TCREUR_Public/120810.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, August 10, 2012, Vol. 13, No. 159



OSTREGION SA: S&P Puts 'B+' Rating on EUR775MM Bonds on Watch Neg
UNICREDIT BANK: S&P Lowers Ratings on Hybrid Debt to 'BB+'


UNICREDIT BANK AG: S&P Lowers Rating on Hybrid Debt to 'BB+'


* ICELAND: Wants to Halt Use of Deposits for Risky Investments


QUINN INSURANCE: Administration Cost is "Shocking," Says Owner
TREASURY HOLDINGS: KBC's Bid to Wind Up Companies Adjourned


CARTESIO 2003-1: S&P Lowers Ratings on Five Note Classes to 'B+'


DBK LEASING: Moody's Assigns 'Ba3' Corporate Family Rating


STORK TECHNICAL: S&P Affirms 'B-' Rating on EUR272.5MM Sr. Notes


CENTRAL EUROPEAN: S&P Keeps 'CCC+' Long-Term Corp. Credit Rating
* CITY OF OLSZTYN: Fitch Affirms 'BB+' Ratings; Outlook Stable


* KHAKASSIA: Fitch Assigns 'BB-(EXP)' Rating to RUB2BB Bond Issue


BANKINTER SA: S&P Assigns LT Ratings to Mortgage Covered Bonds

U N I T E D   K I N G D O M

BG GROUP: Asks Justices to Review US$185-Mil. Award Reversal
MERLIN CLAIMS: In Administration on Market Conditions
PORTSMOUTH FOOTBALL: Tal Ben Haim Leaves Club After Wage Deal
SLHT: Protesters Fight for NHS Future After Firm's Administration
STEPHENSON CLARKE: In Liquidation; Sells Last Vessel

TATA STEEL: Moody's Cuts CFR to 'B3'; Outlook Remains Negative
* Moody's Says EU Bank Deleveraging to Benefit Asset Managers


* EUROPE: Commission to Detail Banking Supervisor Plans by Sept.
* BOOK REVIEW: Corporate Debt Capacity



OSTREGION SA: S&P Puts 'B+' Rating on EUR775MM Bonds on Watch Neg
Standard & Poor's Ratings Services placed on CreditWatch with
negative implications its 'B+' long-term rating on EUR425 million
in floating-rate senior secured bonds, due 2039, and a EUR350
million floating-rate senior secured loan from the European
Investment Bank (EIB; AAA/Negative/A-1+), due 2038. Both were
borrowed by Luxembourg-registered special-purpose vehicle
Ostregion Investmentgesellschaft Nr. 1 S.A. (Ostregion).

"The '2' recovery rating, indicating our expectation of
substantial recovery (70%-90%), is not affected," S&P said.

"The CreditWatch placement reflects an increasing chance that we
could lower the ratings by one or more notches, if the project
parties do not reach an agreement that allows the project to
receive sufficient and timely top-up payments from the minimum-
traffic guarantee extended by Asfinag, the Austrian Roads Agency,
within the next three months, or if penalty points for
underperformance remain high," S&P said.

"The proceeds of the bonds and loan are being used to finance the
Ostregion Package 1 (Project Ypsilon), a 33-year public-private
partnership concession to design, build, finance, operate, and
maintain a 52-kilometer stretch of motorway to the north of the
City of Vienna (unsolicited ratings: AA+/Negative/A-1+). The
proceeds were onlent to Bonaventura Strassenerrichtungs GmbH, the
project concessionaire. The concession grantor and offtaker is
the Austrian Roads Agency, Autobahnen- und Schnellstrassen-
Finanzierungs-Aktiengesellschaft (Asfinag; AA+/Negative/A-1+),"
S&P said.

The payment mechanism used to reimburse Bonaventura combines
availability payments and shadow tolls.

"The bonds and the loan benefit from an unconditional and
irrevocable guarantee of payment of scheduled interest and
principal from Ambac Assurance U.K. Ltd. (Ambac, not rated)," S&P

"Under Standard & Poor's criteria, a rating on monoline-insured
debt reflects the higher of the rating on the monoline insurer,
if any, or Standard & Poor's underlying rating (SPUR) on the
debt. Therefore, the current rating on the bonds and the loan
reflects the SPUR," S&P said.

The 'B+' debt rating reflects a number of credit risks,

-  The transaction's highly leveraged financial structure--total
    debt to equity stands at 99.8%;

-  The weak traffic record to date, which in S&P's opinion has
    little chance of catching up with initial expectations;

-  High reliance on heavy-goods traffic, which is sensitive to
    the economy; and

-  Weak senior debt coverage ratio forecast under S&P's base-
    case scenario; S&P assumes that this ratio could fall below
    the default ratio (1.05x) at several points, leaving the
    project dependent on Asfinag's minimum revenue guarantee.

These risks are partially offset by these strengths:

-  No construction risk;

-  Limited traffic risk, mitigated by the availability of
    payments accounting for the bulk of the project's revenues;

-  A supportive concession agreement that includes compensation
    payments from Asfinag to restore the senior debt service
    coverage ratio (SDSCR) of 1.05x if traffic is lower than

-  Relatively low operational risk; and

-  Liquidity support in the form of a fully funded six-month
    debt service reserve account and dividend lockup occurring at
    a senior debt service coverage ratio of 1.125x, increasing to
    1.15x in the later stages of the project.

"We understand that Bonaventura and Asfinag have not yet agreed
how to interpret Asfinag's minimum-traffic guarantee, a key
supporting factor for the current rating level, given the subdued
traffic performance and forecast," S&P said.

"We are also concerned that, during the last half of 2011,
Bonaventura faced revenue deductions due to operating
underperformance. We understand, however, that Bonaventura has
received far fewer of the 'penalty points' that indicate lower-
than-contracted service quality in the first half of 2012," S&P

"The project has so far met its debt service in full and on time,
and the debt service reserve account has not been tapped despite
the operating underperformance and the absence of Asfinag's
guarantee payments. Cash has been locked in the project by the
deferral of all four mezzanine debt service payments to date,"
S&P said.

"We expect to resolve the CreditWatch placement following the
conclusion of the discussions between the project parties on the
interpretation the minimum-traffic guarantee," S&P said.

"We could lower the rating by one or more notches if we see
increasing risk that a lack of agreement between the parties may
delay Asfinag's guarantee payment from 2012. We could also lower
the rating if the level of performance penalty points remains
high or operating costs increase. Either would jeopardize our
expectation for the 'B+' rating level that the debt-service-
coverage ratio will be at least 1.05x," S&P said.

"We could revise the outlook to stable if we are certain that the
minimum-traffic guarantee will be paid on time and in a
sufficient amount to offset traffic underperformance, and if
costs and operating performance improve in line with the initial
forecast," S&P said.

UNICREDIT BANK: S&P Lowers Ratings on Hybrid Debt to 'BB+'
Standard & Poor's Ratings Services affirmed its 'A' long-term and
'A-1' short-term counterparty credit ratings on UniCredit Bank
Austria AG (Bank Austria). The outlook is negative.

"At the same time, we lowered our ratings on the bank's
subordinated debt to 'BBB' from 'BBB+' and our ratings on the
hybrid debt to 'BB+' from 'BBB-'," S&P said.

The 'AA' ratings on Bank Austria's guaranteed obligations, which
reflect a deficiency guarantee from the City of Vienna
(unsolicited AA+/Negative/A-1+), are unaffected.

"The affirmation follows that on Bank Austria's parent, UniCredit
SpA (BBB+/Negative/A-2) on Aug. 3, 2012. Due to the increased
economic risk we see in Italy, we revised our assessment of
UniCredit's stand-alone credit profile (SACP) to 'bbb+' from 'a-
'. We have consequently also revised Bank Austria's SACP downward
to 'bbb+' from 'a-'. In our view, Bank Austria's SACP is
sensitive to the deterioration of the parent's SACP, given the
tight operational interaction between the two entities, among
other things," S&P said.

"We have lowered our assessment of Bank Austria's capital and
earnings position to 'moderate' from 'adequate,' as defined in
our criteria, to reflect our anticipation that the weakening of
UniCredit's SACP will in turn affect Bank Austria's SACP. Our
risk-adjusted capital (RAC) ratio for Bank Austria was 6.3% at
year-end 2011, and we expect it to improve in 2012 and 2013 as a
result of internal capital generation. However, we believe the
ratio is unlikely to comfortably exceed 7% over the next 12-18
months, given the downside risk to earnings trends in Central and
Eastern Europe (CEE), due to the potential impact of persistently
weak economic conditions in Western Europe. In this context, we
think the parent could be less supportive of Bank Austria's
capitalization, particularly in light of the higher credit risk
we see in UniCredit's domestic operations that in our view puts
its capital and earnings under pressure. Accordingly, we think
that UniCredit could manage Bank Austria's capital to operate
with lower cushions relative to minimum regulatory requirements
than in the past, and/or, among other things, take a higher
dividend pay-out from its subsidiary than in the past," S&P said.

The negative outlook on Bank Austria reflects that on the
Republic of Austria (AA+/Negative/A-1+) and the bank's parent,


UNICREDIT BANK AG: S&P Lowers Rating on Hybrid Debt to 'BB+'
Standard & Poor's Ratings Services affirmed its 'A' long-term and
'A-1' short-term counterparty credit ratings on UniCredit Bank AG
(UniCredit Bank), the German subsidiary of Italy-based UniCredit
SpA (UniCredit). The outlook is negative.

"At the same time, we lowered our ratings on UniCredit Bank's
subordinated debt to 'BBB' from 'BBB+', on its junior
subordinated debt to 'BBB-' from 'BBB, and on its hybrid debt to
'BB+' from 'BBB-'," S&P said.

"The affirmation follows our affirmation of the ratings on
UniCredit. At the same time, we have revised down our assessment
of UniCredit Bank's stand-alone credit profile (SACP) to 'bbb+'
from 'a-', reflecting our lowering of UniCredit's SACP and group
credit profile to 'bbb+'. In our view, UniCredit Bank's SACP is
sensitive to the deterioration of the parent's SACP, given the
tight operational interaction between the two entities, among
others," S&P said.

"We have lowered our assessment of UniCredit Bank's risk position
to 'weak' from 'moderate,' as our criteria define the terms. This
revision reflects the parallel weakening in the SACPs on
UniCredit Bank and UniCredit. Our assessment of UniCredit Bank's
risk position also reflects some concentration in its corporate
credit portfolio, some complexity in its credit market related
business, and some tail risk in credit losses that are not fully
captured in our RAC framework given very low economic risk we
assign to Germany. At the same time, UniCredit Bank's credit
losses have been lower than the average for its peer for the past
few years, which stems from its significant restructuring of real
estate assets," S&P said.

"In our opinion, the bank's capital and earnings position is
'strong,' based on our projection that our risk-adjusted capital
(RAC) ratio will remain comfortably above 10% in the next 18-24
months (versus 10.6% at end-June 2011). We consider that our
assessment of UniCredit Bank's capital and earnings as 'strong'
overstates its capital position to some extent. As such, we have
revised downward the bank risk position. That's because UniCredit
Bank has strong operational interaction with activities across
the UniCredit group, particularly in corporate and investment
banking. In addition, the bank bears some intragroup credit
exposure to the parent. The charges that we apply to our RAC
ratio on UniCredit Bank do not fully capture the potential impact
of credit risks that could arise from strain on UniCredit," S&P

"Our SACP and ratings on Unicredit Bank continue to reflect the
anchor of 'a-' (the anchor is our starting point for assigning a
bank a long-term rating) for commercial banks operating in
Germany. They also factor in our view of the bank's adequate
business position, strong capital and earnings, average funding,
and adequate liquidity, as our criteria define these terms," S&P

"In our view, UniCredit Bank continues to have an 'adequate'
business position, underpinned by its strong corporate franchise
in Bavaria and some parts of Northern Germany. We see some
volatility in its business flows that is inherent to its
investment banking activity," S&P said.

"UniCredit Bank's funding is 'average,' based on our 'strong'
assessment for funding in the German banking sector. Reliance on
wholesale funding is higher than the average for German banks,
but in line with other large domestic players. We view the bank's
liquidity as 'adequate,' given its prudent liquidity management,"
S&P said.

"Our view of UniCredit Bank's 'high' systemic importance for the
German banking sector results in a two-notch uplift from the
SACP, reflecting our view of a 'moderately high' likelihood of
systemic support," S&P said.

"The ratings on UniCredit Bank are now at the same level as the
indicative issuer credit ratings because we no longer apply a
negative adjustment to the ratings to reflect the bank's strong
link with UniCredit. The negative effects of the bank's strong
link with UniCredit are now incorporated in our assessment of
UniCredit Bank's SACP," S&P said.

"Our downward revision of UniCredit Bank's SACP has lead us to
lower our issue ratings on the bank subordinated and hybrid debt,
given that we notch down from the bank's SACP under our
criteria," S&P said.

The negative outlook on UniCredit Bank reflects on its parent
UniCredit, S&P noted.  "In turn, the outlook on UniCredit factors
in the possibility that we could lower the ratings if, all other
factors remaining equal, we were to lower our ratings on the
Republic of Italy (unsolicited BBB+/Negative/A-2)," S&P said.

S&P added that it could also lower its ratings on UniCredit if

-- sees further weakening in domestic economic and banking
    industry conditions; or

-- it perceives that its asset quality metrics in 2012 and 2013
    are markedly worse than what it currently anticipates under
    its baseline scenario.

"If we lowered the ratings on UniCredit, we would reassess the
UniCredit Bank's stand-alone credit profile (SACP), as we believe
that deterioration in the group's creditworthiness may negatively
affect our views of UniCredit Bank's business position, capital,
and funding and liquidity position, among others," S&P said.

"A revision of the outlook to stable would depend on a similar
action taken on UniCredit, which would hinge on our anticipation
of an improvement in economic and operating conditions for the
Italian banking system," S&P said.


* ICELAND: Wants to Halt Use of Deposits for Risky Investments
Erik Larson at Bloomberg News reports that Iceland was brought to
the brink of bankruptcy when its biggest banks failed four years
ago.  Now, the site of the world's most spectacular financial
collapse is becoming a pioneer in banking reform, Bloomberg says.

"We've been burned by this and that's why we have to look very
closely at what we need to do to prevent it happening again,"
Bloomberg quotes Economy Minister Steingrimur J. Sigfusson as
saying in an interview.  "Icelanders are more interested in
taking greater steps than small steps when it comes to regulating

His party, the junior member in Prime Minister Johanna
Sigurdardottir's coalition, has submitted a motion to parliament
to stop banks using state-backed deposits to finance risky
investments, Bloomberg relates.  The move puts Iceland on course
to become the first western nation since the global financial
crisis hit five years ago to force banking conglomerates to split
their business, Bloomberg says.

The Icelandic lawmaker who presented the motion, Alfheidur
Ingadottir, says the best way to stop banks creating asset
bubbles is to pass laws akin to the 1933 Glass-Steagall Act,
which separated commercial and investment banking in the U.S. for
more than six decades, according to Bloomberg.


QUINN INSURANCE: Administration Cost is "Shocking," Says Owner
RTE News reports that Sean Quinn said the latest figures on the
administration cost of Quinn Insurance are truly shocking.  He
relayed in a statement that the court and the Department of
Finance should seek further information on what he called an
astronomical figure, the report relayed.

Mr. Quinn reiterated his stand that Quinn Insurance was
unnecessarily placed into administration, according to RTE News.

The report relates that Mr. Quinn said he was naive not to have
challenged the provisional appointment of the administrators and
asserted that the administrators discouraged him from doing so.

Mr. Quinn also said the government was misled by the
administrators who he said had set about destroying one of the
most profitable companies in Irish corporate history, the report

                       Quinn Insurance

Quinn Insurance is owned by Sean Quinn, who was once Ireland's
richest man, and his family.  The company has more than 20% of
the motor and health insurance market in Ireland.  Employing
almost 2,800 people in Britain and Ireland, it was founded in
1996 and entered the UK market in 2004.

As reported by the Troubled Company Reporter-Europe, The Irish
Times related that the Financial Regulator put Quinn Insurance
into administration in March 2010 after his office discovered
guarantees had been provided by the insurer's subsidiaries as far
back as 2005 on Quinn Group debts of more than EUR1.2 billion.
The regulator said the guarantees reduced the amount the firm had
in reserve to protect policyholders against possible claims,
putting 1.3 million customers at risk, according to the Irish

TREASURY HOLDINGS: KBC's Bid to Wind Up Companies Adjourned
Aodhan O'Faolain and Ray Managh at report that KBC
Bank's application to have Treasury Holdings and 15 related
companies wound up has been adjourned to later this month.

Lawyers for the bank told the High Court on Wednesday that it
made a demand for a EUR30 million payment from the developers and
15 related companies, which it said it is owed arising out of
loans advanced for the development of the Spencer Dock project in
Dublin, relates.  Due to the firm's alleged
failure to satisfy the demand, the Belgian-owned bank maintains
that the firms are insolvent, the report cites.

KBC petitioned the court to have Treasury Holdings and the
related companies wound up, with insolvency practitioner David
Carson of Deloitte appointed as liquidator to the firms.  The
related companies include Spencer Dock National Convention Centre
Hotel, Spencer Dock Development Company, Faxgore Ltd, Querida
Ireland Holdings Ltd, and Robheat Ltd, the report notes.

The companies, all with a registered address at Connaught House,
1 Burlington Road, Dublin 4, have opposed KBC's applications on
grounds including that Treasury Holdings is in talks aimed at
securing new investment to cover the loans, notes.

At Wednesday's sitting of the High Court, Mr. Justice John
Hedigan agreed to adjourn the bank's petition to the end of the
month to allow for the exchange of affidavits and submissions
between the parties, says.

The judge, as cited by, said the matter will go
ahead on Monday, August 27, subject to a judge being available to
hear the case.  The hearing is estimated to last for half a day.
The National Asset Management Agency will be a notice party to
the application, discloses.

Treasury Holdings is an Irish property developer.  The company
owns the Westin Hotel in Dublin and the Irish headquarters of
accounting firm PricewaterhouseCoopers.


CARTESIO 2003-1: S&P Lowers Ratings on Five Note Classes to 'B+'
Standard & Poor's Ratings Services lowered to 'B+ (sf)' from 'BB-
(sf)' its credit ratings on Cartesio S.r.l.'s series 2003-1 class
1, 2, 3, 4, and 5 notes.

"The rating actions follow our Aug. 3, 2012 downgrade of Dexia
Crediop SpA (B+/Negative/B) -- one of the swap counterparties in
the transaction -- and reflect the application of our 2012
counterparty criteria. We also lowered all of our ratings in the
transaction on Aug. 2, 2012, following our Feb. 10, 2012
downgrade of Dexia Crediop," S&P said.

"The transaction documents relating to the swaps provided by
Dexia Crediop are not consistent with our 2012 counterparty
criteria, and they do not include a replacement framework. Under
our 2012 counterparty criteria, if a swap agreement does not
reflect a replacement framework consistent with any of our
current or previous counterparty criteria, the counterparty can
support note ratings no higher than our long-term rating on the
relevant counterparty," S&P said.

"After lowering to 'B+' from 'BB-' our long-term rating on Dexia
Crediop, we have therefore lowered our ratings on all of
Cartesio's notes to the same level as our rating on the
counterparty," S&P said.

"Cartesio's series 2003-1 is a medium-term note program, with
receivables represented by payments under lease contracts between
the originator, SAN.IM (a company owned by Region of Lazio), and
certain healthcare entities as collateral," S&P said.


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 representations,
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 Report
included in this credit rating report is available at:


DBK LEASING: Moody's Assigns 'Ba3' Corporate Family Rating
Moody's Investors Service has assigned corporate family ratings
(CFRs) to five finance companies in Kazakhstan, the Middle East,
South Africa and Ukraine. At the same time, Moody's has also
lowered by one-notch the issuer ratings of two finance companies
in the Middle East. The actions reflect the implementation of
Moody's revised global rating methodology for Finance Companies,
"Finance Company Global Rating Methodology", published on
March 19, 2012, and is not driven by company-specific credit

Ratings Rationale

The assignment of the corporate family ratings (CFRs) follows the
implementation of Moody's revised global rating methodology for
finance companies, which stipulates the key operational,
financial and environmental factors Moody's considers when rating
these companies. The CFRs incorporate the affected finance
companies' standalone credit profiles, as well as any parental or
affiliate support.

In contrast to these finance companies' issuer ratings, which
represent Moody's opinion of credit risk equivalent to the
companies' senior unsecured debt obligations, the CFRs represent
the rating agency's opinion of the companies' consolidated credit
risk, equivalent to the weighted average of all debt classes
within the companies' capital structure.

Using the CFR as a reference point, the methodology codifies
Moody's framework for assigning ratings to the various classes of
debt issued by non-investment-grade finance companies on the
basis of expected differences in loss-given-default. This
framework considers the proportionality, seniority and level of
asset protection associated with various debt classes, both
nominally and in relation to each other.

In the case of the three finance companies in Kazakhstan, South
Africa and Ukraine, Moody's has assigned CFRs at the same level
of the companies' issuer ratings. This reflects the predominance
of senior unsecured obligations in the companies' debt structure,
hence the similar seniority between the credit risk indicated by
the issuer rating and by the CFRs.

However, in the case of the two Middle Eastern finance companies,
the implementation of the revised methodology has led to a one-
notch lowering of the issuer ratings and the assignment of CFRs
one notch above those issuer ratings. This reflects the
predominance of senior secured obligations in these companies'
debt structures and hence the structural subordination in
seniority between the issuer ratings, which indicate credit risk
equivalent to senior unsecured obligations, and the CFRs, which
captures this predominance.

What Could Move the Ratings Up/Down

A sustained improvement in the companies' financial fundamentals,
specifically in their funding profiles, liquidity, leverage,
profitability and asset quality, could exert upward pressure on
the ratings. Conversely, a deterioration in the companies'
financial fundamentals, owing to a weakening operating
environment or company specific developments, could exert
downwards pressure on the ratings.

List of Affected Issuers/Ratings

The affected issuers are the following:

- Al Omaniya Financial Services SAOG: Corporate family ratings
(CFRs) of Ba3 were assigned. As the company's total debt is
predominantly made up of senior secured debt (>66.7%) according
to the company's 2011 financial statements, the CFR indicates
credit risk equivalent to senior secured debt. The issuer ratings
assigned to Al Omaniya, which indicates the issuer's ability to
repay senior unsecured obligations, were lowered by one notch to
B1, from Ba3, to reflect structural subordination. The ratings
carry a stable outlook.

- DBK Leasing: Corporate family ratings (CFRs) of Ba3 were
assigned, taking into account the predominance of senior
unsecured debt in the company's overall debt structure. The
Ba3/NP issuer ratings have been affirmed. The ratings carry a
negative outlook.

- Raiffeisen Leasing Aval: A long-term national scale corporate
family rating of was assigned, taking into account the
predominance of senior unsecured debt in the company's overall
debt structure. The national scale issuer rating was

- RCS Investment Holdings (Proprietary) Ltd: A long-term
national scale corporate family rating of was assigned,
taking into account the predominance of senior unsecured debt in
the company's overall debt structure. The national
scale issuer ratings have been affirmed. The ratings carry a
stable outlook.

- Saudi Orix Leasing Company: Corporate family ratings (CFRs) of
Ba1 were assigned. As the company's total debt is predominantly
made up of senior secured debt (>66.7%) according to the
company's 2011 financial statements, the CFR indicates credit
risk equivalent to senior secured debt. The issuer ratings
assigned to Saudi Orix, which indicate the issuer's ability to
repay senior unsecured obligations, were lowered by one notch to
Ba2/NP, from Ba1/NP, to reflect structural subordination. The
ratings carry a stable outlook.

The principal methodology used in rating Al Omaniya Financial
Services SAOG and Saudi Orix Leasing Company was Finance Company
Global Rating Methodology published in March 2012.

The methodologies used in rating DBK Leasing, Raiffeisen Leasing
Aval and RCS Investment Holdings (Proprietary) Ltd were Finance
Company Global Rating Methodology published in March 2012, and
Mapping Moody's National Scale Ratings to Global Scale Ratings
published in March 2011.

Moody's National Scale Ratings (NSRs) are intended as relative
measures of creditworthiness among debt issues and issuers within
a country, enabling market participants to better differentiate
relative risks. NSRs differ from Moody's global scale ratings in
that they are not globally comparable with the full universe of
Moody's rated entities, but only with NSRs for other rated debt
issues and issuers within the same country. NSRs are designated
by a ".nn" country modifier signifying the relevant country, as
in ".za" for South Africa.


STORK TECHNICAL: S&P Affirms 'B-' Rating on EUR272.5MM Sr. Notes
Standard & Poor's Ratings Services affirmed its 'B-' issue rating
on the EUR272.5 million, five-year, senior secured notes issued
by Netherlands-based business services company Stork Technical
Services Holding B.V. (STS; B/Stable/--). "The recovery rating on
the senior secured notes remains unchanged at '5', indicating our
expectation of modest (10%-30%) recovery in the event of a
payment default," S&P said.

"The affirmation follows STS' relaunch of its EUR272.5 million
senior secured notes issue and a EUR100 million super senior
revolving credit facility (RCF; not rated) to refinance the bulk
of its outstanding bank debt. STS had postponed the issuance in
July 2012 because of market conditions," S&P said.

"The affirmation reflects STS' revision of the amount and the
maturity date of the senior secured notes. STS has issued
EUR272.5 million of senior secured notes, compared with EUR315
million proposed previously. STS has also brought forward the
maturity date of the senior secured notes to 2017, from 2019
previously," S&P said.

"The recovery rating reflects our going-concern valuation of STS
at the hypothetical point of default and the senior secured
notes' security package. The amendments to the amount and
maturity date of the senior secured notes have improved coverage
compared with the previous launch, to be slightly higher than the
10%-30% range. However, we are maintaining the recovery rating at
'5' to reflect the substantial amount of debt that STS has
incurred and the relatively high amount of debt ranking prior to
the senior secured notes," S&P said.

"In addition to STS' current outstanding debt, we see a risk of
the company raising additional debt if there is crystallization
of some guarantees in the event of a default. The documentation
also allows STS to raise additional debt in the form of
incremental facilities," S&P said.

"We note that the organizational structure of the wider group
under STS' parent company Stork B.V. is fairly complex, with two
different businesses and borrowing groups--STS and Fokker
Technologies Topco B.V. (Fokker; not rated). There are also a
number of debt instruments--such as shareholder loans and
payment-in-kind [PIK] loans--located at the holding company, with
relatively strong documentary provisions. Overall, while we view
the changes to the amount and maturity of the senior secured
notes as moderately positive in terms of recovery, we continue to
see recovery prospects as constrained by the complexities of the
organizational structure," S&P said.

                         RECOVERY ANALYSIS

S&P said it understands that STS has made these changes to the
capital structure from the time of the previous launch:

-  A reduction of the amount under the senior secured notes to
    EUR272.5 million from EUR315 million, and an advancement of
    the maturity date to 2017 from 2019.

-  A reduction of the amount under the super senior RCF to
    EUR100 million from EUR120 million, and an advancement of the
    maturity date to 2017 from 2019.

-  An increase in the amount under the PIK loans to EUR240
    million from EUR170 million.

-  An increase in the amount under the new shareholder loans to
    at least EUR130 million from at least EUR100 million.

S&P also said it understands that STS has made these changes to
the documentation for its various debt facilities:

-  The senior secured notes now include a cap on the amount that
    STS can borrow under the factoring facility of EUR10 million.

-  The permitted collateral liens covenant under the senior
    secured notes document is now set at 3.50x, an improvement
    over the previous level of 4.25x.

-  The cash borrowing cap under an RCF is now lower at EUR80
    million, compared with a EUR90 million cap in the previous

-  The RCF document now allows borrowing of an additional EUR10
    million as an incremental facility.

-  In addition, there have been some changes to the provisions
    under the PIK loan documentation.

"For the purposes of our recovery analysis, we value STS as a
going concern, based on our assessment of its "fair" business
risk profile," S&P said.

"In order to determine recoveries, we simulate a default
scenario. We believe that a default would be triggered mainly by
a deep and prolonged cyclical economic downturn and intense price
competition, resulting in deteriorating performance and a loss of
customer contracts. This would lead to stressed cash flows and a
payment default owing to an inability to pay interest expenses,"
S&P said.

"We value STS using a market multiple approach. We estimate STS'
stressed enterprise value at approximately EUR275 million at our
simulated point of default in 2014. This valuation does not
include any value from Fokker, because it is outside STS'
borrowing groups and because we understand that both Fokker's and
STS' documentation do not provide any cross guarantees, lending,
or security to each other," S&P said.

"In our recovery waterfall, we deduct about EUR19 million of
enforcement costs from the stressed enterprise value of EUR275
million. This leaves a net enterprise value of about EUR255
million. We further deduct 50% of pension costs as priority
liabilities from the net enterprise value, as well as the
structurally advantaged debt of STS' subsidiary Mecanicos
Asociados S.A. of EUR49 million, including six months of
prepetition interest. This leaves about EUR175 million of
residual value available for the repayment of the super senior
RCF and the senior secured notes," S&P said.

"We deduct cash borrowings under the super senior RCF of EUR80
million from the net enterprise value, with the remaining EUR20
million to be used to provide guarantees. This leaves a residual
value of about EUR90 million available for the outstanding senior
secured notes of about EUR290 million, including six months of
prepetition interest. This translates into modest recovery
prospects at the high end of the 10%-30% range for the senior
secured noteholders," S&P said.

Ratings Affirmed
Stork Technical Services Holding B.V.
  Senior Secured Debt                   B-
   Recovery Rating                      5


CENTRAL EUROPEAN: S&P Keeps 'CCC+' Long-Term Corp. Credit Rating
Standard & Poor's Ratings Services kept on CreditWatch with
negative implications its 'CCC+' long-term corporate credit
rating on U.S.-based Central European Distribution Corp. (CEDC),
the parent company of Poland-based vodka manufacturer CEDC
International sp. z o.o. The 'CCC+' issue rating on CEDC's
senior secured notes and 'CCC-' issue rating on the unsecured
notes also remain on CreditWatch negative.

All ratings were originally placed on CreditWatch on June 8,

"The CreditWatch status reflects our view that uncertainties
remain related to CEDC's ongoing accounting review and that
CEDC's liquidity could further and substantially weaken if there
was a breach of covenants which could lead to the acceleration of
the payment of the 2016 notes, upon receipt of a written notice
of 25% or more of the noteholders," S&P said.

"CEDC has announced that the accounting review was still ongoing
and that it might not be able to file its second-quarter results
by Aug. 14, 2012, as requested by the SEC. We understand that
this would constitute a breach of covenants, as per the
documentation of the EUR430 million and $380 million 2016 notes,
for which CEDC would have a 30-day remedy period," S&P said.

"Therefore, in exchange for a waiver fee, CEDC has asked for an
extension of the SEC filing date to Nov. 12, 2012. The waiver
requires consent from the majority of the noteholders, and the
deadline for the consent is Aug. 10, 2012, but could be
extended," S&P said.

"Standard & Poor's aims to resolve or update the CreditWatch
placement within the next three months. During this period, we
expect to receive adequate and updated financial and operating
information to conduct our analysis. We will monitor factors
including the outcome of the waiver solicitation, the magnitude
of the financial restatements, and the group's performance and
Liquidity," S&P said.

"We could lower the ratings by one or several notches if CEDC
does not obtain a waiver for the filing covenant, if the
accounting review concludes with restatements that would be
higher than the current $30 million-$40 million impact on EBITDA
estimated by CEDC, if we perceive further signs of weak corporate
governance, or if we see further deterioration in the group's
liquidity," S&P said.

"We could affirm the 'CCC+' rating if CEDC successfully files its
quarterly financials, and if the restatements do not exceed
current estimates. We will continue to monitor the 2013
refinancing risk, as we believe that some execution risks
remain," S&P said.

* CITY OF OLSZTYN: Fitch Affirms 'BB+' Ratings; Outlook Stable
Fitch Ratings has affirmed the Polish City of Olsztyn's Long-term
foreign and local currency ratings at 'BB+' with Stable Outlook
and Long-term National Rating at 'BBB+(pol)' with a Stable

Olsztyn's ratings reflect the expected gradual improvement in
operating performance in the medium term, which should lead to a
satisfactory operating balance to cover growing debt service.
The ratings take into account the pressure on the city's budget
stemming from municipal companies if they start their investments
in 2013-2014 as well as Olsztyn's low liquidity.  The Stable
Outlook reflects the moderate pressure on Olsztyn's debt
resulting from investments that are largely financed with EU

Dynamic growth in direct debt or indirect risk above Fitch's
projections or the city's operating balance being constantly
insufficient to cover debt service may lead to a negative rating
action.  Conversely, the ratings could be upgraded if the city
manages to improve the operating margin above 10% on a
sustainable basis and when direct and indirect risk does not
exceed Fitch's projections.

Fitch believes the operating margin may steadily grow to about
10% by 2015 from 6.5% in 2011, as result of capex rationalization
measures backed up by Olsztyn's efforts to broaden its tax base.
The agency expects the operating balance to rise to PLN80 million
by 2015 from PLN41.5 million in 2011 and to fully cover Olsztyn's
growing debt service.  Debt service may rise to PLN54m annually
in the medium term.  For 2012-2013 Fitch projects that debt
service to operating balance may be about 100% but then improve
to 70% by 2015.

Despite high EU funds that Olsztyn may receive to finance its
investments, direct debt may grow and peak at PLN340 million in
2014 (2011: PLN264 million).  Debt may remain moderate and below
45% of current revenue.  The city's capex may remain high in
2012-2014 and total PLN660 million.  Fitch expects the city's
capital revenue may average about PLN160 million annually and
cover about 70% of planned capex.

Fitch forecasts that Olsztyn's contingent liabilities may
increase to about PLN410 million by 2015 (2011: PLN144 million),
if all the city's companies start their investments.  Existing
and new indirect debt may limit the risk to the city's budget, as
it largely relates to self-supporting companies.  Major
considered investments comprise the solid waste management plant
construction (investment may start in 2013), the stadium
construction (may start in 2013/2014) and the heating plant that
should be ready from 2017.

Olsztyn has a population of about 176,000 and is the capital of
the Warminsko-Mazurskie Region.  This is one of the five Polish
regions with the lowest wealth indicators in Poland, which
entitles Olsztyn to receive EU funds under the special
'Development for Eastern Poland' program under the European
Regional Development Fund.


* KHAKASSIA: Fitch Assigns 'BB-(EXP)' Rating to RUB2BB Bond Issue
Fitch Ratings has assigned the Russian Republic of Khakassia's
upcoming RUB2 billion domestic bond issue, due August 9, 2015, an
expected Long-term local currency rating of 'BB-(EXP)' and an
expected National Long-term rating of 'A+(rus)(EXP)'.

The final rating is contingent upon the receipt of final
documents conforming to information already received.

The region has Long-term local and foreign currency ratings of
'BB-' and a National Long-term rating of 'A+(rus)'.  The Long-
term ratings both have Stable Outlooks.  The region's Short-term
foreign currency rating is 'B'.

The bond issue has a fixed-rate coupon, which rate will be set on
August 9, 2012.  The principal will be amortized by 40% of the
initial bond issue value on November 7, 2013.  The remaining 60%
will be redeemed on August 9, 2015.  The proceeds from the bond
issue will be used to refinance maturing debt and to fund capital


BANKINTER SA: S&P Assigns LT Ratings to Mortgage Covered Bonds
Standard & Poor's Ratings Services assigned its 'A' long-term
credit ratings to Bankinter S.A.'s (BB+/Negative/B) mortgage
covered bonds ("cedulas hipotecarias"). "At the same time, we
have assigned a negative outlook to the ratings on these covered
bonds," S&P said.

"The covered bonds are senior secured debt issued by Bankinter.
According to our criteria, we view the covered bond ratings as
issue ratings that are linked to our issuer credit rating (ICR)
on the issuer," S&P said.

"Under our criteria for rating covered bonds, we evaluate the
maximum potential rating on a covered bond program as the bank's
ICR plus the maximum number of notches of ratings uplift. The
maximum number of notches of uplift results from our assessment
and classification of the program's asset-liability mismatch
(ALMM) risk and the program categorization," S&P said.

"When determining the program categorization, we consider
primarily our view of the jurisdiction of a program and its
ability to access external financing or monetize the cover pool.
Finally, we assign the covered bonds to one of three distinct
categories. Under our criteria, to achieve the maximum potential
number of notches of uplift, the available credit enhancement
needs to be commensurate with the target credit enhancement," S&P

"Following our analysis, and given our view of the Spanish legal
framework, we have categorized Bankinter's mortgage covered bonds
in category '1' and determined a 'high' ALMM classification.
Under our criteria, these combinations enable us to assign to the
covered bonds a maximum potential ratings uplift of five notches
above our long-term ICR on Bankinter," S&P said.

"Based on our criteria and the application of our credit and cash
flow stresses from the latest information we received from the
issuer, we have assessed that the overcollateralization available
to support Bankinter's cedulas hipotecarias is commensurate with
the maximum ratings uplift above the long-term ICR on Bankinter,"
S&P said.

"Therefore, we have assigned our 'A' long-term ratings to
Bankinter's mortgage covered bonds, which reflects this maximum
ratings uplift of five notches," S&P said.

"At the same time, we have assigned a negative outlook to the 'A'
ratings on these covered bonds. This reflects the fact that, all
other things remaining equal, any rating action on Bankinter
would automatically lead to a corresponding rating action on its
covered bonds," S&P said.

"Our ratings on Bankinter's mortgage covered bonds follow our
analysis of the issuer's asset and cash flow information as of
June 30, 2012," S&P said.

"We assess the cover pool's credit risk as per our 'Criteria for
Rating Spanish Residential Mortgage-Backed Securities,' published
March 1, 2002, 'Methodology And Assumptions: Update To The Cash
Flow Criteria For European RMBS Transactions,' published Jan. 6,
2009, 'Principles Of Credit Ratings,' published Feb. 16, 2011,
and 'Expanding European Covered Bond Universe Puts Spotlight on
Key Analytics,' published July 16, 2004," S&P said.

"We evaluate cash flows generated by the cover pool, and the cash
flow required to service outstanding covered bonds under severe
economic conditions. This evaluation aims to determine whether
the assets in the cover pool are sufficient to meet the payments
on the covered bonds in a timely manner," S&P said.

S&P said its cash flow analysis assesses the cover pool's
performance by considering:

-  Credit risk (as described in the paragraphs below);

-  Interest rate and currency risk;

-  ALMM risk resulting from cash flow mismatches between assets
    and liabilities in terms of maturity, and from market value
    mismatches if the program has to liquidate assets;

-  Prepayment risk and servicing costs; and

-  An appropriate stress-testing of these risks, using S&P's
    cash flow model (Imake).

"In our modeling, we use cash flow assumptions as per our general
cash flow criteria, because we consider these to be appropriate
to apply to covered bonds, due to the similar cash flow risk
nature of residential mortgage-backed securities (RMBS) and
covered bonds," S&P said.

"The ratings on the covered bonds reflect our expectation of
timely payment of interest and ultimate repayment of principal by
the final maturity date of the covered bonds," S&P said.

As of March 31, 2012, the key characteristics of the combined
residential mortgage books of the three entities were:

Classification of ALMM mismatch                High
Program categorization                         1
Maximum potential rating                       A
Current available credit enhancement (%)       92.96
Target credit enhancement commensurate with
the highest credit rating (%)                 79.05

S&P calculated the current credit enhancement as
ALMM-Asset-liability mismatch.


Year      Percentage of covered
          bonds outstanding (%)

2012               0.00
2013              31.78
2014              27.43
2015              17.59
2016              11.20
2017               8.00
2018               1.60
2020               1.60
2022               0.80
TOTAL            100.00

Bankinter's covered bonds' weighted-average life is 2.3 years,
with the highest maturity concentration taking place in 2013
(31.78% of the outstanding notes).


Residential Mortgage Loan Book

Principal balance (EUR)          15,676,084,540
Total number of loans                   128,547
Average loan size (EUR)                 121,948
Weighted-average LTV ratio (%)            55.60
Weighted-average seasoning (months)          63
Weighted-average term to maturity (months)  276
Floating-rate loans (%)                   99.91
Weighted-average margin (bps)                68

Nonresidential Mortgage Loan Book

Principal balance (EUR)          8,451,438,210
Total number of loans                   32,679
Average loan size (EUR)              258,619.8
Weighted-average LTV ratio (%)           66.29
Weighted-average seasoning (months)         51
Weighted-average term to maturity (months) 192
Floating-rate loans (%)                  99.56
Weighted-average margin (bps)              136


Andalucia          14.42
Aragon              2.62
Asturias            1.55
Balearic Islands    2.96
Basque Country      3.75
Canary Islands      4.55
Cantabria           1.59
Castilla-La Mancha  3.66
Castilla-Leon       4.22
Catalonia          12.59
Extremadura         0.68
Galicia             1.73
La Rioja            0.59
Madrid             31.14
Murcia              2.66
Navarra             0.65
Valencia           10.56
Others              0.08

Madrid is the region with the highest concentration (31.14%) as
the bank has historically been quite active in this region.

"We assessed the likelihood that the borrowers would default on
their mortgage payments (the foreclosure frequency), and the
amount of loss on the subsequent sale of the property (the loss
severity, expressed as a percentage of the outstanding loan). We
determined the total mortgage balance that we assume will
default, and the total amount of this defaulted balance that is
not recovered for the entire residential book, by calculating the
weighted-average foreclosure frequency (WAFF) and the weighted-
average loss severity (WALS)," S&P said.

"The product of the WAFF and WALS is the net loss that we assume
may affect the portfolio in a 'AAA' scenario. At the 'AAA' level,
the WAFF and WALS results were," S&P said:

WAFF (%)                    33.84
WALS (%)                    45.72
Assumed net credit loss (WAFF x WALS) (%)   15.47

"Our assessment indicated that this combination of factors, along
with the appraisal of other risk factors, is commensurate with
'A' ratings on Bankinter's cedulas hipotecarias," S&P said.

"We have assigned a negative outlook to the 'A' ratings on these
covered bonds. This reflects the fact that, all other things
remaining equal, any rating action on the issuer would
automatically lead to a corresponding rating action on the
covered bonds issued by Bankinter," S&P said.


Country: Covered bond type


Bankinter S.A.       A/Negative

Spain: Mortgage Covered Bonds (Cedulas Hipotecarias)

U N I T E D   K I N G D O M

BG GROUP: Asks Justices to Review US$185-Mil. Award Reversal
Jamie Santo at Bankruptcy Law360 reports that BG Group PLC has
asserted to the U.S. Supreme Court that the D.C. Circuit erred in
reversing an arbitration award of more than $185 million stemming
from the British oil company's dispute with Argentina, rendering
an opinion that contravened both court precedent and national

BG Group filed a petition for writ of certiorari on July 27 in
response to the D.C. Circuit's decision that an arbitration panel
had overstepped its authority by taking on the dispute in
violation of the preconditions of a bilateral treaty, according
to Bankruptcy Law360.

MERLIN CLAIMS: In Administration on Market Conditions
Eilis Jordan at Business Sale reports that Merlin Claims has
entered administration, despite the fact that just two months
ago, it denied it was facing troubles.

Eilis Jordan relates that the group covers a number of different
firms and the companies entering administration are Merlin Claims
Services Holdings, Merlin Claims Services Finance, Merlin
Commercial & Complex Claims, Merlin Claims, Merlin Liability
Claims, Merlin Surveying Services and Merlin Restoration Repair

BDO LLP business restructuring partners Mark Shaw and Shay Bannon
are working on the administration and will be engaging the
group's employees and clients to discuss the options available,
according to Eilis Jordan.

"Merlin has been affected by the on-going impact of market
conditions, including an increasingly benign claims environment
and an overcapacity within the loss adjusting sector. . . . In
recent months, Merlin has been working through plans to
restructure its operations and has also been actively engaged to
find an investor or purchaser of the business without success,"
the report quoted Mr. Shaw as saying.

The report notes that Rumors that the business has been
struggling have been circulating for months since the firm lost
an adjusting contract with Legal & General.

This was one of the firm's biggest sources of revenue and caused
problems for the business despite the fact that Kevin Wood,
Merlin chief technical officer, claimed that the business would
still have plenty of work, the report says.

PORTSMOUTH FOOTBALL: Tal Ben Haim Leaves Club After Wage Deal
Nabil Hassan at BBC News reports that Portsmouth defender Tal Ben
Haim has reached a compromise deal over his wages and has left
the stricken club.  The departure of Mr. Ben Haim was the last
major stumbling block in the club's attempts to avoid

According to BBC, administrator Trevor Birch had said the club
would close on August 10 unless all the senior players left.

Only midfielder Liam Lawrence remains but he is a target for
Cardiff City, while Kanu has left but is still seeking
compensation over unpaid wages, BBC discloses.  That dispute will
be settled by a Football League tribunal, BBC notes.

Mr. Lawrence has also previously said he would come to a
compromise over his wages if the club could not move him on or
before August 10, BBC says.

With Mr. Ben Haim gone and just Mr. Lawrence remaining,
prospective buyers Portpin (former owner Balram Chainrai's
company) can now start the process of bringing the club out of
administration via a company voluntary arrangement (CVA), BBC

Creditors have already agreed Mr. Chainrai's offer of two pence
in the pound, while the Pompey Supporters Trust are also hopeful
of taking control of the club, BBC relates.

                  About Portsmouth Football

Portsmouth Football Club Ltd. --
-- operated Portsmouth FC, a professional soccer team that plays
in the English Premier League.  Established in 1898, the club
boasted two FA Cups, its last in 2008, and two first division
championships.  Portsmouth FC's home ground is at Fratton Park;
the football team is known to supporters as Pompey.  Dubai
businessman Sulaiman Al-Fahim purchased the club from Alexandre
Gaydamak in 2009.  A French businessman of Russian decent,
Gaydamak had controlled Portsmouth Football Club since 2006.

In 2010, the club entered administration as a Premiership club
with UHY Hacker Young partners Andrew Andronikou, Peter Kubik and
Michael Kiely appointed administrators, Accountancy Age noted.
In March 2011, Geoff Carton-Kelly and David Hudson, partners at
Baker Tilly, were appointed liquidators, Accountancy Age related.

SLHT: Protesters Fight for NHS Future After Firm's Administration
News Shopper reports that protesters concerned about the future
of the NHS gathered at the Queen Elizabeth Hospital to supportive
hoots from passing traffic.

Around 30 people assembled to show their support for staff and
patients following last month's announcement that the
financially-crippled South London Healthcare Trust had gone into
administration, according to News Shopper.

The report relates that the trust, which runs the Queen Elizabeth
in Woolwich, Queen Mary's Hospital in Sidcup and the Princess
Royal University Hospital in Farnborough, has racked up debts of
more than GBP150 million over the past three years.

News Shopper notes that an umbrella group - Save our Local NHS
hospitals - of local campaigning groups such as NHS Public
Greenwich organized the demonstration.  The report relates that
they also added more names to a petition of several thousand
signatures which was drafted by hospital staff and states it
cannot be right to bail out banks and not the NHS.

Matthew Kershaw stepped into the role of administrator on July 16
and since the move, there have been several meetings of local
people who fear for the NHS' future and want the Private Finance
Initiative (PFI) debt to be paid off, the report recalls.

STEPHENSON CLARKE: In Liquidation; Sells Last Vessel
Isaac Arnsdorf at Bloomberg News reports that Stephenson Clarke
Shipping Ltd.'s liquidator said the company sold its last vessel
and is going out of business.

According to Bloomberg, a statement from accounting firm Tait
Walker said that the company has been placed into liquidation.

"While previous economic downturns have been weathered, the
current market is one of the worst experienced for many years,
with no upturn forecast for at least 12-18 months," Bloomberg
quotes Stephenson Clarke as saying in the statement.

Stephenson Clarke Shipping Ltd. is the world's oldest shipping
company.  It owned carriers of bulk commodities such as grains
and coal for short-sea voyages.

TATA STEEL: Moody's Cuts CFR to 'B3'; Outlook Remains Negative
Moody's Investors Service has downgraded the corporate family
rating of Tata Steel UK Holdings Limited ("TSUKH") to B3 from B2,
and its EUR3.4 billion term loan facility and EUR690 million
revolving credit facility to B3/LGD 3(49%) ratings from B2/LGD
3(49%). The rating outlook remains negative.

At the same time, Moody's has changed the outlook on the Ba3
corporate family rating of India-based Tata Steel Limited ("TSL")
to negative from stable.

Ratings Rationale

"The downgrade of TSUKH's ratings reflects our expectation of
further weakness in the operating environment facing the European
steel industry, for which Moody's has a negative outlook," says
Alan Greene, a Moody's VP and Senior Credit Officer. "The weak
industry fundamentals in Europe, driven mainly by the depressed
economic environment in the region, are raising significant
challenges for TSUKH, and will likely lead to slower recovery in
its operating and financial profile," says Mr. Greene, adding,
"as such, TSUKH's debt coverage metrics are no longer consistent
with the previous B2 rating."

"The change in TSL's rating outlook to negative from stable
reflects the weakened credit profile of TSUKH, which is a very
substantial subsidiary of TSL," continued Greene who is also
Moody's Lead Analyst for Tata Steel. TSUKH has more than 50% of
the group's overall steel production capacity, and its weakened
financial performance weighs heavily on the consolidated group.

"The change in TSL's outlook to negative also considers our view
that steel supply/demand fundamentals in India will soften, as
the Indian economy undergoes a period of slower growth, and
domestic capacity continues to be added, albeit the country
remains a net importer of steel," says Mr. Greene.

TSL is investing heavily in new Indian steel capacity and, as a
result, the company will be unlikely to generate free cash flow
at the standalone entity level in the near term. This, coupled
with possibility of further capacity cutbacks and losses in
Europe and downward pressure on Indian steel prices, will likely
heighten financial leverage to a level that would position the
TSL group weakly within its Ba3 corporate family rating.

"The Tata Steel group currently is a blend of a highly profitable
Indian steel operation producing 7 million tonnes per annum
(mtpa) of steel and a barely profitable European business running
at 14 mtpa, with some support from SE Asia operations running at
2 mtpa," says Mr. Greene.

The group is investing both to increase its Indian output and to
improve cost efficiency in its European operations. "While this
makes business sense, the outlook for the European steel industry
remains extremely weak," says Mr. Greene, adding, "we expect
consolidated credit metrics to deteriorate further in the current
financial year (FYE March 31, 2013) despite the 1 million tonne
of incremental output from its expanded plant at Jamshedpur."

Tata Steel's strength in India stems from its self-sufficiency in
raw materials -- fully in iron ore and some 50% self-sufficient
in coal. By contrast, the European operations rely on imported,
seaborne raw materials. Moody's notes that considerable focus is
being given by Tata Steel to securing raw materials, primarily
for its European operations and it has made significant
investments in Canada and Mozambique, the benefits of which
should flow through in 2013 and beyond.

TSUKH's B3 rating factors in two notches of support from TSL,
reflecting TSUKH's strategic importance within the group and the
support it is likely to receive in case of need. TSL has
demonstrated strong support for its European subsidiary on a
number of occasions, including equity injection and working
capital support.

Moody's understands that TSUKH has complied with its loan
covenants as at March 2012. However, this is predominantly due to
Tata Steel group involvement in supporting TSUKH's working
capital requirement through a range of measures, such as
procuring raw materials for TSUKH and purchasing its receivables.
As incremental capacity comes onstream in India, the Group's
capacity to provide such support will likely increase.

The outlook for both ratings is negative given the outlook for
steel in Europe and the constraints this is placing on the
Group's overall financial profile, despite the capacity additions
being made in India, that should enhance overall profitability in
due course.

Both ratings are unlikely to go up in the near future, but could
return to a stable outlook. The financial metrics Moody's would
consider are as follows. For TSUKH, Moody's would look for
positive free cash flow generation (i.e operating cash flow less
dividends and capex) and for Adjusted debt/EBITDA to fall below
7.0x on a sustained basis. For TSL, Adjusted debt/EBITDA would be
expected to fall below 3.5x to 4.0x and EBIT interest coverage
improve to at least 3.0x on a sustained basis.

Negative rating pressure could develop in the event of a
worsening in the operating environment beyond Moody's current
expectations. The rating for TSUKH could be considered for a
downgrade if EBITDA remains negative in FY13 or if a revised
level of support from the Group is apparent or the assumptions
behind Moody's expected recovery rate are further pressured.

The rating for TSL could go down if Adjusted debt/EBITDA exceeds
5.0x or if EBIT interest coverage falls below 2.0x to 2.5x on a
sustained basis.

The principal methodology used in rating Tata Steel Limited and
Tata Steel UK Holdings Limited was the Global Steel Industry
Methodology published in January 2009.

Tata Steel UK Holdings is the 100%-owned subsidiary of Tata Steel
Ltd and is the holding company for the European steel operations
that principally comprise the former Corus Group. Tata Steel Ltd,
is an integrated steel company headquartered in Mumbai, India.
The Tata Steel Group is the world's 12th largest steelmaker
producing 24.03 million tonnes of crude steel in FY2012.

* Moody's Says EU Bank Deleveraging to Benefit Asset Managers
Credit-oriented investment managers are expanding their assets
under management (AUM) by acquiring bank-loan portfolios for
their third-party clients, says Moody's Investors Service in a
new Special Comment published on Aug. 8. These managers are also
stepping in to lend third-party funds to corporates and small and
medium-sized enterprises (SMEs), which have been traditionally
served by European banks.

Moody's says that asset managers with the necessary credit-
analysis experience are best placed to take advantage of this
opportunity to engage in bank loan portfolio acquisitions and
direct lending for their third-party clients. However, Moody's
notes that this opportunity is not without challenges as (1)
banks may face hurdles in selling these portfolios due to the
challenges of agreeing on valuation; and (2) several regulatory
challenges will have to be overcome in order for managers to
fully realise the opportunities left by deleveraging European

The number of jurisdictions and legal regimes within Europe
requires a unique expertise to participate in both loan portfolio
acquisitions and direct lending. Moody's notes that managers
without an expertise in this area run an increased risk of future
losses if they are to invest in sectors and regions in which they
lack such expertise.

The new report, entitled "Select Asset Managers Benefit from
European Bank Deleveraging," is now available on
Moody's subscribers can access this report via the link provided
at the end of this press release.

This growth opportunity for asset managers follows the plans by
European banks -- driven by market and regulatory pressures - to
reduce assets over the course of 2011-13. According to the IMF's
April 2012 Global Financial Stability Report, such assets are
estimated at nearly EUR2.0 trillion.

"Managers that have the knowledge and ability to evaluate and
price credit risk across a variety of European domiciles and
sectors will have a unique opportunity to compete for the
acquisition of these portfolios. For managers with this niche
credit-investment expertise, this opportunity is credit positive,
as the expansion of their third-party AUM will generate a longer-
term, stable stream of investment management fee income,"
explains Michael Eberhardt, a Moody's Vice President - Senior
Analyst, and the author of the report.

Moody's says that the timeframe and sizeable pipeline outlined by
the IMF report and investor surveys, indicates that the credit-
positive effects will offer a medium- to long-term benefit to
asset manager franchises. In taking advantage of European bank
deleveraging, niche credit-investment managers are developing
credit-investment vehicles that offer risk-and-return profiles
that can help satisfy the long-term investor need for yield and
assets that generate stable performance in a challenging economic

"Despite the advantages for credit-oriented managers, the longer-
term nature of the investment holding period required by both
investment opportunities implies that managers who lack the
necessary credit expertise and staff resources will find it
difficult to raise third-party funds in order to take advantage
of these opportunities," adds Mr. Eberhardt. "In addition, the
extension of credit by asset managers without the requisite
expertise to understand and price these assets, or originate new
lending to sectors in which they have no expertise, will
potentially experience losses and generate unfavourable returns
for their third-party investors."

However, regulatory and operational issues remain. By lending to
corporates and SMEs, asset managers will need to placate
regulator concern for the systemic risks posed by this
disintermediation of traditional banking. With regards to
systemic concerns, Moody's says that the challenge is reduced as
the public sectors in several European countries, including the
UK, have acknowledged the need for new sources of funding in
meeting the needs of SMEs, at a time when European banks are
pulling back.

Apart from asset-manager specific concerns, Moody's says that the
process of bank deleveraging is not going to offer a smooth
pipeline for asset managers to grow their franchises, because
banks will find it difficult to sell assets at a time when asset
prices are subject to negative pressures due to the macroeconomic


* EUROPE: Commission to Detail Banking Supervisor Plans by Sept.
Matina Stevis at Dow Jones Newswires reports that the European
Commission plans to detail proposals for a euro-zone banking
supervisor -- seen by backers as key to stemming the bloc's
sovereign debt crisis -- by Sept. 11.

Leaders of the European Union decided at a Brussels summit in
late June to establish a banking supervisor, part of measures to
contain the crisis that has seen Greece, Ireland, Portugal and
more recently Cyprus and Spain seek bailouts from international
lenders to finance their economy or banking systems, Dow Jones

The move, Dow Jones says, is a precondition to allowing the
European Stability Mechanism, the bloc's permanent rescue fund,
to recapitalize banks directly.  Germany, the euro zone's biggest
economy and largely the paymaster of the region's bailouts, has
said that without centralized banking oversight it won't allow
the bailout fund to invest in ailing banks in order to save them,
Dow Jones notes.

"We need to decide what kind of structure the new body could be
set up under," Dow Jones quotes a European Union official as
saying.  It cannot conflict with the European Central Bank's
mandate, Dow Jones says.

The proposed banking regulator will have a 360-degree view of the
systemic weaknesses of the big euro-zone banks, those known as
too big to fail, according to Dow Jones.

If all goes to plan, the debt incurred by a EUR100 billion
(US$124 billion) bailout for Spain's banks, agreed earlier this
year, could be transferred from the country's to the ESM's books,
Dow Jones states.  That would be significant in breaking the
negative-feedback loop between struggling countries and weak
banks in the euro zone, according to Dow Jones.

The official, as cited by Dow Jones, said that under the plan,
the European Banking Authority, which currently oversees all 27
EU members, will lose control over the euro-zone nations that
would come under the new organization's remit.  The new body
would be an agency of the European Central Bank, Dow Jones

* BOOK REVIEW: Corporate Debt Capacity
Author: Gordon Donaldson
Publisher: Beard Books, Washington, D.C. 2000 (reprint of 1961
book published by the President and Fellows of Harvard College).
List Price: 294 pages. $34.95 trade paper, ISBN 1-58798-034-7.

"The research project who results are reported in this volume was
primarily concerned with the risk element involved in the
utilization of debt as a source of permanent capital for
business," Bertrand Fox, Director of Research, succinctly writes
in the "Foreword". The research project was funded by and
conducted by an organization connected with Harvard College, the
original publishers of this book in the early 1960s.

The research was not a body of data for analysis as research
typically is in business studies or sociological studies. In the
end, Donaldson recommends perspectives and practices going beyond
the research. This doesn't necessarily go against the findings of
the research, but rather shows the limitations of the thinking of
most businesspersons at the time or their blind spots regarding
the role of debt, especially with respect to potentials for
growth, longevity, and other interests of business management.
The businesses are not identified. Given Donaldson's credibility
and reputation and the Harvard name behind the research project
however, the research data is taken as factual and reliable. The
research was garnered from participating corporations and
financial institutions.

Though there are a few tables, the research is not limited to
financial information strictly as figures and other balance sheet
data. Donaldson was interested as much in corporate leaders'
psychology and presumptions about debt more than current debt
situations and corporate policies regarding debt. Financial
98 institutions were included as part of the study as well
because their views toward corporate debt and the way they worked
with the financial parts of corporations had an effect on
corporate debt of the time.

As Donaldson found from the research, both corporations and
financial institutions understood debt in conventional,
traditional, ways. For the corporations, these ways could be
hampering operations and strategy. The ways corporations were
being hampered were unseen however unless they started looking at
their books differently and became open to taking on debt
differently. Donaldson's singular achievement was to see in the
research ways in which corporations were being hampered and in
thus propose a new way of regarding debt. This was a
revolutionary step for the large majority of businesses. And for
even the small number of businesses which were pursuing
unconventional debt practices, Donaldson's studies and new
perspective put these on solid ground giving better guidance.
Donaldson's readings of the research reflect corporate managers'
own statements (also part of the research) regarding their views
on their company's financial analysis and debt. Managers are
quoted, "Our management is essentially conservative."; "The word
which describes our corporate image is 'dignified'."; "I supposed
in a way we're lazy." The author treats these as "attitudes"--as
in a chapter "Management Attitudes to Non-Debt Sources"--
realizing that it is such "attitudes" more than what financial
figures disclose or debt itself which colors practices about the
fundamental business matter of debt.

Donaldson brings into the open managers false sense of debt. This
false sense is bound in with conventional, inherited concepts and
images of a corporation having no relation to facts. Such
conventional views are perpetuated by an aversion to risk. The
less debt, the less risk, according to the prevailing precept.
But Donaldson points out that managers who observe this actually
often pursue greater risks in product development, entering new
markets, mergers, and other activities.

Corporate "attitudes" to debt since the book's 1961 publication
attest to the deep influence of Donaldson's groundbreaking
perspective. Consumer debt, the growth of credit cards, and other
financial phenomena also evidence changed regard of debt found in
Donaldson's work. The tipping of the balance to too much debt for
many corporations and beyond cannot be attributed to the book
however. For in urging new concepts and uses of debt for the
better management of corporations, Donaldson also goes into
determination and control of risks entailed in new types of debt.
Gordon Donaldson retired in 1993 after close to 20 years at the
Harvard Business School.


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

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  Go to 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
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Information contained herein is obtained from sources believed to
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