TCREUR_Public/120217.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

                           E U R O P E

              Friday, February 17, 2012, Vol. 13, No. 35

                            Headlines



B E L G I U M

ONTEX IV: S&P Affirms 'B+' Corp. Credit Rating; Outlook Negative


C Y P R U S

BANK OF CYPRUS: Fitch Assigns Rating to Mortgage Covered Bonds


F R A N C E

FINANCIERE SPIE: S&P Assigns 'B' Long-Term Corp. Credit Rating


I R E L A N D

CELF LOAN: S&P Raises Rating on Class E Notes to 'CCC+'
EGRET FUNDING: S&P Raises Rating on Class E Notes to 'B (sf)'


P O R T U G A L

BANCO SANTANDER: S&P Lowers Counterparty Credit Rating to 'BB'


U N I T E D   K I N G D O M

EUROSAIL 2007-4BL: S&P Cuts Ratings on Two Note Classes to 'CCC'
UROPA 2007-1B: S&P Lowers Rating on Class B2A Notes to 'B-'
VIRGIN MEDIA: Fitch Affirms 'BB+' Long-Term Issuer Default Rating


X X X X X X X X

* BOOK REVIEW: Kenneth M. Davidson's Megamergers


                            *********


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B E L G I U M
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ONTEX IV: S&P Affirms 'B+' Corp. Credit Rating; Outlook Negative
----------------------------------------------------------------
Standard & Poor's Ratings Services revised the outlook on
Belgium-based private-label hygienic disposables manufacturer
Ontex IV S.A. (Ontex) to negative from stable. "At the same time,
we affirmed our long-term corporate credit rating on Ontex at
'B+'," S&P sid.

"We also affirmed our 'B+' issue rating on Ontex's EUR320 million
7.5% senior secured notes due 2018, and EUR280 million floating-
rate senior secured notes due 2018. The recovery rating on these
instruments is unchanged at '4', indicating our expectation of
average (30%-50%) recovery prospects in the event of a payment
default," S&P said.

"In addition, we affirmed our 'B-' issue rating on the group's
EUR235 million 9% senior unsecured notes due 2019. The recovery
rating on these notes is unchanged at '6', indicating our
expectation of negligible (0%-10%) recovery prospects in the
event of payment default," S&P said.

"The outlook revision reflects the deterioration in Ontex's
credit metrics in the first nine months of 2011, and our view
that the group may not be able to restore its debt protection
metrics to levels that we consider to be in line with the 'B+'
rating in 2012. Accordingly, we have revised downward our
assessment of Ontex's business risk profile to 'fair' from
'satisfactory.' This also reflects our view of the group's
declining profitability and increased competition from branded
product manufacturers," S&P said.

"In the first nine months of 2011, Ontex's operating margins were
lower than we had previously anticipated. This followed prolonged
raw material price inflation (in particular for oil-based
adhesives and fluff pulp) and intensified price competition from
branded players. As a result, Ontex's Standard & Poor's-adjusted
EBITDA margin declined to about 11.3% in the 12 months to Sept.
30, 2011, from 13.9% in the 12 months to Dec. 31, 2010. We
anticipate that the group's EBITDA for the full year ended Dec.
31, 2011, will be EUR20 million-EUR30 million lower than our
earlier forecast of EUR165 million," S&P said.

"In our view, there are risks associated with Ontex's ability to
generate positive free operating cash flow (FOCF) and bring its
ratio of adjusted EBITDA to cash interest above 2x over the next
12 months, due to its declining EBITDA margins," S&P said.

"We could take a negative rating action if Ontex's margins were
to continue to decline such that the group were unable to
generate positive FOCF or achieve and maintain adjusted EBITDA to
cash interest of 2x. We believe that ratings downside could stem
from extraordinary spikes in raw material prices and/or
deterioration in top-line growth arising from intensified price
competition," S&P said.

"We could revise the outlook to stable if Ontex were able to
maintain adjusted EBITDA to cash interest in excess of 2x, which
we consider to be commensurate with the 'B+' rating. We believe
that Ontex could achieve this if its revenues were to increase at
a low-single-digit rate in 2012, and if the group's EBITDA margin
were to improve to the high end of our forecast range of 10.5%-
11.5%," S&P said.


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C Y P R U S
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BANK OF CYPRUS: Fitch Assigns Rating to Mortgage Covered Bonds
--------------------------------------------------------------
Fitch Ratings has assigned Bank of Cyprus Public Company Ltd's
(Bank of Cyprus; 'BB+'/Negative /'B') Cypriot mortgage covered
bonds a 'BBB-' rating.  The EUR1 billion covered bonds issued
under the bank's EUR5 billion program are secured by Cypriot
residential mortgage loans (Cypriot Pool) and represent direct
and unconditional obligations of Bank of Cyprus.

Separately, under the same program, there are currently EUR700
million covered bonds (Greek Pool) outstanding rated 'BBB-'/RWN
and secured by Greek residential mortgage assets.  The aggregate
EUR1.7 billion bonds under the two series are respectively
secured by the Cypriot Pool and the Greek Pool with no cross-
collateralization provision in place.  The bonds are issued under
Cyprus's dedicated covered bond framework and regulated by the
Central Bank of Cyprus.

The combination of Bank of Cyprus's 'BB+' Long-term Issuer
Default Rating (IDR) and the 70% Discontinuity Factor (D-Factor)
assigned to the program would allow the covered bonds to be rated
as high as 'BBB-' on a probability of default (PD) basis.
However, the 10.9% minimum over-collateralization (OC) that the
issuer commits to only allows for equalization of the rating of
the covered bonds on a PD basis with Bank of Cyprus's IDR.  Based
on this level of OC, the covered bonds can only be rated one
notch higher at 'BBB-' after taking into account recoveries from
the cover pool in the event of a covered bonds default.

The assigned D-Factor of 70% is mainly driven by Fitch's
assessment of the likelihood of a pool of Cypriot residential
mortgage assets being liquidated, following an assumed default of
the issuer, within the one-year timeframe allowed by the maximum
extension on the bonds' maturity date.  In Fitch's view, this
timeframe only allows a limited differential of one notch between
Bank of Cyprus's IDR and the covered bonds rating on a PD basis
and thus a D-Factor of 70% has been assigned to the program. This
constitutes an exception from the determination of Fitch's D-
Factor as a weighted score of four components, namely asset
segregation, liquidity gaps, alternative management and covered
bonds oversight.  This criteria deviation is largely due to the
low investment grade rating ('BBB-') of the jurisdiction where
the assets are located, and the presumed challenging market
conditions for the sale or refinancing of a Cypriot mortgage loan
portfolio in case of need.  The D-Factor assessment further
incorporates the comfort gained from the asset segregation
structure, a provision for the appointment of a substitute
servicer by the trustee or the Central Bank of Cyprus, as well as
Bank of Cyprus's operational capacity.  Everything else equal,
the 'BBB-' rating on the covered bonds could be maintained as
long as the issuer's IDR is at least 'BB+'.

As of end-December 2011, the cover pool consisted of first-lien
mortgage loans granted to 13,477 borrowers and secured by
properties located across the Republic of Cyprus.  The pool has
around three years seasoning with the Fitch-indexed current loan-
to-value (LTV) ratio standing low at 48.9%.  The property
collateral is geographically concentrated around the capital of
Nicosia (45.2%), with the rest distributed among the coastal
areas of Limassol (30.2%), Larnaca (12.7%), Paphos (8%) and
Famagusta (3.9%).

Fitch has developed mortgage loss criteria assumptions for
Cyprus, analysing market information and historical asset
performance data provided from domestic financial institutions,
regulatory authorities and independent real estate market
participants.  Among other findings, Fitch identified a
significant divergence in house price performance and outlook
between the mainland (Nicosia) and the various coastal areas.
Such divergence is attributed to a strong component of external
demand for properties located in the more touristic coastal
areas, rendering them more volatile and therefore prone to higher
market value declines.  At a 'BBB-' rating scenario, Fitch
assumes the foreclosure process in Cyprus taking up to seven
years to complete -- the highest among any other European
jurisdiction -- owing to specific legal issues and pronounced
public sector inefficiencies.

Overall, Fitch calculated an expected credit loss of 3% for the
mortgage cover pool at a 'BBB-' scenario, comprising a cumulative
weighted average frequency of foreclosure (WAFF) of 16.3% and a
weighted average recovery rate (WARR) of 81.9%.

In the absence of any interest rate hedging, the program is
exposed to interest rate and basis risk due to mismatches between
the fixed or floating rate from the mortgage loans and the
Euribor-yielding covered bonds.  Both the cover assets and the
covered bonds are euro-denominated, thus no foreign currency risk
is present.

Fitch compared the cash flows from the cover pool in a wind-down
situation, subject to stressed defaults and losses, and under the
management of a third party, to the payments due under the
covered bonds.  The weighted-average residual maturities of cover
assets and liabilities are 11.0 and 3.0 years, respectively.
Fitch assumes the residual maturity mismatches would be bridged
through a portfolio sale occurring at a discounted sale price
during the 12-month extension window of the program.

The total amount of covered bonds outstanding is EUR1 billion
representing 90.1% of the EUR1.109bn cover pool balance.  This
level of asset coverage corresponds to an OC level of 10.9%
(before adjustment for set-off risk from deposits).  Fitch tested
the ability of the OC to withstand a 'BBB-' stress scenario, and
found that recoveries from the covered bonds assumed to be in
default were sufficient to grant a one-notch uplift above the
bank's IDR.  The level of OC supporting a given rating will be
affected, among others, by the profile of cover assets versus
covered bonds.  It cannot be assumed that a given OC supporting
the rating will remain stable over time.


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F R A N C E
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FINANCIERE SPIE: S&P Assigns 'B' Long-Term Corp. Credit Rating
--------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' long-term
corporate credit rating to France-based provider of multi-
technical services Financiere SPIE S.A. (SPIE). The outlook is
negative.

"At the same time, we assigned our issue rating of 'B' to the
EUR1,085 million senior secured credit facilities borrowed by
Clayax Acquisition 4 SAS (French Bidco). These facilities
comprise the revolving credit facility (RCF), the capital
expenditure (capex) facility, the term loan A, and the term loan
B1. The recovery rating on these facilities is '3', indicating
our expectation of meaningful (50%-70%) recovery for debtholders
in the event of a payment default," S&P said.

"We also assigned our issue rating of 'CCC+' to the EUR375
million bridge loan borrowed by Spie Bondco 3 S.C.A. The recovery
rating on this loan is '6', indicating our expectation of
negligible (0%-10%) recovery for noteholders in the event of a
payment default," S&P said.

"Finally, we withdrew our 'B' issue and '3' recovery ratings on
SPIE's EUR250 million term loan B2 because the company has
cancelled this facility," S&P said.

"The rating on SPIE reflects our view of the company's current
capital structure. This structure includes a EUR375 million
bridge loan that was established in August 2011 with a view to
refinancing it with a EUR375 million bond. As this bond has not
been issued, the bridge loan will be extended automatically for
another seven years from August 2012. The bridge loan becomes
more expensive as time passes, and therefore we assume that SPIE
will substitute it for a bond as soon as market conditions
permit," S&P said.

"We see a risk that SPIE's financial ratios may turn lower than
the minimum levels we would consider commensurate for the rating.
In particular, we would look to the company to maintain at least
EBITDA interest coverage of about 2x and FFO to debt above 6%
(improving toward 10% in the coming years) in 2012 to keep the
current rating. These risks would crystallize, in our view, under
a downside operating scenario assuming revenue growth of about
2.0% and an EBITDA margin of about 5.5%, compared with more than
4.0% and 6.5%, respectively, under our baseline scenario. The
latter assumes a weaker economic environment in France than is
currently the case, but would likely support, in our view, credit
ratios commensurate with the current rating," S&P said.

"We could therefore lower the rating if a sizable shortfall in
sales and earnings constrained SPIE's ability to service its
debt, in turn reducing EBITDA cash interest coverage to less than
1.5x and FFO to debt to less than 6%. The rating could also come
under pressure if SPIE's free operating cash flow turns negative
following shortfalls in sales and earnings. We note that in 2008-
2009, SPIE was able to improve its EBITDA margin on flat revenues
despite operating in a weak economic environment. Nevertheless,
such a performance may be hard to repeat given that the EBITDA
margin is higher than it was three years ago. Given SPIE's very
high leverage, any small deterioration in operating results could
jeopardize an improvement of the ratios toward levels more
consistent with the current rating," S&P said.

"Despite a weakening economic environment, we could revise the
outlook to stable in the coming quarters if SPIE maintains sound
cash generation, interest coverage at about 2x, and demonstrates
steady deleveraging," S&P said.


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I R E L A N D
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CELF LOAN: S&P Raises Rating on Class E Notes to 'CCC+'
-------------------------------------------------------
Standard & Poor's Ratings Services raised its credit ratings on
CELF Loan Partners III PLC's class A-1, B-1, B-2, C, D, and E
notes, and the class T combination (T Combo) notes. "At the same
time, we affirmed our rating on the class A-2 notes," S&P said.

Specifically, S&P has raised its ratings on:

   The class A-1 notes to 'AAA (sf)' from 'AA+ (sf)';

   The class B-1 notes to 'A+ (sf)' from 'BBB+ (sf)';

   The class B-2 notes to 'A+ (sf)' from 'BBB+ (sf)';

   The class C notes to 'BBB- (sf)' from 'BB+ (sf)';

   The class D notes to 'BB (sf)' from 'B+ (sf)';

   The class E notes to 'CCC+ (sf)' from 'CCC- (sf)'; and

   The class T Combo notes to 'BB (sf)' from 'CCC (sf)'.

"We have also affirmed our 'AA- (sf)' rating on the class A-2
notes," S&P said.

"The rating actions follow our assessment of the transaction's
performance and take into account recent developments in the
transaction," S&P said.

"For our review of the transaction's performance, we used data
from the trustee report dated Nov. 22, 2011, in addition to our
cash flow analysis. We have taken into account recent
developments in the transaction and have applied our 2010
counterparty criteria," S&P said.

"From our analysis, we have observed that the credit quality of
the portfolio has improved since we last reviewed the
transaction. We have also observed a decrease in the proportion
of defaulted assets (rated 'CC', 'SD' [selective default], and
'D') and in the proportion of assets that we consider to be rated
in the 'CCC' category ('CCC+', 'CCC', and 'CCC-')," S&P said.

"Credit enhancement for all classes of notes and the weighted-
average spread earned on the collateral pool have increased,
which in our view support higher ratings on the class A-1, B-1,
B-2, C, D, and E notes, and the class T Combo notes. We have also
observed from the trustee report that the overcollateralization
test results for all classes have improved and are all passing at
their required levels. In addition, our analysis indicates that
the weighted-average maturity of the portfolio since our last
transaction update has decreased, which has led to a reduction in
our scenario default rates (SDR) for all rating categories," S&P
said.

"We subjected the capital structure to a cash flow analysis to
determine the break-even default rate. In our analysis, we used
the reported portfolio balance that we consider to be performing,
the principal cash balance, the current weighted-average spread,
and the weighted-average recovery rates that we considered to be
appropriate. We incorporated various cash flow stress scenarios
using various default patterns, levels, and timings for each
liability rating category, in conjunction with different interest
rate stress scenarios," S&P said.

"Taking into account our credit and cash flow analyses and also
our counterparty criteria, we consider the credit enhancement
available to the class A-1, B-1, B-2, C, D, and E notes and the T
Combo notes to be commensurate with higher rating levels. We have
therefore raised our ratings on these classes of notes," S&P
said.

"Although several positive indicators show an improvement in the
transaction's overall performance since our previous rating
review, our analysis indicates that the level of credit
enhancement available to the class A-2 notes is currently unable
to withstand our stress scenarios and probabilities of default at
any higher level than their current rating levels. We have
therefore affirmed our 'AA-(sf)' credit rating on the class A-2
notes," S&P said.

"The ratings on the class E notes is constrained by the
application of the largest obligor default test, a supplemental
stress test we introduced in our 2009 criteria update for
corporate collateralized debt obligations (CDOs)," S&P said.

             Standard & Poor's 17g-7 Disclosure Report

SEC Rule 17g-7 requires an NRSRO, for any report accompanying a
credit rating relating to an asset-backed security as defined in
the Rule, to include a description of the representations,
warranties and enforcement mechanisms available to investors and
a description of how they differ from the Represent ations,
warranties and enforcement mechanisms in issuances of similar
securities. The Rule applies to in-scope securities initially
rated (including preliminary ratings) on or after Sept. 26, 2011.

If applicable, the Standard & Poor's 17g-7 Disclosure Reports
included in this credit rating report are available at:

        http://standardandpoorsdisclosure-17g7.com

Ratings List

Class               Rating
             To               From

CELF Loan Partners III PLC
EUR528.5 Million Secured Floating-Rate Notes

Ratings Raised

A-1          AAA (sf)         AA+ (sf)
B-1          A+ (sf)          BBB+ (sf)
B-2          A+ (sf)          BBB+ (sf)
C            BBB- (sf)        BB + (sf)
D            BB (sf)          B+ (sf)
E            CCC+ (sf)        CCC- (sf)
T Combo      BB (sf)          CCC (sf)

Rating Affirmed

A-2          AA- (sf)


EGRET FUNDING: S&P Raises Rating on Class E Notes to 'B (sf)'
-------------------------------------------------------------
Standard & Poor's Ratings Services raised its credit ratings on
Egret Funding CLO I PLC's class A, B, D, and E notes. "At the
same time, we affirmed our rating on the class C notes," S&P
said.

Specifically, S&P has raised its rating on:

   The class A notes to 'AA- (sf)' from 'A+ (sf)';

   The class B notes to 'A- (sf)' from 'BBB (sf)';

   The class D notes to 'BB- (sf)' from 'B (sf)'; and

   The class E notes to 'B (sf)' from 'CCC (sf)'.

"We have also affirmed our rating on the class C notes at 'BB+
(sf)," S&P said.

"The  rating actions follow our assessment of the transaction's
performance and our application of the relevant criteria for
transactions of this type," S&P said.

"For our review of the transaction's performance, we used data
from the trustee report dated Dec. 8, 2011, in addition to our
cash flow analysis. We have taken into account recent
developments in the transaction and have applied our 2010
counterparty criteria as well as our cash flow criteria," S&P
said.

"From our analysis, we have observed that the credit quality of
the portfolio has improved since we last reviewed the
transaction. We have also observed a large decrease in the
proportion of assets that we consider to be rated in the 'CCC'
category," S&P said.

"The weighted-average spread earned on the collateral pool has
increased, which, in our view, supports higher ratings on the
class A, B, D, and E notes. We have also observed from the
trustee report that the overcollateralization test results for
all classes have improved," S&P said.

"In addition, our analysis indicates that the weighted-average
maturity of the portfolio since our last transaction update has
decreased, which has led to a reduction in our scenario default
rates for all rating categories," S&P said.

"We subjected the capital structure to a cash flow analysis to
determine the break-even default rate. In our analysis, we used
the reported portfolio balance that we consider to be performing,
the principal cash balance, the current weighted-average spread,
and the weighted-average recovery rates that we considered to be
appropriate. We incorporated various cash flow stress scenarios
using various default patterns, levels, and timings for each
liability rating category, in conjunction with different
interest-rate stress scenarios," S&P said.

"Taking into account our credit and cash flow analyses and our
2010 counterparty criteria, we consider the credit enhancement
available to the class A, B, D, and E notes to be commensurate
with higher rating levels. We have therefore raised our ratings
on these classes of notes," S&P said.

"The credit enhancement available to the class C notes is
commensurate with the current rating. We have therefore affirmed
our rating on this class of notes," S&P said.

"None of the notes are constrained by the application of the
largest obligor default test, a supplemental stress test we
introduced in our 2009 criteria update for corporate
collateralized debt obligations (CDOs)," S&P said.

Egret Funding CLO I is a cash collateralized loan obligation
(CLO)
transaction, which closed in December 2006, that securitizes
loans to primarily speculative-grade corporate firms.

             Standard & Poor's 17g-7 Disclosure Report

SEC Rule 17g-7 requires an NRSRO, for any report accompanying a
credit rating relating to an asset-backed security as defined in
the Rule, to include a description of the representations,
warranties and enforcement mechanisms available to investors and
a description of how they differ from the Represent ations,
warranties and enforcement mechanisms in issuances of similar
securities. The Rule applies to in-scope securities initially
rated (including preliminary ratings) on or after Sept. 26, 2011.

If applicable, the Standard & Poor's 17g-7 Disclosure Reports
included in this credit rating report are available at:

        http://standardandpoorsdisclosure-17g7.com

Ratings List

Class              Rating
           To               From

Egret Funding CLO I
EUR432.9 Million Floating-Rate Notes

Ratings Raised

A          AA- (sf)      A+ (sf)
B          A- (sf)      BBB (sf)
D          BB- (sf)       B (sf)
E          B (sf)       CCC (sf)

Ratings Affirmed

C         BB+ (sf)      BB+ (sf)


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P O R T U G A L
===============


BANCO SANTANDER: S&P Lowers Counterparty Credit Rating to 'BB'
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on seven
Portugal-based financial institutions. Standard & Poor's also
removed these ratings from CreditWatch with negative
implications, where they were placed on Dec. 7, 2011, or Jan. 31,
2012. The outlook on the long-term ratings is negative.

"The rating actions follow the lowering of the long- and short-
term sovereign credit ratings on the Republic of Portugal
(BB/Negative/B) and our subsequent revision of our Banking
Industry Country Risk Assessment (BICRA) on Portugal to group '7'
from group '5'. The revision of the BICRA was the result of our
revision of the economic risk score to '7' from '6' and of the
industry risk score to '6' from '5') (see 'BICRA On Portugal
Revised To Group '7' From Group '5' Following Sovereign
Downgrade,' published Feb. 14, 2012)," S&P said.

"We lowered our long-term counterparty credit ratings on Banco
Santander Totta S.A., Banco BPI S.A. (BPI), BPI's core subsidiary
Banco Portugues de Investimento S.A., Caixa Geral de Depositos
S.A. (CGD), and Banco Comercial Portugues S.A. (Millennium bcp)
by two notches. In addition, we lowered our long-term
counterparty credit ratings on Banco Espirito Santo S.A. (BES)
and its core subsidiary, Banco Espirito Santo de Investimento
S.A. (BESI), by one notch," S&P said.

"The downgrade of Santander Totta solely reflects the downgrade
of the sovereign ratings. The downgrades of the remaining rated
banks mainly reflect the lowering of our assessments of the
bank's stand-alone credit profiles (SACPs) by either one or two
notches following our BICRA revision and the change of the anchor
we apply to banks operating primarily in Portugal to 'bb' from
'bbb-'. (We determine a bank's anchor based on our calculation of
the weighted average of the economic risk scores of the countries
where the bank operates and the industry risk score of the bank's
country of domicile)," S&P said.

"We downgraded Santander Totta by two notches as a result of the
lowering of the sovereign rating by two notches. Although we
believe that Santander Totta is a highly strategically important
subsidiary for its parent, Banco Santander S.A. (A+/Negative/A-
1), we limit the rating on Santander Totta at the level of the
foreign-currency long-term rating on Portugal," S&P said.

"We lowered our ratings on BPI, BPI's core subsidiary Banco
Portugues de Investimento S.A., and Millennium bcp by two notches
based on the lowering of the anchor for Portuguese banks by two
notches and on our lower capital and earnings assessment of
'weak' rather than 'moderate,' as our criteria define those
terms," S&P said.

"We lowered the ratings on CGD by two notches. We revised our
SACP on CGD by only one notch as opposed to the two-notch
revision on the anchor. This is because, in accordance with our
criteria, once the anchor for a bank is lowered to the
speculative-grade category, the adjustment we make for a weak
capital and earnings assessment on a bank is only one notch
rather the previous two when determining the bank's SACP. We have
also reduced the notches of uplift we factor into the long-term
rating on CGD above the SACP for government support to one from
two," S&P said.

"We lowered our ratings on BES and BESI by one notch owing to our
revision of the SACP. We revised our SACP on BES by only one
notch as opposed to the two-notch revision on the anchor applied
to Portuguese banks. This is because, in accordance with our
criteria, once the anchor for a bank falls to the speculative-
grade category, a 'moderate' assessment of its capital and
earnings becomes a neutral factor for its SACP," S&P said.

"The negative outlooks on our long-term ratings on BES, BESI,
BPI, Banco Portugues de Investimento, and Millennium bcp reflect
Portugal's tough economic and financial landscape ahead, which
could prompt us to lower our SACP assessments on the banks. The
negative outlooks on the long-term ratings on Santander Totta and
CGD reflect the negative outlook on the long-term rating on
Portugal," S&P said.

"See the ratings list for ratings on these financial institutions
and their relevant subsidiaries. We will publish individual
research updates on banks, as well as the ratings by debt type:
senior, subordinated, junior subordinated, and preferred stock,"
S&P said

The ratings are counterparty credit ratings.

Downgraded; CreditWatch Action
                                      To                 From
Banco Santander Totta S.A.
Counterparty Credit Rating           BB/Negative/B      BBB-
/Watch Neg/A-3

Downgraded; CreditWatch Action; Ratings Affirmed

Caixa Geral de Depositos S.A.
Counterparty Credit Rating           BB-/Negative/B
BB+/Watch Neg/B

Banco Comercial Portugues S.A.
Counterparty Credit Rating           B+/Negative/B      BB/Watch
Neg/B

Banco BPI S.A.
Counterparty Credit Rating           BB-/Negative/B
BB+/Watch Neg/B

Banco Portugues de Investimento S.A.
Counterparty Credit Rating           BB-/Negative/B
BB+/Watch Neg/B

Banco Espirito Santo S.A.
Counterparty Credit Rating           BB-/Negative/B     BB/Watch
Neg/B

Banco Espirito Santo de Investimento S.A.
Counterparty Credit Rating           BB-/Negative/B     BB/Watch
Neg/B

NB. This list does not include all ratings affected.


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


EUROSAIL 2007-4BL: S&P Cuts Ratings on Two Note Classes to 'CCC'
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its credit ratings on
Eurosail-UK 2007-4BL PLC's class A2a, D1a, and E1c notes. "At the
same time, we have affirmed our ratings on the class A3a, A3c,
B1a, and C1a notes," S&P said.

"The rating actions follow our credit and cash flow analysis of
the most recent transaction information that we have received,
applying our recently updated U.K residential mortgage-backed
securities (RMBS) criteria," S&P said.

"On March 23, 2009, we lowered our ratings all classes of notes
in this transaction, after it ceased to benefit from a currency
swap," S&P said.

Similarly, the downgrades are primarily driven by the reduction
in credit enhancement as a result of un-hedged currency risk.

"In the absence of a currency swap, available principal to make
payments on the euro-denominated notes is converted at the spot
rate. With the appreciation of the euro against British pound
sterling, principal payments to noteholders have been lower than
if the original currency swap had been in place. Consequently, we
calculate that potential losses resulting from principal payments
to date are at GBP19 million; the euro/sterling spot rate for the
December 2011 payment date (EUR1.17/GBP1) remains below the swap
rate at closing (EUR1.37/GBP1). As long as this remains the case,
we consider that undercollateralization, currently at 17%, will
increase," S&P said.

Severe arrears (defined in this transaction as more than 90
days), while relatively high at 17.7%, have remained fairly flat
since mid-2009.

"Cumulative losses have tailed off in recent quarters as the
stock of repossessed properties has reduced from the mid-2009
peak of 3.38%, which is consistent with other nonconforming U.K.
RMBS transactions that we rate," S&P said.

"In addition, prepayment levels remain low and the transaction is
unlikely to pay down significantly in the near term, in our
opinion," S&P said.

"Although credit enhancement levels for the class A2a notes have
increased slightly since our previous review of this transaction
in July 2010, the rating is no longer commensurate with the level
achieved in our cash flow analysis. We have therefore lowered our
rating on the class A2a notes," S&P said.

"We have also lowered our ratings on the class D1a and E1c notes
because, in our view, there is a one-in-two chance of eventual
default, given that both classes of notes would be
undercollateralized if losses due to principal payments already
made are eventually realized," S&P said.

"We have affirmed our ratings on the class A3a, A3c, B1a, and C1a
notes, based on the results of our credit and cash flow
analysis," S&P said.

"We also consider credit stability in our analysis, to determine
whether or not an issuer or security has a high likelihood of
experiencing adverse changes in the credit quality of its pool
when moderate stresses are applied. However, the scenarios that
we have considered under moderate stress conditions did not
result in our ratings deteriorating below the maximum projected
deterioration that we would associate with each relevant rating
level, as outlined in the credit stability criteria," S&P said.

"We expect severe arrears to remain at their current levels, as
there are a number of downside risks for nonconforming borrowers.
These include inflation, weak economic growth, high unemployment,
and fiscal tightening. On the positive side, we expect interest
rates to remain low for the foreseeable future," S&P said.

"We will continue to monitor this transaction, paying particular
attention to the euro/sterling exchange rate," S&P said.

Eurosail-UK 2007-4BL is a U.K. nonconforming RMBS transaction
backed by first- and second-ranking mortgage loans (in England,
Wales, and Northern Ireland) and standard securities (in
Scotland). It closed in August 2007 and securitizes mortgages
originated by Southern Pacific Mortgage Ltd., Preferred Mortgages
Ltd., Matlock London Ltd., Langersal No. 2 Ltd., Alliance &
Leicester PLC, London Mortgage Co., and Southern Pacific Personal
Loans Ltd.

             Standard & Poor's 17g-7 Disclosure Report

SEC Rule 17g-7 requires an NRSRO, for any report accompanying a
credit rating relating to an asset-backed security as defined in
the Rule, to include a description of the representations,
warranties and enforcement mechanisms available to investors and
a description of how they differ from the Represent ations,
warranties and enforcement mechanisms in issuances of similar
securities. The Rule applies to in-scope securities initially
rated (including preliminary ratings) on or after Sept. 26, 2011.

If applicable, the Standard & Poor's 17g-7 Disclosure Reports
included in this credit rating report are available at:

        http://standardandpoorsdisclosure-17g7.com

Ratings List

Class                Rating
                To            From

Eurosail-UK 2007-4BL PLC
EUR696 Million and GBP251.11 Million Mortgage-Backed Floating-
Rate Notes

Ratings Lowered

A2a             BB+ (sf)      BBB (sf)
D1a             CCC (sf)      B- (sf)
E1c             CCC (sf)      B- (sf)

Ratings Affirmed

A3a             B (sf)
A3c             B (sf)
B1a             B- (sf)
C1a             B- (sf)


UROPA 2007-1B: S&P Lowers Rating on Class B2A Notes to 'B-'
-----------------------------------------------------------
Standard & Poor's Ratings Services lowered and removed from
CreditWatch negative its credit ratings on all classes of notes
in Uropa Securities PLC's series 2007-1B.

"On Dec. 12, 2011, we placed on CreditWatch negative our ratings
on the class A2 to B2 notes due to an update to our methodology
and assumptions for rating U.K. residential mortgage-backed
securities (RMBS) transactions," S&P said.

"We again placed the ratings on the class A2 to A4 notes on
CreditWatch negative on Dec. 21, 2011 due to their link to the
rating on The Royal Bank of Scotland PLC (A/Stable/A-1),
which is the swap counterparty in this transaction. We had
downgraded the swap counterparty on Nov. 29, 2011," S&P said.

"The rating actions are based on the credit and cash flow
analysis that we completed in line with our updated U.K. RMBS
criteria, and our 2010 counterparty criteria," S&P said.

"We have lowered our rating on the class A2b notes to 'A+ (sf)',
which is the maximum achievable rating based on its link to the
rating on the currency swap counterparty, The Royal Bank of
Scotland, plus one notch. This is due to the swap documentation
not being compliant with our 2010 counterparty criteria," S&P
said.

"In our opinion, this 'A+ (sf)' rating would not have been
achievable without giving credit to the currency swap. Our
analysis achieved this rating with no credit given to the
liquidity facility," S&P said.

"We have lowered our ratings on the class A3 and A4 notes to 'A
(sf)', which is the maximum achievable rating based on its link
to the liquidly facility provider, Danske Bank A/S (A/Negative/A-
1). This is the maximum achievable rating in accordance with our
2010 counterparty criteria, due to the weak commitment language
that applies if the liquidity facility provider ceases be an
appropriately rated entity," S&P said.

"We have lowered our ratings on the class M1, M2, B1, and B2
notes to levels in line with our ratings criteria. We applied our
updated U.K RMBS criteria to all notes, and overall the minimum
credit support requirement for all rating levels has increased.
All of Uropa 2007-1B's notes benefit from the credit enhancement
provided by the reserve fund, which is currently fully funded at
GBP4.25 million, and excess spread," S&P said.

"In the portfolio of assets backing this transaction, arrears
were stable in 2011, and losses have been trending downward since
2009. The arrears are similar to our latest nonconforming RMBS
index. To consider the possibility of further deterioration in
asset performance, we have applied more stressful arrears as part
of our stability analysis, and the ratings do not deteriorate
below the levels stated in our criteria. Taking into account the
current macroeconomic environment in the U.K., and the high
proportion of interest-only loans backing Uropa 2007-1B, the
asset principal pay-down on this transaction has remained low,
and therefore the composition of the pool has not significantly
changed since our last review," S&P said.

"Taking into consideration that the overall pool characteristics
have not materially changed, that the asset performance has been
stable, and that the reserve fund is fully funded, the two main
factors for the ratings actions were the application of our
updated U.K. RMBS criteria and our Nov. 29, 2011 downgrade of the
currency swap provider," S&P said.

Uropa Securities' series 2007-1B notes were issued in July 2007
and are backed by a pool of U.K. nonconforming residential
mortgages originated by GMAC Residential Funding Co. LLC,
Kensington Mortgage Co. Ltd., and Money Partners Ltd.

             Standard & Poor's 17g-7 Disclosure Report

SEC Rule 17g-7 requires an NRSRO, for any report accompanying a
credit rating relating to an asset-backed security as defined in
the Rule, to include a description of the representations,
warranties and enforcement mechanisms available to investors and
a description of how they differ from the Represent ations,
warranties and enforcement mechanisms in issuances of similar
securities. The Rule applies to in-scope securities initially
rated (including preliminary ratings) on or after Sept. 26, 2011.

If applicable, the Standard & Poor's 17g-7 Disclosure Reports
included in this credit rating report are available at:

        http://standardandpoorsdisclosure-17g7.com

Ratings List

Class              Rating
           To                  From

Uropa Securities PLC
EUR634 Million, GBP194.524 Million, $17 Million Mortgage-Backed
Floating-Rate Notes and an Overissuance Excess-Spread-Backed
Floating-Rate Notes Series 2007-1B

Ratings Lowered and Removed From Creditwatch Negative


A2b        A+ (sf)             AA- (sf)/Watch Neg
A3a        A (sf)              AA- (sf)/Watch Neg
A3b        A (sf)              AA- (sf)/Watch Neg
A4a        A (sf)              AA- (sf)/Watch Neg
A4b        A (sf)              AA- (sf)/Watch Neg
M1a        BBB- (sf)           A (sf)/Watch Neg
M1b        BBB- (sf)           A (sf)/Watch Neg
M2a        BB- (sf)            A (sf)/Watch Neg
B1a        B (sf)              BB+ (sf)/Watch Neg
B1b        B (sf)              BB+ (sf)/Watch Neg
B2a        B- (sf)             B+ (sf)/Watch Neg


VIRGIN MEDIA: Fitch Affirms 'BB+' Long-Term Issuer Default Rating
-----------------------------------------------------------------
Fitch Ratings has affirmed UK cable company Virgin Media Inc.'s
(Virgin Media) Long-term Issuer Default Rating (IDR) at 'BB+',
and its Short-term IDR at 'B'.  The agency has also affirmed all
of Virgin Media's instrument ratings, as detailed at the end of
this release. T he Outlook on the Long-term IDR is Stable.

Virgin Media's key strength is its "second-incumbent" qualities
in the UK and its strong market share within its geographic
footprint.  Fitch believes that Virgin Media's hybrid fibre co-
axial network should retain its superior speed advantage over the
incumbent's network for a number of years yet, a significant
contributing factor to the company's rating.  In addition, the
company is delivering strong operating leverage, growing free
cash flow despite slowing customer and revenue growth.

"The Virgin Media management team is shifting its focus in the
Consumer segment to improving average revenue per user and
customer retention.  Together with the potential opportunity in
the Business segment, this should enable the company to deliver
low single-digit revenue growth over the medium-term," says
Damien Chew, Senior Director in Fitch's TMT team in London.
"Continued investment in 2012 to maintain its network advantage
should underpin Virgin Media's competitive position over the
longer-term as BT deploys its fibre network."

Fitch does not anticipate a positive rating action unless the
company shows greater financial discipline, such as significantly
lowering its current net leverage target of 3x.  There would also
need to be evidence of a strong and sustainable improvement in
Virgin Media's competitive position in the highly competitive UK
triple-play services market.

Negative rating action could result if operating trends
deteriorated, such as falling average revenue per user (ARPU),
increasing churn and customer-related bad debt levels over a
period of two-three quarters, leading to significant
deterioration in revenue and profits.  A lack of progress in
deleveraging, with Fitch's expectations of funds from operations
(FFO) adjusted net leverage remaining at around 3.5x over the
medium term, would also put pressure on Virgin Media's ratings.
FFO adjusted net leverage was 3.6x at the end of 2011.

The notching applied to Virgin Media's instrument ratings is
unchanged.  The 'BBB-' rated Virgin Media Investment Holdings
(VMIH) senior secured bank facility and senior secured bonds are
rated one notch above the IDR, with the senior unsecured bonds
rated in line with the IDR.  Fitch is comfortable with the
current level of senior secured debt at Virgin Media, which was
2.2x EBITDA at the end of 2011 (at hedged rates, including
capital leases).  However, the current notching of instrument
ratings in the capital structure could be reviewed if there was a
sustained increase in senior secured leverage.

The company's 2018 and 2021 senior secured notes have release of
security and guarantee provisions while these notes are rated
investment grade.  These depend on the continued existence of
similar guarantees for other senior secured creditors, namely
bank debt. Fitch does not anticipate this will change in the
medium term.

Virgin Media has a healthy liquidity position.  It ended December
2011 with GBP300 million in cash and an undrawn GBP450 million
revolving credit facility.  Its earliest debt maturity is in
June 2015, when its GBP750 million bank facility comes due.

Virgin Media's competitive positioning is built on its strong
network position in its geographical footprint covering half of
UK households and businesses.  Virgin Media's higher speed
broadband packages and its interactive TV offering should
continue to support modest ARPU increases, with its mobile
offering and services to UK businesses providing additional
sources of revenue and profit growth.

The following instrument ratings have been affirmed:

  -- VMIH senior secured facilities affirmed at 'BBB-'
  -- Virgin Media Secured Finance Plc 2018 senior secured bonds
     affirmed at 'BBB-'
  -- Virgin Media Finance Plc 2014, 2016 and 2109 senior notes
     affirmed at 'BB+'


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


* BOOK REVIEW: Kenneth M. Davidson's Megamergers
------------------------------------------------
Author: Kenneth M. Davidson
Publisher: Beard Books
Hardcover: 427 pages
Listprice: $34.95
Review by Henry Berry

Megamergers are nothing new to the business world. One of the
first occurred in 1901, when Carnegie Steel merged with several
rival steel corporations, resulting in the billion-dollar United
States Steel. Since then, megamergers have been a part of
American business.  However, the author notes that megamergers
have historically "occurred sporadically and been understandable"
on face value.  By contrast, in recent decades there has been a
"current wave of large mergers [that] is unprecedented."

In Megamergers - Corporate America's Billion-Dollar Takeovers,
Davidson looks at the unprecedented number of megamergers
occurring today and considers whether this signals a change in
the thinking of U.S. business leaders.  Legislators, corporate
executives, mergers specialists, and anyone else involved in,
or affected by, megamergers will find this book enlightening.
An announcement of a merger is usually accompanied with the
pronouncements that it will result in greater synergies,
operational efficiencies, and improved servicing of markets.
Mr. Davidson questions whether this has, in fact, been the case.
He analyzes the subsequent financial performance of the corporate
behemoths produced by these megamergers and concludes that the
majority of them were not justifiable nor, ultimately,
productive.  Mr. Davidson is an admitted skeptic about the value
of mergers to the overall economy and to employees, stockholders,
and consumers.  He is critical of the overly optimistic
rationales prevalent in today's business climate that lead many
businesspersons into mergers.  For the most part, though, he
keeps his biases in check.  He rejects many of the common
criticisms of mergers.  For example, he finds unpersuasive the
argument that mergers should be rejected on the ground that they
undermine market competitiveness.  Nor, does he say, is it
worthwhile to revisit the ongoing debate over whether "'risk
arbitrageurs are good guys or bad guys."

The author states that his "first intention [is] to paint a
picture of what is happening [to] clarify the issues involved and
areas of dispute."  He offers a balanced examination of the
megamerger phenomenon, particularly as it pertains to the energy
and financial services industries.  He goes beyond seeing
megamergers only as phenomena of contemporary corporate culture,
and his analyses go beyond mere statistics.  Megamergers have
their roots not only in business ambitions and current trends,
but also in human nature.  Recognizing this, the author also
addresses the psychology underlying megamergers.  As noted in the
section "The Acquisition Imperative," mergers present a
temptation to the decision-making executives of successful
companies "look[ing] beyond their product and consider[ing] the
disposal of excess profits."  Mr. Davidson explains why a merger
appears to many executives to be a better option than
distributing profits to shareholders, starting new businesses, or
investing in securities. The informed perspective Mr. Davidson
offers in this book, first published in 2003, is just as relevant
today.  It is a book that brings new wisdom to old ways of
thinking about megamergers.

An attorney for the U. S. Federal Trade Commission for 25 years,
Kenneth M. Davidson has also been a corporate attorney and a
visiting law professor.


                            *********

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, Ivy B. Magdadaro, Frauline S.
Abangan and Peter A. Chapman, Editors.

Copyright 2012.  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 Peter Chapman at 240/629-3300.


                 * * * End of Transmission * * *