/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/121017.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Wednesday, October 17, 2012, Vol. 13, No. 207 Headlines C Z E C H R E P U B L I C EP ENERGY: Fitch Assigns 'BB+' Long-Term Issuer Default Rating G E R M A N Y CONTINENTAL AG: Fitch Says Stake Sale Tighten CDS in October 2012 FRESENIUS MEDICAL: S&P Affirms BB+ Rating on Sr. Unsecured Notes G R E E C E NATIONAL BANK: S&P Affirms 'CCC/C' Counterparty Credit Ratings L U X E M B O U R G INTELSAT SA: Closes Sale of U.S. Headquarters for US$85 Million N E T H E R L A N D S ALFACAM GROUP: Seeks Creditor Protection E-MAC NL 2005-III: S&P Affirms 'CCC' Rating on Class E Notes R U S S I A CREDIT EUROPE: Fitch Assigns 'BB-' Rating to Sr. Unsecured Bonds REPUBLICAN INVESTMENT: S&P Assigns 'B' LT Issuer Credit Rating S P A I N ACCESOS DE MADRID: Files for Bankruptcy After Failed Debt Talks AYT CAIXA: Fitch Downgrades Rating on Class C Notes to 'Bsf' AYT COLATERALES: Fitch Cuts Rating on Class D Tranche to 'CCsf' MAPFRE INSURANCE: S&P Cuts Subordinated Debt Rating to 'BB' * S&P Takes Rating Actions on Spanish Financial Institutions S W E D E N * SWEDEN: Moody's Examines Covered Bond Legal Framework S W I T Z E R L A N D DUFRY AG: S&P Assigns 'BB+' Long-Term Corporate Credit Rating PETROPLUS HOLDING: Petit Couronnere Finery Put In Liquidation U N I T E D K I N G D O M ATH RESOURCES: Calls in Deloitte to Explore Restructuring Options CHELBURY HOMES: Legal Claims Pushed Firm Into Administration CLUB CLASS: High Court in London Winds Up Marketing Firms ELIXIR FOUNDATIONS: Collapses Into Administration MANGANESE BRONZE: Geely Mulls Cash Injection UNIGLAZE: In Administration, Cuts 88 Jobs WAVERLEY TBS: In Liquidation as Administrators Fail to Find Buyer * Insolvency Numbers Show Hospitality and Leisure Sector Hit Hard U Z B E K I S T A N AGROBANK OJSC: Fitch Affirms 'B-' Long-Term IDR; Outlook Stable ********* =========================== C Z E C H R E P U B L I C =========================== EP ENERGY: Fitch Assigns 'BB+' Long-Term Issuer Default Rating -------------------------------------------------------------- Fitch Ratings has assigned EP Energy, a.s. (EPE) a Long-term foreign currency Issuer Default Rating (IDR) of 'BB+' with Stable Outlook. Fitch has also assigned EPE's proposed EUR500 million senior secured notes issue due 2019 an expected rating of 'BBB- (exp)'. The final rating is contingent upon the receipt of final documents conforming to information already received. The IDR reflects EPE's contracted lignite mining and low cost heat sales through regional regulated distribution monopolies. These two core segments represent over 80% of EPE's EBITDA (with the rest derived from power generation, trading and supply) making its earnings and cash flows relatively stable and predictable. EPE also benefits from geographical diversification and a limited exposure to adverse regulation. Over 90% of EPE's expected external lignite sales (17 million tons in 2011) are contracted until 2020 and around 60% until 2039 with quality counterparties (efficient base load power plants in Germany designed to use EPE's lignite) and on price terms reflecting the cost structure of the mining operations (and inflation) thus limiting EPE's volume and price risk. EPE can increase its lignite production without significant additional investment. EPE is the largest heat supplier in the Czech Republic with an installed thermal capacity of 3.2 gigawatts (GWth), mostly lignite fired, and heat supplies of 18.1 peta joules in 2011, mostly to retail customers. The company supplies around 360 thousand households in Prague and other major cities, representing a stable customer base and operates one of the largest cogeneration plants in the country. This plant, in Opatovice, is a low-cost heat producer and EPE's heat prices are below the market average and alternative heating solutions. Fitch notes that one of EPE's long-term lignite supply contracts is facing a price dispute. The rating is constrained by EPE's short track record of its current business structure with full ownership of most of the key operations (excluding 27% of Prazska Teplarenska, PT). EPE's group structure is complex, with a number of separate operating and holding companies in several jurisdictions. Centralized treasury and cash pooling is still being developed and operational integration is fairly limited, despite EPE's presence in the entire energy chain (from pit to retail supply). The ratings take into consideration the proposed refinancing, including the new issuance of notes and equal ranking secured loans (with combined size of EUR1,190 million), largely to repay existing bank and shareholder debt (EUR923 million). As part of the refinancing, EPE proposes a significant special dividend of EUR230 million (or 63% of its pro-forma EBITDA for the last 12 months ending June 2012), contributing together with planned capex to an increase in its leverage to above management's target of 3.0x (net debt to EBITDA) for about two years. This target is also higher than most regional peers who have not exceeded or reached their leverage targets (especially the Polish utilities). EPE's dividend policy allows for a pay-out of 50% of net income, but only if the leverage target is met. EPE's liquidity is adequate. After the proposed refinancing, EPE plans to hold at least EUR20 million (equivalent) of cash, and will have EUR40 million of undrawn credit facilities. Considering that most of the capex planned for 2013 and 2014 is to be project-financed, the debt maturity schedule (EUR40 million annually plus the project debt) is well matched to Fitch's expected free cash flows (before project-financed capex) during 2013-16 (around EUR130 million annually). EPE's proposed notes and pari passu facilities (representing the bulk of total debt) will be secured with pledges over shares and material assets in certain key operating companies. An upstream guarantee from all key subsidiaries (except for MIBRAG, the lignite mine and Prazska teplarenska) and a negative pledge covenant mitigate possible structural subordination. Fitch's estimate supports above average recovery expectations for the secured debt, which combined with the provided security and regulated nature of a significant part of earnings (heat generation, distribution and supply represents 38% of EBITDA) support a one-notch uplift for the secured debt instruments. Although the loans are expected to have a shorter maturity (five years) than the bond (seven years), the bond would continue to be secured after the initial loans mature. Positive: Future developments that may, individually or collectively, lead to positive rating action include: -- Longer track record with the current business structure of greater vertical integration of operations, supporting fuel supply self-sufficiency without significant cost implications for the group -- Reduction of target and Fitch's expected leverage to a level comparable with regional peers (below 3.5x net adjusted FFO leverage on sustained basis) Negative: Future developments that may, individually or collectively, lead to negative rating action include: -- A more aggressive financial policy (including opportunistic M&A or higher dividends) that would increase Fitch-expected net adjusted FFO leverage to around 4.0x on a sustained basis -- Significant deterioration in business fundamentals due to a large and sustained increase in the carbon dioxide price or a fall in natural gas prices or structural heat demand decline (perhaps as a result of more effective insulation and/or higher ambient temperatures) ============= G E R M A N Y ============= CONTINENTAL AG: Fitch Says Stake Sale Tighten CDS in October 2012 ----------------------------------------------------------------- Fitch Ratings observes that Continental AG's spreads and CDS have continued to tighten in the first half of October 2012 following the Schaeffler group's decision to dispose of its 10.4% stake in Continental held in its name by two fiduciary private banks. This follows the fixed income markets' positive reaction since Fitch's rating action on May 15, 2012 when the agency upgraded Continental's Long-term Issuer Default Rating (IDR) to 'BB' from 'BB-', and affirmed the Short-term IDR at 'B'. The Outlook is Stable. Schaeffler's decision to sell the stake held by the banks is consistent with Fitch's considerations in its May 2012 rating action. Schaeffler Holding and its subsidiary Schaeffler AG now hold a combined 49.9% of Continental, but this does not change the existing relationship between Schaeffler and Continental as Fitch already considered before the stake disposal that Schaeffler's controlling influence and ability to extract cash from Continental was limited. Continental's ratings continue to reflect Fitch's assessment of Continental's standalone credit profile being consistent with a low 'BBB' rating. However, the ratings also incorporate the agency's assessment of the Schaeffler Group and Continental's consolidated credit quality, including a one-notch uplift to reflect the ring-fencing in place and creditor protection included in Continental's existing bond and loan documentation. Furthermore, Fitch believes that uncertainty remains about what the 'end-game' will be for Schaeffler/Continental and that the ring-fencing is largely dependent on negotiations between Continental and banks' lending at both the Schaeffler and Continental level, whose interest might not be necessarily aligned with Continental's bondholders. The Schaeffler group remains highly leveraged, in spite of the recent Continental stake disposal and further deleveraging is reliant on asset sales. Nonetheless, Fitch considers that Schaeffler's decision to sell a stake in Continental is modestly positive in view of the EUR1.6bn proceeds from the deal applied to Schaeffler's debt reduction. This results in a slightly stronger Schaeffler/Continental combined financial profile. Fitch calculates that the pro-forma funds from operations adjusted leverage on a consolidated basis of Schaeffler Group and Continental has declined to just above one of the agency's positive guidelines of 3x for a possible upgrade. In addition, this move lowers the probability of a full merger or combination between Schaeffler and Continental in the future. FRESENIUS MEDICAL: S&P Affirms BB+ Rating on Sr. Unsecured Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BBB-' issue rating to the proposed senior secured credit facilities, totaling about $3.85 billion, to be borrowed by German health care group Fresenius Medical Care AG & Co. KGaA (FME; BB+/Stable/--), Fresenius Medical Care Holdings Inc. (FMCH; not rated), and some of FME's subsidiaries. The issue rating is one notch above the corporate credit rating on FME. "We have also assigned a recovery rating of '2' to the proposed senior secured facilities, indicating our expectation of substantial (70%-90%) recovery in the event of a payment default," S&P said. "We have not reviewed the full draft of the credit agreement for the proposed senior secured credit facilities, but only detailed terms and conditions. Our ratings are subject to our satisfactory review of the credit agreement," S&P said. "At the same time, we affirmed the 'BBB-' issue rating on FME's existing senior secured debt facilities. The '2' recovery rating on these instruments remains unchanged, reflecting our expectation of substantial (70%-90%) recovery for creditors in the event of a payment default. We expect to withdraw the recovery and issue ratings on these instruments upon refinancing completion," S&P said. "We also affirmed the 'BB+' issue rating on the existing senior unsecured notes. The '3' recovery rating on these instruments remains unchanged, reflecting our expectation of meaningful (50%- 70%) recovery for noteholders in the event of a payment default," S&P said. "We understand that FME will use the proceeds of the proposed senior secured credit facilities to fully refinance the existing facilities maturing March 2013, and for general corporate purposes," S&P said. "Recovery prospects for the various debt facilities are supported by our expectation that, in a default, the company would be reorganized rather than liquidated, and by our understanding that the proposed senior secured credit facilities will substantially benefit from a similar position to the existing senior secured debt," S&P said. "Despite numerical coverage in excess of 100% for the proposed senior secured credit facilities, our recovery rating of '2' reflects our view that the structural and contractual seniority of the senior secured facilities and the recovery value available would unlikely be sufficient to maintain any upward notching of the issue rating under our criteria in the event that the corporate credit rating were raised to 'BBB-'," S&P said. "The proposed facilities, including revolving credit and term loan facilities (RCF) (together, 'the proposed senior secured credit facilities'), will be senior secured obligations of FME and some of its subsidiaries." The proposed senior secured credit facilities will be guaranteed by FME, FMCH, and some of FME's subsidiaries. "The security package provided to the proposed senior secured creditors is substantially similar to the one provided to the existing senior secured creditors, with one major exception, the loss of the springing lien," S&P said. "We view the security package for the proposed senior secured credit facilities as somewhat weak because it only covers share pledges. Moreover, unlike the existing senior secured credit facilities, we understand that the proposed senior secured credit facilities will not benefit from a springing lien on FME's assets that enables the borrowers and guarantors to provide comprehensive asset security if the debt rating falls below 'BB-' or the equivalent," S&P said. The documentation for the proposed senior secured credit facilities will be substantially similar to the existing credit agreement, and will include: Maintenance financial covenants, in terms of maximum net- debt-to-EBITDA ratio, and minimum EBITDA-to-net interest expense, both tested quarterly; Restrictions on debt incurrence, although this is subject to a number of carve-outs; Restrictions on liens, acquisitions, and dividend payments, although subject to carve-outs. "Our hypothetical default scenario for FME contemplates a payment default in 2017, with EBITDA declining to about $1,255 million," S&P said. "At our hypothetical point of default, we value FMC at about $8,160 million using a market multiple approach," S&P said. "We deduct from this stressed enterprise value priority liabilities of about $2,350 million, comprising about $735 million of enforcement costs, priority debt facilities that include securitization and prepetition interest, some finance leases, local bilateral bank lines, European Investment Bank (EIB) loans, and prepetition interest," S&P said. "The numerical recovery prospects for the proposed senior secured credit facilities are in excess of 100%," S&P said. "The recovery prospects for the various unsecured debt instruments, including the proposed notes, are in the 50%-70% range, leading to a recovery rating of '3' on these instruments," S&P said. RATINGS LIST New Rating Fresenius Medical Care AG & Co. KGaA Senior Secured BBB- Recovery Rating 2 Fresenius Medical Care Holdings Inc. Senior Secured* BBB- Recovery Rating 2 Ratings Affirmed Fresenius Medical Care AG & Co. KGaA Senior Secured BBB- Recovery Rating 2 FMC Finance VI S.A. Senior Unsecured* BB+ Recovery Rating 3 FMC Finance VII S.A. Senior Unsecured* BB+ Recovery Rating 3 FMC Finance VIII S.A. Senior Unsecured* BB+ Recovery Rating 3 Fresenius Medical Care US Finance II, Inc Senior Unsecured* BB+ Recovery Rating 3 Fresenius Medical Care US Finance, Inc Senior Unsecured* BB+ Recovery Rating 3 * Guaranteed by Fresenius Medical Care AG & Co. KGaA =========== G R E E C E =========== NATIONAL BANK: S&P Affirms 'CCC/C' Counterparty Credit Ratings -------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'CCC/C' long-term and short-term counterparty credit ratings on Greece-based National Bank of Greece S.A. (NBG) and Eurobank Ergasias S.A. (Eurobank). "We also affirmed our 'CC' issue rating on NBG's and Eurobank's hybrid securities. The outlook is negative," S&P said. "The rating action follows NBG's announcement it has launched a tender offer to acquire all the outstanding shares of Eurobank, on the basis of 58 new shares of NBG for every 100 shares of Eurobank. The offer hinges on the approval of regulatory authorities, including the Hellenic Financial Stability Fund (HFSF). According to NBG's press release, Eurobank's main shareholders, representing 43.6% of capital, have committed to tender their shares to the offer. If approved by NBG shareholders and regulatory authorities, the offer is likely to start at the end of November. Following its potential completion, Eurobank would become an NBG subsidiary. NBG has indicated it intends to proceed with the merger with Eurobank. The affirmation reflects our opinion that, if the merger is approved, the combined entity's financial profile would not be materially different than those we incorporate in our current ratings on NBG and Eurobank," S&P said. "In our opinion, the combined entity would maintain an adequate business position, under our criteria, in line with our current assessments of this factor for NBG and Eurobank. We consider that the combined entity's future revenue stability and business position in Greece would remain vulnerable to the significant deterioration we see in the domestic banking market and economy, to which all banks in the country are exposed. Still, we acknowledge that the combined entity would have a material position in Greece, with 32% market share in terms of deposits. The combined entity would also have a significant international footprint higher than those of other domestic peers, with over 27% of loans and deposits outside Greece, namely in Eastern European countries and Turkey," S&P said. "The negative outlooks are based on the possibility that we could lower the ratings on NBG and Eurobank, if we believe they will default on their obligations, as defined by our criteria. We could lower the ratings on NBG and Eurobank if their access to the EU's extraordinary liquidity support mechanisms, including the ELA discount facility at the European Central Bank (unsolicited AAA/Stable/A-1+), is impaired for any reason. This support currently underpins the banks' capacity to meet their financing requirements. In this context, we also note that persistently high pressure on Greek banks' retail funding bases may lead to further deposit outflows, which could in our opinion increase the banks' need for additional extraordinary liquidity support from EU authorities," S&P said. "We could also lower the ratings if we believe the banks are likely to default as a result of any developments associated with a substantial impairment of their solvency. This could happen if, for any reason, Greek banks are unable to access external capital support, or if we consider such support insufficient to allow the banks to continue meeting regulatory capital requirements mainly as a result of potential recognition of continued large impairments on loans," S&P said. =================== L U X E M B O U R G =================== INTELSAT SA: Closes Sale of U.S. Headquarters for US$85 Million --------------------------------------------------------------- SL 4000 Connecticut LLC, an affiliate of The 601 W Companies LLC, completed the acquisition of Intelsat S.A.'s U.S. administrative headquarters office building located in Washington, DC, for a purchase price of approximately US$85,000,000 pursuant to a Purchase and Sale Agreement dated July 18, 2012, between the Purchaser and Intelsat Global Service LLC, an indirect subsidiary of Intelsat S.A. In addition, on Oct. 5, 2012, upon the closing of the U.S. Administrative Headquarters Property sale, the Seller entered into a lease agreement under which the Seller leased from the Purchaser a portion of the U.S. Administrative Headquarters Property for an initial term of 18 months at an annual gross rental rate of US$9,000,000, with a single option to extend the term of the Post-Closing Lease for up to an additional 12 months at an annual gross rental rate of US$10,500,000. Intelsat S.A. expects that the rental expense under the Post-Closing Lease will be largely offset by cost savings with respect to eliminated maintenance and operations expense associated with Intelsat's prior ownership of the U.S. Administrative Headquarters Property. Intelsat is currently in the process of selecting a location for a new permanent U.S. administrative headquarters office. On Oct. 5, 2012, Intelsat S.A. also purchased Convergence SPV's 25.1% equity interest in New Dawn Satellite Company, Ltd., the joint venture that owns the Intelsat New Dawn satellite. The purchase price of the equity was immaterial to Intelsat. As a result, Intelsat became the sole owner of the satellite, which will be re-named Intelsat 28. The transaction will have no impact on operations of the satellite or on customers using its services. The joint venture is already fully consolidated in Intelsat's publicly filed financial statements. In connection with the purchase of Convergence SPV's equity, on Oct. 5, 2012, Intelsat also repaid in full the approximately $88 million outstanding under the New Dawn secured credit agreement, dated Dec. 5, 2008, and related interest rate swaps. The credit facility consisted of senior and mezzanine term loan facilities. The senior term loan facility provided for a commitment of up to $125.0 million with an interest rate of the London Interbank Offered Rate plus an applicable margin between 3.0% and 4.0% and certain costs, if incurred. The mezzanine term loan facility provided for a commitment of up to $90 million with an interest rate of LIBOR plus an applicable margin between 5.3% and 6.3% and certain costs, if incurred. About Intelsat Intelsat S.A., formerly Intelsat, Ltd., provides fixed-satellite communications services worldwide through a global communications network of 54 satellites in orbit as of Dec. 31, 2009, and ground facilities related to the satellite operations and control, and teleport services. It had US$2.5 billion in revenue in 2009. Washington D.C.-based Intelsat Corporation, formerly known as PanAmSat Corporation, is a fully integrated subsidiary of Intelsat S.A., its indirect parent. Intelsat Corp. had US$7.70 billion in assets against US$4.86 billion in debts as of Dec. 31, 2010. The Company reported a net loss of US$433.99 million in 2011, a net loss of US$507.77 million in 2010, and a net loss of US$782.06 million in 2009. The Company's balance sheet at June 30, 2012, showed US$17.46 billion in total assets, US$18.66 billion in total liabilities, US$48 million in noncontrolling interest, and a US$1.24 billion total Intelsat S.A. shareholders' deficit. * * * Luxembourg-based Intelsat S.A. carries 'B' issuer credit ratings from Standard & Poor's. It has 'Caa1' corporate family and probability of default ratings from Moody's Investors Service. ===================== N E T H E R L A N D S ===================== ALFACAM GROUP: Seeks Creditor Protection ---------------------------------------- John Martens at Bloomberg News reports that Alfacam Group NV to seek creditor protection in judicial reorganization procedure after talks with potential investor broke down on Monday. According to Bloomberg, Alfacam said in e-mail that it will seek to establish contacts with other potential investors. Alfacam Group had net debt of EUR57.2 million on June 30, Bloomberg discloses. Headquartered in Lint, Belgium, Alfacam Group NV provides television facilities and services to broadcasters and production houses in Europe and internationally. E-MAC NL 2005-III: S&P Affirms 'CCC' Rating on Class E Notes ------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its credit ratings on E-MAC NL 2005-III B.V.'s class A, B, D, and E notes. "At the same time, we have raised to 'A (sf)' from 'A- (sf)' our rating on the class C notes," S&P said. "The rating actions follow our credit, cash flow, and counterparty analysis of the most recent transaction information that we have received from the servicer, and we have applied our Dutch residential mortgage-backed securities (RMBS) criteria," S&P said. "Under our 2012 counterparty criteria, the highest potential rating on the notes in E-MAC NL 2005-III is equal to the issuer credit rating on the GIC provider, The Royal Bank of Scotland N.V. (A/Stable/A-1). Therefore, our ratings on the notes are capped at the 'A' rating level," S&P said. "We have calculated our weighted-average foreclosure frequency (WAFF) and weighted-average loss severity (WALS) by applying our Dutch RMBS criteria. For Dutch RMBS transactions, we adjust our WALS by applying a 5% decrease in house prices and giving full credit to the house price index. If we expect arrears to increase in the transaction, we adjust our WAFF by projecting arrears based on historical data," S&P said. "The arrears performance for the underlying pool of this transaction is worse than our Dutch RMBS index--90+ day arrears have increased to 0.96% in July 2012 (the latest interest payment date [IPD]) from 0.81% in July 2011. We have therefore assumed an additional 0.58% of total arrears for this transaction based on increasing arrears, and our view that they are likely to increase in the future," S&P said. "The decline in Dutch house prices since our July 2011 review has increased our estimate of the weighted-average indexed loan-to- value ratio for this pool, and has increased our WALS estimate. The decline in house prices has had less of a negative impact on our WAFF, the increase in the WAFF being due to our assumed arrears. The required level of credit enhancement, an estimate of potential losses, has increased at each rating level," S&P said. Rating WAFF WALS CE level (%) (%) (%) AAA 13.02 18.32 2.39 AA 10.41 15.36 1.60 A 7.74 11.57 0.90 BBB 4.89 9.52 0.47 BB 3.58 6.63 0.24 CE-Credit enhancement. "As of the July 2012 IPD, the reserve fund is fully funded at its EUR4.5 million target amount. This together with the amortization of the class A notes means that the available credit enhancement to all classes of notes has increased since our July 2011 review," S&P said. "We consider that the class A, B, and D notes have sufficient credit enhancement to maintain their current ratings under our cash flow stresses," S&P said. "The increase in credit enhancement for the class C notes has been greater than the increase in the required level of credit enhancement at the 'A' rating level. We have raised our rating on the class C notes based on the results of our cash flow analysis. The class C notes pass our cash flow stresses at a higher rating, we have therefore raised our rating on the class C notes to 'A (sf)' from 'A- (sf)'," S&P said. "We have affirmed our 'CCC (sf)' rating on the class E notes as it is highly unlikely that principal will ultimately be repaid," S&P said. "We also consider credit stability in our analysis. The scenarios that we have considered under moderate stress conditions did not result in our ratings deteriorating below the maximum projected deterioration associated with each relevant rating level," S&P said. "We understand that the issuers and trustee are in discussions to potentially replace counterparties in the transaction. We will incorporate these developments in our analysis when we receive confirmation of any changes," 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 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: http://standardandpoorsdisclosure-17g7.com RATINGS LIST Class Rating To From E-MAC NL 2005-III B.V. EUR645.276 Million Mortgage-Backed Floating-Rate Notes Ratings Affirmed A A (sf) B A (sf) D BBB (sf) E CCC (sf) Rating Raised C A (sf) A- (sf) =========== R U S S I A =========== CREDIT EUROPE: Fitch Assigns 'BB-' Rating to Sr. Unsecured Bonds ---------------------------------------------------------------- Fitch Ratings has assigned Credit Europe Bank's (CEB) RUB5 billion senior unsecured bonds, due October 2015, a final Long- term rating of 'BB-' and a National Rating of 'A+(rus)'. The first and second coupons are set at 9.8%. Investors have an option to redeem the bonds in October 2013. CEB's ratings are: Long-term Issuer Default Ratings (IDR) 'BB- '/Stable, Short-term IDR 'B', Viability Rating 'bb-', Support Rating '3' and National Rating of 'A+(rus)/Stable'. The notes will rank at least equally with CEB's other senior unsecured obligations, except those preferred by relevant legislation. Under Russian law, the claims of retail depositors rank above those of other senior unsecured creditors. At end- H112, retail deposits accounted for 9% of total liabilities of CEB according to the bank's local accounts. CEB (formerly Finansbank (Russia) Ltd) is a mid-sized commercial bank (ranked 47th by assets at end-H112) with a focus on retail lending. It is controlled by Credit Europe Bank N.V., which is part of the larger FIBA Holding A.S., a Turkish conglomerate owned by businessman Husnu Ozyegin. REPUBLICAN INVESTMENT: S&P Assigns 'B' LT Issuer Credit Rating -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' long-term issuer credit rating and 'ruA-' Russia national scale rating to Republican Investment Company (RIC) OJSC. The outlook is stable. "The ratings reflect our view that there is a 'high' likelihood that the Russian Republic of Sakha (BB/Positive/--; Russia national scale 'ruAA'), which owns 100% of the company, would provide timely and sufficient extraordinary support to RIC in the event of financial distress. The ratings also incorporate RIC's stand-alone credit profile, which we assess at 'ccc+' owing to the uncertainty of the company's medium-term business strategy, lack of a track record, and a management without experience in commercial investment activity," S&P said. "In accordance with our criteria for government-related entities (GREs), our view of a 'high' likelihood of extraordinary government support for RIC is based on our assessment of RIC's," S&P said: "Important" role in implementing Sakha's investment program. The republic initially created RIC as a special-purpose company to construct a railroad and other regional transport and social infrastructure. In 2008-2011, RIC's annual investments were on par with capital spending from the republic's budget, equaling about Russian ruble (RUB) 7 billion (about $235 million) on average. The company is likely to complete the railroad project in the medium term and will continue to finance infrastructure projects and invest in regional enterprises," S&P said. "Very strong" link with Sakha's government, which owns 100% of RIC and doesn't plan to privatize it at least until 2017. Sakha outlines RIC's strategy, closely monitors its operations, and approves its development strategy and investment projects. The republic also delegates and appoints Sakha's board of directors, which currently consists solely of Sakha government officials. Nevertheless, Sakha doesn't provide an explicit guarantee for the timely repayment of RIC's debt. "Accordingly, the rating on RIC is two notches higher than the SACP, which is at 'ccc+'. The SACP reflects RIC's lack of a track record, the management's limited experience in commercial investment activity, and high implementation risks related to the new development strategy. This strategy envisions transforming RIC into a more commercially oriented company that invests in equity and debt of companies in Sakha," S&P said. "The transformation into a for-profit development institution will combine investments in commercially viable projects with the support of infrastructure in Sakha. In 2012-2014 RIC plans to complete the railroad construction project, currently its largest investment accounting for 32% of its assets, and transfer it to the republic (to be passed to the federal government) at cost," S&P said. "The board of directors approved the new development strategy in August 2012. However, detailed documentation and medium-term financial plans are yet to be developed. In accordance with the strategy's broad objectives, RIC will focus on managing Sakha's assets and investing in commercial projects and infrastructure and other projects important for the republic's development. The company intends for some projects to be financed jointly with other investors. Given no track record and unclear investment perspectives, we currently assess the implementation and execution risks related with the new strategy as very high," S&P said. "The stable outlook reflects our view that the high likelihood of extraordinary government support that we anticipate for RIC would counterbalance uncertainty regarding the company's new and untested business model," S&P said. "We assess the probability of an upgrade within the next 12 months as highly unlikely at the moment," S&P said. "We could lower the ratings within the next 12 months if we observed a decrease in the likelihood of timely extraordinary support from Sakha, due for example to RIC's lower importance for the republic's investment program than we currently assume in our base-case scenario. Negative developments in RIC's financial profile while it is implementing its new investment strategy might also put pressure on the stand-alone credit profile and, consequently, on the ratings," S&P said. ========= S P A I N ========= ACCESOS DE MADRID: Files for Bankruptcy After Failed Debt Talks --------------------------------------------------------------- Angeline Benoit at Bloomberg News, citing Cinco Dias, reports that Accesos de Madrid has filed for bankruptcy. According to Bloomberg, Cinco Dias said that the company failed to renegotiate its EUR660 million of debt with creditors Accesos de Madrid is the operator for two highways in the region of Spain's capital. AYT CAIXA: Fitch Downgrades Rating on Class C Notes to 'Bsf' ------------------------------------------------------------ Fitch downgrades 3 AyT Caixa Sabadell Hipotecario I Tranchestranche of AyT Caixa Sabadell Hipotecario I as follows: -- Class A (ISIN ES0312192000): downgraded to 'BBB+sf' from 'AA-sf'; off Rating Watch Negative (RWN); Outlook Stable -- Class B (ISIN ES0312192018): downgraded to 'BB+sf' from 'Asf'; off RWN; Outlook Stable -- Class C (ISIN ES0312192026): downgraded to 'Bsf' from 'BBB- sf'; Outlook Negative -- Class D (ISIN ES0312192034): affirmed at 'CCCsf'; Recovery Estimate 0% Fitch placed classes A and B on RWN on April 3, 2012 due to the downgrade of the account bank and swap provider, Confederacion Espanola de Cajas de Ahorros (CECA), to 'BBBsf'/Negative. In the meantime, the bank account role has been replaced by Banco Bilbao Vizcaya Argentaria (BBVA, rated 'BBB+'/Negative) and the transaction documentation now includes a commitment by the bank to implement remedial actions should the bank's rating fall below the current level. In addition, CECA has committed to post collateral as a form of remedy for the swap exposure in an account held with itself, provided that the collateral balance is up to EUR50,000. At present the mark-to-market value of the swap is in favor of the swap provider, hence the collateral amount posted is zero. As a result, and in line with Fitch's structure finance counterparty criteria, the rating of the senior notes is capped at 'A+sf'. The agency has also reviewed the performance of the transaction, and has found that the level of credit support is no longer sufficient to maintain the current ratings. As a result the agency has downgraded the full capital structure, except for the class D notes. Although there has not been an information update since the transaction's last performance review, the agency believes that the current economic environment will put further pressure on borrowers' ability to meet their payments. As a result, the agency expects a further increase in period defaults in the upcoming payment dates, as well as further reserve fund draws, which will further reduce the credit support available to the rated tranches. AYT COLATERALES: Fitch Cuts Rating on Class D Tranche to 'CCsf' --------------------------------------------------------------- Fitch Ratings has downgraded seven and affirmed eight tranches of five AyT Colaterales Global Hipotecario (CGH) transactions. The agency also maintained five tranches on Rating Watch Negative (RWN). The rating actions are driven by various actions taken by respective counterparties following their downgrades to levels below those deemed eligible for counterparties performing direct counterparty support roles in structured finance transactions. On April 3, 2012, the agency placed AyT CGH Navarra I, AyT CGH Cantabria I, AyT CGH Circulo I, AyT CGH CCM 1 and AyT CGH Laietana I on RWN, due to the downgrade of Confederacion Espanola de Cajas de Ahorros (CECA; 'BBB+'/Negative/'F2'), which acted as the account bank and swap provider in these transactions. Since then, the role of account bank in AyT CGH Cantabria I and AyT CGH CCM 1 has been replaced, and is now being performed by Banco Santander ('BBB+'/Negative), while the account bank for AyT CGH Circulo I has been allocated to BBVA ('BBB+'/Negative). The change in account bank roles has also resulted in an updated commitment by the counterparties to implement remedial actions should their ratings fall below 'BBB+'. In line with Fitch's structured finance counterparty criteria, the change in counterparties and the revised downgrade language means that the highest structured finance rating achievable is 'A+sf'. For this reason, the agency has downgraded the senior notes of these three transactions to 'A+sf'. The agency has been informed that no remedial actions will be implemented in AyT CGH Navarra I, and as a result the agency has downgraded the class A notes to 'BBBsf'. The downgrade mirrors the rating of Caixabank ('BBB'/Negative) which performs multiple roles in the transaction. The downgrade is driven by the bank's failure to comply with the transaction documentation, and the agency's inability to rely on the bank's commitment to implement remedial actions, should the bank be subject to further downgrades. Meanwhile, the increased counterparty risk in AyT CGH Laietana I remains unresolved. The agency has also been informed by the management company that efforts are being made to implement appropriate remedies. The agency recognizes that the time to resolve counterparty exposure has been prolonged due to the constantly changing environment and for this reason has maintained the class A and B notes on RWN, pending finalization of remedial actions. The agency has also conducted a full review of the five transactions, which resulted in the downgrade of AyT CGH Navarra I's mezzanine and junior notes. The transaction comprises high loan-to-value ratio mortgages, with highly adverse portfolio characteristics, ie high portions of loans granted to self- employed borrowers or borrowers on temporary contracts, as well as high portions of loans granted to non-resident borrowers. In recent months, the transaction has seen an uptick in period defaults, which has resulted in reserve fund draws and a decline in credit support available to the rated tranches. The agency expects further reserve fund draws on upcoming payment dates, which will put further pressure on the credit support available to the notes, increasing the transaction's dependency on recoveries, the timing of which remains uncertain in the current environment. The agency also notes that there has been a noticeable uptick in arrears in AyT CGH Circulo I. As of the most recent investor report for May 2012, the level of three-months plus arrears reached 1.5% of the current portfolio balance. The agency expects late stage arrears to translate into defaults on the upcoming payment dates, which will most likely lead to further draws on the reserve fund. For this reason, the agency has revised its Outlook on the class C notes to Negative. At present, the reserve fund is at 95.7% of its target amount. The performance of AyT CGH Cantabria I and AyT CGH CCM 1 has remained in line with Fitch's expectations. Both transactions are serviced by Liberbank S. A. ('BB+'/Stable). However, the performance of the two transactions has been significantly different. As of the most recent payment date, AyT CGH CCM 1's reserve fund had been almost fully utilized due to the high volume of defaulted loans that have been provisioned for, while the AyT CGH Catanbria I reserve fund remains at 90% of its target amount. The worse performance of AyT CGH CCM 1 is most likely driven by the higher concentration of borrowers identified as self-employed or on other types of contracts (70% vs. 36% in AyT CGH Cantabria I). The difference in performance of the two portfolios is reflected in the lower ratings assigned to the mezzanine and junior tranches of AyT CGH CCM 1. As the two transactions are serviced by a 'BB+' rated entity, Fitch has analyzed the risk of payment interruption, should the servicer default. The agency found that the two deals would not have sufficient liquidity to cover short-term servicer disruption. The agency believes that the reserve funds of the two transactions cannot be relied upon if Liberbank were to default, as they are likely to be utilized for to provision for defaults. As a result, the agency has decided to maintain all tranches rated 'Asf' and above on RWN. Failure to implement appropriate remedial actions would result in the downgrade of these notes to 'BBBsf' category. The rating actions are as follows: AyT Colaterales Global Hipotecario Caja Cantabria I: -- Class A (ISIN ES0312273446): downgraded to 'A+sf' from 'AA- sf'; RWN maintained -- Class B (ISIN ES0312273453): 'Asf'; RWN maintained -- Class C (ISIN ES0312273461): affirmed at 'BBB-sf'; Outlook Stable -- Class D (ISIN ES0312273479): affirmed at 'BB-sf'; Outlook Negative AyT Colaterales Global Hipotecario CCM 1: -- Class A (ISIN ES0312273248): downgraded to 'A+sf' from 'AA- sf'; RWN maintained -- Class B (ISIN ES0312273255): affirmed at 'BBB-sf'; Outlook Negative -- Class C (ISIN ES0312273263): affirmed at 'CCCsf'; Recovery Estimate 75% -- Class D (ISIN ES0312273271): affirmed at 'CCsf'; Recovery Estimate 0% AyT Colaterales Global Hipotecario Circulo I: -- Class A (ISIN ES0312273321): downgraded to 'A+sf' from 'AA- sf'; off RWN; Outlook Stable -- Class B (ISIN ES0312273339): affirmed at 'Asf'; Outlook Stable -- Class C (ISIN ES0312273347): affirmed at 'BBB-sf'; Outlook revised to Negative from Stable -- Class D (ISIN ES0312273354): affirmed at 'BB-sf'; Outlook Negative AyT Colaterales Global Hipotecario Caixa Laietana I: -- Class A (ISIN ES0312273487): 'AA-sf'; RWN maintained -- Class B (ISIN ES0312273495): 'Asf'; RWN maintained AyT Colaterales Global Hipotecario Caja Navarra I: -- Class A (ISIN ES0312273040): downgraded to 'BBBsf' from 'AA- sf'; Outlook Negative -- Class B (ISIN ES0312273057): downgraded to 'Bsf' from 'Asf'; Outlook Stable -- Class C (ISIN ES0312273065): downgraded to 'CCCsf' from 'BBsf'; Recovery Estimate 10% -- Class D (ISIN ES0312273073): downgraded to 'CCsf' from 'Bsf'; Recovery Estimate 0% MAPFRE INSURANCE: S&P Cuts Subordinated Debt Rating to 'BB' ---------------------------------------------------------- Standard & Poor's Ratings Services lowered to 'BBB+' from 'A-' the long-term counterparty credit and insurer financial strength ratings on the core operating entities of Spain-based Mapfre insurance group: Mapfre Global Risks, Compania Internacional de Seguros y Reaseguros S.A., and Mapfre Re Compa��a de Reaseguros S.A. At the same time, we lowered the long-term counterparty credit rating on the group's holding company, Mapfre S.A., to 'BBB-' from 'BBB'. We also lowered our long-term issue ratings on the subordinated debt of Mapfre S.A. to 'BB' from 'BB+'," S&P said. "We regard Mapfre's U.S. operations--Commerce Insurance Co. and Citation Insurance Co. and their intermediate holding company, Mapfre USA Corp.--as 'strategically important.' We have lowered to 'BBB+' from 'A-' the long-term counterparty credit and insurer financial strength ratings on the first two of these entities, according to our group rating methodology. We have also lowered to 'BB+' from 'BBB-' the long-term counterparty credit rating on Mapfre USA Corp.," S&P said "We also placed all these ratings on CreditWatch with negative implications," S&P said. "The rating actions on the various Mapfre Group entities follow our lowering of the long- and short-term ratings on the Kingdom of Spain (BBB-/Negative/A-3) on Oct. 10, 2012. Under our criteria, our view of country risk generally constrains our ratings on an insurer. Following the sovereign rating action, country risk has, in our view, increased," S&P said. "Our criteria allow up to a two-notch differential between the ratings on Mapfre's core operating entities and the ratings on Spain. This reflects Mapfre's geographic diversification in countries rated higher than Spain, and the sensitivity of the insurance sector to country risk, which we regard as high," S&P said. "The ratings on Mapfre's operating entities reflect our view of the group's strong operating performance; increasing geographic diversification, enhanced by leading positions in Spain and Latin America; and track record of good management. We consider these positive factors to be partially offset by the deteriorating credit quality of the investment portfolio, increasing country risk exposure, and weakening capital adequacy levels and quality," S&P said. "The negative CreditWatch placement reflects the possibility that we could lower the ratings by a further one notch following our review of Mapfre's exposure to country risk and the sensitivity of its profile to the deteriorating credit quality of Spain," S&P said. "We could lower the ratings by a further notch if, in our view, the sensitivity to country risk from exposures to Spanish business, sovereign debt, related bank debt, and deposits--and the resulting potential impact on the business and financial risk profiles--does not justify a two-notch differential with the Spanish sovereign rating," S&P said. "Conversely, we could affirm the ratings at 'BBB+' if, in our opinion, Mapfre's business and financial profiles demonstrate higher-than-anticipated resilience to the deteriorating Spanish environment, through material diversification of exposures," S&P said. "We expect to complete our review of Mapfre's exposure and sensitivity to country risk within the next week, after discussions with management," S&P said. * S&P Takes Rating Actions on Spanish Financial Institutions ------------------------------------------------------------ Standard & Poor's Ratings Services took these rating actions on Spanish financial institutions: S&P lowered its long-term counterparty credit ratings on 11 banks and its short-term counterparty credit ratings on four. S&P placed its long-term and short-term ratings on three banks on CreditWatch with negative implications. S&P placed its long-term ratings on three banks on CreditWatch with negative implications. S&P maintained the long-term ratings on four banks and the short-term ratings on one bank on CreditWatch negative. S&P also placed the short-term ratings on one bank on CreditWatch negative. S&P assigned negative outlooks to the long-term ratings on three banks, namely Banco Santander S.A. (Santander), Banco Bilbao Vizcaya Argentaria S.A. (BBVA), and Barclays Bank S.A. (BBSA). RATIONALE "The rating actions follow our downgrade of Spain on Oct. 10, 2012," S&P said. "The downgrade has direct negative rating implications for the banks that we rated higher than the 'BBB-' long-term rating on Spain, and on all banks where we factored extraordinary government support into the ratings in the form of uplift over the banks' stand-alone credit profiles (SACPs)," S&P said. "We lowered the ratings on BBVA, CaixaBank S.A. (CaixaBank), and its parent company Caja de Ahorros y Pensiones de Barcelona (la Caixa) because we seldom rate financial institutions above the foreign currency long-term rating on the country where the institutions are domiciled. We lowered the ratings on Santander (and as a result its core subsidiary Banco Espanol de Credito S.A. (Banesto), and its highly strategic subsidiary Santander Consumer Finance S.A. (SCF)), because, for the rare cases when we rate banks above the foreign currency long-term rating on the country where they are domiciled, the notching differential between the sovereign and bank rating is generally limited to one notch due to the strong connection we typically see between banks' creditworthiness and that of their country of domicile. We also lowered our issue ratings on the nondeferrable subordinated and hybrid instruments on all the banks. We have affirmed the 'BB/B' ratings on Santander's Portuguese subsidiary, Banco Santander Totta S.A., because we limit the ratings on this subsidiary at the level of the ratings on the Republic of Portugal (BB/Negative/B), although we believe it is a highly strategically important subsidiary for the group," S&P said. "In addition, we removed the one notch of uplift for extraordinary government support that we previously incorporated into our ratings on Banco de Sabadell S.A. (Sabadell), Banco Popular Espanol S.A. (Popular), Bankia S.A. (Bankia), and Banco Financiero y de Ahorros S.A. (BFA), which led us to lower our long-term ratings on these entities by one notch. The number of notches of extraordinary government support that we incorporate into our bank ratings depends on our view of the banks' systemic importance, SACPs, and the sovereign rating. The lowering of our long-term rating on Spain led us to remove the notch of extraordinary government support for these banks. We have not changed our assessments of these banks' systemic importance and we have not yet reviewed the wider implications of the sovereign action on the banks' SACPs. We did not lower our issue ratings on these banks' subordinated debt and hybrid instruments, because we base these issue ratings on the banks' SACPs rather than on their issuer credit ratings. The ratings on Popular, Bankia, and BFA continue to incorporate short-term government support. Our assessment of this has not been affected by the sovereign downgrade, but we will review this again after the banks have finalized their recapitalization plans," S&P said. "Our two-notch downgrade of Spain to 'BBB-' and the factors behind it will likely affect our view of the Spanish banking sector's economic and/or industry risks. In turn, this could affect our assessment of the bank-specific factors that underpin our assessments of Spanish banks' SACPs -- business position, capital and earnings, risk position, funding, and liquidity. As a result, we have placed on CreditWatch negative most of our issuer and issue ratings on Spanish banks that we hadn't already placed on CreditWatch, except those on Santander (and its abovementioned subsidiaries), BBVA, and BBSA. For those banks whose long-term ratings are on CreditWatch, and which all now stand at the same level as their SACPs, we also placed our issue ratings on nondeferrable subordinated debt and hybrid instruments on CreditWatch negative," S&P said. "Our CreditWatch placements on banks' long-term ratings weren't always accompanied by CreditWatch placements on their short-term ratings. In particular, we affirmed our short-term ratings on Sabadell, la Caixa, and Bankinter because we think that, following the CreditWatch resolution, we would not likely lower the long-term ratings by a number of notches sufficient to prompt a lowering of our short-term ratings," S&P said. "We assigned negative outlooks to the long-term ratings on Santander (and its subsidiaries Banesto and SCF), BBVA, and BBSA rather than placing them on CreditWatch negative. For Santander and BBVA, the two largest Spanish banks, this is because we think it unlikely that we would lower their SACPs -- 'a-' and 'bbb+', respectively -- by more than two notches to stand below the current ratings. With regard to BBSA, we derive the ratings from those on its U.K.-based parent Barclays Bank PLC (A+/Stable/A-1) and cap them at the level of our long-term rating on Spain, because we view the bank as a highly strategic subsidiary. As a result, BBSA will not be affected by our review of the Spanish banking sector's economic and industry risks, even if we were to lower its 'bb' SACP following our review," S&P said. "The long-term ratings on the banks that we had already placed on CreditWatch negative pending details on their recapitalization, restructuring, and/or merging plans, and/or our analysis of the latter, remain on CreditWatch. These banks are Popular, Bankia, BFA, and Ibercaja Banco S.A. (Ibercaja). The short-term ratings on Ibercaja also remain on CreditWatch negative and we have also placed our short-term ratings on BFA on CreditWatch negative. We have, however, extended the scope of our CreditWatch to include the potential lowering of these banks' SACPs following our review of the Spanish banking sector's economic and industry risks," S&P said. "Following Ibercaja's announcement on Oct. 9, 2012, that the planned merger with Liberbank and Caja3 had fallen through, we excluded the potential negative consequences of the integration from the scope of our CreditWatch placement. We therefore believe that a negative rating action on Ibercaja would be limited to two notches, from three previously. However, the CreditWatch resolution still depends on our view of the actions Ibercaja will have to take to meet the new capital requirements, and their impact on our assessment of the bank's capital position. We will also assess the strategic challenges posed by the failed merger in the context of an increasingly consolidated Spanish banking system," S&P said. OUTLOOK "The negative outlooks on the long-term ratings on Santander (and consequently Banesto and SCF), BBVA, and BBSA mirror that on the long-term rating on Spain. We could lower our ratings on these banks following a further downgrade of Spain," S&P said. "For Santander and BBVA, we don't anticipate that we would lower our SACPs by more than two notches following our review of the Spanish banking sector, if at all. The possibility that our long- term ratings on these banks would be affected is therefore remote. Under this scenario, we wouldn't lower our issue ratings on their nondeferrable subordinated debt and hybrid instruments because we currently base them on the issuer credit ratings rather than the SACPs," S&P said. Equally, the negative outlook on BBSA mirrors that on Spain. CREDITWATCH "As part of our CreditWatch resolution, we expect to conclude our review of the wider implications of the sovereign downgrade on the economic and/or industry risks for the Spanish banking sector and the Spanish banks we rate in November," S&P said. "While resolving our CreditWatch placements, we will review our assessments of each bank's funding and liquidity -- as we announced in August 2012 -- to better highlight the differences among these institutions, and, when appropriate, recognize where short-term government support is being provided," S&P said. "For the banks currently undergoing recapitalizations and restructurings, we also expect to resolve our CreditWatch placements within the same timeframe once we receive detailed information on these plans and assess their impact on the banks' business and financial profiles," S&P said. RATINGS LIST RATINGS LOWERED To From Banco Bilbao Vizcaya Argentaria S.A. Counterparty Credit Ratings BBB-/Negative/A-3 BBB+/Negative/A- 2 Subordinated BB+ BBB Hybrid Instruments BB- BB+ Barclays Bank S.A. Counterparty Credit Ratings BBB-/Negative/A-3 BBB+/Negative/A- 2 Santander Consumer Finance, S.A. Counterparty Credit Ratings BBB-/Negative/A-3 BBB+/Negative/A- 2 Subordinated BB+ BBB Banco Santander S.A. L-T Counterparty Credit Rating BBB/Negative A-/Negative Subordinated BBB- BBB+ Hybrid Instruments BB BBB- Banco Espanol de Credito S.A. L-T Counterparty Credit Rating BBB/Negative A-/Negative Subordinated BBB- BBB+ Hybrid Instruments BB BBB- Banco Popular Espanol S.A. L-T Counterparty Credit Rating BB/Watch Neg BB+/Watch Neg Bankia S.A. L-T Counterparty Credit Rating BB/Watch Neg BB+/Watch Neg Banco Financiero y de Ahorros S.A. L-T Counterparty Credit Rating B/Watch Neg B+/Watch Neg RATINGS LOWERED; PLACED ON CREDITWATCH To From CaixaBank S.A. L-T Counterparty Credit Rating BBB-/Watch Neg BBB/Negative S-T Counterparty Credit Rating A-3/Watch Neg A-2 Hybrid Instruments BB-/Watch Neg BB Caja de Ahorros y Pensiones de Barcelona L-T Counterparty Credit Rating BB/Watch Neg BB+/Negative Subordinated B+/Watch Neg BB- Banco de Sabadell S.A. L-T Counterparty Credit Rating BB/Watch Neg BB+/Negative PLACED ON CREDITWATCH To From Banco Financiero y de Ahorros S.A. S-T Counterparty Credit Rating B/Watch Neg B Kutxabank S.A. L-T Counterparty Credit Rating BBB-/Watch Neg BBB-/Negative S-T Counterparty Credit Rating A-3/Watch Neg A-3 Confederacion Espanola de Cajas de Ahorros L-T Counterparty Credit Rating BBB-/Watch Neg BBB-/Stable S-T Counterparty Credit Rating A-3/Watch Neg A-3 Bankinter S.A. L-T Counterparty Credit Rating BB+/Watch Neg BB+/Negative Subordinated BB-/Watch Neg BB- Hybrid Instruments B/Watch Neg B Banco de Sabadell S.A. Subordinated B+/Watch Neg B+ Hybrid Instruments B-/Watch Neg B- Banco Popular Espanol S.A. Subordinated B/Watch Neg B Hybrid Instruments CCC+/Watch Neg CCC+ RATINGS AFFIRMED Banco Santander Totta S.A. Counterparty Credit Ratings BB/Negative/B Banco Santander S.A. S-T Counterparty Credit Rating A-2 Banco Espanol de Credito S.A. S-T Counterparty Credit Rating A-2 Caja de Ahorros y Pensiones de Barcelona S-T Counterparty Credit Rating B Banco de Sabadell S.A. S-T Counterparty Credit Rating B Banco Popular Espanol S.A. S-T Counterparty Credit Rating B Bankia S.A. S-T Counterparty Credit Rating B Subordinated CC Bankinter S.A. S-T Counterparty Credit Rating B Banco Financiero y de Ahorros S.A. Subordinated CC Hybrid Instruments C REMAIN ON CREDITWATCH Ibercaja Banco S.A. L-T Counterparty Credit Rating BBB-/Watch Neg S-T Counterparty Credit Rating A-3/Watch Neg Subordinated BB+/Watch Neg Hybrid Instruments B+/Watch Neg N.B. - This list does not include all ratings affected. =========== S W E D E N =========== * SWEDEN: Moody's Examines Covered Bond Legal Framework ------------------------------------------------------- Sweden's covered bond legal framework has a number of strengths that lift it above the average, says Moody's Investors Service in a new Special Comment published on Oct. 15. Important strengths include (1) the law restricts loans backed by commercial property to 10% of the cover pool; and (2) loans more than 60 days past due are not eligible to be included in cover tests. Balanced against the more-numerous strengths, one weakness Moody's highlights is that Sweden's law does not provide for any minimum over-collateralization (OC) level. However, the value of the cover pool assets must always be greater than the value of covered bonds on a nominal and net present value basis, and issuers may commit to holding a certain minimum amount of OC. The new report is entitled "Sweden - Legal Framework for Covered Bonds". In addition to the above-mentioned strengths, other key positives include, but are not limited to: (1) the cover pool administrator has broad powers to enter into senior-ranking liquidity loans and other arrangements to mitigate refinancing risk following issuer default; and (2) cover pool hedging agreements cannot provide for early termination upon insolvency of the issuer, and collateral posting or counterparty substitution should be provided for if counterparty credit quality deteriorates. Moody's also says that for issuers that are specialist credit institutions, the fact that these institutions do not take deposits may mitigate set-off risk. Certain other strengths of the law may offer less protection due to market practice. For example, the law provides for material interest rate and currency risk stresses. However, in practice, if these risks are swapped the swaps are taken into account when performing the stresses, even though the swaps (in particular, any swap with the issuer's parent) may not survive issuer default. The law also provides covered bondholders with a senior unsecured claim on the issuer, but the value of that claim may be limited if the issuer is a specialist entity with few assets outside the cover pool. In the report Moody's has ranked legal features as either Strong, Average, or Weak (denoted Moody's Legal Views or "MLVs"). MLVs reflect a relative, credit-based, view of how legal features compare to a "typical" covered bond legal framework. A common benchmark is used so that reports can be compared across jurisdictions. Moody's will continue to review legal frameworks, so the benchmark and MLVs may evolve over time. Furthermore, market practices may, where permitted: (i) reduce protection for covered bondholders by overriding or otherwise altering the effect of provisions in the law; or (ii) improve protection for covered bondholders over and above the provisions of the law. In these cases Moody's uses "MP" to denote market practice and provide a composite evaluation. The report published on Oct. 15 follows Moody's report on Norway's covered bond legal framework. As each report lists and discusses the same legal features, the reports may be used as a resource for analyzing a country's covered bond legal framework both on a stand-alone basis and also in comparison to other frameworks. ===================== S W I T Z E R L A N D ===================== DUFRY AG: S&P Assigns 'BB+' Long-Term Corporate Credit Rating ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB+' long-term corporate credit rating to Swiss travel retailer Dufry AG. The outlook is stable. "At the same time, we assigned a 'BB+' issue-level rating to the proposed US$500 million eight-year senior unsecured notes to be issued by special-purpose entity Dufry Finance S.C.A., in line with the corporate credit rating of Dufry AG. We also assigned a 'BB+' issue-level rating to the CHF650 million multicurrency revolving credit facilities borrowed by Dufry International A.G, a subsidiary of Dufry AG. The recovery rating on these unsecured debt instruments is '4', indicating our expectation of average (30% to 50%) recovery for debt holders in the event of a payment default," S&P said. "The ratings on the pending bond issue are subject to the successful issuance of this instrument and our review of final documentation," S&P said. "The rating reflects our assessment of Dufry's business risk profile as 'satisfactory,' due to our view of the company's position as a leading global player in the growing, but volatile, retail travel industry. Against this, we see Dufry's financial risk profile as 'significant,' owing to the company's track record of debt-financed external growth. This strategy has caused the company's adjusted ratio of debt to EBITDA to move within 2.0x and 4.0x range in recent years. Dufry has a market share of about 9% in this highly fragmented market following its acquisition of a 51% stake of Hellenic Duty Free Shop S.A. from Folli Follie Group (not rated). The company generated a turnover of CHF2.6 billion and a Standard & Poor's-adjusted EBITDA of CHF365 million in 2011. The company runs a network of more than 1,200 shops, mainly at airports (88% of sales) in 45 countries, and generates about 60% of its sales in emerging markets," S&P said. "The stable outlook reflects our view that, despite its focus on external growth and based on its resilient earnings and FOCF capacity, Dufry will sustain its deleveraging trend after its recent announced acquisition, and maintain its Standard & Poor's- adjusted ratio of debt to prorated EBITDA within 2.5x to 3.5x, while maintaining FOCF generation between 10% to 15% of debt. Furthermore, our assessment takes into account our expectation that the company will quickly deleverage within 12 months following future acquisitions," S&P said. "We could consider a positive rating action if the company sustains a ratio of adjusted debt to EBITDA of about 2.5x, if prorated FFO to debt improves to 30%, and if it implements a more conservative financial policy," S&P said. "We could take negative rating actions if Dufry's financial covenant headroom tightens above our expectations. This could materialize if political event risk results in sales volatility as about 10% of group sales and about 19% of group EBITDA would be generated by the Greek duty-free business according the company. Furthermore, we could lower the rating if debt to pro rata EBITDA were to exceed 3.5x while FOCF to debt fell significantly below 10%, or if external shocks or the loss of major concessions caused a sustained decline in profitability," S&P said. PETROPLUS HOLDING: Petit Couronnere Finery Put In Liquidation ------------------------------------------------------------- Tara Patel at Bloomberg News reports that CFDT labor union representative Laurent Patinier said a French court in Rouen decided to place in liquidation Petroplus Holding AG's Petit- Couronnere finery in Normandy. According to Bloomberg, Mr. Patinier said that the court rejected an offer by Netoil Inc. to take over operations. It set a Nov. 5 deadline for any other improved bids to come forward or else the plant will be shuttered, Bloomberg discloses. About Petroplus Based in Zug, Switzerland, Petroplus Holdings AG is one of Europe's largest independent oil refiners. Petroplus was forced to file for insolvency in late January after struggling for months with weak demand due to the economic slowdown in Europe and overcapacity amid tighter credit conditions, high crude prices and competition from Asia and the Middle East, MarketWatch said in a March 28 report. According to MarketWatch, Petroplus said in March a local court granted "ordinary composition proceedings" for a period of six months. As part of the court process, Petroplus intends to sell its assets to repay its creditors. Some of Petroplus' units in countries other than Switzerland have filed for "different types of proceedings" and are currently controlled by court-appointed administrators or liquidators, which started the process to sell assets, including the company's refineries. =========================== U N I T E D K I N G D O M =========================== ATH RESOURCES: Calls in Deloitte to Explore Restructuring Options ----------------------------------------------------------------- Perry Gourley at The Scotsman reports that the future of ATH Resources was thrown into doubt on Monday after it called in Deloitte to look at options including restructuring or a sale of the business. The company, which has blamed a slump in coal prices for its difficulties, warned that the level of its debts meant shareholders were likely to see the value of their stakes wiped out in any rescue move for the firm, the Scotsman discloses. The news came just two weeks after the company announced that it was in discussions with its key backers to secure support for a proposed refinancing plan, the Scotsman relates. According to the Scotsman, although ATH said on Monday that talks with parties -- including its lenders -- were continuing, it warned that "developments over the past week had led the directors to believe that the company is unlikely to attract the level of capital required to continue operating without a restructuring of the group". "Given the level of liabilities within the company, it is unlikely that shareholder value will be maintained following any possible restructuring." The company's market value has plunged in recent years, from a high of more than GBP110 million in 2007 to just GBP550,000 on Monday, the Scotsman notes. ATH, as cited by the Scotsman, said that Deloitte had been instructed to advise on "all restructuring options that may be available and to assist the board in considering the merit of any proposals from parties who may be interested in investing in or acquiring the business". It will update the market on developments "in due course". ATH Resources is Scotland's second-largest open cast miner. The company employs more than 300 people. It is headquartered in Doncaster. CHELBURY HOMES: Legal Claims Pushed Firm Into Administration ------------------------------------------------------------ Kaleigh Watterson at Insider Media Limited reports that litigation issues stemming from a landslip on a site in Stroud contributed to the administration of Chelbury Homes Ltd. Administrators at PricewaterhouseCoopers LLP revealed that creditors of Chelbury Homes are expected to face a shortfall, according to Insider Media. Ross Connock and Robert Lewis of PwC in Bristol were appointed joint administrators of Chelbury Homes Ltd on July 30, 2012. Insider Media Limited notes that in a report to creditors, the administrators said a slip of an embankment and the collapse of a section of sewer that runs through the embankment occurred at Cheapside in December 2005. Severn Trent Water undertook remedial work to the sewer in 2006. But in 2011 Severn Trent Water lodged a claim against Chelbury Homes for the costs of the work it carried out, citing Chelbury Homes was at fault, the report discloses. A counterclaim was lodged by Chelbury Homes as well as an additional claim against project engineer Wilson Associates (Consulting) Ltd, the report relates. The report notes that Chelbury Homes then sought litigation funding to purse the counterclaim and the claim against Wilson Associates - but it was unsuccessful in securing this. Severn Trent Water and Wilson Associates both issued applications for security for costs against the company in 2012 in the sums of GBP400,000 and GBP218,000 respectively, the report relays. The first hearing in February 2012 was postponed and scheduled to be heard in July 2012. However, the report relates that the directors concluded that should the hearing find against Chelbury Homes, the business would be insolvent. As a result, a notice of intention to appoint an administrator was filed. The administrators said they are currently seeking marketing advice in relation to the sites at Staple Edge View and Cheapside and are engaging with the management agent of the properties at Princess Royal Road, the report says. The report discloses that the administrators said that distributions to the bank depended on future realizations, however, it was "highly likely" that it would suffer a shortfall on its lending. As the company did not have employees no preferential claims are expected and, according to the statement of affairs from the directors, unsecured creditors are owed GBP11, 734, the report notes. The report adds that administrators said they expect that there will be "insufficient asset realizations" to enable a distribution to unsecured creditors. Chelbury Homes Ltd is a property investor and developer in Gloucestershire. CLUB CLASS: High Court in London Winds Up Marketing Firms --------------------------------------------------------- Seven connected companies, which mis-sold membership of a concierge holiday scheme to the public while ostensibly conducting meetings to propose action against timeshare deals, have been wound up in the public interest by the High Court in London. The Companies are: -- Club Class Concierge Ltd; -- Bridge View Consultants Ltd.; -- Club Class Concierge plc; -- Club Class International plc; -- Club Class Holdings Ltd; -- Club Class Corporation plc; and -- Club Class plc. The order to wind up the companies, five of which were registered in Seychelles and two in the UK, followed an investigation by the Company Investigations team of the Insolvency Service in London. The Secretary of State for Business, Innovation and Skills petitioned to wind up all the companies, collectively known as Club Class, as they were all intimately involved in the marketing of the scheme in the UK. One of the English companies, Bridge View Consultants Ltd sold the Club Class product to the public in the UK at meetings which were ostensibly arranged to address people who had been mis-sold timeshares. At these meetings, timeshare owners were encouraged to sign up to a group action against the timeshare industry to be conducted by an organisation called International Timeshare Refund Action (ITRA). The court heard that instead, the ITRA presentation became a Club Class presentation in which consumers were informed there was a "one-off" opportunity for them to irrevocably relinquish their timeshares in part-payment for the substantial cost of the Club Class membership, which ranged from around �7,000 to �15,000. Consumers were unaware in advance that this was the true purpose of the meeting. During the meetings, some lasting up to six hours, consumers were put under immense pressure to exchange their timeshares, which they were told were essentially worthless, but could be set off against the cost of their holiday club membership. Consumers were also told that their timeshare liabilities would continue in perpetuity and pass to their heirs. The principal inducement was that the Club Class group would arrange for the release of the consumer from these onerous liabilities by effecting transfer or other means. Cash-backs were also offered as another sales promotional tool. In fact, consumers' timeshares were simply returned to the resort owner and no real efforts were made to assume their liability. As a result, consumers continued to receive maintenance demands from the resort owners. A representative of the Seychelles companies , Dennis Gilson, , admitted in court that because of the onerous terms that had to be complied with to receive a cash payment, the cash-back offers were the equivalent of a spot-the-ball competition. In making the winding-up orders, the Court found that in addition to the mis-selling and lack of commercial probity which generated a significant volume of complaints, there was a lack of transparency within the operations of the companies. The companies' officers also failed to co-operate with the investigation. Commenting on the case, David Hill an Investigation Supervisor with The Insolvency Service said: "These companies were set up with the aim of duping consumers, who in some cases had already suffered from unfair timeshare deals, by using slick patter for what was in reality the selling of an illusion. There was nothing investors could gain from paying to these companies. "This action shows that The Insolvency Service will investigate and close down companies set up to scam the public" The petitions to wind up the companies were presented in the High Court on August 31, 2011, under the provisions of section 124A of the Insolvency Act 1986 following confidential enquiries by Company Investigations. ELIXIR FOUNDATIONS: Collapses Into Administration ---------------------------------------------------- Tony McDonough at Liverpool Echo.co.uk reports Kirkby-based Elixir Foundations has collapsed and administrators have been called in. "It is with regret that the directors of Elixir Foundations Community Interest Company must announce that the company has had to cease trading . . . . Despite having achieved significant social and environmental impact, generating more than 1,000 jobs for vulnerable adults whilst diverting over 10,000 tonnes of waste from landfill, early operational issues have dogged the company . . . . Despite using their best efforts, including further investment of their own money, the directors have not been able to overcome these historic issues. . . . Having taken this very difficult decision the directors will now work as best they can to ensure the future employment of those affected by these events," Elixir said in a statement obtained by the news agency. The report discloses that the Chester office of Parkin S Booth has been appointed as administrator. Kirkby-based Elixir Foundations is a pioneering Merseyside social enterprise that offered an employment lifeline to more than 1,000 vulnerable adults. MANGANESE BRONZE: Geely Mulls Cash Injection -------------------------------------------- Martin Flanagan at The Scotsman reports that Geely, the Chinese carmaker, is weighing up a rescue bailout for troubled Manganese Bronze. Executives from the Chinese firm, which has a 20% stake in the Coventry-based company, were understood to be flying to Britain on Monday to discuss a possible cash injection, the Scotsman notes. Manganese Bronze suspended trading in its shares on Friday after having to recall 400 of its new TX4 cab model because of a steering system fault, the Scotsman relates. The loss-making vehicle manufacturer has halted sales until the problem is fixed, the Scotsman states. According to the Scotsman, with no income stream for the foreseeable future, a possible cash injection from the Chinese is thought to be top of the agenda in the talks starting last Monday that may be extended this week. The Scotsman relates that John Russell, Manganese's chief executive, admitted at the weekend that "we are not yet at the point where we have crystallized a way forward with Geely". However, he played down suggestions the British company is heading for administration, the Scotsman discloses. Manganese Bronze is the manufacturer of the iconic British black taxi. UNIGLAZE: In Administration, Cuts 88 Jobs ----------------------------------------- Annabelle Dickson at Norwich Evening News 24 reports that Uniglaze appointed administrators just over a year after it was forced to broker a deal with its creditors. A total of 88 staff have lost their jobs and administrators KPMG are looking for a buyer, according to Norwich Evening News 24. The report relates that it comes after the company was forced to broker a refinancing package with a local partner and existing shareholders after it got into trouble in Spring 2011. At the time a new management team, led by managing director Philip Davis, was drafted in to oversee a CVA (Company Voluntary Arrangement) - where a company makes a court-approved agreement with its creditors for the settlement of debts, the report notes. The move kept the firm afloat, saving some 280 jobs at the time, the report relates. Norwich Evening News 24 says that a statement from KPMG said Chris Pole and Richard Philpott had been appointed joint administrators to Uniglaze 2 (East Anglia) Limited. "The company has struggled for a number of years in the wake of the severe downturn that has hit the UK construction sector and wider economy. While market conditions have been very challenging, management and creditors worked together to address the business' financial problems by agreeing a company voluntary arrangement (CVA) in April 2011 . . . . In spite of the company's efforts to find a resolution to its problems via a CVA, the company's cashflow has been substantially impacted by a further decline in turnover and the insolvency of a key customer. . . . In the context of a persistently difficult market for businesses supplying into the construction sector, the company has been unable to restructure further or to attract additional funding, leaving the directors with no other option than to seek the appointment of administrators," the report quoted Chris Pole, director of KPMG's Restructuring practice and joint administrator, as saying. Chris Pole added: "The administrators will seek to complete work already in progress at the main site in New Costessey while exploring the possibility of finding a buyer for the business and its assets. We would encourage any interested parties to contact us as soon as possible." Uniglaze is a Norwich manufacturer and supplier of toughened glass and double glazing. WAVERLEY TBS: In Liquidation as Administrators Fail to Find Buyer ----------------------------------------------------------------- Luke Nicholls at bighospitality.co.uk reports that Waverley TBS has been placed into liquidation after administrators failed to find a buyer for the business, leaving 685 employees redundant and further job losses expected. The report says the business, which was taken over by administrators at Deloitte last week, had attracted interest from companies such Booker and Matthew Clark, but administrators said they would have to wind the company down after no suitable offers came forward. Waverley TBS is a drinks wholesaler. * Insolvency Numbers Show Hospitality and Leisure Sector Hit Hard ----------------------------------------------------------------- The latest PwC analysis of corporate insolvency numbers shows that hospitality and leisure (H&L) was one of the worst off sectors in the twelve months to the end of September compared to the same period the year before. In total, there were 1,464 insolvencies in the H&L sector in the past twelve months compared to 1,304 in the same period the year before. Despite this rise, H&L insolvencies in Q3 2012 were down by 15% compared to Q2, and were down by 11% compared to the same quarter last year. The number of insolvencies across most areas of H&L dropped between Q2 and Q3 apart from gambling and sport. The biggest drop between Q2 and Q3 was seen in hotels, which saw a 43% fall, followed by travel & tourism which saw a 40% drop and bars, a 23% decrease. After reaching a high level at the end of 2011 and into the start of 2012, the level of H&L insolvencies has steadily fallen since Q1 this year, which has been driven by a reduction in insolvencies for pubs and restaurants. However, restaurants were still the worst hit of all H&L sectors in Q3 2012, with 156 insolvencies across the UK. London saw the highest number of restaurant insolvencies in Q3 2012 with 59. London alone has seen 451 restaurant insolvencies since Q4 2010, out of a national total of 1,326. David Chubb, PwC business recovery partner and hospitality and leisure specialist, commented: "Pubs and restaurants have had a good quarter in the fight against the recession. They continue to combat drops in discretionary spend by enticing consumers with promotions like set menu vouchers, happy hours, and multi buy deals. However, there are signs that consumers are now expecting this and are farming the offers without spending on additional courses or drinks which the promotion was priced to entice. Consequently, operators are now having to consider the economics of the special offer strategy. "We are seeing that parts of the pub sector are coming out of recession and there are some good news stories, but behind the figures it is still very clear that across the sector there are both winners and losers. Under-invested pubs and over capacity will continue to be issues and consequently further closures are inevitable, but this has a positive impact for the survivors. "Most of the businesses will be looking for an uplift in performance over the Christmas period and therefore I would expect a further drop in insolvencies for the next quarter. Only time will tell if H&L insolvencies continue to decline beyond the Christmas period, but certainly recessionary pressures on leisure spend will continue over the next 12 months. Limited spending is likely to focus around leisure activities with an element of treat and experience but despite the consumer squeeze, leisure remains a key component of consumer spending." Across all sectors the level of insolvency has continued to decline every quarter this year. There were 3,296 incidences of insolvency across the UK in Q3 this year compared to 4,045 in Q3 2011. This means that the number of companies falling into administration during Q3 this year fell by 18% compared to the previous quarter and there was a drop of 19% compared to Q3 2011. Which Sectors Are Struggling The Most? The worst affected sectors continue to include construction (631 insolvencies) manufacturing (392), retail (346), hospitality & leisure (299) and real estate (139). Across the UK PwC's analysis shows that all regions showed a decline in the number of insolvencies versus the same quarter last year. Most regions also showed a decline compared to the previous quarter of 2012, apart from the West which showed a 7% rise and Wales, an 8% increase. London continues to have the highest number of insolvencies with 851 in Q3, and the region showed a 15% decrease in volume compared to the same quarter last year. Compared to the previous quarter in 2012, London insolvencies in Q3 were down by 6%. The South West saw a 33% fall in insolvencies in Q3 compared to the same quarter last year, which was the biggest year on year improvement of all the regions. The North East & Cumbria was the region that showed the biggest improvement compared to the previous quarter of this year, with a 58% fall in insolvencies. Print this article =================== U Z B E K I S T A N =================== AGROBANK OJSC: Fitch Affirms 'B-' Long-Term IDR; Outlook Stable --------------------------------------------------------------- Fitch Ratings has affirmed OJSC Agrobank's Long-term foreign currency Issuer Default Rating (IDR) at 'B-' with a Stable Outlook and Viability Rating (VR) at 'f'. Fitch has also downgraded the bank's Long-term local currency IDR to 'B-' from 'B'. The agency has removed the IDRs from Rating Watch Negative (RWN), where they were placed on October 31, 2011. RATING ACTION RATIONALE AND DRIVERS - IDRS, SUPPORT RATING AND SUPPORT RATING FLOOR Agrobank's IDRs reflect Fitch's view of the probability that support would be forthcoming from the Uzbek authorities if needed. This view takes into account the evidence of recent regulatory forbearance, the track record of equity injections, Agrobank's significant systemic importance as the fourth-largest bank by assets in the country, and its policy role as a lender to the agricultural sector. At the same time, the downgrade of the Long-term local currency IDR to 'B-' from 'B' reflects the fact that support made available to date by the state authorities, combined with a further planned equity injection, is unlikely, in Fitch's view, to be sufficient to fully restore the bank's solvency. RATING ACTION RATIONALE AND DRIVERS - VIABILITY RATING The affirmation of the VR at 'f' reflects Fitch's view that the bank has not yet regained its solvency following losses resulting from the alleged fraudulent activities of its former employees, discovered in 2011. Agrobank received about UZS11bn of new capital from the state in 2011 and UZS41bn in H112. Taking into account its UZS9bn local GAAP net profit in H112, the bank's Fitch core capital (FCC) should improve but remain negative at end-2012 due to the necessary impairment adjustment relating to the UZS249bn claims against the former employees. The bank expects to recover this amount by taking ownership of property allegedly acquired following the fraud. However, an immaterial proportion has actually been repossessed to date, and Agrobank's auditors made a qualification to the bank's 2011 IFRS accounts with respect to these assets. Management previously expected that the state would make a further UZS74bn equity injection during 2012, but the deadline has slipped several times. Should the expected capital contribution be made in Q412, Agrobank's FCC could turn modestly positive but Fitch estimates that the FCC/risk-weighted assets ratio would likely still be in the low single-digit percentage range. At end-7M12, Agrobank's liquid assets totalled a moderate UZS173bn, or 17% of customer deposits, according to its statutory accounts. However, some of these assets could be encumbered in currency conversion operations for clients and, hence, unavailable for Agrobank's general liquidity needs. Furthermore, the bank has been in breach of some covenants on its third-party wholesale debt. On balance, deposits have been stable to date and the wholesale debt was a manageable 5% of liabilities at end- 7M12 and has not been accelerated to date. RATING SENSITIVITIES The IDRs and Support Rating Floor could be downgraded further should the bank's weak solvency translate into liquidity problems without sufficient and timely state support being made available. The Long-term local currency IDR could be upgraded back to 'B' if a recapitalisation of the bank restores its solvency. A strengthening of the bank's capital position, as a result of equity injections and/or recovery of problem receivables, could also result in an upgrade of the VR. The potential for any upgrade of the Long-term foreign currency IDR and Support Rating Floor is constrained by Uzbekistan's foreign currency transfer and convertibility risks, as a result of which Fitch caps the Long-term foreign currency IDRs of all Uzbek banks at 'B-' (see 'Fitch Downgrades Four Uzbek Banks Foreign Currency IDRs to 'B-', Rates 'B' in Local Currency', dated 7 June 2011, available on www.fitchratings.com). The rating actions are as follows: -- Long-term foreign currency IDR: affirmed at 'B-'; Outlook Stable; off RWN -- Short-term foreign currency IDR: affirmed at 'B'; off RWN -- Long-term local currency IDR: downgraded to 'B-' from 'B'; Outlook Stable; off RWN -- Short-term local currency IDR: affirmed at 'B'; off RWN -- Viability Rating: affirmed at 'f' -- Support Rating: affirmed at '5' -- Support Rating Floor: affirmed at 'B-'; off RWN ********* 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 * * *