes not only loans
classified as "in sofferenza" (hard defaults) but also late
delinquencies. This more conservative provisioning mechanism was
also a driver behind the reserve fund draws in Berica 6 to date.
As of April 2011, the cumulative gross default ratio and the
cumulative loss ratio (which takes all recoveries and repurchases
into consideration) were 6.0% and 2.3% of the initial balance of
the portfolio, respectively.
The continued reserve fund draws in Berica 6 have reduced the
credit support for all classes, especially the most junior notes.
As of last IPD, the CE available to the notes was 10.6% for the
class A2 notes, 4.5% for the class B notes and 0.5% for the class
C notes. Furthermore, on the last IPD, the rated notes amortized
to below 50% of their initial balance. In line with the
transaction documentation, the target level of the cash reserve
from now on will be the greater of 1.3% of the outstanding notes
and EUR8 million, which is the absolute floor of the reserve fund.
As of the last IPD, the reserve fund amounted to EUR3.3 million
against an expected value of EUR9.2 million.
Fitch believes that the deteriorating performance of the assets in
Berica 6 could increasingly affect the CE of all tranches and
possibly reduce the credit support available to the junior notes
to zero, which is why the notes have been placed on RWN. In this
respect, Fitch recognizes that if the negative asset performance
seen to date continues in the upcoming months, all classes could
be subject to possible downgrades. Fitch will closely monitor
Berica 6 and assess the possibility of further rating actions in
the short term.
The notes of Berica 8 started to sequentially amortize on the last
payment date in March 2011, following an initial 18-month lock-out
period. As a result, the CE for the class A notes increased to
18.6% from 14.4% at closing. Unlike all other Berica transactions,
Berica 8 benefits from a non-amortizing cash reserve fund,
amounting to EUR26.5 million as of March 2011 (its target level).
Fitch has considered the potential impact of the new Italian
Decree "Decreto Sviluppo", which was recently introduced by the
Italian government. The scheme will enable certain borrowers who
have a floating-rate mortgage loan to fix the interest rate
payable. In addition, borrowers may extend the loan maturity by up
to five years, provided that the remaining term of the loan is not
extended to more than 25 years. Fitch has been informed by the
originator that the new decree does not affect the deals at
present and notes that, unlike Berica 6, the Berica 8 swap
agreement will not cover borrowers switching from a floating to a
fixed interest rate according to the Decree.
SEAT PAGINE: Agrees Loan Contract Changes with Senior Creditor
--------------------------------------------------------------
Marco Bertacche at Bloomberg News reports that Seat Pagine Gialle
SpA said it agreed on changes to a loan contract with its senior
creditor Royal Bank of Scotland.
According to Bloomberg, Seat Pagine said the agreement allows it
to make contact with other creditors "to identify and implement
financial options to achieve a long-term stabilization of the
company's financial structure by renegotiating its outstanding
debt."
Seat Pagine Gialle SpA (PG IM) -- http://www.seat.it/-- is an
Italy-based company that operates multimedia platform for
assisting in the development of business contacts between users
and advertisers. It is active in the sector of multimedia
profiled advertising, offering print-voice-online directories,
products for the Internet and for satellite and ortophotometric
navigation, and communication services such as one-to-one
marketing. Its products include EuroPages, PgineBianche,
Tuttocitta and EuroCompass, among others. Its activity is divided
into four divisions: Directories Italia, operating through, Seat
Pagine Gialle; Directories UK, through TDL Infomedia Ltd. and its
subsidiary Thomson Directories Ltd.; Directory Assistance, through
Telegate AG, Telegate Italia Srl, 11881 Nueva Informacion
Telefonica SAU, Telegate 118 000 Sarl, Telegate Media AG and
Prontoseat Srl, and Other Activitites division, through Consodata
SpA, Cipi SpA, Europages SA, Wer liefert was GmbH and Katalog
Yayin ve Tanitim Hizmetleri AS.
* * *
As reported by the Troubled Company Reporter-Europe on May 25,
2011, Moody's Investors Service downgraded to Caa3 from Caa1 the
corporate family rating and the probability of default rating of
Seat Pagine Gialle SpA. Concurrently, Moody's downgraded to Caa1
from B3 the rating on SEAT's EUR550 million senior secured notes
due 2017; and to Ca from Caa2 the rating on the EUR1.3 billion 8%
senior notes due 2014, issued by Lighthouse International Company
SA. Moody's said the outlook remains negative.
===================
K A Z A K H S T A N
===================
KAZPOST JSC: S&P Affirms Long-term Issuer Credit Rating at 'BB'
---------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB' long-term
issuer credit and 'kzA+' Kazakhstan national scale ratings on
Kazpost (JSC), a Kazakh postal operator. S&P subsequently withdrew
the ratings at the issuer's request.
"At the time of the withdrawal, the ratings on Kazpost reflected
our expectation of a 'high' probability of timely and sufficient
extraordinary government support in an emergency, and Kazpost's
'b' stand-alone credit profile," S&P said.
S&P's view of a "high" likelihood of extraordinary government
support was based on its assessment of Kazpost's:
* "Important role" as a provider of mail delivery and a
distributer of pension payments on behalf of the government.
Kazpost provides more than 80% of national regular mail
services and delivers about 45% of pensions and social
assistance payments in the country. Kazpost had a near
monopoly in rural areas where 43% of Kazakhstan's population
lives.
* "Very strong" link with the Kazakh government. Kazakhstan's
government wholly owns Kazpost through Samruk-Kazyna
(foreign currency BBB/Stable/A-3; local currency
BBB+/Stable/A-2; Kazakhstan national scale 'kzAAA').
Although partial privatization has been discussed in the
framework of the "people's IPO" considered by the government
for a few government-related entities, S&P doesn't think
such a privatization would weaken the company's link with
the government.
At the time of withdrawal, the 'b' stand-alone credit profile
reflected Kazpost's weak liquidity profile, low profitability, and
weak reporting systems and risk management. The stand-alone credit
profile was further pressured by Kazpost's plans to expand into
riskier retail lending, and plans to attract about KZT4.2 billion
of debt to fund its investment program. The stand-alone credit
profile was supported by Kazpost's adequate capitalization
and good market position in rural areas.
"We viewed Kazpost's liquidity position as weak. Although total
current wholesale funding--outstanding amount of US$6.2 million
from Islamic Development Bank (AAA/Stable/A-1+) as of May 1, 2011-
-stood at less than 3% of total assets, on-demand and short-term
retail customer deposits exceeded cash, cash equivalents, and
unpledged liquid securities on the same date," S&P related.
"At the time of withdrawal, the outlook was stable, indicating
that we didn't expect any changes in the policy and regulatory
framework that would challenge our expectations of a 'high'
probability of timely and sufficient support from the government
in an event of financial distress," S&P said.
=====================
N E T H E R L A N D S
=====================
GRESHAM CAPITAL: Moody's Upgrades Rating on Class D Notes to 'Ba1'
------------------------------------------------------------------
Moody's Investors Service has upgraded the ratings of these notes
issued by Gresham Capital CLO I B.V.:
Issuer: Gresham Capital CLO 1 B.V.
-- EUR48M Class A2 Senior Secured Floating Rate Notes, Upgraded
to Aa1 (sf); previously on Jun 22, 2011 A1 (sf) Placed Under
Review for Possible Upgrade
-- EUR16.5M Class B Deferrable Secured Floating Rate Notes,
Upgraded to Aa3 (sf); previously on Jun 22, 2011 Baa3 (sf)
Placed Under Review for Possible Upgrade
-- EUR18M Class C Deferrable Secured Floating Rate Notes,
Upgraded to A3 (sf); previously on Jun 22, 2011 Ba3 (sf)
Placed Under Review for Possible Upgrade
-- EUR21.6M Class D Deferrable Secured Floating Rate Notes,
Upgraded to Ba1 (sf); previously on Jun 22, 2011 Caa2 (sf)
Placed Under Review for Possible Upgrade
RATINGS RATIONALE
Gresham Capital CLO I B.V., issued in April 2006, is a multi-
currency Collateralised Loan Obligation backed by a portfolio of
mostly high yield European loans. The portfolio is managed by
Investec Bank Plc. This transaction will be in reinvestment period
until March 2012. It is composed of 87% senior secured loans and
8% CLO Securities (4% of those are currently reported as defaulted
by the Trustee).
According to Moody's, the rating actions taken on the notes are
primarily a result of applying Moody's revised CLO assumptions
described in "Moody's Approach to Rating Collateralized Loan
Obligations" published in June 2011. The actions also reflect
consideration of an increase in the transaction's
overcollateralization ratios, delevering of the senior notes since
the rating action in December 2009 as well as the positive ratings
migration expected on the CLO Securities included in the
portfolio.
The actions reflect key changes to the modeling assumptions, which
incorporate (1) a removal of the temporary 30% default probability
macro stress implemented in February 2009,(2) increased BET
liability stress factors as well as 3) change to fixed recovery
rate assumptions. Additional changes to the modeling assumptions
include (1) standardizing the modeling of collateral amortization
profile, and (2) changing certain credit estimate stresses aimed
at addressing time lags in credit estimate updates.
Moody's notes that the Class A1 notes and Variable Funding Notes
have been paid down by approximately 30% since the rating action
in December 2009. The delevering is a result of the failure of
some overcollateralization tests. In addition to principal pay
downs, excess spread is being diverted to pay down Class A Notes
and Variable Funding Notes as a result of Class E OC Test still
failing. The Overcollateralization ratios have increased since the
rating action in December 2009. As of the latest trustee report
dated April 20, 2011, the Class A, B, C, D and Class E
overcollateralization ratios are reported at 147.66%, 132.64%,
119.39%, 106.61%, and 100.85%, respectively, versus October 2009
levels of 128.74%, 118.68%, 109.36%, 99.94%, and 95.80%,
respectively.
Moody's adjusted WARF has declined since the rating action in
December 2009 due to a decrease in the percentage of securities
with ratings on "Review for Possible Downgrade" or with a
"Negative Outlook." Additionally, defaulted securities total about
EUR8 million of the underlying portfolio compared to EUR12.8
million in October 2009. The change in reported WARF understates
the actual credit quality improvement because of the technical
transition related to rating factors of European corporate credit
estimates, as announced in the press release published by Moody's
on September 1, 2010.
Due to the impact of revised and updated key assumptions
referenced in "Moody's Approach to Rating Collateralized Loan
Obligations" published in June 2011, key model inputs used by
Moody's in its analysis, such as par, weighted average rating
factor, diversity score, and weighted average recovery rate, may
be different from the trustee's reported numbers. In its base
case, Moody's analyzed the underlying collateral pool to have a
performing par and principal proceeds balance of EUR220 million,
defaulted par of EUR8 million, a weighted average default
probability of 21.61% (implying a WARF of 3064), a weighted
average recovery rate upon default of 44.3%, and a diversity score
of 31. The default probability is derived from the credit quality
of the collateral pool and Moody's expectation of the remaining
life of the collateral pool. The average recovery rate to be
realized on future defaults is based primarily on the seniority of
the assets in the collateral pool. For a Aaa liability target
rating, Moody's assumed that 97% of the portfolio exposed to
senior secured corporate assets would recover 50% upon default,
while the remainder corporate loans would recover 10%. In each
case, historical and market performance trends and collateral
manager latitude for trading the collateral are also factors.
These default and recovery properties of the collateral pool are
incorporated in cash flow model analysis where they are subject to
stresses as a function of the target rating of each CLO liability
being reviewed.
Moody's notes that this transaction is subject to a high level of
macroeconomic uncertainty, as evidenced by 1) uncertainties of
credit conditions in the general economy and 2) the large
concentration of speculative-grade debt maturing between 2012 and
2014 which may create challenges for issuers to refinance. CDO
notes' performance may also be impacted by 1) the manager's
investment strategy and behavior and 2) divergence in legal
interpretation of CDO documentation by different transactional
parties due to embedded ambiguities.
Sources of additional performance uncertainties are:
1) Delevering: The main source of uncertainty in this transaction
is whether delevering from unscheduled principal proceeds will
continue and at what pace. Delevering may accelerate due to
high prepayment levels in the loan market and/or collateral
sales by the manager, which may have significant impact on the
notes' ratings.
2) Recovery of defaulted assets: Market value fluctuations in
defaulted assets reported by the trustee and those assumed to
be defaulted by Moody's may create volatility in the deal's
overcollateralization levels. Further, the timing of recoveries
and the manager's decision to work out versus sell defaulted
assets create additional uncertainties. Moody's analyzed
defaulted recoveries assuming the lower of the market price and
the recovery rate in order to account for potential volatility
in market prices.
4) Weighted average life: The notes' ratings are sensitive to the
weighted average life assumption of the portfolio, which may be
extended due to the manager's decision to reinvest into loans
with longer maturities and/or participate in amend-to-extend
offerings.
5) Foreign currency exposure: The deal has exposure to non-EUR
denominated assets. Volatilities in foreign exchange rate will
have a direct impact on interest and principal proceeds
available to the transaction, which may affect the expected
loss of rated tranches.
The principal methodology used in this rating was "Moody's
Approach to Rating Collateralized Loan Obligations" published in
June 2011. Other methodologies and factors that may have been
considered in the process of rating this issuer can also be found
on Moody's website.
Moody's modeled the transaction using the Binomial Expansion
Technique, as described in Section 2.3.2.1 of the "Moody's
Approach to Rating Collateralized Loan Obligations" rating
methodology published in June 2011.
The cash flow model used for this transaction, whose description
can be found in the methodology listed above, is Moody's EMEA
Cash-Flow model.
In addition to the quantitative factors that are explicitly
modeled, qualitative factors are part of the 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, specific
documentation features, the collateral manager's track record, and
the potential for selection bias in the portfolio. 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 also notes that 66% of the collateral pool consists of
debt obligations whose credit quality has been assessed through
Moody's credit estimates. if there are large CE in the pool: Large
single exposures to obligors bearing a credit estimate have been
subject to a stress applicable to concentrated pools as per the
report titled "Updated Approach to the Usage of Credit Estimates
in Rated Transactions" published in October 2009.
Moody's Investors Service did not receive or take into account a
third party due diligence report on the underlying assets or
financial instruments related to the monitoring of this
transaction in the past six months. Moody's does not have access
to the underlying portfolio information relating to the non
recoverable costs.
OPERA FINANCE: Fitch Cuts Rating on Two Classes of Notes to 'CC'
----------------------------------------------------------------
Fitch Ratings has downgraded the ratings of three tranches,
affirmed the rating for one tranche and removed the Rating Watch
Negative from two tranches of Opera Finance (Uni-Invest) B.V.:
-- EUR365.2.1m class A (XS0218487436) downgraded to 'CCCsf'
from 'BBBsf'; Recovery Rating (RR) 1 assigned; Removed from
Rating Watch Negative
-- EUR90.0m class B (XS0218489135) downgraded to 'CCsf' from
'Bsf'; RR3 assigned; Removed from Rating Watch Negative
-- EUR94.8m class C (XS0218490653) downgraded to 'CCsf' from
'CCCsf'; remains on RR6
-- EUR59.4m class D (XS0218492279) affirmed at 'CCsf'; remains
on RR6
The notice to noteholders on June 27, 2011 which stated that the
noteholder steering committee had been disbanded due to the
failure to reach a consensus in respect of the bids for the
company and its assets. Fitch's rating actions reflect the
agency's concern that a workout may not be completed prior to
legal maturity of the notes and that the compressed timeframe
could reduce the proceeds of an asset sale.
While it may still be possible to reach a consensual agreement
between noteholders and potential purchasers of the assets, Fitch
expects the special servicer (Eurohypo) will commence a loan
enforcement process, seeking disposal of the company as a going
concern, possibly to one of the bidders involved in the previous
sales process. This would be conducted through a Dutch court
process, following an unconditional offer from a prospective
purchaser. The buyer would then be able to purchase the shares in
the company, with the proceeds used to redeem the outstanding
notes on a sequential basis.
This is a tried and tested enforcement method, but it remains to
be seen whether there is enough time to complete such a process by
final maturity of the notes in February 2012. The special servicer
has stated that it intends and expects to achieve a full
resolution prior to this date. However unforeseen delays could
occur when disposing of an asset portfolio as large and
complicated as that securing this loan. In the event that the loan
has not been repaid by the final legal maturity date of the notes
it is likely that Fitch's ratings of any outstanding notes would
be downgraded to 'Dsf'.
It is possible that the enforcement process could be delayed or
disrupted, particularly if the controlling party (class D
noteholders) opt to appoint a new special servicer through an
extraordinary resolution. It is unclear whether another servicer
would be willing to take on this role, given the stage which the
transaction has reached, and whether the requisite 75% of the
class D noteholders would support such action in any case. If it
becomes clear that class D noteholders will suffer a significant
loss as a result of the proposed workout they may have sufficient
incentive to wish to delay or disrupt the process, in order to
improve their bargaining position.
Fitch understands that the asset portfolio had attracted a number
of bidders before the sales process was suspended. Therefore,
assuming the workout process adopted will now allow the special
servicer to offer the company for sale without the encumbrance of
the existing debt structure, it seems likely that there will again
be bidders for the portfolio. However, there is a risk that
prospective purchasers could use the restricted timeframe to
negotiate a lower transaction price, as the final legal maturity
of the notes approaches. As a result it remains difficult to
accurately assess the likely recovery amounts for the various debt
holders.
The special servicer has released previously confidential
documents relating to the steering committee discussions. These
included a desktop valuation of the portfolio as at April 2011 by
CBRE which provided an indicative market value of EUR633.6
million. The expected value in three other scenarios was also
indicated: i) optimal value of EUR719.5 million; ii) downside
value of EUR444.1 million based on a compressed timeframe to sell
the portfolio in six to twelve months; and iii) firesale value of
EUR400 million based on a sale within six months. Fitch views the
downside and firesale values of the portfolio to be the most
representative of likely recovery amounts, given the limited
remaining time to the final maturity of the notes and the nature
of the portfolio. Fitch's Recovery Ratings reflect the strong loan
recovery prospects for the securitized debt based on these
indications of value.
The size, complexity and secondary nature of the underlying
portfolio have encouraged the special servicer to seek to keep the
property managers involved in the operation and sale of the
assets. Portfolio operating costs (including corporate overheads)
absorb approximately one-third of gross rental income, driven by
the vacancy rate of over 30%. Annualized net operating income is
on a downward trend, due to asset disposals as well as rising
vacancies and high operating costs.
The portfolio has reduced since loan maturity, with approximately
EUR116.5 million of asset disposals. However, with the exception
of sales committed prior to the February 2011 interest payment
date, further asset sales have been halted. Over the past 15
months, the borrower has managed to achieve only 26 asset
disposals, leaving 204 properties remaining in the portfolio.
Fitch will continue to monitor the performance of the transaction.
RBS CAPITAL: S&P Lowers Ratings on Hybrid Instruments to 'C'
------------------------------------------------------------
Standard & Poor's Ratings Services lowered to 'C' from 'CC' the
ratings on the three hybrid instruments retained by RBS Holdings
N.V. as it had anticipated in its rating action of Nov. 30, 2009.
The downgrade follows the deferrals of coupon payments on these
three instruments on June 30, 2011. The deferrals are the result
of restrictions on coupon payments imposed by the European
Commission on RBS Holdings N.V. and announced in November 2009.
With the recent expiry of dividend pusher periods, the group is
now deferring coupon payments, as required by the EC. The
restrictions on coupon payments will expire in April 2013.
Ratings List
To From
RBS Capital Funding Trust V
US$1.25 bil 5.9% callable perp non-cum gtd trust pfd secs (ISIN:
US00372P2039)*
C CC
RBS Capital Funding Trust VI
US$200 mil 6.25% non cum trust pfd secs callable (ISIN:
US00080V2034)*
C CC
RBS Capital Funding Trust VII
US$1.8 bil 6.08% non cum gtd trust pfd secs callable (ISIN:
US00372Q2012)*
C CC
*Guaranteed by RBS Holdings N.V.
===========
P O L A N D
===========
GETIN NOBLE: Fitch Says Parent's Division Won't Affect Ratings
--------------------------------------------------------------
Fitch Ratings says that the intended division of Getin Holding
will have no direct impact on the ratings of Getin Noble Bank SA.
GNB is currently a subsidiary of GH, comprising about 90% of the
group's assets (before consolidation adjustments), but will cease
to be so following the division.
The agency believes that the planned reverse merger of Allianz
Bank Polska with GNB in H112 is also likely to be neutral for
GNB, given the relatively small size of ABZ. Fitch believes that
the merged bank will have a similar risk profile to GNB. At end-
Q111, ABZ's and GNB's total assets equaled about PLN0.9 billion
and PLN45 billion, respectively.
GH plans to acquire 63% of Idea Bank (IB, currently fully-owned by
GNB). As a result, GNB will have to deduct its minority stake in
IB (around PLN132 million) from regulatory capital, which would
absorb around 26bp of the consolidated Tier 1 ratio at end-Q111.
However, this impact will be offset by a sizeable gain on the
disposal (April 2011) of the majority stake in a subsidiary (Open
Finance).
Fitch also notes that after the spin-off of GNB to ABZ, ultimate
control of GNB will remain unaltered. Currently, GNB's ratings do
not factor in potential external support from the bank's majority
shareholder, as Fitch believes that such support cannot be relied
upon.
GNB is a universal retail bank listed on the Warsaw Stock
Exchange. GH, which is ultimately controlled by Leszek Czarnecki,
holds a 93.7% stake in GNB. At end-Q111, GNB was the 10th-largest
bank in Poland by total assets.
GNB's ratings are:
-- Long-term foreign currency IDR: 'BB'; Outlook Stable
-- Short-term foreign currency IDR: 'B'
-- National Long Term Rating: BBB(pol); Outlook Stable
-- Individual Rating: 'D'
-- Support Rating: '3'
-- Support Rating Floor: 'BB'
TU EUROPA: Fitch Affirms IFS Rating at 'BB'; Outlook Stable
-----------------------------------------------------------
Fitch Ratings has affirmed Towarzystwo Ubezpieczen EUROPA SA's and
Towarzystwo Ubezpieczen na Zycie EUROPA SA's, its wholly-owned
subsidiary, Insurer Financial Strength ratings at 'BB'. At the
same time, the agency has affirmed both companies' National IFS
ratings at 'BBB(pol)'. The Outlook on all ratings is Stable.
The two companies form the Poland-based EUROPA Group (EUROPA).
The affirmation reflects EUROPA's sustained good operating
performance, which continues to support the rating, experienced
management team, disciplined strategy and solid level of risk-
adjusted capitalization, which is consistent with the rating level
for both companies.
Fitch views positively the relative dilution in EUROPA's
ownership, following the secondary public offering in 2010, and
action taken by management to reduce the non-life company's
unconsolidated exposure (now 1.2% of total invested assets) to
Getin Noble Bank (GNB: 'BB'/Stable). However, given the
materiality of GNB within the Getin Group, and considering the
concentration of EUROPA's investment portfolio in GNB assets
remains at the current high levels, EUROPA's ratings will remain
strongly linked to GNB's ratings. Fitch notes that EUROPA retains
strong ties with GNB, in particular through the high level of
exposure of the investment portfolio to GNB (over 80% of total
invested assets) and EUROPA's high reliance on GNB for
distribution of its products. The Stable Outlook partly reflects
Fitch's recent rating action on GNB.
The EUROPA insurance entities are rated on a group approach, with
both the non-life and life companies being considered core. The
ratings of both companies are currently equalized due to the
structural proximity of the life company to the non-life company.
Fitch also notes that EUROPA's management has not ruled out the
possibility of providing additional financing to the life company
from the non-life company, should it be required, as has happened
in the past. The agency views this support as further
justification to equalize the ratings at this time.
EUROPA's niche focus on credit-related insurance and investment
products aimed at the Polish financial sector, closely links the
insurer's earnings performance with the health of the Polish
economy. Positively, the Polish economy has proved relatively
resilient to the global credit crisis to date, as reflected in the
stability of EUROPA's operating performance. Consolidated revenues
increased to PLN699.7 million at FY2010 (+15.6%), with strong
growth from the non-life business offsetting a decline in life
premiums: non-life PLN499.8 million (+43%) and life PLN199.9
million (-21.9%). Growth in consolidated net profitability was
creditable, albeit more modest in comparison with top line growth,
rising to PLN150.5 million (+25%).
Given the business concentration, action taken on GNB's ratings is
likely to influence EUROPA's ratings too. A material weakening of
EUROPA's capital position from the currently assessed level could
also lead to a downgrade. Any rating action would factor in the
relative movement of coverage strength of both Fitch's risk-
adjusted assessment and the published regulatory position.
The planned expansion of the EUROPA group is expected to result in
a greater level of product and geographic diversification which,
if successfully executed, could provide uplift to the rating in
the medium term. A reorganization of the insurance operating
companies, which resulted in a separation of the non-life and life
companies within the Getin organization structure, could raise the
possibility of a separation of ratings for the insurance
operations.
EUROPA is 66.5% (79.9% prior to SPO in 2010) owned by Getin
Holding SA group, which includes GNB and a number of leasing
companies. EUROPA's relatively undiversified ownership and
business concentration to group companies has previously been
viewed as a negative rating factor. Fitch views the recent
dilution in ownership positively.
===========
R U S S I A
===========
EUROSIA DRILLING: Fitch Assigns Final 'BB' Rating to RUB5BB Bonds
-----------------------------------------------------------------
Fitch Ratings has assigned OOO Burovoya Kompaniya Eurasia's 8.4%
coupon RUB5 billion bonds due to mature in 2018 a final senior
unsecured rating of 'BB' and a final National senior unsecured
rating of 'AA-(rus)'.
The bonds are the first tranche of BKE's domestic RUB11 billion
bond program and have a put option in 2016, thus their effective
maturity is five years.
BKE is a wholly owned indirect subsidiary of Eurasia Drilling
Company Limited (EDC, 'BB'/Stable). BKE provides onshore drilling
services in Russia and accounted for most of EDC's revenues and
EBITDA in 2010. BKE will use the proceeds from the bonds to
lengthen debt maturity profile.
EDC's other ratings are:
-- Long-term local currency Issuer Default Rating (IDR): 'BB';
Outlook Stable
-- National Long-term rating: 'AA-(rus)'; Outlook Stable
-- Short-term foreign currency IDR: 'B'
-- Short-term local currency IDR: 'B'
OTP BANK: Moody's Upgrades BFSR to D-; Outlook Stable
-----------------------------------------------------
Moody's Investors Service has upgraded the bank financial strength
rating of OJSC OTP Bank (Russia) to D- (mapping to Ba3 on the long
term scale) from E+ (mapping to B1 on the long term scale), with a
stable outlook. At the same time, the long-term and short-term
local and foreign currency deposit ratings were affirmed at
Ba1/Non-prime. The outlook on the long-term ratings remains
negative.
Moody's re-assessment of the bank's BFSR is largely based on
OTPR's audited financial statements for 2010 prepared under IFRS.
RATINGS RATIONALE
According to Moody's, the upgrade of OTPR's BFSR to D- is based on
the following: (i) improved market positions and diversification
of business supported by good access to funding in crisis times;
(ii) development of risk models and seasoning of business in
Russia has resulted in improved and more sustainable risk-adjusted
profitability due to a decline in risk costs and improved cost
efficiency; and (iii) improvement in the bank's asset quality and
diminished pressure on capital from credit risks as reflected in a
notable decline in exposure to the risky construction and real
estate sectors as well as the reduction of its borrower
concentrations.
Moody's notes that, in contrast with many of OTPR's peers, the
bank has improved its market positions during the recent financial
crisis by extending its lending activity and geographical coverage
thanks to a solid core retail deposit base and low dependence on
third-party wholesale funding, which allowed the bank to continue
growing its loan portfolio. According to audited financial
statements under IFRS at year-end-2010, third-party wholesale
funding accounted for only 8% of total liabilities. While the bank
intends to grow this source of funding, management does not expect
it to exceed 20% of non-equity funding and it may be substituted
by parental funding in case of need.
OTPR's bank-specific risk cost associated with the retail book
decreased significantly as a result of development of risk models
and seasoning of business. This, together with (i) the bank's
cost-cutting measures, and (ii) improved economies of scale,
improved the risk adjusted performance, which enabled the bank to
demonstrate solid return on equity (ROE) of over 25% in 2010. In
addition, exposure to long-term Russian-based risk decreased,
thereby easing pressure on equity (e.g. exposure to the
construction and real estate sectors reduced from approximately
100% of equity at end-H1 2009 to 39% at year-end 2010).
OTPR's BFSR continues to be underpinned by: (i) steadily
strengthening franchise and leading positions in certain niche
products which benefit from improved technology and funding; (ii)
minimal corporate governance concerns as the bank is not involved
in related party lending; (iii) sound liquidity as a result of
prudent liquidity management; and (iv) adequate capitalization
supported by the parent through regular capital injections and
sound internal capital generation.
At the same time, Moody's notes that OTPR's BFSR continues to be
constrained by: (i) the still sizable cost base which continues to
exert pressure on profitability (albeit to a much lesser extent
than in the past); (ii) high dependence on the parent -- OTP Bank
(Hungary) -- in terms of ongoing business support, which exposes
the bank to divestiture risks -- as funding from the parent
accounted 22% of non-equity funding at year-end 2010; (iii) still
higher-than-average appetite for long-term Russian-based risks,
such as real estate and construction; and (iv) low diversification
of the corporate franchise.
OTPR's Ba1 deposit ratings incorporate a very high probability of
parental support from OTP Bank (Hungary), and consequently receive
a two-notch uplift from the bank's Ba3 standalone rating (BCA).
Moody's assessment of a very high probability of parental support
is based on (i) the significant operational integration, (ii)
strong strategic fit of OTP with OTP Bank Group, as Russia is one
of three strategic foreign markets for the group, and (iii) the
parent's demonstrated willingness to provide ongoing capital and
liquidity support. At the same time, there remains the risk that
the Russian market could lose its attractiveness, such that OTPR
may be considered non-strategic at a future date.
The negative outlook on the deposit ratings of OTPR reflects the
negative outlook on the Baa3 standalone rating of OTP Bank
(Hungary), the bank's support provider.
PRINCIPAL METHODOLOGIES
The principal methodologies used in this rating were Bank
Financial Strength Ratings: Global Methodology published in
February 2007, and Incorporation of Joint-Default Analysis into
Moody's Bank Ratings: A Refined Methodology published in
March 2007.
Headquartered in Moscow, OTPR reported total assets of RUB97.5
billion (US$3.2 billion) and equity of RUB14.5 billion (or US$476
million), according to the bank's audited IFRS financial report at
year-end 2010. The bank is one of the market leaders in unsecured
retail lending in Russia, with the target products being point of
sale (POS) and credit cards. OTP Bank (Hungary) controls over 95%
of the bank's shares.
=========
S P A I N
=========
BANKIA: Launches Deeply Discounted Stock Listing to Raise Funds
---------------------------------------------------------------
Miles Johnson at The Financial Times reports that two of Spain's
private savings banks have launched deeply discounted stock
listings as they race to raise as much as EUR5 billion (US$7.3
billion) in private funds and avoid partial nationalization.
According to the FT, Bankia, Spain's largest unlisted savings
bank, plans to raise EUR3 billion to EUR4 billion, while Banca
Civica, its smaller rival, aims to sell EUR844 million in equity
on the Madrid stock exchange.
Bankia, formed out of Caja Madrid and six other cajas, and C¡vica
are both attempting to list to meet capital requirement rules
imposed by the Bank of Spain, the FT discloses.
The release of Bankia's prospectus was delayed earlier after the
Comision Nacional del Mercado de Valores, the stock market
regulator, forced it to make changes to the document, the FT
notes.
Bankia has set a price of EUR4.41 to EUR5.05 per share for its 825
million shares, the FT discloses. The FT says the initial public
offering could value the caja at EUR7.6 billion to EUR8.8 billion
and allow it to control more than half of its equity.
At this price, the Bankia listing would value it at a discount of
at least 49% below its EUR13 billion book value, underlining the
measures Spanish savings banks are taking to lure investors, the
FT states. Bankia will sell 60% of the issue to retail investors
and the rest to institutions, according to the FT.
Meanwhile, Banca Civica is selling 222 million new shares for
EUR2.70 to EUR3.80 apiece, listing 47.5% of its equity capital for
a possible value of EUR1.9 billion, the FT relates. Its discount
to book value is greater than Bankia's at about 60%, the FT
discloses.
If the listings succeed, both cajas will begin trading on the
Madrid exchange on July 20, the FT notes.
Doubts
Spain's regional savings banks, known as cajas, had been largely
unknown outside the country until a decade-long property bubble
burst, leaving their balance sheets riddled with bad loans and
prompting the government to force many into emergency mergers, the
FT states.
Separately, the FT reports that with a balance sheet of EUR280
billion heavily exposed to Spain's ailing real estate sector,
skeptics have questioned whether the hastily performed surgery to
create and sell Bankia will be the cure for Spain's caja-related
ills, or instead result in a Frankenstein's monster.
Several investors and rival bankers interviewed by the FT raised
concerns about the impact a further decline in Spanish real estate
could have on Bankia's assets, and the future relationship between
Bankia and BFA, the "bad bank" it was split from as part of its
reorganization.
The appointment of executive chairman Rodrigo Rato, former
International Monetary Fund managing director, has placed an
internationally known figure at its head, but doubts remain about
a management team that has little experience running a listed
financial company, the FT notes.
Bankia has EUR32.9 billion of real estate exposure, or 17% of its
balance sheet, the FT discloses. The FT notes that while the bulk
of this is in land and finished real estate developments, about
EUR6 billion is not collateralized by property, instead being
loans to large developers secured by pledged shares, or personal
guarantees on their assets. The FT says much of these loans are
syndicated, meaning that if they were to become troubled the pain
would be spread among dozens of banks, rather than just Bankia
itself. Bankia will also have to assure investors it can cope
with the large amount of debt the bank will have to refinance over
the next year and a half coming at a time when many cajas have
found the capital markets all but closed to them, the FT
discloses. Next year EUR18.7 billion of its debt matures, with
EUR24 billion maturing in the next 18 months, much of this in
short- and medium- term maturities, the FT states.
By shrinking its loan book by about EUR6 billion, and increasing
its deposit base, Bankia has begun to tackle the problem, meaning,
after the bulk of the IPO proceeds are used to pay down debt it
will be left with about EUR13 billion to refinance, the FT notes.
A separate cause for concern is the possibility of Bankia entering
into a funding agreement with its bad bank parent after the IPO,
something which is not prevented in the agreement between the two
companies, the FT says, citing people close to the lender.
Bankia is a Spanish saving bank.
BBVA CONSUMO 2: Fitch Affirms Rating on Class C Notes at 'Bsf'
--------------------------------------------------------------
Fitch Ratings has affirmed two BBVA consumer loan transactions.
The affirmations follow a review of the transactions' performance.
Since the previous review in February 2010, both transactions have
shown some signs of improvement in performance. Although both
reserve funds remain below target levels, improvements in excess
spread have contributed to the gradual replenishment of each
transactions' reserve fund.
Cumulative default rates remain above original base cases but the
rate of increase appears to be stabilizing for BBVA Consumo
1.Reported recovery rates have been lower than Fitch's
expectations and are currently below 20% of the defaulted
portfolio for both transactions, compared to Fitch's expected
cases above 40%. Both deals benefit from a guaranteed excess
spread of 325bps via the swap. Fitch gave full credit to this
feature in its ratings analysis.
As of June 2011, BBVA Consumo 1 had amortized to 22.2% of its
original balance while BBVA Consumo 2 had amortized to 32.7%. The
revolving periods terminated in April 2008 and September 2008,
respectively, and no early amortization events have occurred.
BBVA Consumo 1 and BBVA Consumo 2 are true sale securitizations of
a pool of consumer loans originated in Spain by Banco Bilbao
Vizcaya Argentaria S.A. (BBVA, the seller and servicer, rated 'AA-
'/Stable/'F1+'). The two transactions are have similar structures,
with the main difference being that BBVA Consumo 2 had a
significant portion (44%) of collateral linked to auto loans.
The rating actions are:
BBVA Consumo 1
-- EUR280.1m class A notes affirmed at 'AA+sf' ; Outlook
revised to Stable from Negative; Loss Severity (LS) Rating
'LS-1'
-- EUR28.5m class B notes affirmed at 'BBBsf'; Outlook revised
to Stable from Negative; LS Rating 'LS-3'
EUR24m class C notes affirmed at 'Bsf' ; Outlook revised to
Stable from Negative; LS Rating 'LS-3'
BBVA Consumo 2
-- EUR431.2m class A notes affirmed at 'AAsf'; Outlook revised
to Stable from Negative; LS Rating 'LS-1'
-- EUR16.5m class B notes affirmed at 'BBBsf'; Outlook revised
to Stable from Negative; LS Rating 'LS-4'
-- EUR42.8m class C notes affirmed at 'Bsf'; Outlook revised to
Stable from Negative; LS Rating 'LS-3'
CAIXABANK - CEDULAS: Moody's Assigns Rating to Covered Bonds
------------------------------------------------------------
Moody's Investors Service has taken these rating actions on the
mortgage covered bonds (Cedulas Hipotecarias or CHs) and public-
sector covered bonds (Cedulas Territoriales or CTs) transferred to
CaixaBank (rated Aa2/P-1/B-, negative outlook, former Criteria
CaixaCorp):
- Mortgage covered bonds assumed by CaixaBank: Aaa, new rating.
- Mortgage covered bonds issued by La Caixa: Aaa, withdrawn for
reorganisation; previously rated Aaa in April 1999.
- Public-sector covered bonds assumed by CaixaBank: Aaa, new
rating.
- Public-sector covered bonds issued by La Caixa: Aaa, withdrawn
for reorganization; previously rated Aaa in August 2006.
RATINGS RATIONALE
The rating actions were prompted by the effective transfer on
June 30, 2011 of La Caixa's banking activities to Criteria
CaixaCorp (Criteria) -- formerly a majority-owned subsidiary of La
Caixa -- which was re-named CaixaBank. On January 27, the board of
directors of both La Caixa and Criteria agreed to transform
Criteria into a bank by transferring La Caixa's banking assets and
liabilities to Criteria. Criteria transferred to La Caixa part of
its industrial stakes and EUR2 billion new shares. Subsequent to
these transactions, Criteria converted into a bank from its
current holding-company status.
La Caixa, which maintains its savings bank character, will
continue to manage its existing social welfare fund as well as the
remaining industrial portfolio. Following the transformation, the
long-term issuer rating of CaixaBank was upgraded to Aa2 from A2.
CaixaBank has assumed all of La Caixa's deposit obligations and
most of its debt obligations (excluding part of the subordinated
debt and government-guaranteed debt), including their existing CHs
and CTs.
Moody's understands that the new cover pool backing CaixaBank's
CHs is La Caixa's former total mortgage pool and has therefore
taken a view on La Caixa's former pool. Moody's has sufficient
information on this pool to assess its credit quality.
Likewise, Moody's understands that the new cover pool backing the
CaixaBank's CTs is La Caixa's former total public-sector pool.
Therefore, Moody's has taken a view on La Caixa's former pool.
Moody's has sufficient information on this pool to assess its
credit quality.
The mortgage covered bonds constitute direct, unconditional and
senior obligations of CaixaBank and are secured by the issuer's
entire mortgage loan pool (excluding securitised loans).
The public-sector covered bonds also constitute direct,
unconditional and senior obligations of CaixaBank and are secured
by the issuer's entire domestic and EEA public-sector loan pool.
The new ratings takes into account these factors:
(1) The credit strength of CaixaBank (Aa2/P-1/B-).
(2) The structure created by the transaction documents in
combination with the legal framework for Spanish mortgage and
public-sector covered bonds.
(3) The credit quality of the assets securing the payment
obligations of the issuer under the covered bonds. All the
cover assets covering the CHs are residential or commercial
mortgages originated in Spain. Most of the assets covering the
CTs are loans to Spanish regional and local governments or
companies owned by such entities.
(4) Sizeable amounts of over-collateralization. For mortgage
covered bonds: on a statutory level this is 25% based on the
eligible cover pool, and total over-collateralization as of
end-March 2011 was 148.5%. The over-collateralization level
needed to maintain the current rating is 11%. For public-
sector covered bonds: on a statutory level this is 42.9%, and
the over-collateralization as of end-March 2011 was 349.7%.
The over-collateralization level needed to maintain the
current rating is 5.5%.
Moody's has assigned a TPI of "Probable" to the CHs and "Probable-
High" to the CTs.
The ratings assigned by Moody's address the expected loss posed to
investors. Moody's ratings address only the credit risks
associated with the transaction. Other non-credit risks have not
been addressed, but may have a significant effect on yield to
investors.
The ratings assigned to the existing CHs and CTs is expected to be
assigned to all subsequent covered bonds issued by CaixaBank under
these programs and any future rating actions are expected to
affect all such covered bonds. If there are any exceptions to
this, Moody's will in each case publish details in a separate
press release.
KEY RATING ASSUMPTIONS/FACTORS
Covered bond ratings are determined after applying a two-step
process: expected loss analysis and TPI framework analysis.
EXPECTED LOSS: Moody's determines a rating based on the expected
loss on the bond. The primary model used is Moody's Covered Bond
Model (COBOL) which determines expected loss as a function of the
issuer's probability of default, measured by its rating of Aa2,
and the stressed losses on the cover pool assets following issuer
default.
Mortgage covered bonds:
The estimated Cover Pool Losses for this program are 33.2%. This
is an estimate of the losses Moody's currently models in the event
of issuer default. Cover Pool Losses can be split between Market
Risk of 20% and Collateral Risk of 13.2%. Market Risk measures
losses as a result of refinancing risk and risks related to
interest-rate and currency mismatches (these losses may also
include certain legal risks). Collateral Risk measures losses
resulting directly from the credit quality of the assets in the
cover pool. Collateral Risk is derived from the Collateral Score
which for this program is currently 19.8%.
Public-sector covered bonds:
The estimated Cover Pool Losses for this program are 27.9%. This
is an estimate of the losses Moody's currently models in the event
of issuer default. Cover Pool Losses can be split between Market
Risk of 19.1% and Collateral Risk of 8.8%. Market Risk measures
losses as a result of refinancing risk and risks related to
interest-rate and currency mismatches (these losses may also
include certain legal risks). Collateral Risk measures losses
resulting directly from the credit quality of the assets in the
cover pool. Collateral Risk is derived from the Collateral Score
which for this program is currently 15.9%.
TPI FRAMEWORK: Moody's assigns a TPI which indicates the
likelihood that timely payment will be made to covered bondholders
following issuer default. The effect of the TPI framework is to
limit the covered bond rating to a certain number of notches above
the issuer's rating.
SENSITIVITY ANALYSIS
The robustness of a covered bond rating largely depends on the
credit strength of the issuer.
The number of notches by which the issuer's rating may be
downgraded before the covered bonds are downgraded under the TPI
framework is measured by the TPI Leeway. Based on the current TPI
of "Probable" and "Probable-high" for the mortgage covered bonds
and public-sector covered bonds, respectively, the TPI Leeway for
both programs is four notches, meaning the issuer rating would
need to be downgraded to Baa1 before the covered bonds are
downgraded, all other things being equal.
A multiple notch downgrade of the covered bonds might occur in
certain limited circumstances. Some examples might be (i) a
sovereign downgrade negatively affecting both the issuer's senior
unsecured rating and the TPI; (ii) a multiple notch downgrade of
the issuer; or (iii) a material reduction of the value of the
cover pool.
For further details on Cover Pool Losses, Collateral Risk, Market
Risk, Collateral Score and TPI Leeway across all covered bond
programs rated by Moody's please refer to "Moody's EMEA Covered
Bonds Monitoring Overview", published quarterly. These figures are
based on the most recent reporting by the issuer and are subject
to change over time.
The principal methodology used in rating CaixaBank was Moodys
Approach to Rating Covered Bonds Rating Methodology, published in
March 2010.
SANTANDER FINANCIACION: S&P Cuts Rating on Class D Notes to 'D'
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered and removed from
CreditWatch negative its credit ratings on Fondo de Titulizacion
de Activos Santander Financiacion 1's class B and C notes. "At
the same time, we lowered our rating on the class D notes.
Additionally, we have affirmed and removed from CreditWatch
negative our rating on the class A notes and affirmed our ratings
on the class E and F notes," S&P said.
"In March 2011, we lowered our rating on Santander Financiacion
1's class D notes and placed on CreditWatch negative our ratings
on the class A, B, and C notes following our preliminary credit
analysis at that time," S&P related.
"We have now performed a full review of the transaction's
collateral performance and structural features, and we have taken
the rating actions in light of the significant performance
deterioration of the underlying collateral backing this
transaction and weakening of the credit enhancement available to
the rated notes," S&P stated.
"Since our last review, we have observed that the level of
cumulative defaults is still increasing and we are therefore
reviewing our default rate assumptions in this transaction. While
the level of short-term delinquencies has been decreasing as of
the latest interest payment dates, we associate this with a
rollover of long-term delinquencies into defaults. In our view,
this indicates that there are insufficient proceeds available to
the issuer to cure such long-term delinquencies," S&P said.
The transaction documents define defaulted assets in this
transaction as assets that have been in arrears for more than 12
months. "In addition, we have not received any recovery
information on defaulted assets from the trustee," S&P said.
"We have consequently lowered our recovery assumptions, taking
into account the lack of recoveries data and the level of
recoveries observed in similar Spanish transactions backed by the
same type of unsecured loans and the same origination years with
Banco Santander S.A. also as servicer of these loans," S&P
related.
As of the most recent payment date in April 2011, the reported
ratio of cumulative defaults -- loans being delinquent for more
than 12 months -- represented 7.38% over the original portfolio
balance securitized at closing.
Due to this increase in defaults associated with a lack of
recoveries, the level of performing collateral available to the
transaction to service the amounts due under the notes is
weakening. Although this level of credit enhancement provided by
the performing balance is positive for the class A, B, and C
notes, it is now negative for the class D, E, and F notes, which
are therefore undercollateralized. Based on the current level of
proceeds received by the reserve fund, the fund will not be able
to repay principal due when these classes mature.
A reserve fund -- funded at closing by the issuance proceeds of
the class F notes -- provides credit enhancement to the rated
notes. It is used to cure defaults in the deal and it has now been
fully depleted since the January 2009 payment date. Since this
date, the reserve fund has not been replenished as the performing
collateral balance has decreased. Additionally, the transaction
did not receive sufficient excess spread to allocate towards the
reserve fund's replenishment.
The reserve fund's depletion has exposed the class E and F notes
to principal amortization deficiencies. These principal
deficiencies began to accrue on the April 2009 interest payment
date, in which the reserve fund was fully depleted, resulting in
interest being deferred on the class D and E notes. "We lowered to
'D (sf)' our rating on the class E notes in August 2009 following
the nonpayment of interest on the July 2009 interest payment date.
At the same time, we lowered to 'CCC (sf)' our rating on the class
D notes as the deferral trigger was close to being breached, and
in February 2011, we further downgraded our rating to 'CCC- (sf)'.
We have since received confirmation that the class D notes did not
pay the amount of interest due on the April 2011 interest payment
date. According to our 'Principles Of Credit Ratings' criteria,
this constitutes a default under our rating definition of such
class that addresses the timely payment of interest and ultimate
payment of principal," S&P stated.
As of the last payment date, the fund accumulated EUR41.8 million
of principal deficiency, which is the difference between the
available remaining principal receipts and the amount of the notes
still to be amortized. According to the transaction documents,
Santander Financiacion 1 will defer the class C notes' interest
when this deficit reaches EUR104.95 million, which is the sum of
50% of the class C notes' principal outstanding balance and 100%
of the class D and E notes' principal outstanding balance as per
the last interest payment date data.
The transaction closed in December 2006 and is now highly seasoned
with a pool factor of 15%. The paydown of the underlying assets
has triggered the amortization of the most senior class of notes
as the notes are paying principal on a sequential basis. Due to
this redemption feature, the level of credit enhancement taking
into account the subordination of junior rated classes has
significantly increased for the class A, B, and C notes. "However,
as the class D and E notes are now undercollateralized, they are
not providing the same level of support to the class A, B, and C
notes as we consider the class D and E notes to be nonperforming,
according to our rating definitions. In addition, these classes do
not benefit from the support of the reserve fund that is now fully
depleted. The class F notes were issued to fund the reserve
fund at closing, and were therefore never backed by underlying
assets," S&P stated.
"Based on the review of our credit analysis assumptions in terms
of default and recoveries and taking into account the current
weakened level of support available to the rated notes in the
capital structure, while the class A notes achieve a 'AAA (sf)'
rating in our cash flow review, we consider a 'A+ (sf)' rating to
be appropriate for the class B notes, as our cash flow analysis
indicates. We have consequently lowered to 'A+ (sf)' from 'AA
(sf)' and removed from CreditWatch negative our rating on the
class B notes," S&P related.
The class C notes cannot benefit from the support of the class D
notes, which are currently rated 'D (sf)'. "Based on the
insufficient credit enhancement available to support a 'A- (sf)'
rating in our cash flow analysis, we have lowered to 'BB- (sf)'
from 'A- (sf)' and removed from CreditWatch negative our
rating on the class C notes. However, we believe that the notes
are not vulnerable to nonpayment of interest in the short term,"
S&P noted.
"We have lowered to 'D (sf)' our rating on the class D notes
following the issuer's failure to meet timely interest payments on
the April 2011 payment date," S&P said.
"We placed the class A notes on CreditWatch negative on Jan. 18,
2011 when our 2010 counterparty criteria became effective," S&P
related.
"Since then, we have received evidence of legally binding
agreements that are in line with our updated criteria. As our cash
flow analysis indicates that a 'AAA (sf)' rating is appropriate
for the class A notes, we have therefore affirmed and removed from
CreditWatch negative our rating on these notes due to counterparty
risk," S&P said.
"We have affirmed our 'D (sf)' ratings on the class E and F notes,
as they had already defaulted in August 2009 and July 2009,
respectively. Since their interest payment defaults, neither of
these classes have paid back some of the interest previously due,"
S&P stated.
Santander Financiacion 1's notes, issued in 2006, are backed by a
portfolio of Spanish consumer loans originated by Banco Santander
S.A. (AA/Negative/A-1+). The transaction documents intended for
Santander Financiacion 1 to have a revolving period of three years
from its closing date in December 2006, but the replenishment
period stopped earlier, in January 2008, due to a delinquency
trigger being breached. This delinquency trigger was set as the
level of loans in arrears for more than 90 days being greater than
2.5% of the outstanding balance of the assets.
Ratings List
Class Rating
To From
Fondo de Titulizacion de Activos Santander Financiacion 1
EUR1,914.3 Million Floating-Rate Notes
Ratings Lowered and Removed From CreditWatch Negative
B A+ (sf) AA (sf)/Watch Neg
C BB- (sf) A- (sf)/Watch Neg
Rating Lowered
D D (sf) CCC- (sf)
Rating Affirmed and Removed From CreditWatch Negative
A AAA (sf) AAA (sf)/Watch Neg
Ratings Affirmed
E D (sf) D (sf)
F D (sf) D (sf)
===========
T U R K E Y
===========
GLOBAL YATIRIM: Fitch Affirms 'B-' Issuer Default Ratings
--------------------------------------------------------
Fitch Ratings has revised Turkey-based Global Yatirim Holding
A.S.'s rating Outlook to Stable from Positive and affirmed its
Long-term foreign and local currency Issuer Default Ratings at
'B-'. The agency has simultaneously affirmed the senior unsecured
rating of Global's US$100 million 9.25% loan participation notes,
maturing in 2012, at 'B-'. The senior unsecured debt has a
Recovery Rating of 'RR4'.
The previous Positive Outlook was based on Fitch's expectation
that Global would progress towards a capital structure based on
recurring, sustainable, dividend streams from its ports and energy
investments, rather than cash flows to the holding company from
capital realizations. Indeed, Fitch expects that dividend receipts
from the ports activities are now likely to be smaller given that
a minority shareholding will be realized in this business. The
Stable Outlook and affirmation at 'B-' therefore reflects the
volatility and weakness in the company's overall earnings profile
in 2009 and 2010 stripping out gains related to asset sales or
'income' related to asset revaluations. Management's private
equity-type strategy is better reflected at the 'B-' rating level.
Global relied mainly on asset sales and capital gains to service
its obligations historically rather than dividends.
Limited cash flows from the parent company's port and energy
subsidiaries, given their own borrowings, a cash sweep mechanism
at the ports level, and the limited prospects for meaningful
dividend flows, are factored into the current rating level. Fitch
notes that Global Ports declared dividends of USD10m out of 2010
distributable profit in 2011. Global Ports' free cash flow
generation capability and the potential for some dividends from
this business over the long term may be a positive, but Fitch
notes that the operating subsidiary may be evaluating new
opportunities in Turkey and abroad after a strategic partner is
added as a minority shareholder. The company management remains
optimistic that dividend income from the ports would be
substantial in the upcoming years and any prospective investment
would be made in cash generating assets that would be able to
distribute dividends within a short time frame. Such a proven
track record of meaningful dividends from the ports business, more
clarity on the business profile of the holding company and
improved operating cash flows at operating subsidiaries would be
positive for the rating.
Fitch expects a net cash position at the holding company level,
after the possible minority stake sale in Global Ports. The
agency's forecasts anticipate that some of this cash will be used
to redeem the US$100 million Eurobond at H212, with the remainder
used as equity in Global Ports to be channeled to new investments.
Fitch also notes that the existing cash balance of approximately
USD45m at the Global parent company level and future dividends
from the ports, real estate and securities business will be
adequate to cover the outstanding Eurobond of nearly USD70m.
Global's group structure, with significant stakes in its key
divisions (Global Ports and Energaz) classifies it as an
industrial investment holding company. In line with its
methodology, the agency assesses Fitch-adjusted leverage metrics
taking into account EBITDA and debt at Global's main operating
subsidiaries. Global Ports remains by far the largest EBITDA
generator in the group, contributing nearly 88% of Fitch
calculated group EBITDA, while the other main business -- Energaz
-- made up the remaining 12% at FY10.
===========================
U N I T E D K I N G D O M
===========================
ALPHA CAPITAL: Court Closes Six Unscrupulous Land Banking Firms
---------------------------------------------------------------
NDS UK reports that the investigation conducted by Company
Investigations, part of the Insolvency Service, found that
Stowford Place Investments Ltd, ASA Global Investments Limited,
Prinston Estates Limited, Alpha Capital Investments (London)
Limited, Greenacre Global Partners Limited and Vinci Trading Ltd
had all seriously misled the public as to the development
prospects of the plots of land they offered for investment and had
operated with a lack of commercial probity.
The companies are linked to earlier land banking companies wound-
up on grounds of public interest and between them raised nearly
GBP1 million from the public before being closed down on May 26,
2011 by the Service's actions.
Welcoming the Court's winding up judgment Company Investigations
Supervisor Chris Mayhew said:
"This sends a clear message to unscrupulous directors; their
business will be investigated and where necessary brought before
the Courts.
We work closely with other regulatory agencies such as the
Financial Services Authority and the City of London Police to put
a stop to unscrupulous companies that peddle their near worthless
schemes to the public using high pressure sales tactics, often to
the elderly or vulnerable.
The public should not fall for a slick sales pitch, glossy
marketing brochure, fancy websites and promises of easy money -
not one of the land banking companies that the Service has
investigated and wound up has made a profit for the investor."
The petitions to wind up the companies were presented on May 19,
2011, under the provisions of section 124A of the Insolvency Act
1986. The petitions were presented following confidential
enquiries carried out by Company Investigations, part of the
Insolvency Service, under section 447 of the Companies Act 1985,
as amended.
On the application of the Secretary of State the Official Receiver
was appointed as provisional liquidator of the companies on
May 26, 2011.
In ordering the companies into liquidation Ms. Registrar Barber
said:
"These companies were all involved in a land banking business that
misled prospective investors in a marked respect. There are links
with Global Land Group Ltd that entered into voluntary liquidation
on Jan. 20, 2010, shortly after the Secretary of State started an
investigation into its affairs and also with a group of companies
referred to as the Pemberton companies that were wound up on
grounds of public interest on March 31, 2010, a provisional
liquidator having earlier been appointed over their affairs.
The circumstances surrounding the Pemberton provisional
liquidation bears some comment by way of backdrop to the present
matter. The proceedings were opposed and undertakings were given
to the Court to effectively cease trading. The undertakings were
not complied with as a consequence of which the Secretary of State
successfully renewed his application to the Court for the
appointment of a provisional liquidator. The individuals behind
the Pemberton companies simply shifted their energies to the
companies subject to the petitions before me having carried on a
land banking business in much the same way as before. They
effectively jumped ship after giving undertakings to the Court to
cease trading. I have been taken in detail to the clear evidence
in support of each petition and the serious mis-statements to
investors who were clearly misled. The allegations are well and
truly made out and in the light of the grounds established against
each of the 6 companies it is entirely appropriate that they be
wound up on grounds of public interest and I do so order."
The Pemberton International Limited group of companies were
earlier wound up on grounds of public interest on March 31, 2010.
About Alpha Capital
Alpha Capital Investments (London) Limited was incorporated as a
private company on Aug. 26, 2009. The registered office of the
company is at City Point, 1 Ropemaker Street, Moorgate, London,
EC2Y 9HT. The company marketed plots at the Keston site selling 20
plots in all for GBP208,000, a mark up of 1,900%.
ASA GLOBAL: High Court Orders Closure of Six Land Banking Firms
---------------------------------------------------------------
NDS UK reports that the investigation conducted by Company
Investigations, part of the Insolvency Service, found that
Stowford Place Investments Ltd, ASA Global Investments Limited,
Prinston Estates Limited, Alpha Capital Investments (London)
Limited, Greenacre Global Partners Limited and Vinci Trading Ltd
had all seriously misled the public as to the development
prospects of the plots of land they offered for investment and had
operated with a lack of commercial probity.
The companies are linked to earlier land banking companies wound-
up on grounds of public interest and between them raised nearly
GBP1 million from the public before being closed down on May 26,
2011 by the Service's actions.
Welcoming the Court's winding up judgment Company Investigations
Supervisor Chris Mayhew said:
"This sends a clear message to unscrupulous directors; their
business will be investigated and where necessary brought before
the Courts.
We work closely with other regulatory agencies such as the
Financial Services Authority and the City of London Police to put
a stop to unscrupulous companies that peddle their near worthless
schemes to the public using high pressure sales tactics, often to
the elderly or vulnerable.
The public should not fall for a slick sales pitch, glossy
marketing brochure, fancy websites and promises of easy money -
not one of the land banking companies that the Service has
investigated and wound up has made a profit for the investor".
The petitions to wind up the companies were presented on May 19,
2011, under the provisions of section 124A of the Insolvency Act
1986. The petitions were presented following confidential
enquiries carried out by Company Investigations, part of the
Insolvency Service, under section 447 of the Companies Act 1985,
as amended.
On the application of the Secretary of State, the Official
Receiver was appointed as provisional liquidator of the companies
on May 26, 2011.
In ordering the companies into liquidation Ms. Registrar Barber
said:
"These companies were all involved in a land banking business that
misled prospective investors in a marked respect. There are links
with Global Land Group Ltd that entered into voluntary liquidation
on Jan. 20, 2010, shortly after the Secretary of State started an
investigation into its affairs and also with a group of companies
referred to as the Pemberton companies that were wound up on
grounds of public interest on March 31, 2010, a provisional
liquidator having earlier been appointed over their affairs.
The circumstances surrounding the Pemberton provisional
liquidation bears some comment by way of backdrop to the present
matter. The proceedings were opposed and undertakings were given
to the Court to effectively cease trading. The undertakings were
not complied with as a consequence of which the Secretary of State
successfully renewed his application to the Court for the
appointment of a provisional liquidator. The individuals behind
the Pemberton companies simply shifted their energies to the
companies subject to the petitions before me having carried on a
land banking business in much the same way as before. They
effectively jumped ship after giving undertakings to the Court to
cease trading. I have been taken in detail to the clear evidence
in support of each petition and the serious mis-statements to
investors who were clearly misled. The allegations are well and
truly made out and in the light of the grounds established against
each of the 6 companies it is entirely appropriate that they be
wound up on grounds of public interest and I do so order."
The Pemberton International Limited group of companies were
earlier wound up on grounds of public interest on March 31, 2010.
About ASA Global
ASA Global Investments Limited was incorporated as a private
company on March 25, 2009. The registered office of the company
is at Suite 109-111 Davina House, 137-149 Goswell Road, London,
EC1V 7ET. The company marketed plots of land at similar mark ups
on 3 sites at Halifax, Keston and Theydon Bois. Some 10 plots were
sold at Halifax raising GBP104,000, 10 plots at Keston raising
some GBP127,000 and 6 plots at Theydon Bois raising GBP25,700. It
also marketed farm land in Western Australia.
COUNTYROUTE PLC: S&P Lowers Senior Secured Debt Rating to 'BB'
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered to 'BB' from 'BB+' its
long-term debt rating on the GBP88 million senior secured bank
loan, due 2026, issued by U.K.-based concessionaire CountyRoute
(A130) PLC. At the same time, the long-term debt rating on
CountyRoute's GBP5.5 million subordinated secured mezzanine bank
loan, also due 2026, was lowered to 'CCC+' from 'B-'. Both ratings
were placed on CreditWatch with negative implications.
"The downgrades reflect our view of the possibility of substantial
major maintenance expenditure over the medium term. The project
therefore faces the prospect of a significant dip in its forecast
senior annual debt service coverage ratios compared with previous
forecasts, and constrained liquidity from the resulting reduction
in cash flows. If this were the case, we understand that it would
also result in a deferral of mezzanine tranche payments," S&P
stated.
A test of the surface of the A130 in 2007 suggested a low residual
life in its current condition. CountyRoute currently forecasts an
increase in major maintenance costs of about 65% (approximately
GBP5.4 million) to restore the road to the necessary condition.
Works were originally projected to start in 2011-2012, with
further works scheduled in 2013-2014. "CountyRoute is currently
reviewing these assumptions because, despite two particularly
harsh winters, we understand that the condition of the road
surface continues to be good, with none of the deterioration that
could be expected from the survey results," S&P said.
"Our own base-case projection forecasts senior ADSCRs of
approximately 1x in 2013-2014 and tight levels of liquidity.
According to the restated financing agreement, we understand that
a lock-up on mezzanine payments occurs when this ratio falls below
1.125x. The senior lenders can also declare an event of default if
the senior ADSCR falls to less than 1.05x. Our assumptions
incorporate CountyRoute's current forecast major maintenance
amounts, although we defer the timing of such expenditure by
approximately 18 months and adjust the distribution. Alternative
forecasts incorporating the same amounts and further reprofiling
of the spending produce similar results. In our opinion,
therefore, the total amount and, to a lesser degree, the timing of
the actual expenditure is crucial to the forecast financial
profile," S&P related.
"The CreditWatch negative status reflects our view of the
continued uncertainty with respect to future major maintenance
expenditure. Our analysis of the project's cash flows leads us to
conclude that they are highly sensitive to the exact amount and
timing of such expenditure. Presently, we have little or no
visibility on the likely level of major maintenance expenditure
over the medium term and we await further information from
CountyRoute," S&P noted.
"We aim to review the CreditWatch on receipt of the September 2011
financial model update from CountyRoute, which we anticipate will
contain further details of its major maintenance strategy and
plans," S&P said.
"We could affirm the ratings with a stable outlook if the amount
of major maintenance expenditure forecast over the medium term
were lower than CountyRoute currently projects, resulting in an
improvement in the project's forecast ADSCRs and liquidity. This
could occur, for example, if CountyRoute were to demonstrate that
the currently anticipated road works could be scaled down or
deferred, or if the original construction contractor were to
accept partial or full responsibility for rectification of the
underlying defects," S&P noted.
"We could lower the ratings if the amount of major maintenance
expenditure forecast resulted in lower projected ADSCRs and
constrained liquidity for CountyRoute over the medium term," S&P
added.
EMI GROUP: Rival May Be Next Owner
----------------------------------
Andrew Edgecliffe Johnson at The Financial Times reports that
Citigroup has been encouraged by the strong field of bidders in
the recent auction of EMI Group's closest rival, Warner Music,
which drew 10 bids from competitors, private equity funds and rich
individuals.
According to the FT, EMI's auction will attract many of the same
names, like the Gores brothers, with the addition of some new
British names, possibly including Simon Cowell, the media
entrepreneur.
An information memorandum was expected to go out last week, but
bidders have yet to see EMI's latest accounts and are still in the
dark about whether pension shortfalls could present serious
obstacles, the FT notes.
Other uncertainties remain about whether Citigroup will entertain
separate offers for EMI's recorded music and music publishing
divisions or allow bidders to team up, the FT states.
But the least expected element of the long-awaited sale is the
possibility that EMI's next owner might be one of its rivals, the
FT says.
Universal, Sony, Warner and a newly formed publishing venture
between Bertelsmann and KKR, also called BMG Music Publishing, are
all expected to bid for EMI, the FT states.
As reported by the Troubled Company Reporter-Europe on June 22,
2011, BBC News related that EMI launched a strategic review into
the future of the business, which it said could result in a sale,
share flotation, or a restructuring of its finances. US bank
Citigroup took ownership of EMI in February after previous owner
Terra Firma, which bought UK-based music company for GBP4.2
billion in 2007, failed to meet loan payments, BBC disclosed.
EMI Group Ltd. -- http://www.emigroup.com/-- is the fourth
largest record company in terms of market share (behind Universal
Music Group, Sony Music Entertainment, and Warner Music Group).
It houses recorded music segment EMI Music and EMI Music
Publishing. EMI Music distributes CDs, videos, and other formats
primarily through imprints and divisions such as Capitol Records
and Virgin, and sports a roster of artists such as The Beastie
Boys, Norah Jones, and Lenny Kravitz. EMI Music Publishing, the
world's largest music publisher, handles the rights to more than a
million songs. EMI Music operates through regional divisions (EMI
Music North America, International, and UK & Ireland). Financial
services giant Citigroup owns EMI.
GREENACRE GLOBAL: Court Orders Closure of Six Land Banking Firms
----------------------------------------------------------------
NDS UK reports that the investigation conducted by Company
Investigations, part of the Insolvency Service, found that
Stowford Place Investments Ltd, ASA Global Investments Limited,
Prinston Estates Limited, Alpha Capital Investments (London)
Limited, Greenacre Global Partners Limited and Vinci Trading Ltd
had all seriously misled the public as to the development
prospects of the plots of land they offered for investment and had
operated with a lack of commercial probity.
The companies are linked to earlier land banking companies wound-
up on grounds of public interest and between them raised nearly
GBP1 million from the public before being closed down on May 26,
2011 by the Service's actions.
Welcoming the Court's winding up judgment Company Investigations
Supervisor Chris Mayhew said:
"This sends a clear message to unscrupulous directors; their
business will be investigated and where necessary brought before
the Courts.
We work closely with other regulatory agencies such as the
Financial Services Authority and the City of London Police to put
a stop to unscrupulous companies that peddle their near worthless
schemes to the public using high pressure sales tactics, often to
the elderly or vulnerable.
The public should not fall for a slick sales pitch, glossy
marketing brochure, fancy websites and promises of easy money -
not one of the land banking companies that the Service has
investigated and wound up has made a profit for the investor."
The petitions to wind up the companies were presented on May 19,
2011, under the provisions of section 124A of the Insolvency Act
1986. The petitions were presented following confidential
enquiries carried out by Company Investigations, part of the
Insolvency Service, under section 447 of the Companies Act 1985,
as amended.
On the application of the Secretary of State the Official Receiver
was appointed as provisional liquidator of the companies on
May 26, 2011.
In ordering the companies into liquidation Ms. Registrar Barber
said:
"These companies were all involved in a land banking business that
misled prospective investors in a marked respect. There are links
with Global Land Group Ltd that entered into voluntary liquidation
on Jan. 20, 2010, shortly after the Secretary of State started an
investigation into its affairs and also with a group of companies
referred to as the Pemberton companies that were wound up on
grounds of public interest on March 31, 2010, a provisional
liquidator having earlier been appointed over their affairs.
The circumstances surrounding the Pemberton provisional
liquidation bears some comment by way of backdrop to the present
matter. The proceedings were opposed and undertakings were given
to the Court to effectively cease trading. The undertakings were
not complied with as a consequence of which the Secretary of State
successfully renewed his application to the Court for the
appointment of a provisional liquidator. The individuals behind
the Pemberton companies simply shifted their energies to the
companies subject to the petitions before me having carried on a
land banking business in much the same way as before. They
effectively jumped ship after giving undertakings to the Court to
cease trading. I have been taken in detail to the clear evidence
in support of each petition and the serious mis-statements to
investors who were clearly misled. The allegations are well and
truly made out and in the light of the grounds established against
each of the 6 companies it is entirely appropriate that they be
wound up on grounds of public interest and I do so order."
The Pemberton International Limited group of companies were
earlier wound up on grounds of public interest on March 31, 2010.
About Greenacre Global
Greenacre Global Partners Limited was incorporated as a private
company on Aug. 25, 2009. The registered office of the company is
Flat 3, Bloomsbury Court, Tupwood Lane, Caterham, Surrey, CR3 6DA.
HMV GROUP: Profits Down to GBP2.6 Million
------------------------------------------
BreakingNews.ie reports that HMV Group plc's bottom-line profits
for the year to April 30 slumped to GBP2.6 million (EUR2.9
million).
The group, which recently sold its Waterstone's book chain and
Canadian business to buy some breathing space in its battle for
survival, said the surplus for the year to April 30 compared with
GBP67.3 million the previous year, BreakingNews.ie relates.
Underlying profits slumped 61% to GBP28.9 million, BreakingNews.ie
discloses.
According to BreakingNews.ie, group sales declined 7% to GBP1.9
billion, while like-for-like sales at its 266 HMV and Fopp stores
in the UK and Ireland were down 14.8% after being squeezed by
weaker consumer spending and competition from internet downloads
and supermarkets.
United Kingdom-based HMV Group plc is engaged in retailing of pre-
recorded music, video, electronic games and related entertainment
products under the HMV and Fopp brands, and the retailing of books
principally under the Waterstone's brand. The Company operates in
four segments: HMV UK & Ireland, HMV International, HMV Live, and
Waterstone's. HMV International consists of HMV Canada, HMV Hong
Kong and HMV Singapore. Waterstone's is a bookseller, which
operates through 314 stores and a transactional Web site for the
sale of both physical and e-books for download. The Company has
operations in seven countries, with principal markets being the
United Kingdom and Canada. Its retail businesses operate through
417 stores in the United Kingdom, Canada, Hong Kong and Singapore.
On Jan. 29, 2010, the Company completed the acquisition of MAMA
Group Plc. Its subsidiaries include HMV Canada Inc, HMV Guernsey
Limited, HMV Hong Kong Limited, and HMV (IP) Limited.
HOMECALL PLUS: Wigan Entrepreneur Rescues Firm From Liquidation
---------------------------------------------------------------
Liz Mc Mahon at Insurance Age reports that Homecall Plus has been
bought by Lauren Dalton, an entrepreneur from Wigan.
Insurance Age relates that after being placed into compulsory
liquidation in May this year, Ms. Dalton has secured funding to
buy the assets of Homecall Plus and is currently meeting with
underwriters, solicitors and various other companies to re-launch
the company.
Brit Insurance, according to Insurance Age, was underwriting the
policies prior to the Dec. 3, 2010, but policies which were taken
out after this date remain invalid. Insurance Age says the new
company taking over Homecall Plus said it was working with a
number of underwriters to ensure policy holders can renew their
policies with confidence.
As reported in the Troubled Company Reporter-Europe on May 23,
2011, BBC News said Homecall Plus of Furthergate, Blackburn, has
been put into compulsory liquidation after a creditor petitioned
the Official Receiver in Blackpool.
Homecall Plus sells insurance to cover household emergencies such
as plumbing, electrical and gas breakdowns.
LAPLAND NEW FOREST: Creditors Get Nothing Back From Park Collapse
------------------------------------------------------------------
Southern Daily Echo reports that the brothers behind the failed
Lapland New Forest theme park will not be pursued for GBP200,000
of missing cash.
The report notes that accountants have told creditors owed
GBP1.2 million that it makes no financial sense to pursue director
Victor Mears and his brother Henry for money which remains
unaccounted for following the liquidation of the company, Lapland
New Forest Ltd.
They have also dropped the idea of making a claim against the
site's landlord, Frederick Nash, for GBP148,000 he received in
rent, Southern Daily Echo relates.
According to Southern Daily Echo, David Young, of liquidator Grant
Thornton, said no creditors -- including hundreds of ticketholders
-- got their money back.
The brothers were convicted in February of misleading customers at
the site at Matcham's Leisure Park near Ringwood, which collapsed
in December 2008.
NORTHERN ROCK: Paragon Joins Bidding Race
-----------------------------------------
Jeff Salway at The Scotsman reports that specialist lender Paragon
has joined the race to buy Northern Rock.
According to The Scotsman, the buy-to-let group has joined Virgin
Money, Coventry Building Society, NBNK Investment and Co-operative
Financial Services among the contenders for Northern Rock, put up
for sale by the UK government last month.
Northern Rock was bailed out by the government after its collapse
in September 2007, before being nationalized in February 2008, The
Scotsman discloses.
It was split last year into Northern Rock Asset Management -- the
so-called "bad bank", housing its more toxic loans -- and Northern
Rock Plc, which is the operation being sold off, The Scotsman
recounts. It had liquid assets of GBP5.9 billion at the end of
2010 and reported a GBP232 million loss for last year, The
Scotsman notes.
The bank has soaked up an estimated GBP1.4 billion of taxpayer
funds and is valued at around GBP1 billion, although experts
believe the sale price could fall below that, due to high capital
requirements, The Scotsman states.
Deutsche Bank, which is advising the UK Treasury and UK Financial
Investments on the sale of Northern Rock, is to send an
information memorandum to interested parties over the coming
weeks, The Scotsman says.
About Northern Rock
Headquartered in Newcastle upon Tyne, England, Northern Rock plc
-- http://www.northernrock.co.uk/-- operating some 70 branches
across the UK. Northern Rock offers residential mortgages and
savings accounts, including variable cash and fixed-rate
Individual Savings Accounts (or ISAs, which are tax-exempt savings
accounts offered in the UK), as well as bonds and traditional
savings accounts. The bank also offers financial planning and
mortgage-related insurance and life assurance products through
third-party providers. Northern Rock was formed in early 2010
after being spun off from its trouble predecessor of the same
name. The remaining company was restructured and renamed Northern
Rock (Asset Management) plc.
PERSEUS PLC: S&P Lowers Rating on Class D Notes to 'D'
------------------------------------------------------
Standard & Poor's Ratings Services lowered its credit ratings on
Perseus (European Loan Conduit No. 22) PLC's class C and D notes.
"To reflect the risk of increased principal losses arising from
the Major Belle loan, we lowered the rating on the class D notes
on Dec. 3, 2011 and lowered the rating on the class C notes on
March 31, 2011," S&P said.
Since then, interest shortfalls on the class D notes have
continued, caused principally by special servicing fees associated
with the Major Belle loan.
"We also expect principal losses on the class D notes due to the
property's characteristics and the current Birmingham property
market dynamics. These fees rank senior to interest payments due
on the notes. They are neither absorbed by the class X
certificates nor funded by liquidity facility," S&P related.
"We have therefore lowered our rating on the class D notes to 'D
(sf)' from 'B- (sf)'. We have also lowered the rating on the class
C notes to 'B- (sf)' from 'B (sf)' due to an increased risk of
interest shortfalls," S&P said.
Perseus ELOC 22 is a true sale commercial mortgage-backed
securities transaction, which closed in December 2005. Three loans
secured on properties in the U.K. currently back the transaction.
The outstanding principal balance of the transaction is now
GBP128.2 million. Morgan Stanley Bank International
originated all of the underlying loans between December 2004 and
December 2005.
Ratings List
Class Rating
To From
Perseus (European Loan Conduit No. 22) PLC
GBP514.538 Million Commercial Mortgage-Backed Floating-Rate Notes
Ratings Lowered
C B- (sf) B (sf)
D D (sf) B- (sf)
PRINSTON ESTATES: Court Closes Six Unscrupulous Land Banking Firms
------------------------------------------------------------------
NDS UK reports that the investigation conducted by Company
Investigations, part of the Insolvency Service, found that
Stowford Place Investments Ltd, ASA Global Investments Limited,
Prinston Estates Limited, Alpha Capital Investments (London)
Limited, Greenacre Global Partners Limited and Vinci Trading Ltd
had all seriously misled the public as to the development
prospects of the plots of land they offered for investment and had
operated with a lack of commercial probity.
The companies are linked to earlier land banking companies wound-
up on grounds of public interest and between them raised nearly
GBP1 million from the public before being closed down on May 26,
2011 by the Service's actions.
Welcoming the Court's winding up judgment Company Investigations
Supervisor Chris Mayhew said:
"This sends a clear message to unscrupulous directors; their
business will be investigated and where necessary brought before
the Courts.
We work closely with other regulatory agencies such as the
Financial Services Authority and the City of London Police to put
a stop to unscrupulous companies that peddle their near worthless
schemes to the public using high pressure sales tactics, often to
the elderly or vulnerable.
The public should not fall for a slick sales pitch, glossy
marketing brochure, fancy websites and promises of easy money -
not one of the land banking companies that the Service has
investigated and wound up has made a profit for the investor".
The petitions to wind up the companies were presented on May 19,
2011, under the provisions of section 124A of the Insolvency Act
1986. The petitions were presented following confidential
enquiries carried out by Company Investigations, part of the
Insolvency Service, under section 447 of the Companies Act 1985,
as amended.
On the application of the Secretary of State the Official Receiver
was appointed as provisional liquidator of the companies on
May 26, 2011.
In ordering the companies into liquidation Ms. Registrar Barber
said:
"These companies were all involved in a land banking business that
misled prospective investors in a marked respect. There are links
with Global Land Group Ltd that entered into voluntary liquidation
on Jan. 20, 2010, shortly after the Secretary of State started an
investigation into its affairs and also with a group of companies
referred to as the Pemberton companies that were wound up on
grounds of public interest on March 31, 2010, a provisional
liquidator having earlier been appointed over their affairs.
The circumstances surrounding the Pemberton provisional
liquidation bears some comment by way of backdrop to the present
matter. The proceedings were opposed and undertakings were given
to the Court to effectively cease trading. The undertakings were
not complied with as a consequence of which the Secretary of State
successfully renewed his application to the Court for the
appointment of a provisional liquidator. The individuals behind
the Pemberton companies simply shifted their energies to the
companies subject to the petitions before me having carried on a
land banking business in much the same way as before. They
effectively jumped ship after giving undertakings to the Court to
cease trading. I have been taken in detail to the clear evidence
in support of each petition and the serious mis-statements to
investors who were clearly misled. The allegations are well and
truly made out and in the light of the grounds established against
each of the 6 companies it is entirely appropriate that they be
wound up on grounds of public interest and I do so order."
The Pemberton International Limited group of companies were
earlier wound up on grounds of public interest on March 31, 2010.
About Prinston Estates
Prinston Estates Limited was incorporated as a private company on
Oct. 24, 2008. The registered office of the company is at 1
Ropemaker Street, London, EC2Y 9HT. The company marketed plots on
3 sites at Halifax, Keston (owned by Mrs. Safia Eshpari and Mr.
Stefan Mitchell) and Folkestone (owned by Mrs Safia Eshpari)
selling 33 plots in all for a total of GBP414,600 representing a
mark up of 1,296%, 2,250% and 3,372% respectively.
RAINFORD GOLF: Enters Into Company Voluntary Arrangement
--------------------------------------------------------
Alan Weston at Liverpool Daily Post reports that the new North
West National golf club threatened with closure only a few weeks
ago is hoping for a brighter future after a rescue package was put
together.
LDP relates that members of the private club, in Rainford, voted
to take out a Company Voluntary Arrangement to allow it to carry
on operating after racking up debts of GBP400,000.
According to LDP, under the terms of the CVA, the club will pay
off most, if not all, debts over an agreed period of time out of
future profits as an alternative to going into administration or
liquidation.
The main golf course re-opened earlier this month, after being
closed since November, while the golf driving range continued
operating throughout the crisis, LDP recounts.
The two sites are now being managed separately, with businessman
Martin Turner running the main course, known as North West
National, and leasing the other site -- which is being re-branded
Rainford Golf Centre -- to husband-and-wife team Joan and Alan
Baily, LDP discloses.
RANK GROUP: S&P Puts 'B+' Long-term CCR on Watch Developing
-----------------------------------------------------------
Standard & Poor's Ratings Services placed its 'B+' long-term
corporate credit rating on U.K.-based gaming company The Rank
Group PLC on CreditWatch with developing implications.
"At the same time, we placed our 'B' issue rating on the US$14.3
million notes due 2018, issued by Rank Group Finance PLC, on
CreditWatch with developing implications," S&P said.
The CreditWatch placement reflects the uncertainties surrounding
Rank's future leadership, governance, financial policies, and
business strategy following the takeover by cornerstone
shareholder Guoco Leisure Ltd. (Guoco; not rated), a subsidiary of
Malaysia-based Hong Leong Group (not rated). "We think it possible
that Guoco will obtain a 75% controlling interest in Rank, which
may result in Rank being delisted from the London Stock Exchange
and no longer being subject to the regulations of a U.K. publicly
listed company," S&P related.
"We believe that the effects of both the change in executive
management and the takeover on Rank's financial risk profile
remain uncertain. That said, Rank's business fundamentals have
improved over the past year. The company continued to deleverage
in 2010, with Standard & Poor's-adjusted debt to EBITDA falling
to 4.3x, from 4.6x in financial 2009. Despite our projection of
low top-line growth in financial 2011, we believe that Rank's
credit metrics will continue to improve, and we foresee adjusted
debt to EBITDA falling within the 3x-4x range by the end of 2011,"
S&P noted.
In addition, Rank's financials could benefit from a favorable
ruling by the European Court of Justice regarding overpaid value-
added tax and associated interest. Since 2008, Rank has received
more than GBP275 million of VAT refunds and associated interest
following successful litigation at both the First Tier VAT
Tribunal and the High Court. The U.K government has lodged a final
appeal against these rulings to the ECJ, with a decision
anticipated by the end of 2011. In addition, Rank has disclosed
that it submitted further claims for at least another GBP275
million of VAT overpayment. The company expects that these claims
will be resolved over the next two to three years.
The rating on Rank reflects its exposure to a mature bingo hall
market (bingo contributes 48% of revenues); tough macroeconomic
conditions for U.K. and Spanish consumers; its currently
aggressive lease-adjusted financial risk profile; and its material
contingent tax liabilities relating to the VAT refunds.
"We consider these factors to be partially mitigated by Rank's
well-known brands; its second-largest share of the U.K. casino and
bingo markets; uncertainty as to whether contingent tax
liabilities will materialize; and its more moderate financial
policy following a period of deleveraging," S&P stated.
"We aim to review the CreditWatch placement once we have more
clarity on Guoco's future strategy for Rank and its possible
effect on the company's business and financial risk profiles," S&P
related.
"We would consider raising the ratings on Rank should Guoco fully
disclose its business strategy, and should the strategy support
favorable credit fundamentals, such as a sustained adjusted debt
to EBITDA ratio of less than 4x," S&P said.
"Conversely, we would consider lowering the ratings if Rank failed
to renew its bank facilities by the third quarter of 2011 or if
Guoco's future strategy for Rank affected the latter's business or
financial risk profiles. In our view, this could occur if Guoco
chose to releverage the company through shareholder distributions,
acquisitions of other U.K.-based casino operators, or through
integrating Rank with Guoco's existing U.K.-based casino and hotel
businesses," S&P stated.
SESSIONS OF YORK: Paragon Print Set to Leave York After Buyout
--------------------------------------------------------------
York Press reports that employees whose jobs were rescued when
Sessions of York went into administration in 2010 are facing
upheaval again after the business said it was leaving York.
Paragon Print & Packaging Group bought the assets of the former
Sessions of York labeling business in April 2010, taking on 40
members of about 100 staff affected by the collapse of the 200-
year-old business, according to York Press. The sale did not,
however, include the Huntington Road premises where the business
is currently based, which is being sold for redevelopment, York
Press relates.
The report notes Mark Lapping, managing director of Paragon Print
& Packaging Group, said the company had conducted an extensive
search during the past 14 months, but could not find a suitable
alternative location in the York area. It is entering into a
consultation period with staff over a proposal to move the
operation to a new 42,000 sq ft facility in Boston, Lincolnshire,
York Press says.
York Press notes that Rick Smith, strategic development director,
said the company would discuss travel and relocation incentives as
part of the consultation. But they would have to move out of the
York site within the next two to three months, he added.
STOWFORD PLACE: High Court Orders Closure of Land Banking Firms
---------------------------------------------------------------
NDS UK reports that the investigation conducted by Company
Investigations, part of the Insolvency Service, found that
Stowford Place Investments Ltd, ASA Global Investments Limited,
Prinston Estates Limited, Alpha Capital Investments (London)
Limited, Greenacre Global Partners Limited and Vinci Trading Ltd
had all seriously misled the public as to the development
prospects of the plots of land they offered for investment and had
operated with a lack of commercial probity.
The companies are linked to earlier land banking companies wound-
up on grounds of public interest and between them raised nearly
GBP1 million from the public before being closed down on May 26,
2011 by the Service's actions.
Welcoming the Court's winding up judgment Company Investigations
Supervisor Chris Mayhew said:
"This sends a clear message to unscrupulous directors; their
business will be investigated and where necessary brought before
the Courts.
We work closely with other regulatory agencies such as the
Financial Services Authority and the City of London Police to put
a stop to unscrupulous companies that peddle their near worthless
schemes to the public using high pressure sales tactics, often to
the elderly or vulnerable.
The public should not fall for a slick sales pitch, glossy
marketing brochure, fancy websites and promises of easy money -
not one of the land banking companies that the Service has
investigated and wound up has made a profit for the investor."
The petitions to wind up the companies were presented on May 19,
2011, under the provisions of section 124A of the Insolvency Act
1986. The petitions were presented following confidential
enquiries carried out by Company Investigations, part of the
Insolvency Service, under section 447 of the Companies Act 1985,
as amended.
On the application of the Secretary of State the Official Receiver
was appointed as provisional liquidator of the companies on
May 26, 2011.
In ordering the companies into liquidation Ms. Registrar Barber
said:
"These companies were all involved in a land banking business that
misled prospective investors in a marked respect. There are links
with Global Land Group Ltd that entered into voluntary liquidation
on Jan. 20, 2010, shortly after the Secretary of State started an
investigation into its affairs and also with a group of companies
referred to as the Pemberton companies that were wound up on
grounds of public interest on March 31, 2010, a provisional
liquidator having earlier been appointed over their affairs.
The circumstances surrounding the Pemberton provisional
liquidation bears some comment by way of backdrop to the present
matter. The proceedings were opposed and undertakings were given
to the Court to effectively cease trading. The undertakings were
not complied with as a consequence of which the Secretary of State
successfully renewed his application to the Court for the
appointment of a provisional liquidator. The individuals behind
the Pemberton companies simply shifted their energies to the
companies subject to the petitions before me having carried on a
land banking business in much the same way as before. They
effectively jumped ship after giving undertakings to the Court to
cease trading. I have been taken in detail to the clear evidence
in support of each petition and the serious mis-statements to
investors who were clearly misled. The allegations are well and
truly made out and in the light of the grounds established against
each of the 6 companies it is entirely appropriate that they be
wound up on grounds of public interest and I do so order."
The Pemberton International Limited group of companies were
earlier wound up on grounds of public interest on March 31, 2010.
About Stowford Place
Stowford Place Investments Ltd was incorporated as a private
company on Jan. 14, 2009. The registered office of the company
was at 165-167 The Broadway, Wimbledon, London, SW19 1NE. The
company marketed plots on a site at Keston, Bromley. Some 18
plots were sold for a total of GBP147,060 representing a mark up
of some 1,125% over the GBP18,000 that the company paid for the
site.
TALENTNATION PLC: Appeals Provisional Liquidation Decision
----------------------------------------------------------
The Drum reports that sources have said that TalentNation has
appealed against the decision to put it into liquidation after a
request from Scottish Enterprise.
The appeal, according to The Drum, was made on July 1.
As reported in the Troubled Company Reporter-Europe on June 14,
2011, The Drum said Scottish Enterprise had successfully
petitioned the courts to have a provisional liquidator appointed
to TalentNation PLC, a company in which it invested GBP1 million
in December 2009. The economic regeneration body said it was
forced to make the move because of concerns about the financial
affairs and governance of TalentNation. The online operation,
which was set up by former Daily Record director and Sun Scottish
editor Steve Sampson, is also the subject of court action from ex-
staff including former Olympic Athlete Brian Whittle, according to
The Drum.
TalentNation PLC operates an online business. The Web site aims
to combine the best in social networking with a safe way of
allowing talented youngsters to upload sports videos of themselves
in the hope of being spotted by talent scouts. Its revenue model
was to be based on advertising and sponsorship.
The company was registered in 2007, but has not filed accounts for
two years. For the year to October 2008, the company has clocked
up losses of around GBP500,000, according to The Drum.
TENDERLEAN LIMITED: Goes Into Administration, Cuts 40 Jobs
----------------------------------------------------------
meatinfo.co.uk reports that Tenderlean Limited has gone into
administration cutting 40 jobs in the process.
Administrators Deloitte have confirmed that they are talking to
several potential bidders and hope to find a buyer very swiftly.
This has raised hopes that the former workers may be rehired,
according to meatinfo.co.uk.
Tenderlean Meats originally went into administration last April,
when it shut its Enniskillen butcher's shop, the report recalls.
However, meatinfo.co.uk says, the administrators found a buyer for
the business, and Tenderlean Limited reopened, saving nearly 100
jobs at the Derrylin factory.
Headquartered in Co. Fermanagh, Tenderlean Limited, supplied pre-
packed beef, lamb and pork to the supermarket Aldi, as well as to
convenience stores and restaurants. It had recently diversified
into making pizzas.
TJ HUGHES: 400+ Midland Workers Faces Race to Save Jobs
-------------------------------------------------------
Jon Griffin at Birmingham Mail reports that more than 400 West
Midland workers are facing a race against time to save their jobs
after 100-year old department store TJ Hughes collapsed into
administration.
The chain has a string of stores across the West Midlands,
including Perry Barr, Lichfield, Walsall, Wolverhampton,
Kidderminster, Redditch, Coventry and Nuneaton. The eight
regional stores employ over 400 people.
As reported in the Troubled Company Reporter on June 30, 2011,
Lancashire Evening Post said that TJ Hughes is set to become the
latest retailer to plunge into administration as the spending
slowdown grips the high street. The report related that the
company is understood to have lined up accountants Ernst and
Young. Click Liverpool reported that the brand, which recorded a
GBP10 million loss in the year to January 31, had been on the
brink of closure before the private equity firm staged the rescue
in March this year. Click Liverpool related that further
investment of around GBP30 million would be needed to keep TJs
afloat but the money could not be found and administrators Ernst
and Young are on stand-by to find a buyer for its profitable
elements.
VINCI TRADING: Court Orders Closure of Six Land Banking Firms
-------------------------------------------------------------
NDS UK reports that the investigation conducted by Company
Investigations, part of the Insolvency Service, found that
Stowford Place Investments Ltd, ASA Global Investments Limited,
Prinston Estates Limited, Alpha Capital Investments (London)
Limited, Greenacre Global Partners Limited and Vinci Trading Ltd
had all seriously misled the public as to the development
prospects of the plots of land they offered for investment and had
operated with a lack of commercial probity.
The companies are linked to earlier land banking companies wound-
up on grounds of public interest and between them raised nearly
GBP1 million from the public before being closed down on May 26,
2011 by the Service's actions.
Welcoming the Court's winding up judgment Company Investigations
Supervisor Chris Mayhew said:
"This sends a clear message to unscrupulous directors; their
business will be investigated and where necessary brought before
the Courts.
We work closely with other regulatory agencies such as the
Financial Services Authority and the City of London Police to put
a stop to unscrupulous companies that peddle their near worthless
schemes to the public using high pressure sales tactics, often to
the elderly or vulnerable.
The public should not fall for a slick sales pitch, glossy
marketing brochure, fancy websites and promises of easy money -
not one of the land banking companies that the Service has
investigated and wound up has made a profit for the investor."
The petitions to wind up the companies were presented on May 19,
2011, under the provisions of section 124A of the Insolvency Act
1986. The petitions were presented following confidential
enquiries carried out by Company Investigations, part of the
Insolvency Service, under section 447 of the Companies Act 1985,
as amended.
On the application of the Secretary of State the Official Receiver
was appointed as provisional liquidator of the companies on
May 26, 2011.
In ordering the companies into liquidation Ms. Registrar Barber
said:
"These companies were all involved in a land banking business that
misled prospective investors in a marked respect. There are links
with Global Land Group Ltd that entered into voluntary liquidation
on Jan. 20, 2010, shortly after the Secretary of State started an
investigation into its affairs and also with a group of companies
referred to as the Pemberton companies that were wound up on
grounds of public interest on March 31, 2010, a provisional
liquidator having earlier been appointed over their affairs.
The circumstances surrounding the Pemberton provisional
liquidation bears some comment by way of backdrop to the present
matter. The proceedings were opposed and undertakings were given
to the Court to effectively cease trading. The undertakings were
not complied with as a consequence of which the Secretary of State
successfully renewed his application to the Court for the
appointment of a provisional liquidator. The individuals behind
the Pemberton companies simply shifted their energies to the
companies subject to the petitions before me having carried on a
land banking business in much the same way as before. They
effectively jumped ship after giving undertakings to the Court to
cease trading. I have been taken in detail to the clear evidence
in support of each petition and the serious mis-statements to
investors who were clearly misled. The allegations are well and
truly made out and in the light of the grounds established against
each of the 6 companies it is entirely appropriate that they be
wound up on grounds of public interest and I do so order."
The Pemberton International Limited group of companies were
earlier wound up on grounds of public interest on March 31, 2010.
About Vinci Trading
Vinci Trading Ltd (formerly Vinci Partners Limited) was
incorporated as a private company on Nov. 9, 2009. The registered
office of the company is at 11 George Street West, Luton, LU1 2BJ.
The company marketed plots at the same sites in Keston and
Folkestone. The company marketed plots at sites in Brentwood and
Grantham which sites are owned by Mrs. Safia Eshpari.
* UK: Suppliers Need Protection vs. Retailers in Administration
---------------------------------------------------------------
internationalsupermarketnews.com reports that suppliers should
protect themselves against retailers in administration.
Over the last couple of weeks a number of retailers such as TJ
Hughes and Jane Norman, have entered administration following weak
trading but their suppliers may have been unaware of the level of
trouble these businesses were in, according to the report.
Therefore, the report notes, supply chain companies need to watch
out for struggling retail clients and protect themselves from the
fallout of clients entering administration.
Suppliers should safeguard their own business as much as possible
in case one of their retail customers go into administration,
particularly if they do not have, or cannot, secure credit
insurance, internationalsupermarketnews.com relates.
The report discloses that there are a number of warning signs
which supply chain firms should take heed of at this difficult
time including tired or rundown stores, low staff morale, late
orders for seasonal products and excessive use of rummage sales.
Announcements made by a retailer's head office, including
constantly changing CEOs, profits warnings, and store closures,
should also be scrutinised and assessed by its clients,
internationalsupermarketnews.com says.
If a trader consistently makes late payments, argues over
deliveries, has quality control issues or requests increased
credit limits it may be time for a supply chain company to speak
to the retailer's management about their business relationship,
internationalsupermarketnews.com notes.
The report adds that by being quick to spot any warning,
businesses can act fast to protect themselves.
* UK: Landlords to Lose Nearly GBP400 Million as Retailers Fall
---------------------------------------------------------------
Claer Barrett at The Financial Times, citing a research from the
Investment Property Databank, reports that landlords of shops
affected by the recent wave of retail insolvencies stand to lose
nearly GBP400 million in forfeited rent payments.
Lost rent from retailers that have gone into administration
recently -- including Focus DIY, Habitat, Jane Norman, Homeform,
Oddbins and TJ Hughes -- is calculated at GBP35.8 million a year,
according to The Financial Times.
The report notes that this is equivalent to 0.5% of the GBP7.2
billion annual commercial property income stream recorded by IPD.
IPD calculates that these retailers had average lease lengths of
10.8 years.
So UK landlords could be left out of pocket by up to GBP393
million, The Financial Times relays.
* UK: More Leading High-Street Retailers Set to Fail, R3 Says
-------------------------------------------------------------
Manchester Evening News reports that a new research by insolvency
professionals trade body R3 reveals that more leading high street
retailers are set to fail.
According to the report, administrators have been lately called in
at fashion retailer Jane Norman and homewares chain Habitat while
Old Trafford-based HomeForm, whose subsidiaries include Dolphin
Bathrooms and Moben Kitchens, and Liverpool-based TJ Hughes are
set to suffer the same fate.
Manchester Evening News relates that R3 said more firms will have
struggled to raise the cash they needed to pay to landlords on
'quarter day' -- June 24 -- the day when retail rents
traditionally fall due.
"The retail crisis has been worse than expected but it is by no
means over yet. The latest victims are long-established high names
which you might have imagined would be too big to fail," the
report quotes Jeremy Oddie, R3 's north west regional chairman
and head of insolvency at the Manchester office of accountants
Mitchell Charlesworth, as saying.
"These latest collapses will have knock-on effects throughout the
economy - on the public purse, given that large amounts of tax
that will be owing, and on suppliers, sub-contractors and staff.
"Unfortunately I believe this is just the end of the beginning and
we are likely to see some more big names fail before the worst is
over," Mr. Oddie said, Manchester Evening News relates.
===============
X X X X X X X X
===============
* EUROPE: One in Six Banks to Fail Stress Test
----------------------------------------------
Victoria Thomson at The Scotsman reports that sources said one in
six banks is set to fail a European Union-wide financial health
check, with casualties expected in Germany, Greece, Spain and
Portugal.
According to The Scotsman, eurozone sources said the European
Banking Authority is set to announce within weeks that between ten
and 15 of the 91 banks being scrutinized in the tests had failed.
The Scotsman says the checks will provide the first picture of the
health of the continent's banks since a previous round a year ago
was deemed too lax.
The new checks will measure how well the core capital that banks
rely on to absorb losses such as unpaid loans holds up when
exposed to an economic dip or fall in property prices, The
Scotsman discloses.
They also gauge the impact on banks should the bonds they own
issued by states such as Greece lose value, The Scotsman states.
But the tests stop short of assessing the full impact of a country
default, The Scotsman notes.
*********
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 * * *