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                           E U R O P E

            Thursday, July 28, 2011, Vol. 12, No. 148

                            Headlines



B U L G A R I A

MUNICIPAL BANK: S&P Affirms 'B+/B' Counterparty Credit Ratings


F R A N C E

NORTEL NETWORKS: Seeks to Hire Collins as Special Irish Counsel


G E R M A N Y

HEAT MEZZANINE: Moody's Reviews Ratings on Notes for Downgrade
K1 GROUP: Founder Helmut Kiener Gets 10-Year Sentence for Fraud
LANTIQ BETEILIGUNGS-GMBH: S&P Cuts CCR to 'B' on Weaker Liquidity
STAGE MEZZANINE: Moody's Reviews B Notes' Ba3 Rating for Downgrade
WESTLB AG: Fitch Revises Senior Debt Rating to Watch Evolving


G R E E C E

* GREECE: Moody's Reviews Ratings of Eight Banks for Downgrade
* GREECE: Moody's Cuts Bond Ratings to 'Ca'; Outlook Developing
* GREECE: Moody's Says EU Support Package Permits Orderly Default


H U N G A R Y

IKR ZRT: Creditor Banks Approve Split of Businesses


I R E L A N D

ALLIED IRISH: Shareholders Approve Nationalization
ALLIED IRISH: May Offer More Than Government's Pay Cap for New CEO
IRISH LIFE: Government Gets Court Order to Inject EUR2.7 Billion
PYLON II: S&P Assigns Preliminary 'B-' Rating to EUR150-Mil. Notes
QUINN GROUP: Anglo Seeks Reverse Ownership Transfer of Finansstroy

RELDON LTD: AIB Seeks Summary Judgment Order of EUR22.3 Million
SEAN DUNNE: To Cooperate With NAMA Takeover
SUPERQUINN: Issued Cheques Dishonored due to Freeze on Bank Accts.
THESEUS EUROPEAN: Moody's Upgrades Rating on Class E Notes to Ba2


I T A L Y

FONDIARIA-SAI: Fitch Affirms 'BB+' Insurer Fin'l Strength Rating


M A C E D O N I A

A1 TELEVIZIJA: Skopje Court Launches Insolvency Procedures


N E T H E R L A N D S

CASE NEW HOLLAND: Moody's Raises Sr. Unsecured Rating to 'Ba2'


R U S S I A

AMT BANK: Central Bank Withdraws Operating License
TRANSCREDITBANK: S&P Raises Counterparty Credit Rating to 'BB+'


U N I T E D   K I N G D O M

HALLIWELLS: Administrators File GBP21MM Claim Against Ex-Partners
HERCULES ECLIPSE: Fitch Affirms Rating on Class E Notes at 'CCC'
HERCULES PLC: S&P Downgrades Rating on Class E Notes to 'B-'
LLOYDS BANKING: FSA to Launch Formal Inquiry Into HBOS Collapse
MANSARD MORTGAGES: Moody's Cuts Rating on B2 Certificate to 'Ca'

NEWCASTLE PRODUCTIONS: 2009 Fire "Avoidable," Bureau Veritas Says
VEDANTA RESOURCES: Moody's Confirms Ba1 Corporate Family Rating


X X X X X X X X

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B U L G A R I A
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MUNICIPAL BANK: S&P Affirms 'B+/B' Counterparty Credit Ratings
--------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on
Bulgarian Municipal Bank A.D. to stable from negative. "At the
same time, we affirmed the 'B+/B' long- and short-term
counterparty credit ratings on the bank. The 'b' stand-alone
credit profile (SACP) is unchanged," S&P said.

"The outlook revision reflects our belief that Municipal Bank is
better placed to manage further potential asset quality
deterioration given its relatively low stock of net nonperforming
loans (NPLs) at end-2010, its adequate capitalization, and the
economic environment in Bulgaria, which in our view is showing
signs of stabilizing," S&P said.

"Despite some stabilizing trends, however, we anticipate that the
bank's asset quality will continue to be strained over the next
three to four quarters as loans season in the still-depressed
macroeconomic environment. Loans more than 90 days overdue reduced
to 5.7% of total loans as of end-2010, having peaked at close to
10% in mid-2010 (3.5% at year-end 2008). We believe this is
largely due to the improved quality and reclassification of some
large loan exposures and compares favorably with domestic peers.
We expect the volume of NPLs to reach low double digits by year-
end 2011," S&P related.

"We believe the bank's profitability is poor because of its low
utilization of interest-bearing assets, its high cost base, and
the weakened operating environment. Nevertheless, earnings are
stable and we do not foresee any significant improvement or
deterioration in the near future," S&P noted.

The bank benefits from adequate liquidity because it holds large
amounts of cash and government securities, which are also required
to fully cover municipal deposits and therefore cannot be used to
extend loans. Funding comes primarily from customer deposits, and
40%-45% of total deposits consist of relatively stable municipal
deposits.

"We also view the bank's capitalization as adequate, providing the
bank with a cushion to absorb loan loss provisions at a time when
the operating environment remains depressed. Standard & Poor's
risk-adjusted capital (RAC) ratio for the bank of 7.8% as of year-
end 2010 is average compared with large international peers.
However, given the bank's small size, high concentrations, niche
nature, and current stressed financial profile, we consider this
to be tight. This is reflected in the RAC ratio after
concentration-related adjustments of 5.1%," S&P said.

"The ratings on Municipal Bank reflect its SACP, which we assess
at 'b', as well as our opinion that there is a "moderate"
likelihood that the City of Sofia (BBB-/Stable/--) would provide
timely and sufficient extraordinary support to the bank in the
event of financial distress. The support is based on a "strong"
link with the City of Sofia. We add one notch of uplift to the
SACP of Municipal Bank, which mainly reflects its status as a
government-related entity, and its parental support," S&P related.

"The stable outlook reflects our belief that Municipal Bank is
better placed to manage further potential asset quality
deterioration given its relatively low stock of net NPLs, its
adequate capitalization, and the economic environment  in
Bulgaria, which in our view is showing signs of stabilizing,"
according to S&P.

"We could raise the ratings if we see evidence of further easing
of asset quality pressures over the next six to 18 months and a
better provisioning cushion. An improved operating environment and
a demonstration of adequate resilience to these new conditions
would also be positive for the ratings. This would mean
maintaining adequate liquidity, asset quality, and capitalization,
and reducing concentrations, or being acquired by a more
supportive strategic investor with higher creditworthiness that is
committed to developing the bank's franchise and providing capital
for future growth," S&P related.

"We would consider a negative rating action if the bank's SACP
were to deteriorate beyond our current expectations, in particular
if NPLs were to rise beyond the low-double-digit range; if its
"strong" link with the City of Sofia weakened; or if the bank were
to lose Sofia's budgetary funds," S&P added.


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NORTEL NETWORKS: Seeks to Hire Collins as Special Irish Counsel
---------------------------------------------------------------
BankruptcyData.com reports that Nortel Networks filed with the
U.S. Bankruptcy Court a motion to retain Eugene F. Collins
(Contact: Doug Smith) as consulting expert and special Irish
counsel at the following hourly rates: partner at EUR400 and
associate/junior attorney at EUR70 to EUR250.

Separately, the Court approved the Company's motion to expand the
scope of employment of Ernst & Young to include certain services
related to the reporting of foreign bank accounts.

                      About Nortel Networks

Nortel Networks (OTC BB: NRTLQ) -- http://www.nortel.com/-- was
once North America's largest communications equipment provider.
It has sold most of the businesses while in bankruptcy.

Nortel Networks Corp., Nortel Networks Inc., and other affiliated
corporations in Canada sought insolvency protection under the
Companies' Creditors Arrangement Act in the Ontario Superior Court
of Justice (Commercial List).  Ernst & Young was appointed to
serve as monitor and foreign representative of the Canadian Nortel
Group.

The Monitor sought recognition of the CCAA Proceedings in the
U.S. by filing a bankruptcy petition under Chapter 15 of the U.S.
Bankruptcy Code (Bankr. D. Del. Case No. 09-10164).  Mary Caloway,
Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll & Rooney
PC, in Wilmington, Delaware, serves as the Chapter 15 petitioner's
counsel.

Nortel Networks Inc. and 14 affiliates filed separate Chapter 11
petitions (Bankr. D. Del. Case No. 09-10138) on Jan. 14, 2009.
Judge Kevin Gross presides over the case.  James L. Bromley, Esq.,
at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as
general bankruptcy counsel; Derek C. Abbott, Esq., at Morris
Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware
counsel.  The Chapter 11 Debtors' other professionals are Lazard
Freres & Co. LLC as financial advisors; and Epiq Bankruptcy
Solutions LLC as claims and notice agent.  Fred S. Hodara, Esq.,
at Akin Gump Strauss Hauer & Feld LLP, in New York, and
Christopher M. Samis, Esq., at Richards, Layton & Finger, P.A., in
Wilmington, Delaware, represent the Official Committee of
Unsecured Creditors.

Certain of Nortel's European subsidiaries also made consequential
filings for creditor protection.  On May 28, 2009, at the request
of the Administrators, the Commercial Court of Versailles, France
ordered the commencement of secondary proceedings in respect of
Nortel Networks S.A.  On June 8, 2009, Nortel Networks UK Limited
filed petitions in this Court for recognition of the English
Proceedings as foreign main proceedings under chapter 15 of the
Bankruptcy Code.

Nortel Networks divested off key assets while in Chapter 11.
In March 2009, the U.S. Bankruptcy Court entered an order
approving the sale of the Layer 4-7 assets to Radware Ltd. as the
successful bidder at auction.  In July 2009, Nortel sold its CDMA
and LTE-related assets to Telefonaktiebolaget LM Ericsson (Publ).
In September 2009, the Court Nortel sold its Enterprise Solutions
business to Avaya Inc.  In October 2009, the Court approved the
sale of assets associated with Nortel's Next Generation Packet
Core network components to Hitachi, Ltd.  On Dec. 2, 2009, the
Court approved the sale of assets associated with Nortel's
GSM/GSM-R business to Telefonaktiebolaget LM Ericsson (Publ) and
Kapsch Carriercom AG.  In December 2009, the Debtors sold their
Metro Ethernet Networks business to Ciena Corporation.  In March
2010, Nortel sold its Carrier Voice Over IP and Application
Solutions business to GENBAND Inc.  In September 2010, Nortel sold
its Multi-Service Switch business to Ericsson.

Nortel Networks filed a proposed plan of liquidation in the
U.S. Bankruptcy Court.  The Plan generally provides for full
payment on secured claims with other distributions going in
accordance with the priorities in bankruptcy law.


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G E R M A N Y
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HEAT MEZZANINE: Moody's Reviews Ratings on Notes for Downgrade
--------------------------------------------------------------
Moody's has placed on review for possible downgrade the ratings of
two classes of notes issued by H.E.A.T. Mezzanine I-2006 S.A.
(Compartment 2)

The notes affected by the rating review are:

Issuer: H.E.A.T Mezzanine S.A. (Compartment 2)

EUR218.4M A Notes, Ba3 (sf) Placed Under Review for Possible
Downgrade; previously on Sep 3, 2010 Downgraded to Ba3 (sf)

EUR10M (currently EUR6.8 million rated balance) Combo Notes, Caa3
(sf) Placed Under Review for Possible Downgrade; previously on
Sep 3, 2010 Downgraded to Caa3 (sf)

The rating of the Combination Note addresses the repayment of the
Rated Balance on or before the legal final maturity. For the combo
note, which does not accrue interest, the 'Rated Balance' is equal
at any time to the principal amount of the Combination Note on the
Issue Date minus the aggregate of all payments made from the Issue
Date to such date, either through interest or principal payments.
The Rated Balance may not necessarily correspond to the
outstanding notional amount reported by the trustee.

RATINGS RATIONALE

This transaction is a static CDO of a portfolio of German SME
mezzanine loans with bullet maturities which are due to redeem in
April 2013. The closing portfolio of EUR280 million has been
reduced to EUR198 million from defaults and early terminations.
The amount of outstanding Class A notes is currently EUR183.0
million from an initial EUR218.4 million due to deleveraging.

The rating review reflects the deterioration in the pool. Although
there have been no further defaults since last rating action,
Moody's considers two issuers worth a combined EUR9 million with a
high likelihood of defaulting, based on information contained in
the latest investor report dated April 28, 2011.

The pool is sensitive to credit deterioration due to low over
collateralization levels and high individual obligor
concentration. The largest issuer in the pool has an exposure of
EUR12.5 million.

Moody's expects to resolve its review in the coming weeks
following the full update of the underlying obligors' credit
assessments via RiskCalc.

The principal methodology used in this rating was "Moody's
Approach to Rating Corporate Collateralized Synthetic Obligations"
published in September 2009. Other methodologies and factors that
may have been considered in the process of rating this issuer can
also be found on Moody's website.


K1 GROUP: Founder Helmut Kiener Gets 10-Year Sentence for Fraud
---------------------------------------------------------------
Oliver Suess and Aoife White at Bloomberg News report that K1
Group founder Helmut Kiener was convicted of defrauding investors
with a EUR345-million (US$497 million) Ponzi scheme and sentenced
to 10 years and eight months in prison.

Mr. Kiener, 52, was found guilty of fraud, forgery and tax evasion
by a court in Wuerzburg, Germany, Bloomberg discloses.  Mr. Kiener
in April confessed to using new investors' money to make up for
losses in the wake of the financial crisis and to having
manipulated some account statements, Bloomberg recounts.

According to Bloomberg, prosecutors said that Barclays Plc and BNP
Paribas SA lost a combined EUR223 million and private investors
lost about EUR122 million.

Achim Groepper, Kiener's lawyer, said he was satisfied with the
sentence because it was less than the 12 years and nine months
sought by prosecutors, Bloomberg notes.  He won't appeal the
verdict, Bloomberg states.

According to Bloomberg, prosecutors said that Mr. Kiener used
funds from BNP to acquire luxury real estate in Florida and his
German hometown of Aschaffenburg that he planned to use for
himself.  Through a network of companies and people, he also
bought Mercedes, Bentley, and Maybach cars, two boats, and jet
skis with BNP money, while telling the bank the money would be
invested in various hedge funds and real estate, Bloomberg says,
citing the prosecutor.  The lender lost about EUR52 million,
Bloomberg notes, citing the indictment.

K1 Invest Ltd. and K1 Global Ltd. were the two main funds he
operated and which took the losses that prompted the trial,
Bloomberg discloses.

Mr. Kiener told the court in May that he began forging account
statements for K1 Invest immediately after it was set up,
Bloomberg relates.

Mr. Kiener halted his Germany-based operations after the national
regulator Bafin investigated them in 2001, Bloomberg discloses.
He told the judges that he bought a company in the British Virgin
Islands which had Bafin operating clearance and renamed it K1
Global Ltd., Bloomberg discloses.  Mr. Kiener, as cited by
Bloomberg, said that a year later he set up K1 Invest Ltd., in the
Virgin Islands.


LANTIQ BETEILIGUNGS-GMBH: S&P Cuts CCR to 'B' on Weaker Liquidity
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its long-term corporate
credit rating on Germany-based semiconductor company Lantiq
Beteiligungs-GmbH & Co. KG to 'B' from 'B+'. "We also lowered our
'BB-' issue ratings on Lantiq's debt to 'B+', in line with the
corporate credit rating," S&P said.

"At the same time, we put the corporate credit rating and the
issue ratings on Lantiq's debt on CreditWatch with negative
implications. The recovery rating on the debt remains at '2',
indicating our expectation of substantial (70%-90%) recovery in
the event of a payment default," S&P related.

The downgrade reflects Lantiq's weaker-than-expected operating
results in the six months to March 31, 2011, and our assessment of
the company's liquidity profile as less than adequate, primarily
due to our projections of weak covenant headroom and significant,
negative free cash flow generation.

"We are revising our assessment of Lantiq's financial risk profile
to 'highly leveraged' from 'aggressive'. This is primarily
because, in our base-case assessment, we expect headroom under the
company's financial maintenance covenants to potentially decline
to much less than 10% over the next 12 months, mainly due to lower
sales and margins in fiscal 2011 than budgeted and a tightening
covenant schedule from Sept. 30, 2011. Furthermore, absent
additional long-term funding from Lantiq's owner, private-equity
company Golden Gate Capital (GGC), we view it as likely that the
company's available liquidity reserves, comprising cash on hand
and availability under its US$20 million revolving credit facility
(RCF), could decline to less than US$20 million by Sept. 30, 2011.
This is largely because of significant one-time cash outflows
related to the carve-out of Lantiq from its former parent company
Infineon AG (not rated) and meaningful restructuring costs to
streamline its operations," S&P related.

As of March 31, 2011, Lantiq reported cash on hand of US$11
million, an undrawn RCF of US$20 million, and gross financial debt
of US$184 million. "The latter excludes US$102 million (nominal
value) in convertible preferred equity certificates and US$101
million in preferred equity certificates, which we view as debt-
like instruments under our criteria," S&P said.

In the six months to March 31, 2011, Lantiq's revenues declined by
4.5% year on year to US$233 million and EBITDA before
restructuring costs and special items amounted to US$31.9 million.
According to Lantiq, the revenue decline resulted primarily from
its customers' reduction of excess inventories, which they had
accumulated in the second half of fiscal year ended Sept. 30,
2010. Lantiq forecasts a further revenue decline for the third
quarter of fiscal 2011, but stable earnings compared with the
second quarter of fiscal 2011.

Lantiq reported negative free operating cash flow (FOCF) of US$4
million in the first half of fiscal 2011. This excludes a one-time
interest payment of US$27.3 million related to the November 2010
refinancing of GGC's original bridge financing for its acquisition
of Lantiq. "In our base case, however, we expect Lantiq to
generate negative FOCF of about US$14 million in the second half
of fiscal 2011, chiefly due to further meaningful one-time
restructuring and carve-out costs and capital expenditure
investments," S&P said.

"The ratings are constrained by what we see as Lantiq's relatively
narrow product focus, concentrated customer and supplier base,
operation in a highly competitive and volatile industry, and
leveraged capital structure. Partly offsetting these factors are
the company's strategy of not having inhouse manufacturing
facilities, which minimizes capital spending requirements and
moderates operating leverage. The group also benefits from its
solid niche market positions, moderate operating margins, and
relatively high interest cover ratios for the current rating," S&P
said.

"We expect to resolve the CreditWatch within the next three
months, after assessing how Lantiq is addressing the expected
deterioration of its covenant headroom and liquidity reserves,"
S&P related.

"We could lower the ratings by at least one notch if we concluded
that Lantiq's liquidity reserves would deteriorate materially in
the coming months or if projected covenant headroom were not to
recover to more than 15%, following an expected low point in the
second half of fiscal 2011," S&P said.

"We could affirm the ratings if Lantiq were able to reset its
covenant schedule, resulting in prospective covenant headroom of
about 25%, and if, at the same time, it received material
additional funding from its owners," S&P noted.


STAGE MEZZANINE: Moody's Reviews B Notes' Ba3 Rating for Downgrade
------------------------------------------------------------------
Moody's has placed on review for possible downgrade the ratings of
two classes of notes issued by Stage Mezzanine. The notes affected
by the rating review are:

Issuer: StaGe Mezzanine 2006

EUR132.8M A Notes, A1 (sf) Placed Under Review for Possible
Downgrade; previously on Nov 4, 2010 Downgraded to A1 (sf)

EUR20M B Notes, Ba3 (sf) Placed Under Review for Possible
Downgrade; previously on Nov 4, 2010 Downgraded to Ba3 (sf)

RATINGS RATIONALE

StaGe Mezzanine is a German SME CLO referencing a static portfolio
of senior unsecured loans with bullet maturities in 2012. The
closing portfolio of EUR175.8 million has been reduced to a
current performing size of EUR126.8 million from defaults and
early terminations. The amount of outstanding Class A notes is
currently EUR94.4 million from an initial EUR132.8 million due to
deleveraging.

The rating review reflects the deterioration in the pool beyond
Moody's expectations. Since last rating action, two issuers worth
a total of EUR9 million have defaulted. Moody's considers two more
issuers worth a combined EUR5.5 million with a high likelihood of
defaulting, as well as further general deterioration of the pool
beyond Moody's previous expectations, based on comments provided
by the manager and the qualitative credit assessments contained in
the investor report dated June 28, 2011. Should the additional two
issuers default the over collateralization on the senior notes
would be 128.5%.

The review will be concluded upon the update of the Riskcalc
assessments used to analyze the pool.

The principal methodology used in this rating was "Moody's
Approach to Rating Corporate Collateralized Synthetic Obligations"
published in September 2009. Other methodologies and factors that
may have been considered in the process of rating this issuer can
also be found on Moody's Web site.


WESTLB AG: Fitch Revises Senior Debt Rating to Watch Evolving
-------------------------------------------------------------
Fitch Ratings has revised WestLB AG's senior debt rating of 'A-'
to Rating Watch Evolving (RWE) from Rating Watch Positive (RWP).
At the same time, Fitch has maintained both WestLB's Long-term
Issuer Default Rating (IDR) of 'A-' and Support Rating Floor of
'A-' on RWP.

The rating action follows Fitch's further review of the
restructuring plan announced by WestLB on June 24. The
restructuring plan is based on an agreement between its owners,
the Federal Agency for Financial Market Stabilisation
(Bundesanstalt fur Finanzmarktstabilisierung, FMSA) and Erste
Abwicklungsanstalt (EAA; 'AAA'/Stable) and was sent to the
European Commission for approval on June 30, 2011.

Assuming the plan gets EC approval, which Fitch considers likely,
the agreed restructuring process would include these measures,
among others, by June 2012:

   -- WestLB's assets and liabilities of about EUR40bn-EUR45bn
      would be transferred to the newly established 'Verbundbank'.

   -- Business segments or selected assets and liabilities that
      the bank is able to sell would be transferred to third
      parties.

   -- Most of the remaining assets and liabilities would be
      transferred to EAA. Only a minor proportion of assets and
      liabilities not transferred to Verbundbank, third parties
      and/or EAA would remain at WestLB, which would be renamed
      SPM-Bank.

At this stage, details have yet to be determined about which
assets could be sold or on what legal basis the liabilities could
be transferred to third parties. However, a transfer of any debt
obligation to a third party could lead to a downgrade and/or a
withdrawal of its rating. The RWE on senior debt takes this
potential event into account. Ratings of senior debt issues not
transferred to third parties by June 30, 2012 will most likely be
upgraded, given that the obligor after that date will be the EAA,
the 'Verbundbank' or SPM-Bank.

Fitch did not carry out a full review as described in its Global
Financial Institutions Rating Criteria, but limited its review to
an assessment of the event's impact on the bank's support-driven
ratings.

The rating actions are:

WestLB

   -- Long-term IDR: maintained at 'A-', RWP

   -- Short-term IDR: affirmed at 'F1'

   -- Individual Rating: 'D' unaffected

   -- Support Rating: affirmed at '1'

   -- Support Rating Floor: maintained at 'A-', RWP

   -- Senior unsecured debt: 'A-', revised to RWE from RWP

   -- Short-term debt: affirmed at 'F1'

   -- Senior market-linked securities: 'A- emr', revised to RWE
      from RWP

   -- State-guaranteed/grandfathered debt: affirmed at 'AAA'

   -- State-guaranteed/grandfathered subordinated debt: affirmed
      at 'AAA'


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* GREECE: Moody's Reviews Ratings of Eight Banks for Downgrade
--------------------------------------------------------------
Moody's Investors Service has placed on review for possible
downgrade the ratings of eight Greek banks. This rating action
follows the announced EU support program for Greece and debt
exchange proposals by major financial institutions, which imply
that private creditors will incur substantial economic losses on
their holdings of government debt.

The affected banks are: National Bank of Greece SA (NBG), EFG
Eurobank Ergasias SA (Eurobank), Alpha Bank AE (Alpha), Piraeus
Bank SA (Piraeus), Agricultural Bank of Greece (ATE), Attica Bank
SA, Emporiki Bank of Greece (Emporiki), and General Bank of Greece
(Geniki).

RATIONALE FOR REVIEW

The main driver of the decision to place the bank ratings on
review for possible downgrade is the inclusion of the private
sector in the latest round of official funding for Greece, which
will directly impact the banks' Greek Government Bond (GGB)
holdings. The Institute of International Finance (representing
major financial institutions) has indicated that investor losses
are likely to be in excess of 20%.

FACTORS TO BE CONSIDERED IN THE BANK REVIEW

The review of the Greek banks will focus on four factors:

(1) The impact of the materialization of losses on the banks' GGB
    portfolios. In several cases, these GGB holdings exceed 150%
    of Tier 1 capital.

(2) Risks related to the banks' outstanding exposures to GGBs
    following the debt exchange and further difficult operating
    conditions. The EU program and proposed debt exchange will
    increase the likelihood that Greece will be able to stabilize
    and eventually reduce its overall debt burden. Nevertheless,
    Moody's recognizes that Greece will continue to face medium-
    term solvency challenges. Greece's debt burden is still likely
    to remain well in excess of 100% of GDP for many years, and
    the country will still face very significant implementation
    risks to fiscal and economic reform. Accordingly, Moody's
    expects operating conditions following the debt exchange to
    continue to exert pressure on banks' profitability and asset
    quality metrics.

(3) Despite the market's recent positive reaction over the past
    couple of days, the banks remain vulnerable to an erosion of
    confidence among depositors. Moody's will be assessing this
    vulnerability, as any loss in confidence could lead to further
    deposit outflows and prevent capital market access for a
    sustained period. Moody's notes that private sector deposits
    have declined by 21% since end-2009 (to May 2011), with
    approximately 30% of this decline taking place during the
    first five months of 2011.

(4) The review will also take into account important risk
    mitigants in the form of existing support mechanisms available
    for Greek banks and a number of new mechanisms, including (i)
    financing recapitalization, if needed, through the European
    Financial Stability Facility (EFSF), and (ii) the provision of
    credit enhancements to underpin the quality of collateral, in
    order to allow continued use for access to Eurosystem
    liquidity operations.

The specific rating changes implemented are:

National Bank of Greece SA, NBG Finance plc, and National Bank of
Greece Funding Limited: The baseline credit assessment (BCA) of
Caa1, the long-term deposit ratings and senior unsecured debt
ratings of B3, the subordinated debt ratings of Caa2, the backed
(government-guaranteed) senior unsecured ratings of B3, and the
preferred stock (Hybrid Tier 1) of Ca (hyb), were all placed on
review for possible downgrade.

EFG Eurobank Ergasias SA, EFG Hellas plc, EFG Hellas (Cayman
Islands) Limited, and EFG Hellas Funding Limited: The BCA of Caa1,
the long-term deposit ratings and senior unsecured debt ratings of
B3, the subordinated debt ratings of Caa2, the backed (government-
guaranteed) senior unsecured ratings of B3, and the preferred
stock (Hybrid Tier 1) of Ca (hyb), were all placed on review for
possible downgrade.

Alpha Bank AE, Alpha Credit Group plc and Alpha Group Jersey
Limited: The BCA of Caa1, the long-term deposit ratings and senior
unsecured debt ratings of B3, the subordinated debt ratings of
Caa2, the backed (government-guaranteed) senior unsecured ratings
of B3, and the preferred stock (Hybrid Tier 1) of Ca (hyb), were
all placed on review for possible downgrade.

Piraeus Bank SA, Piraeus Group Finance plc, and Piraeus Group
Capital Limited: The BCA of Caa1, the long-term deposit ratings
and senior unsecured debt ratings of B3, the subordinated debt
ratings of Caa2, the backed (government-guaranteed) senior
unsecured ratings of B3, and the preferred stock (Hybrid Tier 1)
of Ca (hyb), were all placed on review for possible downgrade.

Agricultural Bank of Greece SA and ABG Finance International plc:
The BCA of Caa1, the long-term deposit ratings and senior
unsecured debt ratings of B3, and the subordinated debt ratings of
Caa2, were all placed on review for possible downgrade.

Attica Bank SA and Attica Funds plc: The BCA of Caa1, the long-
term deposit ratings of B3, and the subordinated debt ratings of
Caa2, were all placed on review for possible downgrade.

Emporiki Bank of Greece SA and Emporiki Group Finance plc: The BCA
of Caa1, the deposit and senior unsecured debt ratings of B1, and
the subordinated debt ratings of B2, were all placed on review for
possible downgrade. The deposit and debt ratings of Emporiki
receive significant uplift from Moody's assessment of a very high
probability of capital and liquidity support from its French
parent, Credit Agricole SA.

General Bank of Greece SA: The BCA of Caa1 and the long-term
deposit rating of B1, were all placed on review for possible
downgrade. The deposit ratings of General Bank of Greece receive
significant uplift from Moody's assessment of a very high
probability of capital and liquidity support from its French
parent, Societe Generale.

PREVIOUS RATING ACTIONS & METHODOLOGIES USED

The principal methodologies used in rating these banks were Bank
Financial Strength Ratings: Global Methodology published in
February 2007, Incorporation of Joint-Default Analysis into
Moody's Bank Ratings: A Refined Methodology published in March
2007, and Moody's Guidelines for Rating Bank Hybrid Securities and
Subordinated Debt published in November 2009. Please see the
Credit Policy page on www.moodys.com for a copy of these
methodologies.

All banks affected by the review are headquartered in Athens,
Greece:

- National Bank of Greece SA reported (unaudited) total assets of
  EUR117.8 billion as of March 2011

- EFG Eurobank Ergasias SA reported (unaudited) total assets of
  EUR80.5 billion as of March 2011

- Alpha Bank SA reported (unaudited) total assets of EUR64.0
  billion as of March 2011

- Piraeus Bank SA reported (unaudited) total assets of EUR56.6
  billion as of March 2011

- Agricultural Bank of Greece SA reported (unaudited) total assets
  of EUR28.9 billion as of March 2011

- Emporiki Bank of Greece SA reported (unaudited) total assets of
  EUR27.8 billion as of March 2011

- Attica Bank SA reported (unaudited) total assets of EUR4.6
  billion as of March 2011

- General Bank of Greece SA reported (unaudited) total assets of
  EUR4.0 billion as of March 2011


* GREECE: Moody's Cuts Bond Ratings to 'Ca'; Outlook Developing
---------------------------------------------------------------
Moody's Investors Service has downgraded Greece's local- and
foreign-currency bond ratings to Ca from Caa1 and has assigned a
developing outlook to the ratings.

The combination of the announced EU support program and debt
exchange proposals by major financial institutions implies that
private creditors will incur substantial economic losses on their
holdings of government debt. The rating's developing outlook
reflects the current uncertainty about the exact market value of
the securities creditors will receive in the exchange. After the
debt exchanges have been completed, Moody's will re-assess the
credit risk profile of any outstanding or new securities issued by
the Greek government.

The announced EU program along with the Institute of International
Finance's (IIF's) statement (representing major financial
institutions) implies that the probability of a distressed
exchange, and hence a default, on Greek government bonds is
virtually 100%. The magnitude of investor losses will be
determined by the difference between the face value of the debt
exchanged and the market value of the debt received. The IIF has
indicated that investor losses are likely to be in excess of 20%.

Looking further ahead, the EU program and proposed debt exchanges
will increase the likelihood that Greece will be able to stabilize
and eventually reduce its overall debt burden. The support package
for Greece also benefits all euro area sovereigns by containing
the severe near-term contagion risk that would likely have
followed a disorderly payment default or large haircut on existing
Greek debt. However, Greece will still face medium-term solvency
challenges: its stock of debt will still be well in excess of 100%
of GDP for many years and it will still face very significant
implementation risks to fiscal and economic reform.

PREVIOUS RATING ACTION & METHODOLOGY USED

Moody's previous rating action on Greece was implemented on 1 June
2011, when the rating agency downgraded Greece's government bond
ratings by three notches to Caa1 from B1. Prior to that, Moody's
last rating action on Greece was taken on May 9, 2011, when the
rating agency placed Greece's government bond ratings on review
for possible downgrade.

The principal methodology used in this rating was "Sovereign Bond
Ratings", which was published in September 2008. Please see the
Credit Policy page on www.moodys.com for a copy of this
methodology.


* GREECE: Moody's Says EU Support Package Permits Orderly Default
----------------------------------------------------------------
The support package for Greece announced after last Thursday's
summit benefits all euro area sovereigns by containing the
contagion risk that would likely have followed a disorderly
payment default on existing Greek debt, says Moody's Investors
Service in a new Special Comment published on July 25. However,
the credit implications of the announcement for creditors of
individual countries depend on the balance of the positive market-
stabilizing elements of the plan and the negative precedent set by
the endorsement of distressed exchanges between Greek creditors
and the sovereign.

GREECE

The support package incorporates the participation of private
sector holders of Greek debt, who are now virtually certain to
incur credit losses. If and when the debt exchanges occur, Moody's
would define this as a default by the Greek government on its
public debt.

Accordingly, Moody's has downgraded Greece's debt ratings from
Caa1 to Ca to reflect the expected loss implied by the proposed
debt exchanges. Once the distressed exchange has been completed,
Moody's will reassess Greece's rating to ensure that it reflects
the risk associated with the country's new credit profile,
including the potential for further debt restructurings. While the
rating agency believes that the overall package carries a number
of benefits for Greece -- a slightly reduced debt trajectory,
lower debt-servicing costs, as well as reduced reliance on
financial markets for years to come -- the impact on Greece's debt
burden is limited.

OTHER EURO AREA SOVEREIGNS

The support package for Greece benefits all euro area sovereigns
by containing the severe near-term contagion risk that would
likely have followed a disorderly payment default or large haircut
on existing Greek debt. The EFSF will also be given additional
powers to extend support to euro area sovereigns and stabilize
sovereign bond prices.

Ireland and Portugal, which currently receive support from the
European Financial Stability Mechanism (EFSF), will pay lower
interest rates on their borrowings going forward. Set against
that, however, despite statements to the contrary, the support
package sets a precedent for future restructurings should the
finances of another euro area sovereign become as problematic as
those of Greece. The impact of Thursday's announcement for
creditors of Ireland and Portugal is therefore likely to be
credit-neutral.

As for creditors of other non-Aaa sovereigns with high debt
burdens or large budget deficits, the positive elements of the
announcement -- including the positive short-term impact on market
sentiment, the introduction of tools to help stabilize sovereign
debt prices and avoid the disruptive effect of disorderly defaults
and, should funding from the EFSF ever be required, the lower
interest rate which would be charged -- need to be weighed against
the negative implications of this precedent-setting package should
any country face financing challenges similar in severity to
Greece's. On balance, Moody's says that, for creditors of such
countries, the negatives will outweigh the positives and weigh on
ratings in future.


=============
H U N G A R Y
=============


IKR ZRT: Creditor Banks Approve Split of Businesses
---------------------------------------------------
MTI-Econews reports that creditor banks of financially troubled
IKR Zrt have approved the transfer of part of the company's
activities plus debt to the Czech Republic-registered company
Agrofert.

According to MTI, IKR chief executive Attila Szaxon on Monday
evening said that CIB, Erste, K&H, MKB, OTP and Raiffeisen banks
had endorsed splitting IKR into two companies.

The company's agribusiness-financing as well as fertilizer,
pesticide and seed sales business will go to IKR Agrocentrum, MTI
says.  That company will be taken over, together with IKR's debt
and other obligations, by Agrofert, MTI states.  IKR will retain
the company's agricultural-machinery sales and related services,
MTI notes.

IKR, which currently has HUF15.5 billion in outstanding loans, had
revenue of HUF50 billion in 2010, down from HUF94 billion in 2009
and HUF120 billion in 2008, MTI discloses.

IKR Zrt is a Hungarian agribusiness.


=============
I R E L A N D
=============


ALLIED IRISH: Shareholders Approve Nationalization
--------------------------------------------------
Geoff Percival at Irish Examiner reports that the nationalization
of Allied Irish Banks plc has been approved by the bank's
shareholders, despite opposition from the floor at its
extraordinary general meeting in Dublin on Tuesday.

According to Irish Examiner, the move -- which ultimately sees the
government stump up around EUR12.6 billion of AIB's total post-
March capital requirement of EUR14.8 billion (made up of AIB's
EUR13.3 billion target and the EUR1.5 billion needed by the EBS
Building Society, which is now part of the AIB group) -- will
result in the state having a 99.8% share of what is being promoted
as one of the two pillars of the new Irish banking landscape.

Irish Examiner relates that Tuesday's vote centered around the
state buying further equity in the bank for EUR5 billion, the
issue of contingency capital of EUR1.6 billion for potential
future needs, the raising of around EUR2 billion through the
'burning' of junior bondholders and EUR6.1 billion in a further
Government injection to meet targets.

The government previously injected EUR7.2 billion into AIB over
the course of 2009 and 2010. AIB has raised between EUR5 billion
and EUR6 billion through its own means; either via bondholder
deals or asset sales, Irish Examiner recounts.

                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.


ALLIED IRISH: May Offer More Than Government's Pay Cap for New CEO
------------------------------------------------------------------
Simon Carswell at The Irish Times reports that Allied Irish Banks
executive chairman David Hodgkinson on Tuesday said the bank may
need to offer more than the government's EUR500,000 pay cap to
find the right chief executive candidate.

According to The Irish Times, Mr. Hodgkinson said it was
appropriate to recruit an international chief executive as there
was "very little in the way of people domestically who are not
already involved in the banking problems of the past".

Mr. Hodgkinson, as cited by The Irish Times, said that the pay
might be large but that was a reality to deal with if credible
candidates were to be found outside Ireland as "top people can get
jobs anywhere".

Mr. Hodgkinson was speaking to shareholders, including Breda
O'Byrne, at the extraordinary general meeting where they
overwhelmingly approved a further State injection of about EUR12.7
billion, pushing government ownership of the bank to 99.8%, The
Irish Times relates.

Shareholders voiced opposition to the recapitalization with some
questioning whether the capital would help economic recovery, The
Irish Times 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.


IRISH LIFE: Government Gets Court Order to Inject EUR2.7 Billion
----------------------------------------------------------------
Simon Carswell and Mary Carolan at The Irish Times report that the
Irish government has secured a High Court order to inject EUR2.7
billion into Irish Life & Permanent by the end of this month,
taking control of a fifth Irish bank.

According to The Irish Times, the order allows the government to
invest up to EUR3.8 billion but it is hoped that the company can
raise EUR1.1 billion through the sale of Irish Life and a debt
buyback with junior bondholders.

The consequences were "potentially catastrophic" if the company
was not recapitalized by July 31, the head of bank restructuring
at the Department of Finance John Moran warned in an affidavit,
The Irish Times states.

The Central Bank stress tests in March set a capital target of
EUR4 billion, of which EUR2.9 billion had to be raised by July 31,
The Irish Times notes.  The company has raised EUR200 million, The
Irish Times discloses.

The Irish Times says the EUR2.7 billion injection will leave the
state with a stake of more than 99%.

Shareholders have five days to oppose the order under the Credit
Institutions (Stabilisation) Act, the sweeping banking legislation
introduced last year which the Minister is using for the
recapitalization, The Irish Times states.

Piotr Skoczylas, who was voted onto the board of the company last
week to represent shareholders opposed to the state
recapitalization, is leading the legal challenge, The Irish Times
discloses.

About 260 shareholders with more than 18% of the company will
oppose the order, according The Irish Times.

Mr. Skoczylas, as cited by The Irish Times, said they would
challenge the order on the basis that the state recapitalization
was "grossly unreasonable" and that the legislation was
unconstitutional.

The shareholders want the company to delay the recapitalization to
allow for alternative funds to be sourced from private investors,
The Irish Times notes.

Headquartered in Dublin, Irish Life & Permanent plc --
http://www.irishlifepermanent.ie/-- is a provider of personal
financial services to the Irish market.  Its business segments
include banking, which provides retail banking services; insurance
and investment, which includes individual and group life assurance
and investment contracts, pensions and annuity business written in
Irish Life Assurance plc and Irish Life International, and the
investment management business written in Irish Life Investment
Managers Limited; general insurance, which includes property and
casualty insurance carried out through its associate, Allianz-
Irish Life Holdings plc, and other, which includes a number of
small business units.  On June 30, 2008, it acquired the rest of
the 50% interest in Joint Mortgage Holdings No. 1 Limited (the
parent of Springboard Mortgages Limited), resulting in Springboard
Mortgages becoming a wholly owned subsidiary.  On December 23,
2008, it acquired an additional 23% of Cornmarket Group Financial
Services Ltd, bringing its interest to 98%.


PYLON II: S&P Assigns Preliminary 'B-' Rating to EUR150-Mil. Notes
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned preliminary credit
ratings to the EUR150 million class A and B principal-at-risk
variable-rate notes to be issued by Pylon II Capital Ltd. (Pylon
II), sponsored by Natixis S.A. (A+/Stable/A-1).

The notes will be exposed to major European windstorms in mainland
France between August 2011 and April 2016. Pylon II is an Irish
special-purpose private limited company.

The issuer will invest proceeds from the sale of the notes in a
global master repurchase agreement (repo)-the tri-party repo with
Natixis as the counterparty. Natixis will also be the counterparty
to the risk transfer contract, and will in turn enter into
financial contracts with Electricite Reseau Distribution France
(ERDF), a wholly-owned subsidiary of Electricite De France (AA-
/Stable/A-1+). Natixis is part of the BPCE (A+/Stable/A-1) group
of affiliated companies.

The notes provide protection to Natixis, and ultimately ERDF, for
Europe windstorm losses above an index value of 777 (for class A)
and 420 (for class B), up to an index value of 1,050 (class A) and
777 (class B) on a per-occurrence basis.

EQECAT Inc., as the event calculation agent, will calculate an
index value following a qualifying event. It will base the index
value on wind speeds measured by the METNEXT network of measuring
stations across France, and on predetermined weights by location.

Class A has a "drop-down" feature: If class B suffers a partial or
total loss of principal, the class A notes' attachment and
exhaustion points will be lowered to ensure that there is no gap
in the cover.

"The rating we have assigned to the class A notes does not reflect
the additional risk of these notes attaching because of this
feature. However, if an event causes these notes to drop down, we
will rerate the class A notes at that time, to reflect the
increased probability of attachment," S&P said.

Ratings List

Class           Prelim.          Prelim.
                rating*           amount
                                (mil. EUR)

A               B+ (sf)               65
B               B- (sf)               85


QUINN GROUP: Anglo Seeks Reverse Ownership Transfer of Finansstroy
------------------------------------------------------------------
Richard Curran at The Sunday Business Post Online reports that
Anglo Irish Bank is to petition a Russian court to reverse the
transfer of ownership of a Russian company to a nephew of
entrepreneur Sean Quinn.

The Russian company, Finansstroy, owns an office block in Moscow
valued at around EUR125 million, The Post.ie discloses.  Peter
Quinn became the 100% owner of Finansstroy on July 8, The Post.ie
says, citing Companies Office filings in Russia.

According to The Post.ie, Anglo Irish Bank will argue in court
that the transfer should be disallowed, not only because it did
not take account of share pledges granted to Anglo on foot of
Quinn family loans, but because it actually took place after the
state-owned bank got an interlocutory injunction in the High Court
in Dublin, preventing the transfer of any assets from a group of
Quinn property companies to any third parties.

Peter Quinn instructed the bank, which holds the accounts for
rental income on the office block attributed to Finansstroy, to
allow him withdraw EUR4.5 million in June, The Post.ie discloses.
Quinn also submitted an application to the Russian courts to have
Finansstroy declared bankrupt, The Post.ie notes.

As reported by the Troubled Company Reporter-Europe on July 26,
2011, The Irish Times related that a Moscow court has adjourned
until next month a hearing to declare Finansstroy bankrupt within
the international property group of the family of businessman Sean
Quinn.  The Moscow court of arbitration will hear the bankruptcy
petition from on August 24 after ruling on Friday that it had
insufficient documentation to proceed with the case at the
scheduled hearing, The Irish Times disclosed.

Quinn Group ROI Ltd. controls its cement, building materials,
glass and other manufacturing businesses in Ireland and Britain
through its ownership of Quinn Group, an operating entity
registered in Northern Ireland.


RELDON LTD: AIB Seeks Summary Judgment Order of EUR22.3 Million
---------------------------------------------------------------
Mary Carolan at The Irish Times reports that Allied Irish Banks is
seeking summary judgment orders for almost EUR60 million against
developer Dermot O'Rourke arising from unpaid loans and guarantees
mostly related to properties here and in the UK.

Bank of Scotland Ireland, now Bank of Scotland plc, previously
secured EUR16.5 million judgment orders against Mr. O'Rourke and,
the court heard on Tuesday, had initiated bankruptcy proceedings
against him last month, The Irish Times relates.

In 2006, Mr. O'Rourke, along with developer Gerry Conlan, sold 400
acres associated with the Millennium Park business park in Co
Kildare for EUR320 million, The Irish Times recounts.

AIB's action is against Mr. O'Rourke; his wife Perle; Reldon Ltd,
a company of which he is a director; and the Keredern partnership,
of which he was a general partner before he resigned in May 2010,
The Irish Times discloses.

The bank, The Irish Times says, is seeking summary judgment for
about EUR33 million and GBP22 million (EUR24.8 million) against
Mr. O'Rourke and for sums of GBP19.7 million (EUR22.3 million) and
EUR15.2 million against both Reldon and Keredern.

The bank's claim against Ms. O'Rourke is for about EUR517,000
arising from a March 2009 loan offer to Mr. and Ms. O'Rourke to
finance the cost of an investment in the European Hotel Group, The
Irish Times notes.  That investment, Ms. O'Rourke's counsel
claimed on Tuesday, was encouraged by AIB and Goodbody
stockbrokers and she was not independently advised, The Irish
Times states.

All the defendants opposed the case being fast-tracked by the
Commercial Court on grounds of alleged delay by the bank, since
first demanding repayment of the loans in June 2010, in bringing
the proceedings, according to The Irish Times.  The Irish Times
notes that Mr. O'Rourke claimed he had advanced proposals to AIB
in May 2010, before the demand issued, but those proposals were
"ignored".

Denis McDonald SC, for the bank, rejected those claims and said
the bank had engaged in protracted negotiations with
Mr. O'Rourke's advisers in an effort to agree a repayment plan and
should not be penalized for not rushing to litigation, The Irish
Times notes.


SEAN DUNNE: To Cooperate With NAMA Takeover
-------------------------------------------
Emmet Oliver Deputy at Independent.ie reports that developer Sean
Dunne last night said he would take National Asset Management
Agency (NAMA)'s moves against his property empire "on the chin"
and he planned to fully co-operate with the bank over EUR350
million of outstanding debt.

Mr. Dunne told the news agency in an interview that there was no
plan to take legal action against NAMA and he accepted there could
be consequences from not being able to repay the funds borrowed by
companies linked to his DCD Builders Ltd firm.

As reported in the Troubled Company Reporter on July 27, 2011, RTE
News said that NAMA has appointed accountancy firm Grant
Thornton's Paul McCann, a property receiver, to a number of
properties owned by Sean Dunne.  NAMA had acquired EUR350 million
of Mr. Dunne's loans from Irish banks, according to RTE News.  The
report related that among the properties included is Hume House in
Ballsbridge that was purchased for EUR130 million in 2006.  RTE
News notes that other properties in Dublin included in the
receivership are located in the Docklands, Sandymount, Rathfarnham
and Herbert Street.  Some of the loans belonging to Mr. Dunne that
transferred to NAMA were initially lent to him by Bank of Ireland,
the report disclosed.  Last year the agency acquired some land and
development loans extended to Mr. Dunne by Irish banks, RTE News
recalled.

Sean Dunne is a famous developer in Ireland.


SUPERQUINN: Issued Cheques Dishonored due to Freeze on Bank Accts.
------------------------------------------------------------------
Barry O'Halloran at IrishTimes.com reports that a freeze imposed
on Superquinn's bank accounts prevented the retailer from honoring
cheques issued to creditors before it was placed in receivership,
owing EUR55 million to suppliers and EUR275 million to banks.

As reported in the Troubled Company Reporter on July 20, 2011,
Reuters said RTE News reported Superquinn was put into
receivership by a syndicate of banks, including Allied Irish
Banks, Bank of Ireland, and National Irish Bank after building up
debts of more than EUR400 million (US$561 million).  Kieran
Wallace and Eamonn Richardson, representatives of professional
services firm KPMG, have been appointed as receivers to the firm.

IrishTimes.com notes that a number of creditors confirmed that a
number of Superquinn cheques issued to suppliers two weeks ago
have bounced.  The report relates that the cheques were issued on
July 11, and creditors who presented them before July 18 received
their payments.  Any cheques presented from that point were not
honored as the banks froze Superquinn's accounts the day the
receivers moved in, IrishTimes.com notes.

Mr. Wallace said that creditors who presented payments on July 15,
to banks other than those against which the Superquinn cheques
were drawn, could also have been hit, IrishTimes.com says.

Messrs. Wallace and Richardson said that they will pay for stock
that Superquinn held once they were appointed, and for deliveries
received while they are in control of the company, IrishTimes.com
relates.  Mr. Wallace said they had paid suppliers who were facing
difficulty and also accelerated payments to creditors who have
retention of title or some other form of security over their
goods, the report notes.

Jerome Reilly at Sunday Independent relates that Senator John
Whelan, speaking in the Seanad (Irish Parliament), said that he
will call on the minister to issue an instruction and intervene so
the receivers will honor those cheques.  However, Enterprise
Minister Richard Bruton told the Sunday Independent in an
interview that he would not intervene on behalf of suppliers.
"The minister understands that Superquinn employs approximately
2,800 people, and over 600 businesses act as suppliers to the
company.  His immediate concern is for these workers and
suppliers, and he has met representatives of both groups," Sunday
Independent quoted an unnamed spokesman for Mr. Bruton as saying.

Meanwhile, RTE News reports that Musgrave, which is in the process
of buying Superquinn from the receivers, is finalizing plans for a
scheme to help suppliers experiencing losses as a result of the
receivership.  RTE News relates that Musgrave said the scheme will
give suppliers access to the Musgrave group's supply network to
sell their goods, and will prioritize small distressed Irish
companies.  The report discloses that unions representing the
2,800 staff at Superquinn support the planned sale of the company
to the Musgrave group.

Moreover, Suzanne Lynch at IrishTimes.com notes that a EUR10
million fund is to be established to reimburse certain creditors
of Superquinn.  The report relates that the joint receivers of the
company are expected to announce details of the scheme soon.  Only
suppliers who are not covered by credit insurance will be covered
by it, IrishTimes.com relates.

The scheme will be funded by Musgrave and indirectly through the
banks, using money generated during the course of the
receivership, and is contingent upon Musgrave's purchase of
Superquinn, IrishTimes.com adds.

          Suppliers Set for Multimillion Insurance Payout

Nicola Cooke at The Sunday Business Post Online reports that
credit insurers of suppliers who are owed payments from Superquinn
are likely to pay out millions of euro to some of those affected.
The report relates that Ibec group Food and Drink Industry Ireland
(FDII) has claimed that up to EUR100million is owed to suppliers
of the chain.  Atradius, Coface and Euler Hermes are the three
main credit insurers based in Ireland that have around 90% market
share.

Many of the 600 suppliers are unsecured creditors, although some
larger ones had retention of title agreements with the company,
according to The Sunday Business Post Online.

Xavier Denecker, Coface managing director for Britain and Ireland,
told The Sunday Business Post in an interview that that the
company will have a "hefty payout" on their cover to Superquinn
suppliers and agreed that this was likely to be in the region of
several million euro.

The Sunday Business Post relates that Atradius is also set to be
hit with a multimillion-euro payout to suppliers to the retailer.
Industry sources confirmed that Euler Hermes removed cover on
Superquinn in recent weeks, the report notes.

The Sunday Business Post says that Isme (Irish Small and Medium
Enterprise) Director Mark Fielding said that around 100 of their
members are suppliers to Superquinn, and are owed between
EUR14,000 and EUR104,000.

        High Court Cross Examines Superquinn Directors

IrishTimes.com notes that a number of Superquinn directors were
cross-examined in the High Court, as the legal dispute over the
future of the supermarket chain.  The report relates that
Superquinn Directors Kieran Ryan, David Courtney and Simon
Cantrell, and shareholders Bernard Doyle and Terry Sweeney.  Doug
Smith, a partner with solicitors firm Eugene F Collins, who was
expected to give evidence in support of Mr. Cantrell, was not
questioned, IrishTimes.com discloses.

As reported in the Troubled Company Reporter-Europe on July 27,
2011, newstalk.ie said that two separate legal actions have come
before the High Court over the future of Superquinn.  Superquinn
directors went to court looking to begin the process of
examinership, according to newstalk.  The report related that the
directors now want an injunction against the appointment of the
receivers.  newstalk disclosed that a director of Superquinn Simon
Cantrell has said in a sworn affidavit to the High Court that his
name was included in the petition for examinership lodged by
directors without his consent.

Under cross-examination, IrishTimes.com relates Mr. Ryan said
there was a resolution to present the petition at the meeting on
July 18 and that he, Messrs. Courtney and Cantrell had "broken
off" from a meeting which also included Messrs. Sweeney and Doyle
and agreed to present the petition for examinership, though Mr.
Cantrell said he did not want to be involved in the court
procedure.  Under questioning, the report discloses, Mr. Ryan said
that a formal vote had been taken at the meeting.

However, IrishTimes.com relates that when cross-examined by Lyndon
MacCann SC, for the petitioners, Mr. Cantrell denied a decision
was taken by the board to seek the appointment of an examiner at
the meeting.  It was an informal gathering to discuss the
situation the company was in, he added.  While accepting that
examinership was discussed, Mr. Cantrell said there was "no
resolution" on a petition, IrishTimes.com adds.

The court will decide whether the petition was brought within the
three-day period as stipulated under the Companies Act and whether
the application for court protection constituted "exceptional
circumstances," according to IrishTimes.com.  The report relates
that the court will also consider whether the company validly
resolved to present the petition for examinership and whether the
directors validly resolved to present a petition in their capacity
as directors.

The outcome of the preliminary hearing on July 26, will determine
whether a full hearing of the examinership petition will proceed
on today, July 28.

Superquinn is one of Ireland's largest domestic retailers.  It
employs around 2,800 people in 23 stores around the country.
Superquinn is owned by Select Retail Holdings, which bought the
retailer for EUR350 million in 2005.


THESEUS EUROPEAN: Moody's Upgrades Rating on Class E Notes to Ba2
-----------------------------------------------------------------
Moody's Investors Service has upgraded the ratings of these notes
issued by Theseus CLO S.A:

Issuer: Theseus European CLO S.A.

   -- EUR135M Class A1 Notes, Upgraded to Aaa (sf); previously on
      Jun 22, 2011 Aa3 (sf) Placed Under Review for Possible
      Upgrade

   -- EUR90M Class A2A Notes, Upgraded to Aaa (sf); previously on
      Jun 22, 2011 Aa2 (sf) Placed Under Review for Possible
      Upgrade

   -- EUR10M Class A2B Notes, Upgraded to Aa1 (sf); previously on
      Jun 22, 2011 A3 (sf) Placed Under Review for Possible
      Upgrade

   -- EUR16M Class B Notes, Upgraded to A1 (sf); previously on Jun
      22, 2011 Baa3 (sf) Placed Under Review for Possible Upgrade

   -- EUR19M Class C Notes, Upgraded to Baa1 (sf); previously on
      Jun 22, 2011 Ba3 (sf) Placed Under Review for Possible
      Upgrade

   -- EUR11M Class D Notes, Upgraded to Baa3 (sf); previously on
      Jun 22, 2011 B3 (sf) Placed Under Review for Possible
      Upgrade

   -- EUR15M Class E Notes, Upgraded to Ba2 (sf); previously on
      Jun 22, 2011 Caa3 (sf) Placed Under Review for Possible
      Upgrade

RATINGS RATIONALE

Theseus CLO S.A, issued in August 2006, is a single currency
Collateralised Loan Obligation ("CLO") backed by a portfolio of
mostly high yield European loans. The portfolio is managed by
Invesco Senior Secured Management, Inc. This transaction will be
in reinvestment period until August 27, 2012. Current portfolio is
predominantly composed of senior secured loans.

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 since the rating action in October
2009.

The actions reflect key changes to the modelling 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 a
fixed recovery rate modelling framework. Additional changes to the
modelling assumptions include (1) standardizing the modelling of
collateral amortization profile and (2) changing certain credit
estimate stresses aimed at addressing time lags in receiving
information required for credit estimate updates.

The overcollateralization ratios of the rated notes have also
improved since the rating action in October 2009. According to the
trustee latest report dated 27 June 2011, the reported Class A,
Class B, Class D, Class D and Class E overcollateralization ratios
of have improved by 4% to 8% versus August 2009 reported levels
(where the October 2009 rating actions were based on) of 128.96%,
120.67%, 112.10%, 107.68% and 102.18%, respectively, and all
related overcollateralization tests are currently in compliance.

Moody's also notes that this action also reflects improvements of
the transaction performance since the last rating action. WARF has
remained relatively stable. However, the reported WARF understates
the actual improvement in credit quality 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 the portfolio par amount, 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 EUR 313 million,
defaulted par of EUR1.24 million, a weighted average default
probability of 23.57% (consistent with a WARF of 3069) a weighted
average recovery rate upon default of 44.42% and a diversity score
of 40.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 85.89% of the portfolio exposed to
senior secured corporate assets would recover 50% upon default,
while the remainder non first-lien loan corporate assets would
recover 10%. In each case, historical and market performance
trends and collateral manager latitude for trading the collateral
are also relevant 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) 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.

2) Other collateral quality metrics: 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 lower
   of reported and covenanted values for weighted average spread,
   and diversity score.

3) Credit estimate concentration: Around 60.5% of the current
   collateral pool consists of debt obligations whose credit
   quality has been assessed through Moody's credit estimates.

The principal methodology used in this rating was "Moody's
Approach to Rating Collateralized Loan Obligations" published in
June 2011.

Moody's modelled 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
modelled, 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.


=========
I T A L Y
=========


FONDIARIA-SAI: Fitch Affirms 'BB+' Insurer Fin'l Strength Rating
----------------------------------------------------------------
Fitch Ratings has affirmed Italian insurance company Fondiaria-
SAI's and its main subsidiary, Milano Assicurazioni's (Milano)
Insurer Financial Strength (IFS) ratings at 'BB+' and removed them
from Rating Watch Negative (RWN) where they were placed on
November 24, 2010. The Outlook for the ratings is Negative.

The affirmation reflects Fitch's view that concerns over FonSAI
and Milano's capital increases have eased, following shareholders'
strong support for the planned capital increase. The ratings are
also underpinned by FonSAI's strong domestic franchise, which
generates sustained revenues. The Negative Outlook reflects the
challenges facing management in implementing its new business
plans, including sluggish economic growth and increased volatility
in capital markets in Italy.

Although Q111 results disclosed preliminary signs of a recovery in
underwriting profitability for non-life business, the operating
environment in Italy remains challenging, with weak prospects for
economic growth and growth in household discretionary income
following the government's tight fiscal consolidation strategy. In
addition, although raising EUR800 million of equity is a clear
benefit for the group, FonSAI's capital adequacy remains weak and
its investment leverage is relatively high in Fitch's view,
exposing the company to investment market fluctuations.

FonSAI is exposed to euro zone sovereign credit risk. The company
has disclosed that, had it not made use of an option granted by
the local regulator to all Italian insurers, it would have
breached its regulatory consolidated Solvency I margin at end-
March 2011. As a result, should the financial dislocation
affecting Italian sovereign and corporate debt securities and
market values of Italian financial institutions materially
deteriorate, Fitch believes the risk would increase that FonSAI
could again breach regulatory capital requirements, causing the
company to need to strengthen its capitalization. In this
scenario, Fitch notes that FonSAI's financial flexibility may be
restricted because it may well be harder for it to seek additional
fresh capital from shareholders in the short term and as a
consequence the ratings could be downgraded.

The rating could also be downgraded if FonSAI fails to implement
successfully its turnaround plan, resulting in a combined ratio
above 105% at year-end 2011.

Conversely, the Outlook could be revised to Stable if FonSAI
succeeds in executing its turnaround plan, maintains the group's
consolidated Solvency 1 regulatory capital position above 120% for
a prolonged period of time, the non-life business generates
sustainable earnings as evidenced by a decrease in the reported
combined ratio to around 100% at year-end 2011 and the group shows
resilience to capital market volatility.

FonSAI is the parent company and main operating entity of the
second-largest domestic insurance group in Italy, with
consolidated gross written premiums of EUR12.9 billion in 2010.
The group, created by the merger between Fondiaria and SAI in
2002, holds leading positions in the Italian non-life market
through FonSAI and its 60% ownership of the other main operating
entity, Milano. The group's presence in the life sector is more
limited than non-life but increasing, following a bancassurance
joint venture with Banco Popolare.


=================
M A C E D O N I A
=================


A1 TELEVIZIJA: Skopje Court Launches Insolvency Procedures
----------------------------------------------------------
SeeNews reports that a Skopje court has launched insolvency
procedures against A1 Televizija.

According to SeeNews, daily Dnevnik reported in its electronic
edition that court-appointed administrator Aco Petrov said A1
station was unable to repay its EUR30 million (US$43 million)
debts, which include EUR9.5 million owed to the country's tax
administration.

The Public Revenue Office, UJP, filed the insolvency claims
against A1 and blocked its bank account, SeeNews discloses.

A1 TV is a Macedonian TV station owned by Velija Ramkovski.


=====================
N E T H E R L A N D S
=====================


CASE NEW HOLLAND: Moody's Raises Sr. Unsecured Rating to 'Ba2'
--------------------------------------------------------------
Moody's Investors Service raised the ratings of CNH Global NV and
its supported affiliates. Ratings raised are the company's
Corporate Family Rating (CFR), Portability of Default (PDR), and
senior unsecured rating to Ba2 from Ba3. The company's Speculative
Grade Liquidity rating remains at SGL-3. The rating outlook is
stable.

RATINGS RATIONALE

The upgrade recognizes the favorable long-term demand fundamentals
in the global farm equipment market, CNH's strong position in this
sector, and the company's broad geographic footprint. Moreover,
CNH has made considerable progress in improving the operating
efficiencies and return measures of its farm equipment business.
It has also strengthened its dealer network. As a result of these
factors, CNH is well-positioned to generate steady improvement in
its credit metrics. Moody's also notes that CNH's construction
equipment markets have bottomed out following the unprecedented
downturn of 2009/2010. The company has significantly reduced
construction equipment production capacity, and Moody's expects
that demand will gradually improve. Consequently, the construction
equipment operations, which currently represent approximately 20%
of total sales, will represent a much less significant drag on
overall performance.

An additional consideration in the upgrade is the prudent asset
quality, equity base and earnings performance of CNH's Financial
Service (CNHFS) operations. CNHFS fills an important strategic
role in supporting the retail and wholesale shipments of CNH
equipment, and has a US$18.5 billion managed portfolio.

CNH's current credit metrics (particularly leverage and interest
coverage) are marginal for the Ba2 rating level. For the twelve
months through March 31, 2011, CNH's key metrics were the
following: debt/EBITDA was high at 5.1x, EBIT/interest was modest
at 1.7x, EBITA margin was adequate at 5.9%, and retained cash
flow/debt a strong 18.4% (all metrics reflect Moody's standard
adjustments). Moody's notes that CNH's leverage and coverage
measures are weak, in part, due to the significant amount of debt
it has taken on to help fund the operations of CNHFS. CNH has
approximately US$4.3 billion in funded debt, but it has made net
loans to CNHFS of approximately US$1.7 billion. The funding of
these advances to the finance operation places an additional
burden on CNH's debt service measures. Nevertheless, the upgrade
to Ba2 anticipates CNH's credit metrics (including leverage and
interest coverage) will show steady improvement.

The stable outlook reflects Moody's expectation that CNH will
become more solidly position at the Ba2 rating level as leverage
and interest coverage measures improve. This improvement should be
driven by favorable long-term fundamentals in the farm equipment
industry and gradual recovery in construction equipment demand.

The key long-term challenge to CNH's credit profile and to any
further improvement in the company's rating is CNHFS' heavy
reliance on the ABS market, and its need to access that market for
considerable levels of funding annually.

CNHFS has approximately US$12 billion in debt due to third
parties. Of this amount, approximately US$9 billion is raised in
the ABS market. The performance of CNHFS' securitizations has been
good, with charge off and loss levels well below enhancement
levels. Moreover, the health of ABS market has been reestablished
and market appetite for CNHFS' ABS transactions should remain
sound. Nevertheless, CNHFS' heavy concentration of funding from
one source is an important risk factor.

An additional risk factor is the maturity profile of the CNHFS'
debt. CNH's public filings at year-end 2010 indicate that the
financial service operations have approximately US$8 billion in
debt coming due during the next twelve months. This amount
considerably exceeds CNH's consolidated liquidity sources, which
are represented primarily by US$5 billion in cash and marketable
securities at June 2011. The resulting liquidity shortfall is
approximately US$3 billion. The majority of CNHFS' US$8 billion in
maturing debt represents self-liquidating ABS transactions that do
not pose any default risk for CNH/CNHFS. Nevertheless, as these
self-liquidating transactions mature, CNHFS needs to find
replacement funding in order to support the origination of new
retail and wholesale receivables. The cornerstone of CNHFS'
financing strategy has been its ability to consistently access the
securitization market for as much as US$5 to US$7 billion annually
in new ABS issuances and renewals of maturing securitization
facilities. These sources of funding are relatively reliable given
the historical performance of CNHFS' past transactions and the
current health of the ABS market. Nevertheless, the resulting
liquidity shortfall of US$3 billion will represent a hurdle to
further improvement in CNH's rating. Narrowing this shortfall
(possibly through multi-year committed credit facilities, multi-
year term ABS conduits, revolving term ABS facilities, or other
vehicles) will be critical to any further upward movement in CNH's
rating.

CNH's rating could come under pressure if softness in key
agricultural equipment or construction equipment markets resulted
in EBIT/Interest failing to exceed 2x and debt/EBITDA remaining
above 5x by year end 2011. Moreover, by 2012 EBIT/interest should
approximate 2.5x and debt/EBITDA should be in the area of 4x to
forestall rating pressure .

There could be upward movement in CNH's rating if EBIT/interest
was on track to hit 4x and debt/EBITDA was likely to remain below
2x. An essential consideration in any further upward movement in
CNH's rating would also be the degree to which the company
narrowed its current US$3 billion liquidity shortfall.

The last rating action for CNH was a change in the outlook to
stable on March 12, 2007.

The principal methodology used in rating CNH Global NV and its
supported affiliates was the Global Heavy Manufacturing Industry
Methodology published in November 2009. Other methodologies used
include Loss Given Default for Speculative-Grade Non-Financial
Companies in the U.S., Canada and EMEA published in June 2009.


===========
R U S S I A
===========


AMT BANK: Central Bank Withdraws Operating License
--------------------------------------------------
Roland Oliphant at The Moscow Times reports that the Deposit
Insurance Agency is facing its largest-ever payout after the
Central Bank pulled the operating license of the country's 83rd
largest bank Thursday.

According to The Moscow Times, the Central Bank said in a
statement posted on its Web site Thursday morning that it withdrew
AMT Bank's operating license over "substantial reporting
irregularities".

"AMT Bank placed funds in low-quality assets without adequate
provisioning against possible losses," The Moscow Times quotes the
regulator as saying.

According to The Moscow Times, the Central Bank added that AMT had
not complied with repeated instructions from it on the accurate
assessment of the bank's assets and creation of reserves, "which
significantly affected the volume of bank equity."

AMT, which holds an estimated RUR15 billion (US$536 million) in
retail deposits, was put into temporary administration until it
goes into receivership or a liquidation administrator is
appointed, The Moscow Times relates.

The Deposit Insurance Agency, as cited by The Moscow Times, said
that each AMT depositor would be covered for up to 700,000 rubles.

The agency is likely to pay out RUR12 billion to AMT depositors --
the largest payout in its history, The Moscow Times states.  The
remaining RUR3 billion is to be raised from the liquidation
process, The Moscow Times says, citing Gazeta.ru.

AMT Bank in Russia is a universal financial institution with a
regional network of 41 branches.


TRANSCREDITBANK: S&P Raises Counterparty Credit Rating to 'BB+'
--------------------------------------------------------------
Standard & Poor's Ratings Services raised its long-term
counterparty credit rating on TransCreditBank to'BB+' and the
Russia national scale rating to 'ruAA+'. The outlook is stable.

At the same time, the 'B' short-term counterparty credit rating
was affirmed.

"The rating action reflects our view that the ongoing acquisition
of TransCreditBank by JSC VTB Bank (VTB; BBB/Watch Neg/A-3) is
having a positive impact on TransCreditBank's stand-alone credit
profile. It also reflects our assessment that the probability of
exceptional shareholder support, if necessary, remains unchanged,"
S&P said.

On Oct. 4, 2010, the supervisory board of VTB approved the phased
acquisition of 100% of TransCreditBank. Earlier this month, VTB
increased its stake to 72.88, leaving Russian Railways (JSC) (RZD;
BBB/Stable/--) with a blocking portfolio of 25% plus one share.
VTB plans to acquire the remainder of the bank by Jan. 1, 2014.

"Our rating action assumes a smooth transfer of ownership to VTB
with no negative impact on TransCreditBank's customer franchise
and operations. VTB's status as the controlling shareholder and
strategic investor is likely in our view to lead to improvements
in TransCreditBank's capitalization, cost of funds, and sales
effectiveness," S&P related.

The long-term rating on TransCreditBank continues to incorporate a
three-notch uplift above its stand-alone credit profile to reflect
VTB's role as the majority shareholder.

The ratings on TransCreditBank continue to reflect our view of the
bank's high single-name concentrations, relatively weak
capitalization at a time of renewed rapid business expansion, and
high credit risks. These weaknesses are partly offset by
TransCreditBank's strong business links to and support from
RZD and increasing operational support from VTB. They are also
offset by the bank's funding, which is less confidence-sensitive
funding than that of its peers, its good core revenue generation,
and its asset quality, which is consistently better than that of
its peers. "We expect RZD to continue servicing its major
operations through TransCreditBank," S&P said.

With total assets of RUB391 billion (US$12.8 billion) as of
Dec. 31, 2010, TransCreditBank ranks among Russia's top 15 banks
in terms of assets.

"While concentration risks are high, with the 20 largest borrowers
representing almost three times the bank's adjusted total equity,
we consider that the bank's asset quality is better than the
Russian banking sector average. TransCreditBank focuses on high
quality corporate clientele, including RZD and related companies
(8.4% of gross loans on Dec. 31, 2010), and RZD employees
(22.7%)," S&P related.

On Dec. 31, 2010, TransCreditBank's risk-adjusted capital (RAC)
ratio before adjustments for diversification stood at a weak 3.9%.
The bank's capitalization could fall further due to resumed loan
growth. "At the same time, we expect VTB to inject additional
capital into TransCreditBank over the next three years. In April
2011, VTB injected RUB5.5 billion and plans to inject a further
RUB3 billion in the form of long-term subordinated debt (which is
not included in our calculation of the RAC ratio).  We understand
that VTB plans to inject about RUB7 billion in the first quarter
of 2012 and maintain the bank's Tier I capitalization at a minimum
9.5%, which roughly translates to a RAC ratio of 4%-6%," S&P said.

Provisions, representing 5.5% of total gross loans as of Dec. 31,
2010, are relatively tight, considering TransCreditBank's weak
capitalization levels and very high recent growth. Asset quality
is better than the bank's peer group average with 3.6% of total
loans overdue by more than 90 days and restructured loans at about
1% of total loans.

RZD and related parties continue to support TransCreditBank's
funding and liquidity, representing 37% of the bank's total
liabilities as of Dec. 31, 2010. "We believe that this funding is
less confidence sensitive than that of the bank's peers and we
expect that RZD will maintain this funding support," S&P said.

"The stable outlook reflects our expectation that
TransCreditBank's asset quality indicators and profitability will
remain better than the system average," S&P added.


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


HALLIWELLS: Administrators File GBP21MM Claim Against Ex-Partners
-----------------------------------------------------------------
Suzi Ring at legalweek.com reports that BDO, the administrators of
Halliwells, have launched a claim in the High Court against a
group of former partners in a bid to reclaim more than GBP21
million gained through a controversial 'reverse premium' property
payout.

BDO launched the claim against Halliwells' former Chairman Ian
Austin and 31 other ex-partners in the Chancery Division of the
High Court on July 4, according to legalweek.com.  The report
relates that Addleshaw Goddard is advising BDO on the GBP21.13
million claim, with litigation firm Peters & Peters acting for 30
of the 32 defendants.

legalweek.com discloses that BDO's claim outlines three main areas
where the partners breached their obligations to the firm through
the reverse premium property payout:

   -- breaching Halliwells' partnership deed by failing to act in
      good faith and parting with the LLP's property "otherwise
      than in the ordinary course of business";

   -- breaching their fiduciary duties to act in the best
      interests of the firm, not to make a "secret profit" and not
      to prefer their personal interests over the firm's; and

   -- breaching the Limited Liability Partnership (LLP)
      regulations 2001.

legalweek.com notes that the form goes on to say that in the case
that any of the defendants did not commit these breaches, the
claimant seeks a declaration that they knew the payments received
had been "caused or permitted pursuant to the aforesaid breaches",
or that they were "unjustly enriched" at the expense of Halliwells
LLP.  The report says that the claim also includes a number of
orders including that the defendants hold their respective shares
of the money owed on trust, that they pay damages or equitable
compensation for the breaches, and that interest is paid on all
sums owing.

The claim also states: "that the claimant is entitled to trace the
sums received by each defendant representing their share of the
sums totaling GBP21,132,693 into any property held by each
respective defendant," legalweek.com relays.

The report notes that news that the claim has been launched comes
after Legal Week reported last month that BDO had issued letters
to former partners demanding they repay the money.  The claim
relates to the GBP24.5 million paid out to Halliwells' equity
partners in 2007 when the firm sold a stake in the freehold of its
new office in Spinningfields, Manchester, legalweek.com notes.

The majority of the so-called 'reverse premium' was distributed to
equity partners -- a move that has been criticised for
contributing to Halliwells' later financial problems, the report
adds.

As reported in the Troubled Company Reporter-Europe on Feb. 18,
2011, legalweek.com said that the latest report from
administrators BDO revealed that Halliwells owed unsecured
creditors more than GBP190 million.  Legalweek.com relates that to
date, BDO has received claims worth GBP191.5 million from
unsecured creditors.  Landlord and lease creditors account for
GBP182.2 million of claims received to date, with Her Majesty's
Revenue & Customs the next largest creditor with some GBP4.3
million in taxes and GBP1.1 million in VAT, according to
legalweek.com.  Legalweek.com noted that the debt figure is
significantly higher than the GBP14.1 million originally thought
to be owed to unsecured creditors.  At that point, HMRC was
identified as the largest of the non-preferential creditors,
legalweek.com relates.

Halliwells is a law firm based in Manchester.


HERCULES ECLIPSE: Fitch Affirms Rating on Class E Notes at 'CCC'
----------------------------------------------------------------
Fitch Ratings has affirmed Hercules (Eclipse 2006-4) plc's CMBS
notes, due October 2018:

   -- GBP642.4m class A (XS0276410080): affirmed at 'Asf' Outlook
      Negative

   -- GBP43.9m class B (XS0276410833): affirmed at 'BBBsf';
      Outlook Negative

   -- GBP25.0m class C (XS0276412375): affirmed at 'BBsf'; Outlook
      Negative

   -- GBP50.9m class D (XS0276413183): affirmed at 'Bsf'; Outlook
      Negative

   -- GBP29.0m class E (XS0276413340): affirmed at 'CCCsf';
      Recovery Rating of 'RR6'

The affirmation is driven by the stable performance of the
majority of the loans in the pool since Fitch's last rating
action. The Negative Outlook on all classes of notes reflects the
uncertainty regarding the Ashbourne Portfolio loan.

The Ashbourne Portfolio loan (9% of the securitized transaction
balance) was recently transferred to special servicing following a
breach of the loan's EBITDAR to rent covenant of 1.15x. Southern
Cross, the tenant's parent company and the operator of the
Ashbourne nursing home portfolio, has announced its intention to
cease operations. It is not yet clear what the intentions of the
landlord/borrower for these properties will be. Any significant
reduction in rents is likely to affect debt service payments.

The super senior nature of the exposure is reflected by a reported
interest coverage ratio (ICR) of 3.13x. The loan, secured by a
portfolio of 90 nursing homes, remains relatively lowly leveraged
with a loan-to-value ratio (LTV) of 56%. This is based on a
November 2010 valuation, which revealed a 21% market value decline
(MVD) versus the portfolio's last valuation in 2008. While loan-
level subordination should offer protection to noteholders,
operational risk in the sector may have further adverse
implications for income and value that go beyond Fitch's
assumptions. This uncertainty is reflected in the Negative
Outlook.

The transaction is dominated by three loans accounting for 73% of
the pool: Chapelfield (27%), River Court (26%) and Cannon Bridge
(20%). None of these loans (or indeed the smaller loans in the
pool) has seen material changes in performance since Fitch's last
rating action, although, in Fitch's view, Cannon Bridge remains
excessively leveraged. All of the loans mature between 2015 and
2016, with bond maturity in October 2018.

Fitch will continue to monitor the transaction's performance.


HERCULES PLC: S&P Downgrades Rating on Class E Notes to 'B-'
------------------------------------------------------------
Standard & Poor's Ratings Services lowered its credit ratings on
HERCULES (ECLIPSE 2006-4) PLC's class A, B, C, D, and E notes.

The rating actions follow S&P's review of the transaction.

"We believe the borrowers are likely to face refinancing
difficulties at maturity if the current difficult market
conditions persist: The loans are secured against secondary-
quality properties, in our view; some feature inherent risks to
single-tenant exposure; and another loan is now in special
servicing due to recent events concerning Southern Cross
Healthcare. In light of these facts, we consider that the
creditworthiness of the loan pool has deteriorated enough to
warrant a downgrade of all classes of notes in the transaction,"
S&P related.

The Ashbourne Portfolio Priority A loan (9.2% of the loan pool) is
now in special servicing (Capita Asset Services) following a
covenant breach that caused an event of default. The loan is
secured on a portfolio of 91 nursing homes located throughout the
U.K., and is entirely let to Southern Cross Healthcare Group.
Austerity measures affecting the care home sector are beginning to
take place, notably through freezes in fee levels. "This comes at
a time of rising costs for operators. In our view, this is likely
to weaken profitability for operators and to have a knock-on
effect on investor appetite for care home properties. We believe
it could also narrow the options available to the special servicer
to resolve the loan, and could have a direct and detrimental
effect on the properties' income and value. We have revised
downward our view of the value of the properties as a result," S&P
said.

The Cannon Bridge loan (19.6% of the loan pool) was restructured
in March 2010 following the vacation of a major tenant, and its
scheduled maturity date is now January 2015. The property was
valued in 2009 at GBP115 million, at the time of the vacancy. "We
believe the value of the asset to have increased, in light of
improved market conditions in the City of London from a rental,
occupier, and investment perspective. However, we consider that
the sale proceeds of the property may be insufficient to fully
repay the securitized loan if the difficult market conditions
persist," S&P related.

In addition, three loans -- River Court (26.4%), Booker (7.5%),
and Welbeck (4.1%) -- are each secured on a portfolio of
properties let almost entirely to one tenant. "We have considered
these loans against a range of scenarios, including one where the
tenants default or vacate. The River Court loan is secured on a
prime Central London office, let to Goldman Sachs (97% of the
rental income) for a further 9.4 years to break option. We do not
foresee losses on this loan. By contrast, the properties securing
the Booker and Welbeck loans are of secondary quality, in our
opinion, and may face significant market value declines if the
properties become vacant. In our view, the real estate market in
the U.K. is currently two-tiered, with prime core assets
exhibiting strong rental growth, and good occupier and investor
demand; whereas the secondary market is experiencing significant
market value declines and poor rental growth. In a vacant
possession value scenario, we believe there is an increased risk
that the sale (or refinance) proceeds could be insufficient to
fully repay the senior loan," S&P said.

The remaining two loans are Chapelfield (26.73%) and Endeavour
(6.32%). Chapelfield is secured on a prime shopping center in
Norwich, which is 100% occupied and let to a variety of tenants,
including national retailers. Endeavour is secured on a mixed
portfolio of five assets, including three office/retail properties
in Central London's West End. Both loans are performing above
their covenants and mature in 2016. "Although we do not foresee
any losses on these loans, we believe they may be exposed to
refinancing risk," S&P said.

At the time of the securitization, HERCULES (ECLIPSE 2006-4) was
backed by a pool of seven loans secured against commercial
properties in the U.K. The outstanding note balance is GBP791
million, down from GBP814 million at closing.

Ratings List

HERCULES (ECLIPSE 2006-4) PLC
GBP814 Million Commercial Mortgage-Backed Floating-Rate Notes

Class               Ratings
            To                   From

Ratings Lowered

A           A- (sf)              AA (sf)
B           BBB (sf)             A (sf)
C           BBB- (sf)            BBB (sf)
D           BB- (sf)             BB (sf)
E           B- (sf)              B (sf)


LLOYDS BANKING: FSA to Launch Formal Inquiry Into HBOS Collapse
---------------------------------------------------------------
Erikka Askeland at The Scotsman reports that city regulators have
announced a formal inquiry into the failure of HBOS, three years
after it was forced into a merger with Lloyds TSB.

The bank is already subject to an "enforcement investigation"
which gives the Financial Services Authority the power to compel
former and current directors of the bank to give evidence which
could lead to fines, bans, prohibitions and censures, The Scotsman
discloses.

Now the FSA is to look into the reasons for the collapse of the
Edinburgh-based bank which has led to thousands of job losses, The
Scotsman says.  The Scotsman relates that FSA chairman Lord Adair
Turner, in a letter to Andrew Tyrie, chairman of the Treasury
select committee, said the failure of HBOS was a "key element" in
the harm caused by the financial crisis.

According to The Scotsman, he wrote: "HBOS's failure resulted in
the need for significant public support, via emergency liquidity
assistance, guarantees and equity injection.

"HBOS's role in the pre-crisis credit boom was a key element in
the developments which led to the financial crisis and the macro
economic harm which it has caused.  There is therefore a public
interest in knowing what happened at HBOS."

The FSA could not confirm if former chief executive Andy Hornby,
or other members of the former HBOS board, have been compelled to
give evidence to the FSA, The Scotsman notes.

The Scotsman relates that the FSA said the HBOS investigation is
still ongoing, adding: "While the enforcement process is ongoing,
it would not be appropriate to launch a wider review."

                  About Lloyds Banking Group PLC

Lloyds Banking Group plc -- http://www.lloydsbankinggroup.com/--
is a financial services group providing a range of banking and
financial services, primarily in the United Kingdom, to personal
and corporate customers.  The Company operates in four segments:
Retail, Wholesale, Wealth and International, and Insurance. Its
main business activities are retail, commercial and corporate
banking, general insurance, and life, pensions and investment
provision.  It also operates an international banking business
with a global footprint in over 30 countries.  Services are
offered through a number of brand, including Lloyds TSB, Halifax,
Bank of Scotland, Scottish Widows, Clerical Medical and Cheltenham
& Gloucester, and a range of distribution channels.  In March
2010, Capita Group Plc acquired Ramesys (Holdings) Ltd from Lloyds
Banking Group plc's Lloyds Bank.  In April 2011, Lloyds Banking
Group plc's LDC bought gas and chemicals business, A-Gas, and a
stake in UK2 Group, a Web hosting company.


MANSARD MORTGAGES: Moody's Cuts Rating on B2 Certificate to 'Ca'
----------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of three
classes of mezzanine and junior notes issued by Mansard Mortgages
2006-1 PLC and three classes of mezzanine and junior notes issued
by Mansard Mortgages 2007-1 PLC.

RATINGS RATIONALE

The rating action concludes the review for possible downgrade of
these notes and takes into consideration the worse-than-expected
performance of the collateral.

The rating action reflects the credit quality of the underlying
mortgage portfolio, from which Moody's determined the MILAN Aaa
Credit Enhancement (MILAN AaaCE) and the lifetime losses (expected
loss), as well as the transaction structure and any legal
considerations as assessed in Moody's cash flow analysis. The
expected loss and the Milan AaaCE are the two key parameters used
by Moody's to calibrate its loss distribution curve, which is used
in the cash flow model to rate European RMBS transactions.

Portfolio Expected Loss:

Moody's has reassessed its lifetime loss expectations taking into
account the collateral performance to date. Although arrear levels
in both deals have been moderately decreasing in the last few
quarters, which has been the case for the UK non-conforming RMBS
sector as a whole, the collateral performance has been worse than
assumed since the last rating action in January 2009.

As of April 2011, Mansard Mortgages 2006-1 cumulative losses as a
percentage of the original portfolio balance amounted to 5.0%, up
from 0.7% as of January 2009. These are among the highest
cumulative losses experienced to date by 2006 vintage transactions
rated by Moody's. The high cumulative losses resulted in a fully
depleted reserve fund and an unpaid balance in the principal
deficiency ledger ("PDL"), which led to under-collateralization of
class B2 notes. The unpaid PDL balance reached GBP 5.2 million in
the third quarter of 2010 and has since decreased to GBP3.8
million, or 19.3% of the outstanding principal balance of class B2
notes. This drop was the result of increasing levels of excess
spread generated by the portfolio as delinquencies and periodic
repossessions fell from their 2009 peaks.

Loans delinquent by more than 90 days (including outstanding
repossessions) as a percentage of the current portfolio amount to
17.4%, decreased from 23.0% as of January 2009. The improvement in
delinquencies drove a decrease in periodic repossessions to 0.5%
from 1.5% of the outstanding portfolio balance over the same
period. Since January 2009, constant prepayment rates have
decreased to 6.4% from 34.2%, while weighted average loss severity
has increased to 35.3% from 26.7%. Moody's has increased its
lifetime expected loss assumption for this portfolio to 9.3% from
5.0% of the original portfolio balance, after considering the
current amount of realized losses and completing a roll-rate and
severity analysis for the non-defaulted portion of the portfolio.

As of April 2011, Mansard Mortgages 2007-1 cumulative losses as a
percentage of the original portfolio balance amount to 4.5%, up
from 0.3% as of January 2009. The cumulative losses resulted in
depletion of the reserve fund, which now stands at 1% of the
target level. The transaction has experienced unpaid PDL balances
in the past, but these balances were fully coved as of April 2011,
as a result of increasing levels of excess spread generated by the
portfolio as delinquencies and periodic repossessions decreased
from the peaks experienced in 2009. Loans delinquent by more than
90 days (including outstanding repossessions) as a percentage of
the current portfolio amount to 13.4%, decreased from 17.0% as of
January 2009. The improvement in delinquencies resulted in the
drop in periodic repossessions to 0.7% from 0.8% of the
outstanding portfolio balance over the same period. Since January
2009, constant prepayment rates have decreased from 31.3% to 4.7%,
while weighted average loss severity has increased to 33.0% from
25.7%. Moody's has increased its lifetime expected loss assumption
for this portfolio to 9.5% from 5.0% of the original portfolio
balance, after considering the current amount of realized losses
and completing a roll-rate and severity analysis for the non-
defaulted portion of the portfolio.

MILAN Aaa CE

Moody's has also re-assessed updated loan-by-loan information on
the portfolios and increased its MILAN AaaCE assumption to 40.0%
from 37.0% in both transactions, mainly due to the increased level
of borrower concentration as the portfolios amortize. As of April
2011, Mansard Mortgages 2006-1 pool factor is 40.6% and Mansard
Mortgages 2007-1 pool factor is 55.0%. The available credit
enhancement for the senior notes is equal to 58.5% and 51% in
Mansard Mortgages 2006-1 and Mansard Mortgages 2007-1
respectively.

RATING METHODOLOGIES

The principal methodology used in this rating was Moody's Approach
to Rating RMBS in Europe, Middle East, and Africa, published in
October 2009. Other methodologies used in this rating are
described in Moody's Approach to Rating UK RMBS published in April
2005, Moody's Updated Methodology for Rating UK RMBS published in
October 2009 and Revising Default/Loss Assumptions Over the Life
of an ABS/RMBS Transaction published in December 2008. Please see
the Credit Policy page on www.moodys.com for a copy of these
methodologies.

LIST OF RATINGS ACTIONS

Issuer: Mansard Mortgages 2006-1 PLC

   -- GBP27.5M M2 Certificate, Downgraded to Ba1 (sf); previously
      on Aug 27, 2010 Baa1 (sf) Placed Under Review for Possible
      Downgrade

   -- GBP12.5M B1 Certificate, Downgraded to Caa1 (sf); previously
      on Aug 27, 2010 Ba1 (sf) Placed Under Review for Possible
      Downgrade

   -- GBP20M B2 Certificate, Downgraded to Ca (sf); previously on
      Aug 27, 2010 Caa1 (sf) Placed Under Review for Possible
      Downgrade

Issuer: Mansard Mortgages 2007-1 Plc

   -- GBP14.375M M2a Notes, Downgraded to Baa3 (sf); previously on
      Aug 27, 2010 Baa2 (sf) Placed Under Review for Possible
      Downgrade

   -- GBP12.5M B1a Notes, Downgraded to B3 (sf); previously on Aug
      27, 2010 Ba2 (sf) Placed Under Review for Possible Downgrade

   -- GBP6.875M B2a Notes, Downgraded to Caa3 (sf); previously on
      Aug 27, 2010 Caa1 (sf) Placed Under Review for Possible
      Downgrade


NEWCASTLE PRODUCTIONS: 2009 Fire "Avoidable," Bureau Veritas Says
-----------------------------------------------------------------
Alastair Craig at Evening Chronicle reports that a study completed
by international safety audit specialist, Bureau Veritas, revealed
that a factory fire at Longbenton's Findus Foods plant in January
2009 was "totally avoidable."

The fire, the report relates, sent Findus Food's operator,
Newcastle Productions, into administration.

As a result of the administration proceedings, Newcastle made 295
shop floor jobs redundant, according to Evening Chronicle.  The
report relates that the fire caused an estimated GBP20 million
worth of damage and left hundreds of families facing a bleak
future.

Bureau Veritas has heavily criticized safety measures at the
plant, Evening Chronicle relates.  The report notes that experts
said warehouses at the factory had no sprinkler system, which they
claim would have minimized the damage caused by the blaze and
avoided the firm's financial collapse and lost workforce.

Jim Fitzpatrick Member of Parliament, of the influential All Party
Parliamentary Fire Safety and Rescue committee, has validated the
report's findings, Evening Chronicle discloses.

Following the fire, the North Tyneside plant later re-opened under
the firm Longbenton Foods, but in March, workers were made
redundant after the company went into administration, Evening
Chronicle notes.  The report relates that staff was told not to
return to work while Managing Director Geir Frantzen tried to
secure enough funding to restart production.

Administrators Grant Thornton Partners took over the company and
said they hoped to safeguard jobs at the site on Benton Lane, but
then announced 150 workers had been dumped on the dole, the report
adds.

Newcastle Productions is a manufacturer of teatime favorite Crispy
Pancakes in the United Kingdom.


VEDANTA RESOURCES: Moody's Confirms Ba1 Corporate Family Rating
---------------------------------------------------------------
Moody's Investors Service has confirmed Vedanta Resources Plc's
Corporate Family Rating of Ba1 and Senior Unsecured Bond Rating of
Ba2. At the same time Moody's has changed the outlook on the
ratings to negative.

This rating action closes the review for downgrade initiated on
August 17, 2010, after Vedanta announced the proposed acquisition
of a controlling stake (of up to 60%) in Cairn India Ltd. (CIL)
for US$9.6 billion or less. On 21 December, 2010 and April 18,
2011, Moody's announced the continuation of its review of Vedanta.

Although Moody's had indicated in its April announcement that a
downgrade was likely following the closing of the Cairn
transaction, Vedanta has since been able to reduce the purchase
price of CIL by some US$625 million, while at the same time
issuing bonds of US$1.65 billion and arranging a new US$500
million term facility, thus improving liquidity. Furthermore, the
continuing buoyancy of commodity prices and Vedanta's ability to
increase output from existing operations will result in a lower
than expected increase in external net funding needs, when the
remaining 30% of CIL it seeks, is purchased. As a result, Moody's
has now ultimately decided to confirm Vedanta's ratings, albeit
with a negative outlook.

"We expect the acquisition of Cairn India to be completed within a
few weeks, with ONGC and Cairn agreeing on the royalty issue. To
the extent that Cairn has lowered the effective price and Vedanta
has now built up a 28.5% stake, the financial parameters of the
transaction should hold no surprises" says Alan Greene, a Moody's
Vice President -- Senior Credit Officer.

"However, we have retained the negative outlook given Moody's
continuing and various concerns about the Group. The likely
timeframe of the negative outlook is an opportunity for Vedanta to
tackle some of these areas -- namely to beef up the Parent's
balance sheet, to bring to market much-heralded IPOs of two
subsidiaries, to work through some regulatory, environmental and
tax challenges in India and, of course, to bed-in the large Cairn
acquisition", adds Greene, also Moody's lead analyst for Vedanta.

Moody's notes that the acquisition debt is being raised at the
Parent company level and the implications this has for
subordination within the Group, and the standalone credit quality
of the relatively thinly capitalized Parent. The lack of cash
profits generated by the Parent and Moody's concerns over the
mechanics of upstreaming dividends from the operating and
intermediate companies, represent subordination. As a result, the
rating of senior unsecured debt issued by, or guaranteed by, the
Parent is lower by one notch, relative to the CFR. The gap could
potentially widen, if there is any deterioration in the relative
strength of the Parent company balance sheet or the quality of its
earnings.

Moody's notes that mooted IPOs of its African copper business,
Konkola Copper Mines and of Sterlite Energy have not progressed.
Similarly, development of the aluminium business has been deferred
following difficulties sourcing bauxite domestically, although the
smelters' captive power units have been supporting Vedanta's
energy earnings.

Sesa Goa's recent purchase of a small, part-built steel works in
India represents another diversification which might mark the
start of another business vertical, that of integrated
steelmaking, that could require significant investment. In the
medium-term this purchase could help mitigate the tightening of
controls over its iron ore exports out of India.

Moody's notes that there is limited tolerance in the rating for
further debt-financed expansion plans or weakness within the
operating environment for commodities.

The outlook could be stabilized if Vedanta 1) successfully
integrates CIL, with evidence of a stable and sustainable
production and business profile; 2) the planned expansion projects
start generating the expected returns; 3) there is evidence of a
stable and sustainable business profile for the company; and 4)
the relatively weak capitalization of the Parent is addressed. At
this juncture Moody's sees no upward pressure on the rating as the
outlook already reflects Moody's expectation of some improvement
in credit metrics as a mitigating factor for the qualitative
considerations outlined. On a consolidated basis, Vedanta's credit
metrics are strong and approaching those of investment grade rated
peers.

Conversely, the ratings could come under downward pressure if the
company 1) faces further challenges in the oil and gas operations
under CIL; 2) the Parent remains thinly capitalized with less than
expected dividends upstreaming from the core operating
subsidiaries; 3) undertakes further acquisitions, investments or
shareholder remuneration policies that include incremental debt;
or 4) it fails to satisfactorily execute its expansion projects.
Credit metrics that Moody's would consider for a ratings downgrade
include CFO (less dividends)/Adjusted Debt below 15%, Adjusted
Debt to EBITDA exceeding 3.5-4.0x, or EBIT interest coverage
declining to 3.5x or less on a sustained basis.

The principal methodology used in rating Vedanta is Rating
Methodology on Global Mining Industry published in May 2009.

Headquartered in London, UK, Vedanta Resources plc is a metals and
mining company focusing on integrated zinc, aluminum, copper, iron
ore mining and commercial power generation. Its operations are
predominantly located in India. It is listed on the London Stock
Exchange and is 62% owned by Volcan Investments Ltd.


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


* Upcoming Meetings, Conferences and Seminars
---------------------------------------------

July 27-30, 2011
  AMERICAN BANKRUPTCY INSTITUTE
     Southeast Bankruptcy Workshop
        The Sanctuary at Kiawah Island, Kiawah Island, S.C.
           Contact: 1-703-739-0800; http://www.abiworld.org/

Aug. 4-6, 2011
  AMERICAN BANKRUPTCY INSTITUTE
     Mid-Atlantic Bankruptcy Workshop
        Hotel Hershey, Hershey, Pa.
           Contact: 1-703-739-0800; http://www.abiworld.org/

Oct. 14, 2011
  AMERICAN BANKRUPTCY INSTITUTE
     NCBJ/ABI Educational Program
        Tampa Convention Center, Tampa, Fla.
           Contact: 1-703-739-0800; http://www.abiworld.org/

Oct. __, 2011
  AMERICAN BANKRUPTCY INSTITUTE
     International Insolvency Symposium
        Dublin, Ireland
           Contact: 1-703-739-0800; http://www.abiworld.org/

Oct. 25-27, 2011
  TURNAROUND MANAGEMENT ASSOCIATION
     Hilton San Diego Bayfront, San Diego, CA
        Contact: http://www.turnaround.org/

Dec. 1-3, 2011
  AMERICAN BANKRUPTCY INSTITUTE
     23rd Annual Winter Leadership Conference
        La Quinta Resort & Spa, La Quinta, Calif.
           Contact: 1-703-739-0800; http://www.abiworld.org/

April 3-5, 2012
  TURNAROUND MANAGEMENT ASSOCIATION
     TMA Spring Conference
        Grand Hyatt Atlanta, Atlanta, Ga.
           Contact: http://www.turnaround.org/

Apr. 19-22, 2012
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     Annual Spring Meeting
        Gaylord National Resort & Convention Center,
        National Harbor, Md.
           Contact: 1-703-739-0800; http://www.abiworld.org/

July 14-17, 2012
  AMERICAN BANKRUPTCY INSTITUTE
     Southeast Bankruptcy Workshop
        The Ritz-Carlton Amelia Island, Amelia Island, Fla.
           Contact: 1-703-739-0800; http://www.abiworld.org/

Aug. 2-4, 2012
  AMERICAN BANKRUPTCY INSTITUTE
     Mid-Atlantic Bankruptcy Workshop
        Hyatt Regency Chesapeake Bay, Cambridge, Md.
           Contact: 1-703-739-0800; http://www.abiworld.org/

November 1-3, 2012
  TURNAROUND MANAGEMENT ASSOCIATION
     TMA Annual Convention
        Westin Copley Place, Boston, Mass.
           Contact: http://www.turnaround.org/

Nov. 29 - Dec. 2, 2012
  AMERICAN BANKRUPTCY INSTITUTE
     Winter Leadership Conference
        JW Marriott Starr Pass Resort & Spa, Tucson, Ariz.
           Contact: 1-703-739-0800; http://www.abiworld.org/

April 10-12, 2013
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     TMA Spring Conference
        JW Marriott Chicago, Chicago, Ill.
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October 3-5, 2013
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     TMA Annual Convention
        Marriott Wardman Park, Washington, D.C.
           Contact: http://www.turnaround.org/


                            *********

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-
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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
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                            *********


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-
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