/raid1/www/Hosts/bankrupt/TCREUR_Public/110926.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
E U R O P E
Monday, September 26, 2011, Vol. 12, No. 190
Headlines
A U S T R I A
A-TEC INDUSTRIES: Restarts Sale Talks with Penta Investments
B E L G I U M
FORTIS BANK: Moody's Affirms Rating on CASHES at 'Ba3 (hyb)'
KBC BANK: Moody's Affirms Rating on Debt Securities at Ba1(hyb)
D E N M A R K
BANKNORDIK: Moody's Confirms 'D+' Bank Financial Strength Rating
G R E E C E
GREEK ABS: Moody's Withdraws 'B3' Rating on Class A Notes
* GREECE: ECB Official Klaas Knot Does Not Rule Out Default
I R E L A N D
BOVALE DEVELOPMENT: Approval for Business Plan Expected Shortly
CORSAIR FINANCE: Moody's Lowers Rating on Series 13 Notes to 'B3'
VEGA CONTAINER: Moody's Confirms Rating on Class A Notes at 'Ba3'
I T A L Y
FIAT SPA: Moody's Lowers Corporate Family Rating to 'Ba2'
* ITALY: Banking Sector Faces Funding Strains
N E T H E R L A N D S
GATEWAY II: Moody's Raises Rating on Class B-2 Notes to 'Ba3'
JUBILEE CDO: Moody's Raises Ratings on Two Note Classes to 'B2'
R U S S I A
BRUNSWICK RAIL: S&P Assigns 'BB-' Corporate Credit Rating
KRAYINVESTBANK OJSC: Fitch Assigns 'B' LT Issuer Default Rating
POMOSCH INSURANCE: S&P Assigns 'B-' Counterparty Credit Rating
S P A I N
SANTANDER HIPOTECARIO: S&P Lowers Rating on Class F Notes to 'D'
* SPAIN: Debt-Laden Clubs Can't Take Refuge in Administration
T U R K E Y
EXPORT CREDIT: S&P Affirms 'BB/B' Foreign Currency Ratings
U N I T E D K I N G D O M
MEZZVEST INVESTMENTS: Moody's Lifts EUR55MM Notes Rating to Caa1
REFLECTIONS PRINT: Proposes Company Voluntary Arrangement
X X X X X X X X
* EUROPE: To Recapitalize 16 Banks Close to Failing Stress Tests
* BOND PRICING: For the Week September 19 to September 23, 2011
*********
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A U S T R I A
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A-TEC INDUSTRIES: Restarts Sale Talks with Penta Investments
------------------------------------------------------------
Boris Groendahl at Bloomberg News reports that A-Tec Industries
AG is seeking new talks to find a buyer as the company races
against a Sept. 30 deadline to raise funds to pay creditors.
According to Bloomberg, Nicole Berger-Akin, an A-Tex spokeswoman,
on Thursday said that A-Tec is restarting negotiations with Penta
Investments Ltd., a Czech suitor whose previous bid was rejected,
after a member of a group that agreed to buy some assets pulled
out. She confirmed a report by Austrian magazine Format on
Thursday that Pakistani investor Alshair Fiyaz's Solstice
International is no longer interested in acquiring A-Tec's
Montanwerke Brixlegg unit, Bloomberg notes.
Martin Danko, a spokesman at Penta's Prague headquarters, said in
a telephone interview, that the private equity firm is "open to
suggestions" from A-Tec on how to proceed, Bloomberg relates.
A-Tec, Bloomberg says, needs more than EUR200 million
(US$269 million) in proceeds from the sale to pay 47% of claims
under a reorganization approved by creditors in December. The
insolvency administrator must receive the sum by the end of this
month, Bloomberg states.
On Oct. 22, 2010, the Troubled Company Reporter-Europe, citing
Bloomberg News, related that A-Tec sought court clearance to
reorganize debt after losing access to its line of credit because
of an Australian power-station project's financial difficulties.
A-Tec said in an Oct. 20 statement that it had filed for self-
administered reorganization proceedings at the Vienna Commercial
Court and appointed trustees for bondholders, Bloomberg
disclosed. The company has a EUR798 million (US$1.11 billion)
revolving credit facility and EUR302 million in outstanding
bonds, according to Bloomberg data.
A-TEC Industries AG engages in plant construction, drive
technology, machine tools, and minerals and metals businesses in
Europe and internationally. The company is based in Vienna,
Austria.
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B E L G I U M
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FORTIS BANK: Moody's Affirms Rating on CASHES at 'Ba3 (hyb)'
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Moody's Investors Service has affirmed Fortis Bank SA/NV's BFSR
to C- which now translates into Baa1 on the long-term scale
versus Baa2 previously. At the same time, the outlook on the BFSR
has been revised to positive from negative. Concurrently, the A1
long-term debt and deposit ratings have been placed on review for
upgrade and the Prime-1 short-term rating has been affirmed.
Moody's has also affirmed the Convertible and Subordinated Hybrid
Equity-linked Securities (CASHES) at Ba3 (hyb) with a negative
outlook, as well as the perpetual junior subordinated securities
at A3 (hyb), which have been place on review for possible
upgrade. The Tier 1 instruments were upgraded to Baa1 (hyb) from
Baa3 (hyb), while the perpetual junior subordinated notes issued
by BNP Paribas Fortis funding were upgraded to A3 (hyb) from Baa2
(hyb), both instruments remain under review for possible upgrade.
The conclusion of the review for upgrade of the long-term debt
and deposit ratings will depend on the outcome of the current
review on parent BNP Paribas (Aa2 on review for downgrade, B-/A1
on review for downgrade, P-1). Any upgrade would be limited to
one notch.
Ratings Rationale
The affirmation of the BFSR, which now maps to Baa1 on the long-
term scale reflects the stabilization in Fortis Bank's franchise
and progressive integration into BNP Paribas, the progress
achieved in de-risking and restructuring the bank as well as the
bank's adequate financial fundamentals, notably its solid capital
base and restored liquidity profile.
After a period of significant turmoil leading to the break-up of
the former Fortis group, Moody's believes that the banking
franchises in Belgium and Luxembourg have stabilized, thanks to
the acquisition by the Belgium and Luxembourg states and the
subsequent sale of 75% to BNP Paribas. Moody's notes that the
bank has significantly de-risked and deleveraged its balance
sheet and operations in recent years, in particular with the sale
of the most-troubled structured credit assets to Royal Park
Investment SPV, the reduction of its investment portfolio risk-
wise despite some notable exposures to European sovereigns, the
closure or transfer of riskier CIB activities to BNP Paribas and
a focus on client-driven activities in this field, and a
refocusing on countries considered as core (Belgium, Luxembourg,
Poland and Turkey).
The progressive integration with BNP Paribas' centralized systems
for risk management, liquidity management and trading are also
viewed as positive steps towards improving the bank's risk
profile. Moody's believes that the integration with BNP Paribas
is progressing satisfactorily and notes that targeted synergies
from the merger have been revised upwards in 2010. The opening of
Brussels-based Competence Centers in trade services, factoring,
cash management and corporate & transaction banking Europe for
the entire group BNP Paribas seems to confirm this view.
The BFSR is still constrained by a variety of factors among which
are Fortis Bank's very significant and ongoing reorganization and
expectation of further integration costs going forward (revised
upwards in 2010), the bank's limited recurring profitability in
retail banking in Belgium due to its high cost base, some
borrower concentration in respect of large corporate clients and
European sovereigns, and the transfer to BNP Paribas of its
leasing and asset management activities.
The positive outlook on Fortis Bank's BFSR reflects Moody's
expectation that following the stabilization of Fortis Bank's
franchise and risk profile, further visible improvements in
profitability should be achievable over the foreseeable future.
Long-Term Ratings on Review for Upgrade
The review for upgrade of the long-term debt and deposit ratings
reflects a number of factors, namely (i) the higher Baa1
standalone credit profile, (ii) Moody's parental support
assumptions for Fortis Bank which have been revised to "very
high" from "moderate", reflecting the ongoing successful
integration with the parent and strategic relevance for the
group, thereby taking the adjusted baseline credit assessment
(BCA) to A2, and (iii) unchanged assumptions for very high
systemic support by Belgium (Aa1; stable).
The outcome of Fortis Bank's long-term ratings' review depends on
the conclusion of the pending rating review of BNP Paribas. In
case the parent's BFSR and LT ratings are confirmed, Fortis
Bank's long-term debt and deposit ratings will be upgraded by one
notch to Aa3. However, if BNP Paribas's BFSR and LT ratings are
downgraded by one notch, Fortis Bank's long-term debt and deposit
ratings will be confirmed at A1.
Key Rating Sensitivities
Improvements in recurring underlying profitability in Belgium and
continued progress on integration with BNP Paribas's standards
and centralized risk management systems (which could lead us to
progressively align the bank's Risk Positioning scores with those
of its parent) would be positive for the ratings.
The BFSR could be downgraded if the bank: (i) suffers significant
asset quality deterioration; (ii) fails to stabilize its
franchise (e.g. if its market shares decline); (iii) cannot
sustain a satisfactory level of underlying profitability; or (iv)
enters into riskier activities too aggressively.
Fortis Bank's long-term debt and deposit ratings are currently on
review for upgrade with possible rating outcomes described above.
Subordinated Obligations and Hybrid Securities
The starting point in Moody's approach to rating hybrid
securities is the Adjusted Baseline Credit Assessment (Adjusted
BCA), which reflects the bank's standalone credit strength,
including parental and/or cooperative support, if applicable. The
Adjusted BCA excludes systemic support.
The Adjusted BCA is A2 for Fortis Bank and includes some uplift
for parental support from BNP Paribas.
The perpetual debt securities (ISIN: BE0119807122) issued by
Fortis Bank were upgraded to Baa1 (hyb) from Baa3 (hyb), and
placed on review for further upgrade. The ratings were positioned
two notches below the Adjusted BCA to reflect the instruments'
deeply subordinated claim in liquidation. Coupons must be
suspended if a weak mandatory deferral trigger is breached
(solvency). There is also optional deferral, which is restricted
by a pusher with a 12-month look-back period. Any unpaid coupons
are cumulative and must be settled through an alternative coupon
settlement mechanism (ACSM).
The Tier 1 perpetual debt securities (ISIN: BE0117584202) issued
by Fortis Bank were also upgraded to Baa1 (hyb) from Baa3 (hyb),
and placed on review for further upgrade. The ratings were
positioned two notches below the Adjusted BCA to reflect the
instruments' deeply subordinated claim in liquidation. Coupons
must be suspended if a weak mandatory deferral trigger (solvency)
is breached or at the issuer's option. Both the mandatory and
optional deferral are subject to a pusher with a 12-month look-
back period. Any unpaid coupons are cumulative and must be
settled through an alternative coupon settlement mechanism
(ACSM).
Moody's affirmed Fortis Bank's rating on its Upper Tier 2
perpetual junior subordinated securities rating (ISIN:
BE0934549511) at A3 (hyb) and the rating was placed on review for
upgrade. The rating is positioned one notch below the Adjusted
BCA to reflect the instruments' junior subordinated claim in
liquidation. Coupons must also be suspended if a weak mandatory
deferral trigger (solvency) is breached. There is also optional
deferral, which is restricted by a pusher with a 12-month look-
back period.
Moody's upgraded BNP Paribas Fortis Funding's Upper Tier 2
perpetual junior subordinated securities ratings (ISIN:
XS0071344799 and XS0063913387) to A3 (hyb) from Baa2 (hyb). The
ratings are positioned one notch below the Adjusted BCA due to
its junior subordinated claim in liquidation. Coupons can be
suspended at the issuer's option, subject to a pusher with a 12-
month look-back period.
Moody's also affirmed the Ba3 (hyb) rating of the Convertible and
Subordinated Hybrid Equity-linked Securities (CASHES), with a
negative outlook. The securities were issued by Fortis Bank.
However, Moody's rating of the CASHES is based on Ageas Holdings'
rating as the terms and conditions of the CASHES include a
mandatory deferral trigger tied to dividend payments on Ageas
Holdings' ordinary shares.
Principal Methodologies
The methodologies used in these ratings 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.
In 2010, Fortis Bank reported a net income group share of
EUR1,907 million, including EUR970 million stemming from
discontinued operations, while revenues stood at EUR 54 billion
(versus EUR4.6 billion in 2009). Fortis Bank had total assets
amounting to EUR348 billion and a Tier 1 ratio of 16.5% at year-
end 2010 (respectively EUR428 billion and 12.3% at year-end
2009). In the first half of 2011, Fortis Bank reported a net
income group share of EUR71 million, impacted by a loss of
EUR317 million on discontinued operations, while its Tier 1 ratio
ended at 16.9%.
KBC BANK: Moody's Affirms Rating on Debt Securities at Ba1(hyb)
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Moody's Investors Service has downgraded to A1 from Aa3 KBC
Bank's long-term senior debt and deposit ratings. The outlook on
the bank's long-term ratings is stable. The downgrade of the
entity's long-term ratings was driven by the lowering of its Bank
Financial Strength Ratings (BFSR) to C, which corresponds to A3
on Moody's long-term rating scale, from C+. The outlook on the
BFSR is negative.
At the same time, Moody's has downgraded to A2 from A1 holding
company KBC Group's long-term senior debt rating. The outlook on
KBC Group's ratings was changed to stable from negative.
Moody's affirmed at Prime-1 the short-term ratings of both KBC
Bank and KBC Group.
Moody's affirmed at Ba1(hyb) the cumulative Perpetual Debt
Securities issued by KBC Bank, and at Ba3(hyb) the non-cumulative
Trust Preferred Securities issued by KBC Bank Funding Trust II,
III and IV. Moody's changed the outlook on both hybrids to stable
from positive.
Ratings Rationale
Sound Fundamentals But Uncertainty Over State Aid Repayment Has
Increased
The rating agency's decision to downgrade KBC Bank's BFSR and
long-term debt ratings was driven by the following factors:
(i) Moody's perception of increased uncertainty regarding KBC
Group's ability to repay by year-end 2013 (representing the
period agreed upon with the EU Commission in 2009) the whole
amount of the core capital securities held by the Belgian
Federal and Flemish Regional Governments, while at the same
time achieving Basel 3 pro forma Core Tier 1 ratio of 8% at
the group level.
(ii) Moody's concerns regarding the consequences that this
potential inability may have on the group's credit profile,
notably via the imposition of further conditions by the EU
Commission, which could negatively affect KBC's
diversification or franchise.
Moody's recognises that KBC Group currently has a relatively high
regulatory Core Tier 1 ratio, which suggests some ability to
repay part of the aid it has received from the government.
However, the ultimate amount it will be able to repay by the
year-end 2013 will depend on both (1) its ability to implement
the business disposal program as scheduled in its restructuring
plan, without incurring any significant capital losses; and (2)
the level of earnings it will be able to accumulate over the next
three years after dividend distributions to shareholders and
coupon payments on the state-held capital.
Moody's notes that the group has encountered delays in executing
its disposal program. In addition, the current market conditions
may further negatively affect the timely divestment of the assets
earmarked for sale. Regarding KBC's earning generation capacity,
the level of income could be hampered by the evolution of the
loan books in Ireland and Central and Eastern Europe (CEE), which
have been hit by significant impairments over the past two years.
At the same time, Moody's recognises:
(iii) The bank's good fundamentals, notably its strong franchise
in Belgium and the countries of Central and Eastern Europe
where it operates, and its sound liquidity profile based
on a stable and resilient customer deposit base.
(iv) The recovery in net income since 2010, mainly due to a
substantial decrease in losses related to the legacy
structured product portfolio. In Moody's opinion, the
potential risk stemming from KBC's exposures to CDOs is
now reasonably reflected in the current carrying values
and the likelihood of further significant losses to be
incurred by the group on these products is low in Moody's
base case scenario.
Despite these strengths, Moody's believes that the challenges KBC
is facing are more consistent with a BFSR of C, which corresponds
to A3 on Moody's long-term rating scale. The negative outlook
reflects the uncertainties on the level of constraints that could
be imposed by the EU Commission.
Moody's factors a very high probability of external support from
the Belgian Government into KBC Bank's long-term debt and deposit
ratings of KBC Bank, resulting in two notches of uplift from its
A3 standalone rating. This is based on the rating agency's
perception that, due to its importance within the Belgian retail
market as evidenced by its high shares in both domestic savings
and lending markets, KBC Bank continues to benefit from high
systemic support. This support has been in evidence since 2008
through the hybrid injection and guaranty extended on the bank's
exposures to CDOs. The stable outlook results from the limited
sensitivity of the bank's senior long-term rating to a potential
downgrade of the BFSR at this point on the ratings scale.
The A2 long-term debt rating of KBC Group is positioned one notch
below that of KBC Bank and is a function of the structural
subordination of the holding company relative to bank creditors,
the sound profile of the group's insurance business (a sister
company to the Bank), and the current modest level of double
leverage (approximately 11% as at year-end 2010 as per Moody's
estimate).
Ratings Sensitivity
Downward pressure may be exerted on KBC Bank's BFSR from (i) a
significant deterioration in the performance of the loan books in
Ireland or in CEE; (ii) an increase in corporate defaults
worldwide, which could trigger further losses on CDOs; and/or
(iii) other pressure on returns that could hamper KBC's ability
to repay state aid without compromising its capital,
diversification or franchise.
KBC Bank's long-term debt and deposit ratings would be downgraded
as a result of a multi-notch downgrade of the BFSR. Similarly, it
could be downgraded in the event of a multi-notch downgrade of
the rating of the Government of Belgium or a lower perception by
Moody's of the probability of systemic support that would
extended in the future to KBC Bank.
Downward pressure on KBC Group's long-term ratings could stem
from (i) a downgrade of KBC Bank's ratings; (ii) deterioration of
the insurance company's solvency; or (iii) a significant increase
in double leverage.
As evidenced by the current negative outlooks, Moody's sees
little prospect of an upgrade on both KBC Bank's and KBC Group's
ratings as long as state aid is not repaid.
Hybrid and Junior Subordinated Debt Ratings
KBC Group is committed to paying coupons on the capital
securities held by the Belgian Federal and Flemish Regional
Governments in 2011, 2012 and 2013. Since the documents of the
hybrid securities issued or guaranteed by the bank contain a
pusher, dividend/coupon payments on parity or more junior
securities issued by either KBC Bank or KBC Group "push" hybrid
coupon payments. Moody's therefore expects all coupons to be paid
on hybrid securities until 2014. Payments on KBC's hybrid
securities were made both in 2009 and 2010 despite the group not
making any payment on the governments' capital securities during
this period. Nevertheless, Moody's believes that uncertainties
remain regarding hybrid coupon payments made after 2013. In the
event that KBC Group is unable to repay its entire outstanding
state aid package by year-end 2013, the European Commission may
potentially require it to suspend hybrid coupon payments.
KBC's hybrid securities' ratings continue to be notched from KBC
Bank's A3 Adjusted Baseline Credit Assessment (Adjusted BCA).
Moody's arrives at the Adjusted BCA by adding parental and
cooperative support, if applicable, to the BCA, which excludes
systemic and regional support. In the case of KBC Bank, the
Adjusted BCA is in line with the BCA of A3, as Moody's does not
factor in any form of support. The ratings also incorporate
Moody's view that, while the bank is implementing its
restructuring plan and state aid has not been reimbursed,
investment grade ratings are not appropriate for these
instruments. These ratings were affirmed:
-- The Perpetual Debt Securities issued by KBC Bank are
positioned four notches below KBC Bank's Adjusted BCA at
Ba1(hyb). Moody's adds that unpaid coupons are cumulative on
these securities and must be settled through an alternative
coupon settlement mechanism (ACSM). Coupon payments can be
suspended at the bank's option.
-- The non-cumulative Trust Preferred Securities issued by KBC
Bank Funding Trust II, III and IV are positioned six notches
below KBC Bank's Adjusted BCA at Ba3(hyb). These securities
are junior to the Perpetual Debt Securities and coupons can
be suspended on a non-cumulative basis at the bank's option.
Given the uncertainty that remains regarding hybrid coupon
payments after 2013, the outlook for both securities has been
changed to stable from positive.
Impact on Subsidiaries
In respect of the Group's main operating units, Moody's has taken
these rating actions:
-- KBC Bank N.V.'s BFSR was downgraded to C from C+, long-term
deposits and senior unsecured debt ratings were downgraded to
A1 from Aa3, and cumulative Perpetual Debt Securities issued
by KBC Bank were affirmed at Ba1(hyb). The outlook on the
BFSR is negative while all other ratings carry a stable
outlook. The Prime-1 short-term deposit ratings were
affirmed.
-- KBC Group N.V.'s long-term senior unsecured debt rating and
issuer rating were downgraded to A2 from A1. The outlook is
stable. The Prime-1 short-term issuer rating was affirmed.
In respect of the Group's funding vehicles, Moody's has taken
these rating actions:
-- Kredietbank North America Finance Corp's Prime-1 backed
commercial paper rating was affirmed.
-- KBC International Finance N.V.'s backed senior unsecured
rating was downgraded to A1 from Aa3, backed senior unsecured
MTN rating was downgraded to (P)A1 from (P)Aa3, and backed
subordinated MTN was downgraded to (P)A2 from (P)A1. All
ratings carry a stable outlook.
-- KBC Bank Funding Trust II's backed non-cumulative preferred
stock rating was affirmed at Ba3 (hyb). The rating carries a
stable outlook.
-- KBC Bank Funding Trust III's backed non-cumulative preferred
stock rating was affirmed at Ba3 (hyb). The rating carries a
stable outlook.
-- KBC Bank Funding Trust IV's backed non-cumulative preferred
stock rating was affirmed at Ba3 (hyb) . The rating carries a
stable outlook.
-- KBC IFIMA N.V.'s backed senior unsecured rating was
downgraded to A1 from Aa3, backed subordinated debt rating
was downgraded to A2 from A1. The outlook is stable. The
Prime-1 short-term debt rating was affirmed.
-- KBC Dublin Capital's Prime-1 backed commercial paper rating
was affirmed.
-- KBC Financial Products International Ltd's backed senior
unsecured debt rating was downgraded to A1 from Aa3. The
outlook is stable. The Prime-1 short-term debt and commercial
paper ratings were affirmed.
-- KBC Financial Products International VI Ltd's backed senior
unsecured debt rating was downgraded to A1 from Aa3. The
outlook is stable.
Moody's says that any potential impact of this rating action on
the Group's other subsidiaries will be considered separately.
Principal Methodologies
The methodologies used in this rating 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.
Based in Brussels, KBC Group had total assets amounting to
EUR320.8 billion at year-end 2010. KBC Group's consolidated total
income stood at EUR8.38 billion and its net profit group share
stood at EUR1.86 billion in 2010.
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D E N M A R K
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BANKNORDIK: Moody's Confirms 'D+' Bank Financial Strength Rating
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Moody's Investors Service has downgraded BankNordik P/F's long-
and short-term deposit ratings to Baa3 / Prime-3 from Baa2 /
Prime-2. The rating agency confirmed the standalone bank
financial strength rating (BFSR) at D+, which will now be mapping
to Ba1 on the long-term scale, from Baa3. The outlook for all the
ratings is negative.
BankNordik's deposit ratings and BFSR had been place on review
for downgrade on 31 May, triggered by the bank's announcement of
the acquisition of branches of the failed Danish bank
Amagerbanken A/S (ratings withdrawn) from Finansiel Stabilitet,
the government body responsible for managing failed banks.
Following the downgrade, the bank's Baa3 deposit rating continues
to benefit from one notch of support by the regional government
of the Faroe Islands (Aa3 negative).
In addition, Moody's clarified a statement in a press release
dated February 26, 2011 regarding BankNordik. In that press
release, Moody's referred to BankNordik's Aaa government-
guaranteed debt. Moody's, however, does not rate the government-
guaranteed debt of BankNordik.
Ratings Rationale
Notwithstanding the beneficial franchise impact of BankNordik's
expansion beyond its historical Faroe Islands base, today's
downgrade highlights the increased uncertainty on the longer term
performance of BankNordik. The acquisition brings execution risk
as it lead to a considerable 51% expansion of the bank's loan
book into the Danish market, where property prices have been
under downward pressure in recent years, which may negatively
affect loan performance.
In addition, Danish banks typically take a second lien mortgage
on property collateral (this practice is only developing in
BankNordik's historical Faroese market), putting pressure on the
recovery potential when loans default, which is more of a concern
given the property price declines.
Finally, Moody's notes that, in addition to some deterioration in
BankNordik's asset quality during the financial crisis (problem
loans -- loans subject to individual impairments -- increased
from 6.8% of gross loans in 2008 to 10.4% at year-end 2010), the
protracted time period of Amagerbanken's decline may have
encouraged financially stronger clients to change banks prior to
the bank failing in February 2011, so that remaining clients
transferring to BankNordik may have weaker than average financial
strength.
Moody's notes positively that BankNordik's funding remains
strong. The transaction reportedly increased the bank's deposit
base by 63%, leading to a deposit-to-loan ratio to around 105%.
BankNordik's long term deposit rating will continue to benefit
from one notch of uplift that reflects the potential of support
from the Faroe Islands home government. BankNordik reports a 43%
market share on the islands.
The negative outlook on the bank's ratings reflects the
substantial challenges that BankNordik faces in the coming years,
integrating the acquired branches and establishing its foothold
in the Danish onshore banking market, while managing the
efficiency of its operations. The acquisition came only 15 months
after the bank first established a foothold in the Danish
mainland through the acquisition of 12 branches from another
Danish regional bank in 2010. As a result of the two
acquisitions, the bank's loan book has increased by 85% since
year-end 2009 to an estimated DKK12.9 billion (EUR1.7 billion).
Principal Methodologies
The methodologies used in this rating were Bank Financial
Strength Ratings: Global Methodology published February 2007, and
Incorporation of Joint-Default Analysis into Moody's Bank
Ratings: A Refined Methodology published in March 2007.
Based in Torshavn, Faroe Islands, BankNordik reported
consolidated assets of DKK13.3 billion (EUR1.8 billion) as of
June 30, 2011, excluding the Amagerbanken acquisition.
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G R E E C E
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GREEK ABS: Moody's Withdraws 'B3' Rating on Class A Notes
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Moody's Investors Service has withdrawn the credit rating of
Praxis II Finance Plc, a Greek ABS securitization of assets
originated and serviced by Piraeus Bank (B3, Non-Prime).
Immediately prior to the rating withdrawal, the transaction was
rated Ba3, on review for downgrade. Details on the affected notes
are provided below.
Issuer: Praxis II Finance Plc
A Notes, Withdrawn (sf); previously on Jul 29, 2011 Ba3 (sf)
Placed Under Review for Possible Downgrade
Ratings Rationale
Moody's has withdrawn the rating for its own business reasons.
The principal methodology used in this rating was Moody's
Approach to Rating Credit Card Receivables-Backed Securities
rating methodology, published in April 2007.
* GREECE: ECB Official Klaas Knot Does Not Rule Out Default
-----------------------------------------------------------
Gabi Thesing at Bloomberg News, citing Het Financieele Dagblad,
reports that European Central Bank Governing Council member Klaas
Knot said he no longer excludes a Greek default.
According to Bloomberg, Mr. Knot said "It is one of the
scenarios. I'm not saying that Greece will not default."
Bloomberg relates that Mr. Knot was cited by Dagblad as saying
"I've long been convinced that bankruptcy is not necessary. The
news from Athens, however, is not encouraging" and "I am now less
definite in excluding a default bankruptcy than I was a few
months ago."
Meanwhile, Tony Czuczka at Bloomberg News reports that Michael
Meister, a senior lawmaker in German Chancellor Angela Merkel's
party, said in an opinion article in the Sueddeutsche Zeitung
that policy makers must be prepared for an orderly insolvency by
Greece once the euro area's permanent rescue system for indebted
states starts up in mid-2013.
Bloomberg relates that Mr. Meister said orderly insolvency would
mean Greece stays in the currency union. He said that calls for
Greece to leave the euro area are misguided because that would
set off a financial and economic crisis, Bloomberg notes.
=============
I R E L A N D
=============
BOVALE DEVELOPMENT: Approval for Business Plan Expected Shortly
---------------------------------------------------------------
Emmet Oliver at Irish Independent reports that developers Tom and
Michael Bailey, who control Bovale Developments, expect to get
approval from the National Asset Management Agency for their
business plan shortly despite the company being in a loss-making
position.
Talks between the two sides will conclude shortly and the
brothers are confident their business plan will get NAMA's
support, putting the company on a more long-term footing,
according to Irish Independent.
The company incurred losses in the year to the end of June 2010
and its ability to continue as a going concern is dependent on
the support of NAMA, its key lender, Irish Independent discloses.
The auditors claim it is extremely difficult to value property
assets at present because there are not enough transactions
taking place, Irish Independent says.
Meanwhile, NAMA on Wednesday updated the markets on its progress
in repaying some of the EUR30.5 billion of debt it has issued to
the banks in return for buying their property loans, Irish
Independent relates.
NAMA, as cited by Irish Independent, said it had repaid a further
EUR500 million of NAMA bonds, the third repayment of bonds so far
this year. This brings the total of NAMA bonds redeemed to some
EUR1.25 billion.
According to Irish Independent, NAMA pointed out that "In
addition to repayments of EUR299 million in advances made by the
Minister for Finance [repayments made in October 2010 and end
February 2011], the news means that NAMA has reduced its
indebtedness by EUR1.55 billion in approximately 18 months."
Bovale is a housebuilder that operates mainly in north Co Dublin,
but also does retail developments, the most well know of which is
Charlestown in Finglas.
CORSAIR FINANCE: Moody's Lowers Rating on Series 13 Notes to 'B3'
-----------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of these
notes issued by Corsair Finance (Ireland) No. 2 Limited - Series
13:
Issuer: Corsair Finance (Ireland) No. 2 Limited
-- EUR200M Series 13 Floating Rate Secured Portfolio Credit -
Linked Notes, Downgraded to B3 (sf); previously on Mar 1,
2011 Downgraded to Ba2 (sf)
Ratings Rationale
This transaction is a collateralized debt obligation (the
"Collateralized Synthetic Obligation" or "CSO") referencing a
static portfolio of 50 synthetic credit corporate exposures.
Moody's explained that the rating action taken is the result of
the overall credit deterioration of the reference portfolio. The
transaction is exposed to Bank of Ireland and Allied Irish Banks,
p.l.c. which have suffered credit events since the last rating
action in March 2011. The 10-year weighted average rating factor
of the portfolio, adjusted with forward looking measures and
based on senior unsecured debt ratings, has deteriorated from 234
to 445, equivalent to an average rating of the current portfolio
of Baa3. In downgrading the rating of the tranche, Moody's has
taken into account that the reference portfolio is 100% exposed
to the Banking and Finance industry sectors. Furthermore 95% of
the reference portfolio is exposed to subordinated debt.
Approximately 28% of the reference portfolio is exposed to
entities in Greece, Ireland, Portugal and Spain, countries of
which some have experienced multi notch downgrades since the last
rating action. The notes have a remaining life of 4.26 years and
credit enhancement of approximately 7.78%.
Because of the high concentration of subordinated debt in the
reference portfolio, in its base case run Moody's used
subordinated debt ratings as inputs in the CDOROM.
In the process of determining the final rating, Moody's took into
account the results of the sensitivity analysis where two
exposures amounting to 4% of the pool were ran as defaulted in
order to test the deal sensitivity to the lowest rated entities
of the portfolio. This run generated a result that was consistent
with the rating assigned today.
Moody's analysis of corporate CSOs is subject to uncertainties,
the primary sources of which includes complexity, governance and
leverage. Although the CDOROM model capture many of the dynamics
of the Corporate CSO structure, it remains a simplification of
the complex reality. Of greatest concern are (a) variations over
time in default rates for instruments with a given rating, (b)
variations in recovery rates for instruments with particular
seniority/security characteristics and (c) uncertainty about the
default and recovery correlations characteristics of the
reference pool. Similarly on the legal/structural side, the legal
analysis although typically based in part on opinions (and
sometimes interpretations) of legal experts at the time of
issuance, is still subject to potential changes in law, case law
and the interpretations of courts and (in some cases) regulatory
authorities. Although the impact of these decisions is mitigated
by structural constraints, anticipating the quality of these
decisions necessarily introduces some level of uncertainty in
Moody's assumptions. Given the tranched nature of Corporate CSO
liabilities, rating transitions in the reference pool may have
leveraged rating implications for the ratings of the Corporate
CSO liabilities, thus leading to a high degree of volatility. All
else being equal, the volatility is likely to be higher for more
junior or thinner liabilities.
The base case scenario modeled fits into the central
macroeconomic scenario predicted by Moody's of a sluggish
recovery scenario of the corporate universe. Should
macroeconomics conditions evolves towards a more severe scenario
such as a double dip recession, the CSO rating will likely be
downgraded to an extent depending on the expected severity of the
worsening conditions.
The principal methodology used in this rating was "Moody's
Approach to Rating Corporate Collateralized Synthetic
Obligations" published in September 2009.
Moody's analysis for this transaction is based on the CDOROM.
This model is available on moodys.com under Products and
Solutions --Analytical models, upon return of a signed free
license agreement.
Due to the impact of revised and updated key assumptions
referenced in "Moody's Approach to Rating Corporate Synthetic
Obligations", key model inputs used by Moody's in its analysis
may be different from the manager/arranger's reported numbers. In
particular, rating assumptions for all publicly rated corporate
credits in the underlying portfolio have been adjusted for
"Review for Possible Downgrade", "Review for Possible Upgrade",
or "Negative Outlook".
Moody's did not run a separate loss and cash flow analysis other
than the one already done using the CDOROM model. For a
description of the analysis, refer to the methodology and the
CDOROM user guide on Moody's Web site.
In addition to the quantitative factors that are explicitly
modeled, qualitative factors are part of the rating committee
considerations. These qualitative factors include the structural
protections in each transaction, the recent deal performance in
the current market environment, the legal environment, specific
documentation features, the collateral manager's track record,
and the potential for selection bias in the portfolio. All
information available to rating committees, including
macroeconomic forecasts, input from other Moody's analytical
groups, market factors, and judgments regarding the nature and
severity of credit stress on the transactions, may influence the
final rating decision.
VEGA CONTAINER: Moody's Confirms Rating on Class A Notes at 'Ba3'
-----------------------------------------------------------------
Moody's Investors Service has confirmed this rating to the notes
issued by Vega Container Vessel 2006-1 Public Ltd. Co.
-- US$171,790,000 Class A Floating Rate Notes due 2018,
Confirmed at Ba3(sf)
Ratings Rationale
The transaction is designed to finance a fleet of container
vessels for CMA CGM S.A., one of the largest container shipping
companies in the world, to which Moody's currently assigns a
corporate family rating of B1/Negative outlook.
An unconditional and irrevocable guarantee of principal on the
final legal maturity of the Notes and interest is provided by
Syncora Guarantee (UK) which is rated Ca. Moody's has assigned a
Ba3(sf) underlying rating to the Class A Notes, reflecting the
credit quality of the transaction. The underlying rating of the
Class A Notes principally reflects (i) Moody's view of CMA CGM's
credit quality and the probability that it will default on its
obligations under the transaction and (ii) Moody's view of the
additional degree of protection provided by the legal and
financial arrangements of the transaction to the Class A
Noteholders in the event of default by CMA CGM, based on an
estimate of the probability and severity of a shortfall for the
Class A Notes in the event of a sale of the collateral and
liquidation of the transaction following such default. This view
is based, in part, on a quantitative model of the transaction and
factors in the characteristics of the collateral pool, the
volatility of vessel prices, the potential claims ranking in
priority to the Class A Notes and the structural enhancements of
the transaction. It also takes into account an element of
uncertainty as to the timing required for the legal proceedings
relating to the enforcement, repossession and sale of the
collateral and the fact that there are no precedents for the
transaction under the new French insolvency law that came into
force on January 1, 2006.
The Class A Notes are direct, secured obligations of the Issuer.
Together with other funds raised by the Issuer, the proceeds of
the Class A Notes are on-lent by the Issuer to the Owners, 12
Irish orphan special purpose vehicles. These loans are be back-
to-back with all the debt obligations of the Issuer (on an
aggregate basis in respect of their amount). Each Owner has, in
turn, used the proceeds of the loans to finance the acquisition
of a vessel, comprising four 1,700 TEU family vessels, two 4,400
TEU family vessels and six 5,100 TEU vessels (together the
"Vessels"). Each Vessel is chartered to CMA CGM under a bareboat
charter agreement (the "Charterparty"). The Charterparties
require CMA CGM to pay to the Owners each quarter amounts equal,
in aggregate, to the interest and principal due by the Owners to
the Issuer (including for the final principal repayment), plus
fees and expenses of the Owners and the Issuer.
Vega ContainerVessel 2006-1 Public Limited Company is an Irish
orphan special purpose vehicle, which issues debt instruments for
the purpose of ship financings for CMA CGM S.A., one of the
largest container shipping companies in the world.
The Ba3(sf) rating reflects the transaction's credit strengths,
including: (i) a simple interest and principal priority of
payments, with sequential amortization of the notes; (ii) a
liquidity facility covering approximately 36 months worth of
Class A interest payments provided by DNB Nor (Aa3/P-1); and
(iii) a reserve fund which can be used to cover potential
enforcement costs.
However, Moody's believes that the transaction has several credit
weaknesses, including the following: (i) the weak financial
strength of CMA CGM S.A., acting as single charter counterparty
to the transaction; (ii) a single industry exposure to the
container shipping market; (iii) exposure to weak legal
jurisdictions, and (iv) the very high volatility of the shipping
markets in general.
The principal methodology used in this rating was Moody's
Approach to Rating Shipping Loans for Structured Finance
Transactions, published in November 2010.
Moody's used its Shipping model (to derive the securitized
portfolio's loss distribution), to determine the potential losses
incurred by the notes under each loss scenario.
=========
I T A L Y
=========
FIAT SPA: Moody's Lowers Corporate Family Rating to 'Ba2'
---------------------------------------------------------
Moody's Investors Service has downgraded the corporate family
rating (CFR) and probability of default rating (PDR) of Fiat
S.p.A. to Ba2 from Ba1. Concurrently, following application of
the Loss Given Default Methodology, Moody's has also downgraded
the debt issued by Fiat's rated subsidiaries Fiat Finance &
Trade, Fiat Finance North America and to Ba3 from Ba1 as well as
Fiat Finance Canada's provisional rating to (P)Ba3 from (P)Ba1.
The outlook on the ratings is negative. This concludes the review
for downgrade initiated on 26 April 2011 following Fiat's stake
increase in Chrysler Group LLC.
Ratings Rationale
"[The] rating action reflects Moody's expectation that the
creditworthiness of Fiat and Chrysler will become more closely
aligned over time as the strategy and operations of the two
groups becomes progressively more intertwined," says Falk Frey, a
Moody's Senior Vice President and lead analyst for Fiat. The
intensified use of common vehicle architectures, modules and
drivetrain technologies increases mutual dependency, which could
result in the two companies having to support each other in the
event of financial difficulty. This is despite Fiat not
guaranteeing Chrysler's debt (and Moody's understands that Fiat
has no intention to set up guarantees for the benefit of
Chrysler) and the fact that the financial management and
arrangements of the two companies remain separate.
Moody's also notes that there are cross-default clauses included
in the bonds issued by Fiat under its Global Medium Term Note
program that point to the financial linkage between two
companies.
Downgrades:
Issuer: Fiat Finance & Trade Ltd.
-- Senior Unsecured Medium-Term Note Program, Downgraded to
(P)Ba3 from (P)Ba1
-- Senior Unsecured Regular Bond/Debenture, Downgraded to Ba3
from Ba1
-- Senior Unsecured Regular Bond/Debenture, Downgraded to Ba3
from Ba1
Issuer: Fiat Finance Canada Ltd.
-- Senior Unsecured Medium-Term Note Program, Downgraded to
(P)Ba3 from (P)Ba1
Issuer: Fiat Finance North America Inc.
-- Senior Unsecured Medium-Term Note Program, Downgraded to
(P)Ba3 from (P)Ba1
-- Senior Unsecured Regular Bond/Debenture, Downgraded to Ba3
from Ba1
Issuer: Fiat S.p.A.
-- Probability of Default Rating, Downgraded to Ba2 from Ba1
-- Corporate Family Rating, Downgraded to Ba2 from Ba1
Outlook Actions:
Issuer: Fiat Finance & Trade Ltd.
-- Outlook, Changed To Negative From Rating Under Review
Issuer: Fiat Finance Canada Ltd.
-- Outlook, Changed To Negative From Rating Under Review
Issuer: Fiat Finance North America Inc.
-- Outlook, Changed To Negative From Rating Under Review
Issuer: Fiat S.p.A.
-- Outlook, Changed To Negative From Rating Under Review
The Ba2 rating also reflects (i) Fiat's business risk, with a
pure focus on the highly cyclical automotive industry, including
through its stake in Chrysler Group and the activities of Magneti
Marelli (automotive components) and Teksid (supplier of engine
blocks), as well as Comau (industrial automation systems for the
auto industry)and Fiat Powertrain (operating mainly as an
internal supplier of engines and transmissions); and (ii) Moody's
view that Fiat has a relatively infrequent model renewal rate
overall compared with some of its direct peers, and that this is
constraining the group's competitive position. In Moody's view,
this was also reflected by Fiat's market share losses in Europe
and its domestic market of Italy in 2010 and in the year to date.
In addition, the Ba2 rating takes into consideration a
substantial increase in Fiat's capital expenditure (capex) in the
current year and beyond compared with a reduced level in 2010.
This is a result of the group's strategy to develop and launch
attractive new volume models to the market.
Furthermore, Moody's notes that Fiat will be vulnerable to
greater competitive pressure arising from weaker market demand,
increasing price pressure and growing overcapacities in Brazil,
its most profitable market. The latter is the result of the
substantial additional capacity that will be implemented over the
next three years within the country. Based on public
announcements from car manufacturers, Moody's calculates an
increase of approximately 50% in total Brazilian available
production capacity by 2014. Such a rise will significantly
outpace Moody's market growth expectations, thereby resulting in
overcapacities with the likely consequence of declining
profitability.
Moody's understands that Fiat and Chrysler are currently fine
tuning their product and production plans. In the rating agency's
view, possible decisions to delay the introduction of major new
models could result in the group's competitive positioning being
weakened, market share losses and continued under-absorption of
fixed costs, especially in Europe.
However, at the same time, the inclusion of Chrysler in Moody's
analysis positively affects Fiat's previously very limited
geographic diversification. Moody's had viewed this lack of
geographic diversification as a key weakness in Fiat's previous
business profile.
Moreover, Moody's has taken into account the potential cost
savings resulting from the increasing operational integration
between Fiat and Chrysler regarding common architecture, modules
and technologies as well as purchasing. A positive market
acceptance of Fiat's new models, especially the Lancia-branded
Chrysler derivatives, would improve the currently very low
capacity utilization rates in Fiat's European plants and
positively affect fixed-cost coverage.
Fiat's ratings also benefit from its leading market positions in
Brazil (with an approximate market share of 23%), which has been
the group's major source of profits and cash flows in recent
years.
In addition, Fiat benefits from a dominant domestic Italian
market presence, with a market share of approximately 30%.
However, sovereign austerity programs and a weakening economy as
a result of the debt crisis could negatively affect car demand in
the group's key market.
Moody's rating anticipates that, although it could be
challenging, Fiat will be able to contain further market share
losses within the next two years before regaining market shares
in Europe as a result of its attractive renewed model range.
Moody's anticipates that the launch schedule will accelerate from
2012 onwards.
Moody's considers Fiat's liquidity profile to be good, excluding
Chrysler and the unknown amount of cash outflow that would be
involved if Fiat were to exercise its option to purchase 40% of
the current stake of the VEBA Trust in Chrysler. As of June 30,
2011, the group (excluding Chrysler) had EUR12.0 billion in cash,
to which a Dual Tranche Bond totalling EUR1.5 billion and a new
EUR1.75 billion Revolving Credit Facility maturing in July 2014
(substituting the existing EUR1.0 billion RCF) were added in
July. In Moody's view, these sources should cover the anticipated
uses of cash for the next 12 months. These uses comprise (i)
capex; (ii) debt maturities; (iii) cash for day-to-day needs;
(iv) approximately EUR500 million for the 6% stake in Chrysler
from the UST, the 1.5% stake from the Canadian government and the
UST rights under the Equity Recapture Agreement between the UST
and VEBA; (v) dividends to be paid in 2012.
Outlook
The negative outlook reflects the execution risk regarding the
organizational and, more importantly, the operational integration
of Chrysler and Fiat. It also reflects Fiat's ambitious
management plans for 2012 and beyond to strengthen its operating
margins from current levels. This is driven by the group's
introduction of new models and the optimization of its industrial
capacity. In this regard, Moody's believes that 2012 will be an
important year in terms of validating Fiat's strategy of using
Chrysler platforms for products to be sold in Europe and branded
as Fiat, Lancia or Alfa Romeo cars in Europe. Positive
achievements should result in Fiat increasing capacity
utilization rates in its domestic plants, regaining market shares
as well as improving its profitability in Europe. Increased
profitability in Europe will reduce the group's dependency on the
Brazilian market, which in Moody's view could become more
challenging going forward. However, the negative outlook reflects
that these plans could be derailed by adverse macroeconomic
developments, notably in Western Europe.
The outlook could be stabilized if Fiat were to successfully
execute the integration of Chrysler, measured by the milestones
of achievement listed above. A more stable positioning within the
Ba2 rating category could also result if Chrysler were able to
further improve its ratings.
WHAT WOULD CHANGE THE RATINGS -- DOWN
Moody's would consider downgrading Fiat's ratings in the event of
(i) a further erosion of Fiat's market share in Europe, resulting
from the group's possible decision to deviate from its current
launch schedule and delay the introduction of new models; (ii)
any emerging evidence that management's industrial plans are not
working or have been delayed; (iii) high triple digit million
Euro negative free cash flow generation in 2012; (iv) Debt/EBITDA
not falling below 4.0x; or (v) a deterioration in Chrysler's
operating performance, which would be in contrast to Moody's
expectation of improvements in profitability.
STRUCTURAL CONSIDERATIONS
The senior unsecured notes issued by Fiat's funding vehicles Fiat
Finance &Trade, Fiat Finance North America and Fiat Finance
Canada (currently no notes outstanding) are structurally
subordinated to a significant portion of debt located at Fiat's
operating subsidiaries (mainly trade payables), with a preferred
claim on the cash flows at these entities. Consequently, the
ratings of Fiat's outstanding bonds are one notch below the
group's CFR, according to Moody's Loss Given Default Methodology.
METHODOLOGY
The principal methodology used in rating Fiat S.p.A. was the
Global Automobile Manufacture Industry Methodology published in
June 2011. Other methodologies used include Loss Given Default
for Speculative-Grade Non-Financial Companies in the U.S., Canada
and EMEA published in June 2009.
Headquartered in Torino, Italy, Fiat S.p.A. is one of Italy's
leading industrial groups and one of Europe's largest automotive
manufacturers by unit sales. On January 1, 2011, the group
completed the demerger of its capital goods activities, mainly
Iveco and CNH (Ba2, stable outlook), into a separate company,
called Fiat Industrial (Ba1, stable outlook). On a pro-forma
basis, the new Fiat S.p.A. generated consolidated revenues of
EUR35.9 billion and reported a trading profit of EUR1.1 billion
in 2010.
* ITALY: Banking Sector Faces Funding Strains
---------------------------------------------
Rachel Sanderson at The Financial Times reports that concerns
about funding strains in Italy's banking sector intensified last
week as Standard & Poor's cut the long-term credit ratings of
seven Italian lenders, including Intesa Sanpaolo and Mediobanca,
after downgrading the country's sovereign debt.
The common view among senior Italy bankers is that the market
rout is overdone given the strength of the Italian retail
network, the main depositary for Italy's EUR8,600 billion
(US$11,775 billion) private wealth, more than three times its
national debt, the FT discloses.
Still, the market squeeze means the "Italian banks will struggle
with liquidity long before they have problems with capital
despite their strong retail platform," the FT quotes Anna Maria
Benassi, head of research at Banca Leonardo, as saying. Italy's
borrowing costs are about 100 basis points higher today than in
the spring, putting pressure on the banks' funding costs, the FT
notes.
Antonio Guglielmi, lead analyst at Mediobanca, expects the
stresses on funding of Italian banks may lead to consolidation of
smaller regional lenders, the FT says.
Senior retail bankers point out that pressure on Italy's
financial institutions is exacerbated by the government imposing
a 20% tax on financial assets compared with 12.5% on state bonds,
and are lobbying hard to change this, the FT states.
=====================
N E T H E R L A N D S
=====================
GATEWAY II: Moody's Raises Rating on Class B-2 Notes to 'Ba3'
-------------------------------------------------------------
Moody's Investors Service has taken these rating actions on the
notes issued by Gateway II Euro CLO B.V.:
Issuer: Gateway II Euro CLO B.V.
-- EUR35.5M Class A-2 Senior Secured Floating Rate Notes due
2023, Confirmed at Aa2; previously on Jun 22, 2011 Aa2
Placed Under Review for Possible Upgrade
-- EUR27.5M Class A-3 Deferrable Senior Secured Floating Rate
Notes due 2023, Upgraded to A2; previously on Jun 22, 2011
Baa1 Placed Under Review for Possible Upgrade
-- EUR24M Class B-1 Deferrable Senior Secured Floating Rate
Notes due 2023, Upgraded to Baa3; previously on Jun 22,
2011 Ba2 Placed Under Review for Possible Upgrade
-- EUR20M Class B-2 Deferrable Senior Secured Floating Rate
Notes due 2023, Upgraded to Ba3; previously on Jun 22, 2011
Caa1 Placed Under Review for Possible Upgrade
Ratings Rationale
Gateway II Euro CLO B.V., issued in March 2007, is a
multicurrency Collateralised Loan Obligation ("CLO") backed by a
portfolio of mostly high yield European loans. The portfolio is
managed by Pramerica Investment Management. This transaction will
be in reinvestment period until 19 July 2013. It is composed of
94% 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 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 the lack of forward
looking indicators as well as time lags in receiving information
required for credit estimate updates.
The overcollateralization ratios of the rated notes have improved
since the rating action in April 2011. The Class A-2, Class A-3,
Class B-1, and Class B-2 overcollateralization ratios are
reported at 132.59%, 120.82%, 112.13% and 105.79%, respectively,
versus February levels of 128.8%, 117.4%, 108.9% and 102.8%,
respectively, and all related overcollateralization tests are
currently in compliance.
Improvement in the credit quality is observed through a decrease
in the proportion of securities from issuers rated Caa1 and
below. Securities rated Caa or lower make up approximately 4.46%
of the current underlying portfolio versus 11.78% in February
2011. Meanwhile, the reported weighted average rating factor
("WARF") has been stable (2855 as of the latest trustee report
dated July 2011, compared to 2877 in the February 2011 report).
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
374.46million, a weighted average default probability of 20.31%
(consistent with a WARF of 2833), a weighted average recovery
rate upon default of 47.75% for a Aaa liability target rating, a
diversity score of 36 and a weighted average spread of 2.98%. 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 94% 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
2015 which may create challenges for issuers to refinance. CLO
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. Moody's tested for a
possible extension of the actual weighted average life in its
analysis.
(2) Foreign exchange rate risk: The deal has exposure to non-EUR
denominated assets. Volatilities in foreign exchange rate will
have a direct impact on interest and principal proceeds available
to the transaction, which may affect the expected loss of rated
tranches.
(3) 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 rating
factor, weighted average spread, weighted average coupon, and
diversity score. However, as part of the base case, Moody's
considered spread levels higher than the covenant levels due to
the large difference between the reported and covenant levels.
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.
JUBILEE CDO: Moody's Raises Ratings on Two Note Classes to 'B2'
---------------------------------------------------------------
Moody's Investors Service has upgraded the ratings of these notes
issued by Jubilee CDO V B.V.:
-- EUR8.475MM Class D-1 Senior Secured Deferrable Floating
Rate Notes, Upgraded to B2 (sf); previously on Jun 22, 2011
Caa1 (sf) Placed Under Review for Possible Upgrade
-- EUR12.725MM Class D-2 Senior Secured Deferrable Fixed Rate
Notes, Upgraded to B2 (sf); previously on Jun 22, 2011 Caa1
(sf) Placed Under Review for Possible Upgrade
-- EUR11.725MM Class Y Combination Notes, Upgraded to B2 (sf);
previously on Jun 22, 2011 Caa2 (sf) Placed Under Review
for Possible Upgrade
Moody's also has confirmed the ratings of these notes issued by
Jubilee CDO V B.V.:
-- EUR28.9MM Class A-1B Senior Secured Floating Rate Notes,
Confirmed at Aa2 (sf); previously on Jun 22, 2011 Aa2 (sf)
Placed Under Review for Possible Upgrade
-- EUR155.55MM Class A-2 Senior Secured Floating Rate Notes,
Confirmed at Aa1 (sf); previously on Jun 22, 2011 Aa1 (sf)
Placed Under Review for Possible Upgrade
-- EUR45.8MM Class B Senior Secured Floating Rate Notes,
Confirmed at A3 (sf); previously on Jun 22, 2011 A3 (sf)
Placed Under Review for Possible Upgrade
-- EUR46.8MM Class C Senior Secured Deferrable Floating Rate
Notes, Confirmed at Ba2 (sf); previously on Jun 22, 2011
Ba2 (sf) Placed Under Review for Possible Upgrade
-- EUR4MM Class V Combination Notes, Confirmed at Ba1 (sf);
previously on Jun 22, 2011 Ba1 (sf) Placed Under Review for
Possible Upgrade
-- EUR11.325MM Class W Combination Notes, Confirmed at Ba2
(sf); previously on Jun 22, 2011 Ba2 (sf) Placed Under
Review for Possible Upgrade
The ratings of the Combination Notes address the repayment of the
Rated Balance on or before the legal final maturity. For Classes
V, the 'Rated Balance' is equal at any time to the principal
amount of the Combination Note on the Issue Date increased by the
Rated Coupon of 0.25% per annum respectively, accrued on the
Rated Balance on the preceding payment date minus the aggregate
of all payments made from the Issue Date to such date, either
through interest or principal payments. For Class W and Class Y,
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.
The ratings of Class X have been withdrawn as the notes have been
split back to its component notes.
Ratings Rationale
Jubilee CDO V B.V., issued in June 2005, is a single currency
Collateralised Loan Obligation ("CLO") backed by a portfolio of
mostly high yield European loans. The portfolio is managed by
Alcentra Ltd. The reinvestment period ended on August 21, 2011.
It 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 reflect key changes to the modeling assumptions,
which incorporate (1) a removal of the temporary 30% default
probability macro stress implemented in February 2009, (2)
increased BET liability stress factors as well as (3) change to a
fixed recovery rate modeling framework. Additional changes to the
modeling assumptions include changing certain credit estimate
stresses aimed at addressing the lack of forward looking
indicators as well as time lags in receiving information required
for credit estimate updates.
The overcollateralization ratios of the rated notes have improved
since the rating action in November 2009. The Class A/B, Class C
and Class D overcollateralization ratios are reported at 124.38%,
111.30% and 106.23%, respectively, versus October 2009 levels of
121.85%, 109.31% and 104.44%, respectively, and all related
overcollateralization tests are currently in compliance.
Reported WARF has increased from 2867 to 3046 between October
2009 and August 2011. However, this reported WARF overstates the
actual deterioration 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. Additionally, defaulted securities total
about EUR4.5 million of the underlying portfolio compared to
EUR15.8 million in October 2009.
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 502 million,
defaulted par of EUR4.5 million, a weighted average default
probability of 25.15% (consistent with a WARF of 3513, a weighted
average recovery rate upon default of 41.88% for a Aaa liability
target rating, a diversity score of 33 and a weighted average
spread of 3.32%. 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 80% 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%. Because approximately 12.6%
of non first lien loans assets in the portfolio are second-lien
loans, Moody's also considered a scenario with a slightly higher
weighted average recovery rate assuming that the second-lien
loans would recover 25% upon default instead of 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 2) the large
concentration of speculative-grade debt maturing between 2012 and
2015 which may create challenges for issuers to refinance. CLO
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) Deleveraging: The main source of uncertainty in this
transaction is whether delevering from unscheduled principal
proceeds will continue and at what pace. Deleveraging may
accelerate due to high prepayment levels in the loan market
and/or collateral sales by the manager, which may have
significant impact on the notes' ratings.
2) Moody's also notes that around 59% of the collateral pool
consists of debt obligations whose credit quality has been
assessed through Moody's credit estimates. Large single exposures
to obligors bearing a credit estimate have been subject to a
stress applicable to concentrated pools as per the report titled
"Updated Approach to the Usage of Credit Estimates in Rated
Transactions" published in October 2009.
3) Recovery of defaulted assets: Market value fluctuations in
defaulted assets reported by the trustee and those assumed to be
defaulted by Moody's may create volatility in the deal's
overcollateralization levels. Further, the timing of recoveries
and the manager's decision to work out versus sell defaulted
assets create additional uncertainties. Moody's analyzed
defaulted recoveries assuming the lower of the market price and
the recovery rate in order to account for potential volatility in
market prices.
4) Weighted average life: The notes' ratings are sensitive to the
weighted average life assumption of the portfolio, which may be
extended due to the manager's decision to reinvest into new issue
loans or other loans with longer maturities and/or participate in
amend-to-extend offerings.
The principal methodology used in this rating was "Moody's
Approach to Rating Collateralized Loan Obligations" published in
June 2011.
Moody's modeled the transaction using the Binomial Expansion
Technique, as described in Section 2.3.2.1 of the "Moody's
Approach to Rating Collateralized Loan Obligations" rating
methodology published in June 2011.
The cash flow model used for this transaction, whose description
can be found in the methodology listed above, is Moody's CDOEdge
model.
In addition to the quantitative factors that are explicitly
modeled, qualitative factors are part of the rating committee
considerations. These qualitative factors include the structural
protections in each transaction, the recent deal performance in
the current market environment, the legal environment, specific
documentation features, the collateral manager's track record,
and the potential for selection bias in the portfolio. All
information available to rating committees, including
macroeconomic forecasts, input from other Moody's analytical
groups, market factors, and judgments regarding the nature and
severity of credit stress on the transactions, may influence the
final rating decision.
===========
R U S S I A
===========
BRUNSWICK RAIL: S&P Assigns 'BB-' Corporate Credit Rating
---------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' long-term
corporate credit rating to Russian rail freight car lessor
Brunswick Rail Ltd. The outlook is stable.
"The rating reflects our view of Brunswick Rail's fair business
risk profile and aggressive financial risk profile. The rating
reflects the refinancing risk associated with the company's
syndicated loan facility due in August 2012; evolving industry
dynamics; and Brunswick Rail's aggressive growth strategy, which
requires significant investments and results in negative free
operating cash flow. That said, Brunswick Rail currently benefits
from the strong demand for rail freight cars in Russia and the
fact that many of its leases extend for about another three
years, therefore providing some level of cash flow stability,"
S&P stated.
Evolving industry dynamics could alter the competitive landscape,
and Brunswick Rail's limited scale and high customer
concentration represents one of the company's most prominent
business risks. JSC Russian Railways (BBB/Stable/--)--the
indirect owner of 45% of the freight car fleet in Russia--has
announced plans to sell off a majority stake in its subsidiary
JSC Freight One (BBB-/Stable/A-3) in 2011, which could introduce
new competitors or new market strategies to the Russian rail
freight market. The company's multiyear operating leases -- which
have an average remaining tenor of about three years -- and well-
developed credit risk policy, partially mitigate this risk.
"The stable outlook reflects our view that Brunswick Rail will
maintain an adequate liquidity position despite its considerable
refinancing needs. It also reflects our belief that the company
will maintain adjusted FFO to debt in the 15%-20% range and that
operating performance will remain robust, with strong utilization
rates and profitability levels," S&P noted.
"We could lower the rating if the company were to fail to
maintain adequate liquidity, especially given the maturity of its
August 2012 syndicated loan facility. Downside pressure could
arise from weakening economic conditions leading to lower
utilization rates and counterparty defaults. It could also arise
from increasing competition, or more aggressive financial
policies such as large debt-funded acquisitions without
corresponding lease contracts," S&P related.
"We consider upward rating movement to be unlikely in the near
term given Brunswick Rail's refinancing requirements in 2012,"
S&P stated.
KRAYINVESTBANK OJSC: Fitch Assigns 'B' LT Issuer Default Rating
---------------------------------------------------------------
Fitch Ratings has assigned Russia's OJSC Krayinvestbank (KIB) a
Long-term Issuer Default Rating (IDR) of 'B+' with a Stable
Outlook.
KIB's IDRs and Support Rating reflect the potential support that
KIB may receive if needed from Krasnodar Region (KR,
'BB'/Positive), which directly owns a 97.05% stake in the bank.
Fitch's view of the propensity to provide support is based on
KR's majority ownership and a track record of assistance to date,
including issuance of guarantees for the bank's borrowings,
indirect liquidity support (through local government-owned
entities), as well as provision of capital, including the planned
RUB2.5bn equity injection expected in Q411.
At the same time, Fitch considers the propensity of such support
to be constrained by the bank's limited systemic importance for
the region and corporate governance issues. In particular, Fitch
is concerned about KIB's significant exposure to construction and
real estate (roughly 2.3x of end-2010 IFRS equity) which, in the
agency's opinion, may to a large degree be in some way related to
officials within the current regional administration and/or the
bank's management.
In light of these concerns, the bank's Long-term IDR is unlikely
to be upgraded, even if KR's Long-term rating is upgraded to
'BB+'. This is reflected in KIB's Stable Outlook. Conversely,
downside pressure on KIB's Long-term IDR could arise if there was
any major weakening of the relationship between KR and the bank,
for example, as a result of changes in any key senior regional
officials (KR's governor's current term ends in April 2012,
although Fitch's base case expectation is that he will be
reappointed). A further marked increase in related party and
relationship lending could also give rise to downward pressure on
the bank's Long-term IDR if, in Fitch's view, this could make it
potentially more costly or less politically acceptable to support
the bank.
KIB's Viability Rating (VR) of 'b-' reflects the bank's small
franchise; modest profitability (ROE of 2.9% in 2010) and
significant construction exposure consisting of loans
(approximately 15% of end-2010 equity), investment property (60%
of equity), and bonds of local investment companies (1.2x
equity). The quality of the latter exposures is of particular
concern due to the companies' weak reported financial results.
According to KIB's representatives, these companies are investing
the proceeds from the bond issues in construction in KR.
The VR also considers the planned rapid expansion (management
forecasts 50% loan growth in 2011-2012), which is expected to be
partially funded by domestic bond issuance, increasing
refinancing risk. The targeted growth will also offset the
positive impact on capitalization of the planned (in Q411) RUB2.5
billion equity injection; the latter should result in an
improvement of the regulatory capital adequacy ratio to an
estimated 20% from a low 11.6% at end-H111, but this will likely
only be temporary.
On the positive side, the VR reflects reasonable reported loan
book quality metrics, with non-performing and restructured loans
of 4% and 12.1% of end-2010 loans, respectively, although these
ratios should be considered together with the higher risk asset
exposures outside the loan book. The improved regional operating
environment, including due to significant capital inflows related
to preparations for the 2014 Olympic Games in Sochi, is also
moderately positive, although the prevalence of investment
spending in the region could cause local banks to take on more
long-term, leveraged and higher risk exposures.
Funding is reasonably diversified, although it has weaknesses.
About 80% comes from customer accounts, approximately half of
which are retail. These are rather granular, but also costly.
The other half comprises corporate accounts, most of which come
from state-controlled companies, including the largest of
RUB3.2bn (15% of end-Q111 liabilities) belonging to a company
engaged in construction for the Sochi Olympics. Fitch attributes
the bank's ability to attract such customers to its regional
ownership and notes the potential vulnerability of such accounts
to changes in the bank's ownership and/or its relationship with
the regional authorities.
KIB is one of the largest banks in Krasnodar with a lending
market share of approximately 6%.
The rating actions are as follows:
-- Long-term foreign currency IDR: assigned at 'B+'; Stable
Outlook
-- Long-term local currency IDR: assigned at 'B+'; Stable
Outlook
-- National Long term Rating: assigned at 'A-(rus)'; Stable
Outlook
-- Short-term IDR: assigned at 'B'
-- Viability Rating: assigned at 'b-'
-- Support Rating: assigned at '4'
POMOSCH INSURANCE: S&P Assigns 'B-' Counterparty Credit Rating
--------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' long-term
counterparty credit and insurer financial strength ratings and
'ruA-' Russia national scale rating to Russia-based insurance
company Pomosch Insurance Company Ltd. (IC Pomosch). The outlook
is stable.
"The ratings on IC Pomosch reflect our view of the company's weak
competitive position in international terms, the high industry
and country risks in Russia, and the company's weak
capitalization. These factors are offset by IC Pomosch's marginal
operating performance and quality of investments," S&P stated.
IC Pomosch was established in 1995 as a regional insurer based in
St. Petersburg, predominantly focused on corporate property
insurance and travelers' medical insurance in the region. In
2007, the company opened a branch in Moscow, which created
significant business inflow in 2008, particularly, increasing
volumes of obligatory insurance that cover liabilities under
state contracts.
"We consider IC Pomosch's overall competitive position to be weak
in international terms, as reflected in the company's relatively
small size and generally low brand recognition in the Russian
insurance market, except for niche segments where it is well
represented. IC Pomosch's lack of regional presence and recent
penetration in new and highly competitive insurance lines are
additional constraints. We note that the company's competitive
position also reflects the high industry and country risks in
Russia," S&P stated.
In 2010, IC Pomosch was ranked No. 53 among direct insurers in
Russia, posting gross premiums written (GPW) of Russian ruble
(RUB) 1.6 billion (about $55 million). About 23% of the company's
GPW came from obligatory insurance that covers liabilities under
state contracts, and in this segment IC Pomosch had a leading
market share of 12%. The Russian insurance regulator imposed
obligatory insurance in 2005, but abolished it in August 2010.
"Owing to this, we believe that IC Pomosch's competitive position
could weaken in 2011. However, we consider that IC Pomosch could
partly compensate for the loss in this type of insurance through
growth in insurance of construction risks and liability
insurance, an area in which it ranks in the top 10, based on
GPW," S&P related.
"We assess IC Pomosch's capitalization as weak and weighed down
by weak risk-based capital adequacy, but supported by adequate
reinsurance protection. Capital adequacy, according to Standard &
Poor's risk-based insurance capital model, is weak: As of Dec.
31, 2010, available total adjusted capital (RUB571 million) was
65% lower than the level commensurate with the 'BBB' rating.
However, we note that IC Pomosch has increased its statutory
capital to RUB850 million, which exceeds the new regulatory
requirements of RUB480 million (effective Jan. 1, 2011) for
companies transacting reinsurance business," S&P stated.
"The quality of IC Pomosch's reinsurance program is adequate, in
our view. The company places about 79% of its outward reinsurance
with companies rated 'A-' or higher, which is on par with large
insurance companies in Russia," S&P related.
"We consider IC Pomosch's operating performance to be marginal,
reflected in a very high expense ratio, but very low loss ratios.
The net loss ratio was a low 29% in 2010 compared with 17% in
2009. This stemmed mainly from the low loss ratio relating to
obligatory insurance that covers liabilities under state
contracts, insurance of construction risks, and other liability
insurance. However, we note that the company's net expense ratio
is very high compared with that of regional peers. In 2010, the
net expense ratio was 75% compared with 82% in 2009. However, IC
Pomosch's net combined ratios increased to 104% in 2010 from 99%
in 2009," S&P stated.
"We believe that the quality of the company's investment
portfolio is positive for the rating. In 2010, the investment
portfolio constituted bonds (60% of the investment portfolio),
shares (15%), loans (3%), cash and cash equivalents (20%),
promissory notes (1%), and mutual funds (about 1%). In our view,
IC Pomosch's overall credit risk is moderate, reflecting the
company's investments in fixed-income instruments of marginal
credit quality. IC Pomosch is exposed to market risk through its
investments in equities that are subject to significant market
volatility. We note, however, that the company invests in the
equities of Russian blue-chip companies and currently aims to
decrease its equity exposure to less than 10% of the investment
portfolio. Net investment income totaled RUB14.9 million in 2010,
up from RUB0.7 million in 2009," S&P stated.
"The outlook is stable because we expect IC Pomosch to preserve
the marginal quality of its investments, while showing at least
marginal operational results in 2011 and beyond. We expect IC
Pomosch's competitive position to be weak overall, although the
company could successfully develop in particular niches. We do
not expect IC Pomosch's combined ratio to decrease to less than
90% in 2011-2012, owing to an expense ratio that is higher than
peers'," S&P related.
A significant deterioration of earnings, competitive position,
quality of reinsurance protection, or capitalization could lead
to negative rating actions.
A positive rating action is unlikely at this stage, but could
occur if IC Pomosch further improved its competitive standing, if
Standard & Poor's risk-based capital adequacy ratio for the
company increased to at least marginal levels, and if the other
credit indicators stayed at their current levels.
=========
S P A I N
=========
SANTANDER HIPOTECARIO: S&P Lowers Rating on Class F Notes to 'D'
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its credit rating on
Fondo de Titulizacion de Activos Santander Hipotecario 6's class
F notes.
At closing, the class F notes were used to fund the reserve fund
and are not backed by securitized assets. As of the last payment
date in August 2011, this class of notes has partially defaulted,
as only 59.58% of the interest due on these notes was paid. "We
have therefore lowered our rating on the class F notes to 'D
(sf)'," S&P stated.
"The rest of the notes, which we affirmed in July 2011, remain
unaffected, as there has been no depletion of the reserve fund
(which is at its required level) or significant deterioration in
the quality of the pool," S&P related.
"As of August 2011, the percentage of loans in arrears for more
than 90 days was 5.28%, up from 4.14% on the May 2011 interest
payment date (IPD), and defaulted loans represented 0.09% of the
outstanding balance of the assets, compared with 0.02% on the May
2011 IPD. These increases are normal, given the short seasoning
of this transaction, and we took them into account at closing
in our rating stability analysis," S&P stated.
The portfolio, originated by Banco Santander S.A., comprises
residential mortgage-backed loans granted to individuals in Spain
to buy a property.
Ratings List
Class Rating
To From
Fondo de Titulizacion de Activos Santander Hipotecario 6
EUR1.260 Billion Mortgage-Backed Notes
Rating Lowered
F D (sf) CCC- (sf)
* SPAIN: Debt-Laden Clubs Can't Take Refuge in Administration
-------------------------------------------------------------
Buenos Aires Herald reports that financially troubled Spanish
clubs will no longer be able to escape relegation by going into
administration after the government agreed a change in the law.
The move met with approval from the Spanish Players' Union (AFE)
who had listed the practice as one of their chief grievances when
they called a strike that delayed the start of this season's
league competition, Buenos Aires Herald relates.
"This reform . . . will prevent the undesirable use and abuse of
certain instruments of the bankruptcy law and ensure stability
and equality in sports competitions," Buenos Aires Herald quotes
the government as saying.
An increasing number of debt-laden clubs have gone into
administration recently, whereby Spanish law can override
competition rules that could have lead to them being relegated
for failing to pay their players, Buenos Aires Herald discloses.
A number of sides in La Liga have sought refuge from creditors,
recent examples being Real Zaragoza and Racing Santander, as have
more than half of second division clubs, Buenos Aires Herald
recounts.
Rival clubs say the rules surrounding the bankruptcy process have
been abused as an easy way for struggling teams to get out of
their predicament and preserve their league status, Buenos Aires
Herald notes.
===========
T U R K E Y
===========
EXPORT CREDIT: S&P Affirms 'BB/B' Foreign Currency Ratings
----------------------------------------------------------
Standard & Poor's Ratings Services assigned 'BBB-/A-3' local-
currency issuer credit ratings to the Export Credit Bank of
Turkey (Tuerk Eximbank). The long- and short-term foreign-
currency ratings were affirmed at 'BB' and 'B'. The outlook is
positive.
The rating action follows the raising of the long- and short-term
Local currency ratings on the Republic of Turkey (see 'Republic
of Turkey Local-Currency Ratings Raised To 'BBB-/A-3' On
Deepening Local Capital Markets; Outlook Positive,' Sept. 20,
2011).
The ratings on Tuerk Eximbank are equalized with those on the
Republic of Turkey, reflecting Standard & Poor's opinion that
there is an "almost certain" likelihood that the Turkish
government would provide timely and sufficient extraordinary
support to Tuerk Eximbank in case of financial distress. In
accordance with S&P's criteria for government-related entities
(GREs), its rating approach for Tuerk Eximbank is based on its
view of the bank's:
"Critical" role in supporting Turkish exports, which is a key
factor of national economic development; and
"Integral" link to the Turkish government through sole
sovereign ownership, government control of the board of
directors, and a guarantee on the ultimate recovery of losses
on the bank's sovereign lending.
Tuerk Eximbank is the official state export credit agency. It has
been mandated to support foreign trade, and Turkish contractors
and investors operating abroad, through credit, guarantee, and
insurance programs. The bank does not compete, but works closely,
with commercial banks, encouraging them to increase their support
for the export sector. As well as offering direct lending, the
bank also provides insurance and guarantees to Turkish commercial
banks to encourage them to finance export transactions backed by
sales made on deferred payment terms.
Various bodies govern Tuerk Eximbank, the highest-ranked being
the Supreme Advisory and Credit Guidance Committee, which is
chaired by the deputy prime minister in charge of the bank's
activities. The committee is the main decision-making authority
for developing the bank's strategy and sets limits for credit,
guarantees, and insurance transactions. The deputy prime minister
for the economy selects the board of directors, and Tuerk
Eximbank's general manager is named by a decree signed by the
same deputy prime minister in charge of the bank's activities,
the prime minister, and the Turkish president.
Strong government support for Tuerk Eximbank is also evident from
repeated capital contributions to the bank's equity base, either
directly to paid-in capital or to specific funds that are managed
by the bank and incorporated into its total shareholder funds. By
end-2010, paid-in capital from the government totaled Turkish
TRY2.0 billion, up from TRY1.3 billion at end-2008. In addition
to the contributions to paid-in capital, the Turkish treasury
gives the bank additional money from designated funds. If
requested, the treasury would support Tuerk Eximbank's funding
efforts by guaranteeing the bank's borrowings abroad.
The positive outlook on Tuerk Eximbank mirrors that on the
Republic of Turkey. As long as the state continues to provide
support, any change in the ratings on Turkey will result in a
similar rating action on Tuerk Eximbank.
"Conversely, any change in our assessment of Tuerk Eximbank's
critical role for, and integral link with, the government could
lead to downward pressure on the rating," S&P related.
===========================
U N I T E D K I N G D O M
===========================
MEZZVEST INVESTMENTS: Moody's Lifts EUR55MM Notes Rating to Caa1
----------------------------------------------------------------
Moody's Investors Service has upgraded the ratings of these notes
issued by Mezzvest Investments I Limited.:
Issuer: MezzVest Investments, Limited
-- EUR290MM Class A1 Secured Floating Rate Facilities, due
2023, Upgraded to Baa1 (sf); previously on Mar 26, 2010
Downgraded to Baa2 (sf)
-- EUR105MM Class A2 Secured Floating Rate Variable Funding
Facilities, due 2023, Upgraded to Baa1 (sf); previously on
Mar 26, 2010 Downgraded to Baa2 (sf)
-- EUR50MM Class B Secured Floating Rate Facilities, due 2023,
Upgraded to Ba3 (sf); previously on Mar 26, 2010 Downgraded
to B1 (sf)
-- EUR55MM Class C Secured Deferrable Floating Rate
Facilities, due 2023, Upgraded to Caa1 (sf); previously on
Mar 26, 2010 Downgraded to Caa2 (sf)
The Caa3 (sf) rating of Class D Variable Funding Facility remains
unchanged.
Ratings Rationale
Mezzvest Investments I Limited, issued in July 2007, is a single
currency Collateralised Loan Obligation ("CLO") backed by a
portfolio of European mezzanine and second lien loans, a number
of which pay some, or all, of their interest in kind (PIK). The
portfolio is managed by Mezzvest. This transaction will be in
reinvestment period until July 2012. However, due to the
portfolio management constraints placed upon the manager, the
underlying portfolio is currently nearly static.
The performing pool is highly concentrated, currently referencing
fifteen separate issuers with a diversity score of 8.
According to Moody's, the rating actions taken on the notes are
primarily a result of amortization of the senior notes. Moody's
notes that the Class A notes have been paid down by approximately
28.1% or EUR76.8 million since the rating action in March 2010.
As a result of the deleveraging, the overcollateralization ratios
have increased since the rating action in March 2010. As of the
latest trustee report dated August 31, 2011, the Class A/B and
Class C overcollateralization ratios are reported at 141.3% and
115.6% respectively, versus February 2010 levels of 121.1% and
109.3%, respectively.
Some improvement in the credit quality is observed through a
better average credit rating of the portfolio (as measured by the
weighted average rating factor "WARF"). As of the latest trustee
report dated August 2011, the WARF is currently 3170 compared to
3377 in the February 2010 report. 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.
In its base case, Moody's analyzed the underlying collateral pool
to have a performing par and principal proceeds balance of
EUR365.4 million, defaulted par of EUR137.5 million, a weighted
average default probability of 37.0% (consistent with a WARF of
4897), and a weighted average recovery rate upon default of
20.0%.
Moody's supplemented its base case analysis with further
scenarios contemplating lower recovery rate, sensitivity to
ratings migration and higher default probability, and higher
correlation on industries that constitute more than 8% of the
pool.
Moody's notes that the transaction's performance is highly
sensitive to the credit conditions of a few large single B
obligors, as the largest three obligors constitute 42.8% of the
performing pool. As a result, the notes ratings could subject to
more volatility than typically more diversified CLO structures.
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 2) the large
concentration of speculative-grade debt maturing between 2012 and
2015 which may create challenges for issuers to refinance. CLO
notes' performance may also be impacted by 1) the manager's
investment strategy and behavior and 2) divergence in legal
interpretation of CDO documentation by different transactional
parties due to embedded ambiguities.
Sources of additional performance uncertainties are:
1) Recovery of defaulted assets: The pool is exposed to a large
proportion of mezzanine loans, the recoveries on which are
subject to a high degree of volatility in the event of default.
2) Deleveraging: The main source of uncertainty in this
transaction is whether deleveraging from unscheduled principal
proceeds will continue and at what pace. Deleveraging may
accelerate due to high prepayment levels in the loan market
and/or collateral sales by the manager, which may have
significant impact on the notes' ratings.
3) Moody's also notes that 100% of the collateral pool consists
of debt obligations whose credit quality has been assessed
through Moody's credit estimates. Large single exposures to
obligors bearing a credit estimate have been subject to a stress
applicable to concentrated pools as per the report titled
"Updated Approach to the Usage of Credit Estimates in Rated
Transactions" published in October 2009.
The principal methodology used in this rating was "Moody's
Approach to Rating Collateralized Loan Obligations" published in
June 2011.
Due to the low industry diversity and the low granularity of the
collateral pool, Moody's CDOROMTM was used to simulate default
scenarios then applied as an input in the cash flow model.
Moody's also supplemented its modeling with scenario analysis to
assess the ratings impact of jump-to-default by certain large
obligors.
The cash flow model used for this transaction, whose description
can be found in the methodology listed above, is Moody's EMEA
Cash-Flow model.
In addition to the quantitative factors that are explicitly
modeled, qualitative factors are part of the rating committee
considerations. These qualitative factors include the structural
protections in each transaction, the recent deal performance in
the current market environment, the legal environment, specific
documentation features, the collateral manager's track record,
and the potential for selection bias in the portfolio. All
information available to rating committees, including
macroeconomic forecasts, input from other Moody's analytical
groups, market factors, and judgments regarding the nature and
severity of credit stress on the transactions, may influence the
final rating decision.
REFLECTIONS PRINT: Proposes Company Voluntary Arrangement
---------------------------------------------------------
Adam Hooker at PrintWeek reports that Reflections Print
Lamination has turned to a Company Voluntary Arrangement (CVA)
after being hit with GBP250,000 of bad debt this year.
According to PrintWeek, a meeting has been called for October 7,
2011, at which creditors will be offered 44p in the pound. There
is also a profit ratchet built into proposal to distribute 50% of
excess profits over forecast to be passed on to creditors,
PrintWeek notes.
Reflections managing director Luke Hastings told PrintWeek that
he had spoken to a number of creditors already and was hopeful
that the proposal would be accepted.
"I think 44p in the pound is quite a high figure for these type
of arrangements, you don't always see that. I have already had
good feedback; our creditors seem to be supportive," PrintWeek
quotes Mr. Hastings as saying.
The company has been the subject of widespread rumor for several
months, with many in the industry speculating that the company
would be sold in a pre-pack administration deal, PrintWeek
relates. However, Mr. Hastings, as cited by PrintWeek, said that
he did not want to go down that route.
In total Reflections' creditors list totals GBP5 million, with
GBP1.3 million owed to secured creditors and GBP2.6 million to
unsecured creditors and GBP882,000 to contingent creditors, which
provide services or financial products, PrintWeek discloses.
A further GBP31,000 is owed to directors Paul Hastings and Luke
Hastings, PrintWeek says.
Reflections Print Lamination is a finishing specialist.
===============
X X X X X X X X
===============
* EUROPE: To Recapitalize 16 Banks Close to Failing Stress Tests
----------------------------------------------------------------
Brooke Masters, Peggy Hollinger and Alex Barker at The Financial
Times report that European officials look set to speed up plans
to recapitalize the 16 banks that came close to failing last
summer's pan-EU stress tests as part of a coordinated effort to
reassure the markets about the strength of the 27-nation bloc's
banking sector.
According to the FT, a senior French official said the 16 banks
regarded to be close to the threshold would now have to seek new
funds immediately.
The move would affect mostly mid-tier banks. Seven are Spanish,
two are from Germany, the FT says. Greece and Portugal, and one
each from Italy, Cyprus and Slovenia, the FT discloses. The list
includes Germany's HSH Nordbank and Banco Popolare of Italy, the
FT notes.
The EU internal markets commissioner, Michel Barnier, as cited by
the FT, said the 16 banks that nearly failed the stress tests
"are judged to be fragile and must also be strengthened further.
We want the recapitalization for these banks to be by private
means. The era of bailing out banks must end. But I cannot of
course exclude the possibility that some of the above banks will
require state aid."
According to the FT, an EBA spokeswoman said "The EBA is working
with [national supervisors] to ensure a coordinated approach in
identifying and addressing such capital needs . . . [and] will be
reviewing the actions undertaken by those banks."
Banks that did better in the stress tests but are not yet in
compliance with the tough new capital requirements agreed last
winter by global regulators will be expected to accelerate their
"march towards the Basel III ratios", the French official, as
cited by the FT, said. The Basel III agreement gives banks until
2019 to be fully compliant, the FT notes.
When the European Banking Authority, the new pan-EU supervisor,
tested 91 banks against a stressed economic scenario, including
rating downgrades of sovereign debt, nine banks failed and were
told to raise more capital by the end of December, the FT
relates.
The 16 institutions that are now the focus of attention ended up
with core tier one capital ratios -- the key measure of financial
strength -- of 5 and 6%. The pass mark was 5%, the FT discloses.
The EBA had given those banks until April 2012 to implement plans
to shore up their capital buffers, the FT states.
The FT notes that while the banks are expected to turn to private
markets first, officials said that state aid may be required.
The other 14 banks on the list are: Espirito Santo and Banco
Portugues of Portugal; Piraeus Bank and Hellenic Postbank of
Greece; Banco Popular Espanol, Bankinter, Caixa Galicia, BFA-
Bankia, Banco C¡vica, Caixa Ontinyent, Banco De Sabadell of
Spain; Nova Ljubljanska Banka of Slovenia; Cyprus's Marfin
Popular Bank and Norddeutsche Landesbank of Germany, the FT
discloses.
* BOND PRICING: For the Week September 19 to September 23, 2011
---------------------------------------------------------------
Issuer Coupon Maturity Currency Price
------ ------ -------- -------- -----
AUSTRIA
-------
BA CREDITANSTALT 5.470 8/28/2013 EUR 60.88
BAWAG 5.400 2/12/2023 EUR 71.02
BAWAG 5.310 2/12/2023 EUR 70.48
BAWAG 5.430 2/26/2024 EUR 68.47
HAA-BANK INTL AG 5.250 10/27/2015 EUR 65.50
HAA-BANK INTL AG 5.270 4/7/2028 EUR 64.95
IMMOFINANZ 4.250 3/8/2018 EUR 3.34
OESTER VOLKSBK 4.810 7/29/2025 EUR 61.38
OESTER VOLKSBK 4.750 4/30/2021 EUR 68.16
OESTER VOLKSBK 5.270 2/8/2027 EUR 60.74
OESTER VOLKSBK 4.170 7/29/2015 EUR 65.13
BELGIUM
-------
ECONOCOM GROUP 4.000 6/1/2016 EUR 19.84
IDEAL STANDARD 11.750 5/1/2018 EUR 71.88
IDEAL STANDARD 11.750 5/1/2018 EUR 71.34
CYPRUS
------
CYPRUS GOVT BOND 6.600 10/26/2016 EUR 75.56
CYPRUS GOVT BOND 4.500 1/4/2017 EUR 68.28
CYPRUS GOVT BOND 4.500 2/15/2017 EUR 68.07
CYPRUS GOVT BOND 4.500 4/2/2017 EUR 67.87
CYPRUS GOVT BOND 5.600 4/15/2017 EUR 69.82
CYPRUS GOVT BOND 4.500 9/28/2017 EUR 66.90
CYPRUS GOVT BOND 5.100 1/29/2018 EUR 68.80
CYPRUS GOVT BOND 4.600 4/23/2018 EUR 66.41
CYPRUS GOVT BOND 4.600 10/23/2018 EUR 65.88
CYPRUS GOVT BOND 4.600 2/26/2019 EUR 65.75
CYPRUS GOVT BOND 6.100 6/24/2019 EUR 72.78
CYPRUS GOVT BOND 4.625 2/3/2020 EUR 64.36
CYPRUS GOVT BOND 6.100 4/20/2020 EUR 72.85
CYPRUS GOVT BOND 5.350 6/9/2020 EUR 68.81
CYPRUS GOVT BOND 6.000 6/9/2021 EUR 69.58
CYPRUS GOVT BOND 6.500 8/25/2021 EUR 71.16
CYPRUS GOVT BOND 5.000 6/9/2016 EUR 70.06
CYPRUS GOVT BOND 4.500 7/11/2016 EUR 69.35
CYPRUS GOVT BOND 4.500 10/9/2016 EUR 68.73
CYPRUS GOVT BOND 4.750 12/2/2015 EUR 71.54
CYPRUS GOVT BOND 3.750 11/1/2015 EUR 69.05
CYPRUS GOVT BOND 4.750 9/30/2015 EUR 72.24
CYPRUS GOVT BOND 5.250 6/9/2015 EUR 74.27
CYPRUS GOVT BOND 4.500 3/30/2016 EUR 70.03
CYPRUS GOVT BOND 4.500 1/2/2016 EUR 70.70
CYPRUS GOVT BOND 4.500 6/2/2016 EUR 69.35
MARFIN POPULAR 4.350 11/20/2014 EUR 51.63
REP OF CYPRUS 4.750 2/25/2016 EUR 72.42
REP OF CYPRUS 4.375 7/15/2014 EUR 76.52
DENMARK
-------
KOMMUNEKREDIT 0.500 12/14/2020 ZAR 44.92
FINLAND
-------
MUNI FINANCE PLC 0.500 3/17/2025 CAD 63.60
MUNI FINANCE PLC 0.500 4/27/2018 ZAR 58.76
MUNI FINANCE PLC 0.500 2/9/2016 ZAR 72.84
MUNI FINANCE PLC 0.500 4/26/2016 ZAR 71.80
MUNI FINANCE PLC 1.000 6/30/2017 ZAR 65.60
MUNI FINANCE PLC 0.500 11/25/2020 ZAR 47.88
MUNI FINANCE PLC 0.250 6/28/2040 CAD 24.72
FRANCE
------
AIR FRANCE-KLM 4.970 4/1/2015 EUR 11.32
ALCATEL-LUCENT 5.000 1/1/2015 EUR 3.21
ALTRAN TECHNOLOG 6.720 1/1/2015 EUR 4.54
ASSYSTEM 4.000 1/1/2017 EUR 19.81
ATOS ORIGIN SA 2.500 1/1/2016 EUR 48.86
AXA SA 5.250 4/16/2040 EUR 72.71
BNP PARIBAS 2.890 5/16/2036 JPY 72.56
CALYON 6.000 6/18/2047 EUR 18.18
CALYON 5.800 10/29/2029 USD 74.31
CAP GEMINI SOGET 3.500 1/1/2014 EUR 37.12
CAP GEMINI SOGET 1.000 1/1/2012 EUR 41.92
CGG VERITAS 1.750 1/1/2016 EUR 25.09
CLUB MEDITERRANE 5.000 6/8/2012 EUR 11.46
CLUB MEDITERRANE 6.110 11/1/2015 EUR 17.31
CMA CGM 8.875 4/15/2019 EUR 43.79
CMA CGM 8.500 4/15/2017 USD 80.35
CMA CGM 8.500 4/15/2017 USD 47.50
CMA CGM 8.875 4/15/2019 EUR 46.00
CREDIT AGRI CIB 6.220 3/17/2031 USD 75.84
CREDIT AGRI CIB 5.950 1/19/2031 USD 73.58
CREDIT AGRI CIB 6.050 1/14/2031 USD 74.49
CREDIT AGRI CIB 6.000 12/23/2030 USD 71.44
CREDIT AGRI CIB 5.400 12/9/2030 USD 68.43
CREDIT AGRI CIB 5.690 11/26/2030 USD 71.31
CREDIT AGRI CIB 5.080 11/23/2030 USD 65.48
CREDIT AGRI CIB 5.450 11/9/2030 USD 69.02
CREDIT AGRI CIB 6.150 2/11/2031 USD 75.06
CREDIT AGRI CIB 5.830 6/30/2031 USD 71.79
CREDIT AGRI CIB 5.350 10/29/2030 USD 68.13
CREDIT AGRI CIB 5.300 10/22/2030 USD 67.84
CREDIT AGRI CIB 5.250 10/18/2030 USD 67.35
CREDIT AGRI CIB 5.300 10/12/2030 USD 65.52
CREDIT AGRI CIB 5.300 10/7/2030 USD 67.70
CREDIT AGRI CIB 5.850 6/30/2031 USD 71.99
CREDIT AGRI CIB 4.910 11/3/2030 USD 64.92
CREDIT AGRI CIB 5.270 8/5/2030 USD 67.74
CREDIT AGRI CIB 5.610 6/15/2031 USD 69.70
CREDIT AGRI CIB 5.650 6/10/2031 USD 70.11
CREDIT AGRI CIB 5.880 4/8/2031 USD 73.88
CREDIT AGRI CIB 5.850 5/27/2031 USD 72.07
CREDIT AGRI CIB 4.850 9/17/2030 USD 63.40
CREDIT LOCAL FRA 3.750 5/26/2020 EUR 66.02
DEXIA CRED LOCAL 4.500 2/25/2020 EUR 70.52
DEXIA CRED LOCAL 4.550 4/2/2020 EUR 70.95
DEXIA MUNI AGNCY 1.000 12/23/2024 EUR 59.44
EUROPCAR GROUPE 9.375 4/15/2018 EUR 59.25
EUROPCAR GROUPE 9.375 4/15/2018 EUR 62.25
FAURECIA 4.500 1/1/2015 EUR 21.10
FONCIERE REGIONS 3.340 1/1/2017 EUR 72.79
GROUPAMA SA 7.875 10/27/2039 EUR 45.98
INGENICO 2.750 1/1/2017 EUR 41.47
SOC AIR FRANCE 2.750 4/1/2020 EUR 20.37
TEM 4.250 1/1/2015 EUR 52.18
GERMANY
-------
BHW BAUSPARKASSE 5.450 2/20/2023 EUR 69.19
BHW BAUSPARKASSE 5.600 4/14/2023 EUR 70.06
BHW BAUSPARKASSE 5.640 1/30/2024 EUR 68.20
COMMERZBANK AG 6.460 6/24/2022 EUR 63.95
COMMERZBANK AG 6.360 3/15/2022 EUR 63.89
COMMERZBANK AG 6.300 3/15/2022 EUR 63.74
COMMERZBANK AG 5.000 4/20/2018 EUR 35.61
COMMERZBANK AG 5.000 3/30/2018 EUR 35.59
COMMERZBANK AG 4.000 11/30/2017 EUR 35.63
COMMERZBANK AG 5.000 10/30/2017 EUR 70.92
DEUTSCHE BANK AG 5.010 3/11/2031 USD 74.20
DEUTSCHE BK LOND 4.750 12/16/2030 USD 73.91
DEUTSCHE BK SING 4.860 6/30/2031 USD 73.00
DEUTSCHE HYP HAN 5.300 11/20/2023 EUR 69.92
DRESDNER BANK AG 6.180 2/28/2023 EUR 60.00
DRESDNER BANK AG 6.550 4/14/2020 EUR 69.29
DRESDNER BANK AG 6.210 6/20/2022 EUR 62.67
DRESDNER BANK AG 5.700 7/31/2023 EUR 57.77
DRESDNER BANK AG 6.000 2/25/2020 EUR 66.96
DRESDNER BANK AG 7.350 6/13/2028 EUR 62.20
DRESDNER BANK AG 7.160 8/14/2024 EUR 63.88
DRESDNER BANK AG 5.290 5/31/2021 EUR 59.68
EUROHYPO AG 6.490 7/17/2017 EUR 4.88
EUROHYPO AG 3.830 9/21/2020 EUR 52.38
EUROHYPO AG 5.560 8/18/2023 EUR 55.00
EUROHYPO AG 5.110 8/6/2018 EUR 67.25
GOTHAER ALLG VER 5.527 9/29/2026 EUR 68.88
HECKLER & KOCH 9.500 5/15/2018 EUR 64.00
HECKLER & KOCH 9.500 5/15/2018 EUR 63.88
HEIDELBERG DRUCK 9.250 4/15/2018 EUR 62.16
HEIDELBERG DRUCK 9.250 4/15/2018 EUR 61.50
HSH NORDBANK AG 4.375 2/14/2017 EUR 49.66
L-BANK FOERDERBK 0.500 5/10/2027 CAD 56.23
RHEINISCHE HYPBK 6.600 5/29/2022 EUR 63.63
GREECE
------
HELLENIC RAILWAY 4.500 12/6/2016 JPY 39.98
HELLENIC REP I/L 2.300 7/25/2030 EUR 23.53
HELLENIC REP I/L 2.900 7/25/2025 EUR 21.97
HELLENIC REPUB 5.200 7/17/2034 EUR 32.38
HELLENIC REPUB 4.625 6/25/2013 USD 76.69
HELLENIC REPUB 4.590 4/8/2016 EUR 34.63
HELLENIC REPUB 5.000 3/11/2019 EUR 36.38
HELLENIC REPUB 6.140 4/14/2028 EUR 33.00
HELLENIC REPUB 2.125 7/5/2013 CHF 50.00
HELLENIC REPUBLI 6.250 6/19/2020 EUR 37.99
HELLENIC REPUBLI 5.900 10/22/2022 EUR 31.46
HELLENIC REPUBLI 4.700 3/20/2024 EUR 30.11
HELLENIC REPUBLI 5.300 3/20/2026 EUR 30.42
HELLENIC REPUBLI 4.500 9/20/2037 EUR 30.34
HELLENIC REPUBLI 4.600 9/20/2040 EUR 30.37
HELLENIC REPUBLI 4.300 3/20/2012 EUR 52.10
HELLENIC REPUBLI 5.250 5/18/2012 EUR 49.51
HELLENIC REPUBLI 5.250 6/20/2012 EUR 71.50
HELLENIC REPUBLI 1.000 6/30/2012 EUR 68.75
HELLENIC REPUBLI 4.100 8/20/2012 EUR 46.77
HELLENIC REPUBLI 4.506 3/31/2013 EUR 45.69
HELLENIC REPUBLI 4.600 5/20/2013 EUR 42.38
HELLENIC REPUBLI 7.500 5/20/2013 EUR 46.37
HELLENIC REPUBLI 3.900 7/3/2013 EUR 43.25
HELLENIC REPUBLI 4.427 7/31/2013 EUR 41.90
HELLENIC REPUBLI 4.000 8/20/2013 EUR 41.60
HELLENIC REPUBLI 4.520 9/30/2013 EUR 44.38
HELLENIC REPUBLI 6.500 1/11/2014 EUR 40.16
HELLENIC REPUBLI 4.500 5/20/2014 EUR 38.65
HELLENIC REPUBLI 4.500 7/1/2014 EUR 39.50
HELLENIC REPUBLI 3.985 7/25/2014 EUR 38.80
HELLENIC REPUBLI 5.500 8/20/2014 EUR 37.09
HELLENIC REPUBLI 4.113 9/30/2014 EUR 39.75
HELLENIC REPUBLI 3.700 7/20/2015 EUR 36.39
HELLENIC REPUBLI 6.100 8/20/2015 EUR 37.31
HELLENIC REPUBLI 3.702 9/30/2015 EUR 39.86
HELLENIC REPUBLI 3.700 11/10/2015 EUR 38.63
HELLENIC REPUBLI 3.600 7/20/2016 EUR 37.28
HELLENIC REPUBLI 4.020 9/13/2016 EUR 40.40
HELLENIC REPUBLI 4.225 3/1/2017 EUR 41.19
HELLENIC REPUBLI 5.900 4/20/2017 EUR 36.83
HELLENIC REPUBLI 4.675 10/9/2017 EUR 42.17
HELLENIC REPUBLI 4.590 4/3/2018 EUR 42.66
HELLENIC REPUBLI 4.600 7/20/2018 EUR 36.87
HELLENIC REPUBLI 6.000 7/19/2019 EUR 37.12
HELLENIC REPUBLI 6.500 10/22/2019 EUR 37.32
HELLENIC REPUBLI 4.300 7/20/2017 EUR 36.50
NATL BK GREECE 3.875 10/7/2016 EUR 56.47
GUERNSEY
--------
CALYON FIN GUER 6.000 9/4/2029 USD 75.19
CREDIT AGRICOLE 5.600 2/25/2030 USD 71.76
IRELAND
-------
AIB MORTGAGE BNK 5.000 3/1/2030 EUR 48.71
AIB MORTGAGE BNK 5.000 2/12/2030 EUR 48.75
AIB MORTGAGE BNK 4.875 6/29/2017 EUR 72.67
AIB MORTGAGE BNK 5.580 4/28/2028 EUR 54.30
ALLIED IRISH BKS 4.000 3/19/2015 EUR 73.43
ALLIED IRISH BKS 5.625 11/12/2014 EUR 69.39
ALLIED IRISH BKS 12.500 6/25/2035 GBP 28.75
ANGLO IRISH BANK 4.000 4/15/2015 EUR 72.43
BANK OF IRELAND 10.000 2/12/2020 GBP 49.25
BANK OF IRELAND 5.600 9/18/2023 EUR 39.00
BANK OF IRELAND 10.000 2/12/2020 EUR 30.00
BANK OF IRELAND 4.473 11/30/2016 EUR 55.50
BANK OF IRELAND 3.585 4/21/2015 EUR 63.38
BANK OF IRELAND 3.780 4/1/2015 EUR 74.27
BK IRELAND MTGE 5.450 3/1/2030 EUR 48.01
BK IRELAND MTGE 3.250 6/22/2015 EUR 74.44
BK IRELAND MTGE 5.400 11/6/2029 EUR 48.39
BK IRELAND MTGE 5.760 9/7/2029 EUR 51.00
BK IRELAND MTGE 5.360 10/12/2029 EUR 48.20
DEPFA ACS BANK 0.500 3/3/2025 CAD 41.35
DEPFA ACS BANK 4.900 8/24/2035 CAD 69.65
EBS BLDG SOCIETY 4.000 2/25/2015 EUR 71.94
IRISH LIFE PERM 4.000 3/10/2015 EUR 71.70
UT2 FUNDING PLC 5.321 6/30/2016 EUR 58.01
ITALY
-----
BANCO POPOLARE 6.375 5/31/2021 EUR 70.85
BTPS 4.000 2/1/2037 EUR 72.90
BTPS I/L 2.350 9/15/2035 EUR 69.35
BTPS I/L 2.550 9/15/2041 EUR 67.85
DEXIA CREDIOP 4.790 12/17/2043 EUR 70.98
INTESA SANPAOLO 2.882 4/20/2020 EUR 74.14
REP OF ITALY 2.870 5/19/2036 JPY 68.64
REP OF ITALY 2.200 9/15/2058 EUR 54.50
REP OF ITALY 4.850 6/11/2060 EUR 70.75
REP OF ITALY 2.000 9/15/2062 EUR 49.11
REP OF ITALY 1.850 9/15/2057 EUR 48.43
CONTROLINVESTE 3.000 1/28/2015 EUR 69.47
KION FINANCE 7.875 4/15/2018 EUR 73.25
KION FINANCE 7.875 4/15/2018 EUR 73.45
NETHERLANDS
-----------
APP INTL FINANCE 11.750 10/1/2005 USD 0.01
BK NED GEMEENTEN 0.500 6/22/2021 ZAR 42.35
BK NED GEMEENTEN 0.500 2/24/2025 CAD 63.36
BK NED GEMEENTEN 0.500 5/12/2021 ZAR 42.58
BK NED GEMEENTEN 0.500 3/3/2021 NZD 67.23
BK NED GEMEENTEN 0.500 3/29/2021 NZD 66.86
BLT FINANCE BV 7.500 5/15/2014 USD 48.50
BLT FINANCE BV 7.500 5/15/2014 USD 46.00
BRIT INSURANCE 6.625 12/9/2030 GBP 54.98
CEMEX FIN EUROPE 4.750 3/5/2014 EUR 71.31
EDP FINANCE BV 4.125 6/29/2020 EUR 72.42
EDP FINANCE BV 4.900 10/1/2019 USD 71.58
EDP FINANCE BV 4.900 10/1/2019 USD 74.00
ELEC DE CAR FIN 8.500 4/10/2018 USD 56.13
FINANCE & CREDIT 10.500 1/25/2014 USD 50.00
FRIESLAND BANK 4.210 12/29/2025 EUR 68.19
INDAH KIAT INTL 12.500 6/15/2006 USD 0.01
ING BANK NV 4.200 12/19/2035 EUR 68.59
ING VERZEKERING 6.375 5/7/2027 EUR 71.24
IVG FINANCE BV 1.750 3/29/2017 EUR 69.57
NORWAY
------
EKSPORTFINANS 0.500 5/9/2030 CAD 50.42
KOMMUNALBANKEN 0.500 5/25/2016 ZAR 71.77
KOMMUNALBANKEN 0.500 12/18/2015 ZAR 74.63
KOMMUNALBANKEN 0.500 1/27/2016 ZAR 73.91
KOMMUNALBANKEN 0.500 3/1/2016 ZAR 73.30
KOMMUNALBANKEN 0.500 3/24/2016 ZAR 72.86
KOMMUNALBANKEN 0.500 7/26/2016 ZAR 71.14
KOMMUNALBANKEN 0.500 7/29/2016 ZAR 70.15
KOMMUNALBANKEN 0.500 5/25/2018 ZAR 58.84
PORTUGAL
--------
BANCO COM PORTUG 3.750 10/8/2016 EUR 66.24
BANCO COM PORTUG 5.625 4/23/2014 EUR 68.49
BANCO COM PORTUG 4.750 6/22/2017 EUR 66.80
BANCO ESPIRITO 6.160 7/23/2015 EUR 70.25
BANCO ESPIRITO 4.600 1/26/2017 EUR 67.81
BANCO ESPIRITO 3.875 1/21/2015 EUR 68.42
BANCO ESPIRITO 6.875 7/15/2016 EUR 65.88
BANCO ESPIRITO 4.600 9/15/2016 EUR 69.68
BRISA 4.500 12/5/2016 EUR 70.98
CAIXA GERAL DEPO 4.250 1/27/2020 EUR 65.43
CAIXA GERAL DEPO 4.455 8/20/2017 EUR 71.75
CAIXA GERAL DEPO 4.750 2/14/2016 EUR 66.87
CAIXA GERAL DEPO 5.090 6/8/2016 EUR 74.23
CAIXA GERAL DEPO 3.875 12/6/2016 EUR 67.96
CAIXA GERAL DEPO 5.980 3/3/2028 EUR 47.63
CAIXA GERAL DEPO 5.380 10/1/2038 EUR 53.28
CAIXA GERAL DEPO 4.400 10/8/2019 EUR 58.87
CAIXA GERAL DEPO 5.500 11/13/2017 EUR 67.63
SPAIN
-----
APK ARKADA 17.500 5/23/2012 RUB 0.38
ARIZK 3.000 12/20/2030 RUB 50.43
DVTG-FINANS 17.000 8/29/2013 RUB 55.55
DVTG-FINANS 7.750 7/18/2013 RUB 20.29
IART 8.500 8/4/2013 RUB 1.00
AYT CEDULAS CAJA 3.750 6/30/2025 EUR 62.36
AYT CEDULAS CAJA 4.750 5/25/2027 EUR 70.04
AYT CEDULAS CAJA 3.750 12/14/2022 EUR 68.43
AYT CEDULAS CAJA 4.250 10/25/2023 EUR 71.97
BANCAJA 1.500 5/22/2018 EUR 65.91
BBVA SUB CAP UNI 2.750 10/22/2035 JPY 75.17
CAJA CASTIL-MAN 1.500 6/23/2021 EUR 59.00
CAJA MADRID 4.125 3/24/2036 EUR 68.66
CEDULAS TDA 6 FO 3.875 5/23/2025 EUR 63.53
CEDULAS TDA 6 FO 4.250 4/10/2031 EUR 60.59
CEDULAS TDA A-5 4.250 3/28/2027 EUR 64.19
COMUN AUTO CANAR 4.200 10/25/2036 EUR 68.17
COMUN AUTO CANAR 3.900 11/30/2035 EUR 64.84
COMUNIDAD BALEAR 4.063 11/23/2035 EUR 69.23
GEN DE CATALUNYA 4.220 4/26/2035 EUR 66.75
GEN DE CATALUNYA 2.750 3/24/2016 CHF 65.17
GEN DE CATALUNYA 2.355 11/10/2015 CHF 67.93
GEN DE CATALUNYA 2.315 9/10/2015 CHF 68.98
GEN DE CATALUNYA 4.690 10/28/2034 EUR 72.55
GENERAL DE ALQUI 2.750 8/20/2012 EUR 70.36
IM CEDULAS 5 3.500 6/15/2020 EUR 74.06
INSTIT CRDT OFCL 3.250 6/28/2024 CHF 73.34
INSTIT CRDT OFCL 2.570 10/22/2021 CHF 71.54
JUNTA ANDALUCIA 4.250 10/31/2036 EUR 68.29
UNITED KINGDOM
--------------
ABBEY NATL TREAS 5.000 8/26/2030 USD 64.13
ALPHA CREDIT GRP 4.500 6/21/2013 EUR 68.38
ALPHA CREDIT GRP 3.250 2/25/2013 EUR 70.75
ALPHA CREDIT GRP 4.400 2/12/2013 EUR 73.25
ALPHA CREDIT GRP 5.500 6/20/2013 EUR 71.75
ALPHA CREDIT GRP 6.000 6/20/2014 EUR 65.38
BAKKAVOR FIN 2 8.250 2/15/2018 GBP 68.00
BARCLAYS BK PLC 5.420 5/5/2031 USD 75.62
BARCLAYS BK PLC 5.100 5/26/2031 USD 73.93
BARCLAYS BK PLC 5.390 8/4/2031 USD 75.26
BARCLAYS BK PLC 5.200 8/25/2031 USD 73.03
BARCLAYS BK PLC 5.230 8/26/2031 USD 73.08
BARCLAYS BK PLC 8.000 6/29/2012 USD 8.56
BARCLAYS BK PLC 10.000 7/20/2012 USD 6.22
BARCLAYS BK PLC 7.000 7/27/2012 USD 8.65
BARCLAYS BK PLC 11.000 7/27/2012 USD 7.58
BARCLAYS BK PLC 9.400 7/31/2012 USD 10.21
BARCLAYS BK PLC 10.800 7/31/2012 USD 25.08
BARCLAYS BK PLC 9.250 8/31/2012 USD 31.83
BARCLAYS BK PLC 9.500 8/31/2012 USD 18.23
BARCLAYS BK PLC 8.000 9/11/2012 USD 9.56
BARCLAYS BK PLC 8.000 9/11/2012 USD 9.96
BARCLAYS BK PLC 5.200 8/29/2031 USD 72.71
BARCLAYS BK PLC 5.250 8/29/2031 USD 72.82
BARCLAYS BK PLC 5.000 6/3/2041 USD 67.83
BARCLAYS BK PLC 13.050 4/27/2012 USD 25.83
BARCLAYS BK PLC 12.950 4/20/2012 USD 23.45
BARCLAYS BK PLC 10.650 1/31/2012 USD 34.34
BARCLAYS BK PLC 9.250 1/31/2012 USD 9.42
BARCLAYS BK PLC 10.350 1/23/2012 USD 26.49
BARCLAYS BK PLC 8.550 1/23/2012 USD 10.67
BARCLAYS BK PLC 8.800 9/22/2011 USD 15.57
BARCLAYS BK PLC 8.750 9/22/2011 USD 71.36
BARCLAYS BK PLC 7.500 9/22/2011 USD 17.07
CO-OPERATIVE BNK 5.875 3/28/2033 GBP 67.81
EFG HELLAS PLC 5.400 11/2/2047 EUR 14.25
EFG HELLAS PLC 6.010 1/9/2036 EUR 33.13
EFG HELLAS PLC 4.375 2/11/2013 EUR 64.25
EMPORIKI GRP FIN 4.000 2/28/2013 EUR 63.13
EMPORIKI GRP FIN 4.350 7/22/2014 EUR 46.63
EMPORIKI GRP FIN 4.000 2/28/2013 EUR 63.13
ENTERPRISE INNS 6.375 9/26/2031 GBP 60.25
ENTERPRISE INNS 6.500 12/6/2018 GBP 71.28
ENTERPRISE INNS 6.875 5/9/2025 GBP 64.00
ENTERPRISE INNS 6.875 2/15/2021 GBP 66.13
ESSAR ENERGY 4.250 2/1/2016 USD 62.94
F&C ASSET MNGMT 6.750 12/20/2026 GBP 63.99
GALA ELECTRIC CA 11.500 6/1/2019 GBP 68.32
GALA ELECTRIC CA 11.500 6/1/2019 GBP 67.83
HEALTHCARE SUPP 2.067 2/19/2043 GBP 93.38
INEOS GRP HLDG 7.875 2/15/2016 EUR 72.21
INEOS GRP HLDG 7.875 2/15/2016 EUR 72.50
OTE PLC 5.000 8/5/2013 EUR 61.93
OTE PLC 7.250 4/8/2014 EUR 60.03
OTE PLC 4.625 5/20/2016 EUR 51.62
UNIQUE PUB FIN 5.659 6/30/2027 GBP 62.58
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than US$3 per
share in public markets. At first glance, this list may look
like the definitive compilation of stocks that are ideal to sell
short. Don't be fooled. Assets, for example, reported at
historical cost net of depreciation may understate the true value
of a firm's assets. A company may establish reserves on its
balance sheet for liabilities that may never materialize. The
prices at which equity securities trade in public market are
determined by more than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Thursday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com
Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/booksto order any title today.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Europe is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland
USA. Valerie U. Pascual, Marites O. Claro, Rousel Elaine T.
Fernandez, Joy A. Agravante, Psyche A. Castillon, Ivy B.
Magdadaro, Frauline S. Abangan and Peter A. Chapman, Editors.
Copyright 2011. All rights reserved. ISSN 1529-2754.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.
Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.
The TCR Europe subscription rate is US$625 per half-year,
delivered via e-mail. Additional e-mail subscriptions for
members of the same firm for the term of the initial subscription
or balance thereof are US$25 each. For subscription information,
contact Christopher Beard at 240/629-3300.
* * * End of Transmission * * *