TCREUR_Public/121031.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 31, 2012, Vol. 13, No. 217



RONIN EUROPE: S&P Affirms 'B/B' Counterparty Credit Ratings


VESTAS WIND: Danish Government Won't Provide Direct Support


DECO 10: Fitch Affirms 'CCCsf' Rating on Class D Notes
MONDI CONSUMER: Moody's Lifts Rating on EUR280MM Notes From Ba1


* GREECE: German Politicians Reject Calls for Debt Restructuring
* GREECE: Germany Likely to Support Expanded Rescue Package


SMURFIT KAPPA: Fitch Rates US$200MM Sr. Subordinated Notes 'BB+'


BLUE PANORAMA: Under Bankruptcy Protection; License Downgraded


SONGA OFFSHORE: Moody's Reviews 'B2' CFR/PDR for Downgrade




BCS HOLDING: S&P Assigns 'B-/C' Counterparty Credit Ratings
INTER RAO: Moody's Assigns 'Ba1' CFR/PDR; Outlook Stable
* LIPETSK REGION: Fitch Assigns 'BB/B' Currency Ratings

S E R B I A   &   M O N T E N E G R O

NOVA AGROBANKA: Postanska Stedionica Takes Over Assets & Clients


BANKIA SA: Blames EUR2.6-Bil. 3Q Loss on Heavy Writedowns
INAER AVIATION: S&P Cuts Long-Term Corp. Credit Rating to 'B'
* SPAIN: Bad Bank to Buy Distressed Loans From Lenders
* SPAIN: Catalan Region Calls for Secession Amid Economic Turmoil


* CITY OF KYIV: S&P Puts 'B-' Issuer Credit Rating on Watch Neg.

U N I T E D   K I N G D O M

BOWEN TRAVEL: In Administration, Cuts Jobs
DECO 6: Moody's Lowers Rating on Class C Notes to 'C'
HIBU PLC: Creditors May Seek Liquidation
IGLO FOODS: Moody's Assigns 'B1' Corp. Family Rating
IGLO FOODS: S&P Affirms 'B+' Corp. Credit Rating; Outlook Stable

KERLING PC: S&P Affirms 'B' Corp. Credit Rating; Outlook Negative
LONMIN PLC: Mulls US$800-Mil. Rights Issue to Avert Debt Breach
LTI: In Administration Amid Spiralling Losses
MYTHEN RE: S&P Assigns Prelim. 'B+' Rating to Class A Notes
RBS CAPITAL: Moody's Corrects Ratings of Hybrid Securities

* UK: Moody's Says Water Sector License Uncertainty Credit Neg.



RONIN EUROPE: S&P Affirms 'B/B' Counterparty Credit Ratings
Standard & Poor's Ratings Services affirmed the ratings on these
Cyprus-based companies:

  -- Ronin Europe Ltd. (B/Stable/B)
  -- S.L. Capital Services Ltd. (SLCS; B/Stable/B)
  -- ABH Financial Ltd. (BB-/Positive/B)

Ronin Europe and SLCS are entities that are located in Cyprus
essentially for tax reasons, but do business quasi exclusively
with Russian and international clients. ABH Financial is a non-
operating holding company that owns the largest Russian private
bank, OJSC Alfa-Bank (BB/Positive/B).

"The affirmation follows the lowering of the long-term ratings on
the Republic of Cyprus to 'B' from 'BB', reflecting our view that
the country's creditworthiness has deteriorated further since the
last downgrade in August," S&P said.

On April 8, 2011, S&P published updated criteria that explains
when it rates non-sovereign issuers above the sovereign in EMU

Important factors for financial institutions include:

  -- The company's exposure to the domestic economy, measured in
     terms of the proportion of the institution's assets; and

  -- The subsidiary's group status, formulated under S&P's group

When S&P assesses the underlying creditworthiness of these
nonsovereign issuers, it also considers the specific risks that
may arise from a funding or liquidity perspective in the event of
sovereign distress.

For "core" subsidiaries with "low" domestic exposure, there is no
sovereign cap on the rating on a subsidiary. "We are therefore
able to rate the entity in line with the ratings on the parent.
We note that Cyprus' Transfer and Convertibility (T&C) assessment
remains at 'AAA', in line with other eurozone sovereigns. It
indicates an extremely low likelihood that the Cypriot
authorities would restrict the access of non-sovereign issuers,
including financial institutions, to foreign exchange needed to
satisfy the issuer's debt service obligations. If this situation
changed, for example, if we were to lower Cyprus' T&C assessment,
we would review the ratings on Ronin Europe, SLCS, and ABH
Financial," S&P said.

                        RONIN EUROPE LTD.

The ratings on Ronin Europe Ltd. reflect its "core" status within
the wider Russian Ronin Partners group, whose group credit
profile (GCP) is 'b'. "As a result, we equalize the ratings with
the parent's GCP," S&P said.

"Ronin owns 100% of Cyprus-based Ronin Europe, which is the
group's booking center for client-driven brokerage and the
settlement center for the group's underwriting operations and
proprietary securities investments," S&P said.

"As Ronin Europe's business, operations, and strategy are highly
integrated with those of the group, Standard & Poor's expects
that the Cypriot subsidiary would likely receive full support
from the group, if needed," S&P said.

"We calculate that Ronin Europe has domestic exposure of well
below 10% of its total assets," S&P said.

The stable outlook mirrors that on its parent.

                   S.L. CAPITAL SERVICES LTD. (SLCS)

The ratings on S.L. Capital reflect its "core" status within the
Aljba Alliance group. "As a result, we equalize the ratings on
SLCS with those on its parent, Aljba Alliance (B/Stable/B)," S&P

"Russia-based Aljba Alliance owns 100% of its Cypriot subsidiary
SLCS, which is the group's booking center for proprietary
securities investments and client-driven brokerage and
underwriting operations. SLCS' business, operations, and strategy
are highly integrated with those of the group," S&P said.

"We calculate that SLCS has domestic exposure of well below 10%
of its total assets," S&P said.

The stable outlook mirrors that on its parent.

                        ABH FINANCIAL LTD.

S&P's ratings on ABH Financial reflect its status as a non-
operating holding company of Russia-based Alfa-Bank.  The long-
term rating on ABH Financial is one notch lower than that on the
operating entity Alfa-Bank. The rating differential is mainly due
to ABH Financial's reliance on dividends and other distributions
from Alfa-Bank to meet its obligations.

S&P calculates that ABH Financial has domestic exposure of well
below 10% of its total assets.

The positive outlook mirrors that on the operating entity Alfa-


Ratings Affirmed

Ronin Europe Ltd.
Counterparty Credit Rating              B/Stable/B

S.L. Capital Services Ltd.
Counterparty Credit Rating              B/Stable/B

ABH Financial Ltd.
Counterparty Credit Rating              BB-/Positive/B


VESTAS WIND: Danish Government Won't Provide Direct Support
Peter Levring and Gelu Sulugiuc at Bloomberg News report that the
Danish government won't provide direct support to Vestas Wind
Systems A/S should the company need a bailout to stay afloat.

Vestas, which has been hurt by higher-than-budgeted costs to
develop its V112 turbine and cuts in green energy subsidies, said
in July it agreed with its banks to defer a so-called test of
financial covenants, delaying loan payments after losses eroded
its cash flow, Bloomberg relates.  The government is now saying
it won't step in to bridge any periods of financial distress at
the company to prevent it going bankrupt, Bloomberg notes.

"We cannot and will not support a single company," Bloomberg
quotes Martin Lidegaard, Denmark's Energy Minister, as saying in
an e-mailed reply to questions.  "It is against the government's
general state aid policy."

Vestas in 2012 announced two rounds of job cuts that hit more
than 3,700 employees, or a sixth of its workforce, to reduce
fixed costs by more than EUR250 million (US$323 million),
Bloomberg recounts.  The company is struggling to stay
competitive as it faces declining demand in Europe and the U.S.,
Bloomberg discloses.

According to Bloomberg, two people with knowledge of the matter
said last month that the company would consider selling about
EUR500 million in shares to existing investors if talks on a
strategic cooperation with Mitsubishi Heavy Industries Ltd. fail.

Vestas Wind Systems A/S is the world's biggest maker of wind
turbines.  The company is based in Aarhus, Denmark.


DECO 10: Fitch Affirms 'CCCsf' Rating on Class D Notes
Fitch Ratings has affirmed DECO 10 - Pan Europe 4 p.l.c (DECO
10), as follows:

  -- EUR203.7m class A1 (XS0276266888) affirmed at 'AAAsf';
     Outlook Stable

  -- EUR276.8m class A2 (XS0276271375) affirmed at 'BBBsf';
     Outlook Stable

  -- EUR31.9m class B (XS0276272001) affirmed at 'BBsf'; Outlook
     revised to Negative from Stable

  -- EUR31.9m class C (XS0276273074) affirmed at 'Bsf'; Outlook

  -- EUR18.9m class D (XS0276273660) affirmed at 'CCCsf'; RE10%

The revised Outlook on the class B notes is due to the declining
performance of the Dresdner Office portfolio (33.3% of the pool
balance) and the maturity default of the Treveria II loan (17.9%
of the pool balance).

The Dresdner loan is a 50% pari-passu syndicated participation,
with the remaining debt securitized in DECO 9 Pan-Europe 3 plc.

The loan was originally structured as a series of sale-and-
leasebacks to Dresdner Bank and is now 75% occupied by
Commerzbank ('A+'/Stable/'F1+'), which took Dresdner over in
2009.  The loan is currently secured by a portfolio of 170 office
properties located throughout Germany.

Fitch believes the loan will fail to redeem at its scheduled
maturity in January 2013 and will enter a protracted workout.
The Fitch LTV stands at 84.0% compared to the current valuation
of EUR773.2m, which gives an LTV of 49.2%.  The agency
understands that Commerzbank will not renew the majority of
former Dresdner leases, as it is looking to consolidate office
space.  Therefore, the majority of the portfolio is expected to
become vacant at each lease expiry.  The portfolio's WA lease
term to expiry is just 3.5 years and it is already 33% vacant by
lettable floor area, although the vacancy is quite concentrated
in few assets (three of the largest five assets, accounting for
11.9% of floor area, are 100% vacant).

Fitch believes marketing the properties without a guaranteed
income stream will be extremely problematic.  Although many of
the assets are in good city office locations, considerable
capital expenditure will be needed to attract new tenancies.
However, as income tails off, there will be less available cash
to perform the required capex.  In the agency's view a loan
restructuring will be the most likely scenario.

The Treveria II loan is secured by 47 retail warehouse assets let
to various strong national retailers and located across western
Germany.  The loan failed to redeem at its scheduled maturity
date in July 2011, and was subsequently granted a 12-month
extension by the servicer, at the time Deutsche Bank, now Situs
Asset Management.  Since the start of the extension period, the
borrower has failed to sell any assets or inject equity.  As
such, the loan was transferred to special servicing in July 2012.

The syndicated loan (the loan is also a 50% participation with
the remaining 50% securing the Sunrise II loan in the EMC VI -
Europrop CMBS) has a reported LTV of 78.2%, much lower than the
Fitch LTV (110.6%).  Fitch expects another long workout
incorporating piecemeal sales starting with the assets that have
the longest WA lease length.

Of the eight remaining loans, Fitch believes that the Rubicon
Nike loan, secured against Nike's headquarters in the Netherlands
and benefiting from a long lease, and the two Swiss loans (Emmen
Wohncenter and Swisscom) will redeem in full at their respective
maturities.  The three facilities account for 34.5% of
outstanding portfolio balance.

MONDI CONSUMER: Moody's Lifts Rating on EUR280MM Notes From Ba1
Moody's Investors Service upgraded the EUR280 million second
priority notes issued by Mondi Consumer Packaging International
AG (formerly known as NORDENIA International AG and, prior to
that, Nordenia Holdings GmbH) ("Nordenia") to Baa3 from Ba1
following the announcement that Mondi plc has provided a
guarantee in support of the legacy bond. There are no changes to
Mondi's Baa3 issuer rating and senior unsecured bond ratings with
a stable outlook.

Ratings Rationale

"The upgrade of Nordenia's legacy bond to Baa3 reflects the
explicit parental support provided by Mondi plc in the form of an
irrevocable and unconditional guarantee for the bond previously
issued by its recently acquired subsidiary" says Anke Rindermann,
Moody's lead analyst for Mondi.

The guarantee is an unsecured, unsubordinated obligation of Mondi
and ranks at least pari passu with Mondi's other unsecured and
unsubordinated obligations. Moody's has consequently aligned the
rating of Nordenia's notes with Mondi's Baa3 issuer and senior
unsecured ratings. Through the provision of the guarantee, Mondi
fully mitigates the weaker credit profile of Nordenia on a stand-
alone basis.

On October 1, 2012, Mondi announced that it has completed the
acquisition of 99.93% of the outstanding share capital of
Nordenia International AG for a final cash consideration of
EUR259 million.

Mondi's Baa3 issuer continues to reflect (i) its well-diversified
business profile; (ii) a track record of relatively stable and
strong margins compared to peers and strong vertical integration;
(iii) fairly stable operating performance and cash flow
generation over 2012 despite challenging economic conditions in
the group's European stronghold; and (iv) a balanced financial
policy reflected in a moderate debt-load, which will however
increase following several debt-funded bolt-on acquisitions, the
most important being the Nordenia transaction.

The ratings are constrained by (i) Mondi's exposure to the
cyclical nature of the paper and packaging products industry with
constant pricing pressure and declining demand in some segments
and markets; (ii) the secular decline in paper use in Western
Europe due to the continued migration towards electronic forms of
communication; and (iii) still elevated costs for key inputs such
as recovered paper, chemicals and energy which are weighing on

An upgrade of Mondi's rating would require a track record of
sustaining the improved profitability and cash flow generation as
evidenced by EBITDA margins in the high teens, RCF/Debt towards
30% and leverage in terms of Debt/EBITDA close to 2x. A further
important consideration will be the group's approach to cash
usage going forward, in particular with regards to shareholder
return and growth projects.

Rating pressure could build were Mondi unable to sustain recent
performance improvements as indicated by RCF/Debt trending to
below 20%, EBITDA margins deteriorating towards 10% or should the
group generate negative free cash flows.

The principal methodology used in rating Nordenia Holdings GmbH
and Mondi Plc was the Global Paper and Forest Products Industry
Methodology published in September 2009.

Mondi is an integrated paper and packaging group which generated
revenues of EUR5.6 billion in the last twelve months ending June


* GREECE: German Politicians Reject Calls for Debt Restructuring
James Angelos at The Wall Street Journal reports that leading
German politicians are rejecting calls for a restructuring of
Greek debt that would lead to a direct loss for German taxpayers,
but they are keeping the door open to other manners of reducing
Greece's unsustainable debt load, including a debt-buyback

Greece's private-sector lenders, who agreed to take losses on
their investments in a massive restructuring of Greek debt, have
refused to accept another so-called haircut on their holdings,
the Journal relates.  Instead, the International Monetary Fund
has suggested that European governments write off a portion of
their loans to Greece, the Journal notes.

German politicians appear to be warming to the idea of granting
Greece more time to revamp its economy and reduce its debt and
budget deficit, the Journal states.  But Germany is refusing to
consider taking a loss on official loans to Greece, fearing such
a plan could spark a revolt against aid for Greece by lawmakers
in Chancellor Angela Merkel's ruling center-right coalition,
according to the Journal.

A public sector write-off on Greek debt is "out of the question,"
the Journal quotes German government spokesman Steffen Seibert as
saying in a government news conference Monday.  Such a
restructuring would preclude further German loans to Greece, he
added, since German law stipulates that loans can only be given
to a nation when default is considered unlikely.  "We would be
tying our hands with such a measure and it would certainly not be
in Greece's interests," Mr. Seibert, as cited by the Journal,

* GREECE: Germany Likely to Support Expanded Rescue Package
Mary M. Lane at The Wall Street Journal reports that passing a
more-generous bailout for Greece through Germany's parliament
could prove easier than expected for Chancellor Angela Merkel,
after most of her coalition appeared willing on Friday, October
26, to give Greece more time and financing to repair its economy.

Senior lawmakers in Ms. Merkel's conservative-led coalition
signaled that the chancellor would likely face limited resistance
in parliament against an expanded aid package for Greece, belying
fears that Germany's legislature would balk at a third bailout
deal for Athens since 2010, the Journal discloses.

The shift in the mood in the Bundestag, Germany's lower house of
parliament, makes it more likely the euro zone will agree to
release urgently needed aid for Greece in November, while easing
the onerous timetable of Greece's austerity program, the Journal

The German government hasn't yet agreed to extra financing for
Greece, the Journal notes.  But most German lawmakers believe it
is only a matter of time, the Journal states.

Senior Bavarian conservative lawmaker Hans Michelbach said the
coalition is willing to give Greece two extra years to cut its
budget deficit and extra financing to keep the floundering
country afloat, provided there is a credible plan to make
Greece's debt sustainable, the Journal relates.

German lawmakers are increasingly resigned to the need for extra
loans for Greece from the euro zone's bailout fund, the Journal
says.  The alternative, many in Ms. Merkel's coalition say, would
be a Greek national bankruptcy and exit from the euro that could
rock the currency zone just as Europe is making progress in
taming its three-year-old debt crisis, according to the Journal.

Mr. Michelbach, as cited by the Journal, said that reducing or
delaying Greece's interest payments on its European rescue loans
and helping Greece to buy back some of its outstanding bond debt
were other possible measures to help Athens make ends meet.

Greece's deeply depressed economy, together with Athens' request
for more time to implement painful overhauls, are prompting
European governments to consider about EUR30 billion
(US$39 billion) of extra financing in addition to Greece's
EUR173 billion loan program drawn up in March, the Journal notes.


SMURFIT KAPPA: Fitch Rates US$200MM Sr. Subordinated Notes 'BB+'
Fitch Ratings has withdrawn Smurfit Kappa Funding's EUR217
million and US$200 million senior subordinated notes' rating
following their full redemption.  At the same time, the agency
has assigned Smurfit Kappa Acquistions's 2020 floating-rate notes
a final rating of 'BB+' following the receipt of the final


BLUE PANORAMA: Under Bankruptcy Protection; License Downgraded
Victoria Moores at Air Transport World reports that Italian civil
aviation authority ENAC has downgraded Blue Panorama (BV) to a
provisional license and given it 12 months to restructure under a
form of bankruptcy protection.

According to ATW, citing a tough operating environment, BV said
it has applied for the EU equivalent of Chapter 11 to
"consolidate its financial and capital structure."

"Blue Panorama Airlines and Blu-express will continue to operate
their flight programs, honoring tickets and reservations as
normal and continuing business partnerships with other airlines,
tour operators and travel agent partners," ATW quotes BV as
sayings in a statement.

On Oct. 23, Italian CAA ENAC granted BV's application, giving it
12 months to restructure, ATW relates.  BV's full license has
been suspended and replaced with a provisional version and ENAC
will now perform monthly checks on BV's operational, economic and
financial position, ATW discloses.  Despite these changes, ENAC
confirms that BV is continuing to fly as normal, ATW notes.

Blu Panorama is a privately owned scheduled and charter airline,
which launched operations in 1998 and carried 2 million
passengers in 2011.  It has bases at Rome Fiumicino, Milan
Malpensa and Bologna and operates four Boeing 767-300ERs and six
Boeing 737s (-300s and -400s).


SONGA OFFSHORE: Moody's Reviews 'B2' CFR/PDR for Downgrade
Moody's Investors Service has placed the B2 CFR and PDR of Songa
Offshore SE under review for downgrade. The rating review was
triggered by Songa's ongoing operational problems and
announcements of the potential sale of the ultra-deepwater
semisubmersible Eclipse as well as the resignation of the CEO,
effective immediately.

Ratings Rationale

The rating action reflects Moody's expectation that the increase
in leverage associated with the company's operational setbacks
from lower vessel utilization and increased yard time might lead
to credit metrics that may no longer be appropriate for the B2
rating and lead to a covenant breach in 3Q 2012, exacerbated by
the sudden and unexpected departure of the CEO.

The resignation of the CEO highlights Moody's concerns over
inconsistent strategy implementation by the company. Songa is
negotiating the sale of the Eclipse, having only entered the
ultra-deepwater space in the past couple of years.

Moody's review will focus on the strategic and financial impact
of a sale of the Songa Eclipse and the means the company has of
curing any potential covenant breach, as well as on the
deleveraging profile and liquidity and the stability of future

Moody's would expect to conclude its review after the
announcement of third quarter results, which are targeted for the
end of November.

The principal methodology used in rating Songa Offshore SE was
the Global Oilfield Services Rating Industry Methodology
published in December 2009.

Songa, established in Norway in 2005 and listed on the Norwegian
stock exchange with a market capitalization of approximately
NOK1.4 billion, has grown rapidly through both acquisitions and
some re-commissioning of second-hand floaters and currently has a
fleet of six semisubmersibles, with four under construction. For
the year ending December 2011, it reported revenue of about
US$500 million.


Fitch Ratings has upgraded Towarzystwo Ubezpieczen Europa SA's
and Towarzystwo Ubezpieczen na Zycie Europa SA's Insurer
Financial Strength (IFS) ratings to 'BB+' from 'BB' and National
IFS ratings to 'BBB+(pol)' from 'BBB(pol)' and removed the
ratings from Rating Watch Positive.  The two companies form the
Poland-based Europa Group (Europa).   At the same time, the
agency has withdrawn the ratings.

The upgrade reflects the takeover of Europa by Talanx
International AG (Talanx) and Meiji Yasuda Life Insurance Company
(Meiji; IFS: 'A'/Stable).  Fitch views Europa as 'Important' to
its new owners based on Fitch's Group Ratings Methodology and
believes that it will benefit from the new ownership through
increased financial flexibility and improved access to
reinsurance. However, the business concentration and high
investment exposure to Getin Noble Bank (IFS: 'BB'/Stable)
continues to be a limiting rating factor.

Fitch has withdrawn Europa's ratings as Europa is no longer
participating in the rating process.  Therefore, Fitch will no
longer have sufficient information to maintain the ratings.
Accordingly, Fitch will no longer provide ratings or analytical
coverage for Europa.


BCS HOLDING: S&P Assigns 'B-/C' Counterparty Credit Ratings
Standard & Poor's Ratings Services assigned its 'B-/C' long- and
short-term counterparty credit ratings to Russian BCS Holding
International Limited (BCS Holding). The outlook is stable.

The ratings on BCS Holding reflect our assessment of the
creditworthiness of the wider BCS Financial Group (BCS Group) and
its status as a non-operating holding company (NOHC) within the
group. BCS Holding, registered in the British Virgin Islands
(BVI), is the 100% owner of several companies that form BCS
Financial Group.

"According to our criteria, we typically view the
creditworthiness of an NOHC as marginally weaker than that of its
operating companies. We assign a notional group credit profile
(GCP) of 'b' to BCS Group and rate BCS Holding one notch below.
Our assessment of the group's GCP is constrained by our view of
the vulnerability of its earnings to a potential decline in
trading volumes, its confidence-sensitive funding base, its
complex -- although typical for the industry -- group structure,
and its fragmented regulatory supervision," S&P said.

"These factors are partly mitigated by the company's well-
established franchise in retail brokerage in Russia, an
experienced and innovative management team, and our assessment of
adequate capitalization for the current ratings. We do not factor
any extraordinary parental support into our assessment of BCS
Group's GCP, as we consider this support to be uncertain. BCS
Group's president, Oleg Mikhasenko, is the founder and the sole
owner of the group," S&P said.

Founded in 1995, BCS Group is one of the largest Russian retail
brokers with more than 100,000 clients.  S&P understands that the
group has a leading position on the Moscow Interbank Currency
Exchange. In September 2012, BCS Group's equity trade turnovers
were among the highest for retail brokers in Russia, turning over
RUB 192 billion for the month.  Its overall trading volume was
RUB3.4 trillion in 2011.  BCS Group had RUB49 billion
(US$1.5 billion) of assets and RUB9.4 billion (US$286 million) of
capital at mid-year 2012.

BCS Group has a complex international group structure, comprising
a number of entities in Russia and abroad, most of which carry
the BCS brand name. BCS Group's main operating companies in
Russia are BrokerCreditService LTD, OOO Investment Management
Company Brokercreditservice, and JSC "BCS - Investment Bank".
BCS Group currently carries out operations with international
investors through BCS (Cyprus) Ltd., but plans to transfer those
to U.K.-based BCS Prime Brokerage Ltd., which was established in
April 2012.

Until 2008, BCS Group was a pure retail broker, but, after the
financial crisis, reconsidered its strategy and moved from being
the monoline provider of retail brokerage for middle-class
clients toward becoming a financial company with a full range of
investment and advisory products, suitable for existing retail
customers, high-net-worth individuals, and institutional clients.
As of year-end 2011, retail brokerage accounted for 64% of total
operating revenues of RUB4.7 billion, institutional brokerage
made up 28% of revenues, and the rest was primarily rental
income.  S&P expects the share of revenues from institutional
brokerage to increase to half of the group's total revenues in
the next two to three years.

BCS Group's risk profile is dominated by market and liquidity
risks, followed by credit risks, and high operational risks,
exacerbated by the unstable operating environment.

Counterparty risk mainly comes from the group's repurchase
agreements (repos), margin lending operations, and cash
placements. Brokerage transactions are settled on a DVP (delivery
versus payment) basis, which we believe somewhat reduces the
company's settlement credit risk. BCS is heavily involved in
margin lending to its clients, accounting for 11% of BCS Group's
assets (55% of equity) at mid-year 2012. Margin lending terms are
in line with the industry average, with maximum leverage of one
to three. Counterparty single-name concentrations are moderate:
the top-20 repo counterparties accounted for 37% of total
receivables at mid-year 2012.

In addition to margin lending, BCS Group provides repo loans to
its own counterparties, which made up a sizable 23% of its own
assets at June 30, 2012. BCS Group applies fairly conservative
haircuts on repo and margin loans, mitigating potential credit
and market losses. Moreover, haircuts on most of its repo
borrowings are generally lower than for its repo lending, which,
to a certain extent, protects the company from adverse market
developments, S&P said.

BCS Group's exposure to market risk stems from the above-
mentioned margin lending activities and proprietary securities
portfolio of RUB14 billion as of June 30, 2012. This portfolio
comprises 28% of BCS Group's assets and 148% of its equity as of
the same date. "We understand that the group follows a
conservative trading strategy, focusing on fairly liquid bonds
rated 'B-' or above. Long equity positions accounted for 21% of
the total portfolio at mid-year 2012. Single-name issuer
concentrations are high, reflecting the limited number of
available investments on the market, which in our view may suit
the group's limited risk appetite," S&P said.

"The structure of BCS Group's short-term funding reflects the
short-term maturity profile of its assets. Customer brokerage
accounts made up 38% of total liabilities at mid-year 2012. BCS
Group uses these on-demand resources for overnight margin
lending. We deem customer accounts to be volatile and moderately
concentrated, with the top-20 customers accounting for 26% of
total brokerage accounts as of June 30, 2012. At the same date,
repo borrowings and customer deposits in the BCS subsidiary bank
(JSC 'BCS - Investment Bank') funded 21% and 15% of total
liabilities, respectively. Another 20% of liabilities were
represented by financial instruments at fair value through
profit or loss, which is mostly short position in equities. These
short equity positions are hedged by long futures positions so
that the group captures the interest rate differential between
the interest rate implied in the equities' futures contracts and
the repo rate. We believe, however, that these strategies could
potentially make the group vulnerable to a sharp drop in the
value of stock prices as it would have to post additional margins
on its long futures position (thus putting pressure on
liquidity)," S&P said.

"In our view, BCS Group's profitability largely depends on the
performance of the Russian stock market. In the autumn of 2008,
the company's monthly trading volumes declined by half, thus
putting pressure on the group's bottom line results. At the same
time, we note that the diversification of BCS Group's customer
base provides some protection from adverse market developments
(the top-20 retail clients accounted for 7% of operating revenues
as of June 30, 2012)," S&P said.

"With total equity of RUB9.4 billion and adjusted total equity to
adjusted assets of 18% on June 30, 2012, BCS Group has a good
cushion to absorb further potential market or credit losses, in
our view. The quality of capital is relatively good because it
only comprises Tier 1 capital. Moreover, there is no debt at the
holding company level," S&P said.

"The stable outlook reflects our expectations that BCS Group will
conclude the streamlining of its business and the start-up of its
new business lines within the next 12 months, in line with its
new strategy. The outlook also reflects our belief that the group
will generate positive income from its core retail brokerage
business, and will increase its profits from institutional
brokerage over the medium term," S&P said.

"We could raise the ratings on BCS Holding if we see improvements
in the group's business line diversification, higher operating
efficiency, and the group's ability to sustain operating
performance throughout market cycles. We could lower the ratings,
however, if the company's liquidity or capital positions were to
weaken significantly or if the company exhibits a higher
proprietary risk appetite. Substantial counterparty confidence
disruption, or another prolonged market downturn, could also lead
to negative rating action," S&P said.

Conversely, the sustainable improvement in the Russian operating
environment could potentially result in positive rating action,
provided that the group keeps its risk appetite under control.

INTER RAO: Moody's Assigns 'Ba1' CFR/PDR; Outlook Stable
Moody's Investors Service has assigned a Ba1 corporate family
rating (CFR) and probability of default rating (PDR) to JSC INTER
RAO UES (INTER RAO), a Russian major electric utility. The
outlook on the ratings is stable. This is the first time Moody's
has assigned a rating to INTER RAO.

Rating Rationale

Given the Russian government's control over INTER RAO through
both direct and indirect shareholding, Moody's considers the
company a government related issuer (GRI). In accordance with
Moody's rating methodology for GRIs, INTER RAO's Ba1 CFR
incorporates a two-notch uplift to the company's standalone
credit quality as measured by a baseline credit assessment (BCA)
of ba3. The uplift is driven by the credit quality of the Russian
government and Moody's assessment of strong probability of state
support in the event of financial distress, as well as high
default dependence between the company and government.

The high default dependence reflects a close linkage between the
financial health and stability of the government and that of
INTER RAO. Moody's assessment of a strong probability of support
from the government factors in INTER RAO's strategic importance
to the Russian electricity system and economy, given the
company's role of an asset consolidation center in the domestic
electric utility sector and a vehicle for Russia's presence in
the international electricity industry and trading. The
assessment also factors in Moody's expectation that the
government's significant involvement in the company will continue
in the medium term.

INTER RAO's ba3 BCA is constrained mainly by (1) its high
business risk of a largely unregulated electric utility business
operating in the evolving Russian electric utility sector; (2) a
large investment program designed to renovate the company's
outdated asset base and strengthen its presence in the
international markets which pressures its financial profile and
liquidity position; (3) the business profile's rapid
transformation of the recent past and the company's ongoing
restructuring, which create significant execution risk over its
strategy and blur the visibility of the medium and long-term
evolution of its financial profile; (4) uncertainties surrounding
the government's vision of the company's target corporate and
shareholder structure, including privatization plans.

As it is common for a largely unregulated electric utility
deriving its revenues from electricity generation, sales and
trading, INTER RAO is exposed to fuel and electricity market
volatilities, which cause cash flow volatility. Furthermore, the
risk of cash flow volatility for the company is heightened by the
challenges associated with the evolving Russian electric utility
sector. The challenges broadly include (1) the evolving
regulatory and market framework; (2) the developing configuration
of the sector, with the consolidation process and redistribution
of influence along state-controlled market players under way; and
(3) uncertainties regarding the state's strategy and involvement
in the sector.

INTER RAO's BCA positively factors in (1) INTER RAO's strong and
sustainable market position in Russia supported by a substantial
and geographically diversified asset base, the third largest in
the country by installed capacity (32.5 GW, including 5.5 GW
abroad), and its relatively large share (15%) in the domestic
retail market; (2) some level of fuel mix diversification and
long-term framework contracts with the largest gas and coal
producers, which ensure access to fuels at competitive terms and
conditions; (3) INTER RAO's de-facto monopoly in Russia'
electricity export and import operations (although limited by
volumes and volatile, these operations are important both as a
natural hedge for INTER RAO's foreign-currency debt obligations
and as an instrument of the state's energy policy); (4) a
relatively high rate of achievable returns associated with a
sizable part of INTER RAO's investment program represented by new
construction projects under long-term capacity supply agreements;
(5) INTER RAO's involvement in the international operations and
projects, which are seen as strategic by the government and, as
such, are likely to be eligible for the government's funding; (6)
INTER RAO's significant cash reserves accumulated by the middle
of 2012 as a result of its ongoing state-imposed role of an asset
consolidation center in the sector.

Moody's noted a deterioration of INTER RAO's financial profile in
H1 2012 driven by unfavorable changes to the regulatory framework
for retail electricity sales businesses, weak domestic
electricity market pricing and unfavorable conditions on the
company's key export market of the Nord Pool. Moreover, the
agency particularly noted that INTER RAO has recently reduced its
2012 EBITDA target indicated to the market with reference to the
unfavorable regulation of retail electricity sales. However, the
company's financial profile as of the middle of 2012 remains
accommodated under the current rating, with debt/EBITDA on a
last-12-months basis of 1.8x, FFO interest coverage of 5.7x and
retained cash flow (RCF)/debt of 32.9%, including Moody's
standard adjustments and a non-standard one (the latter envisages
the reclassification of state-owned Vnesheconombank's (VEB) 2010-
made equity injection in INTER RAO to INTER RAO's debt due to
VEB's put option in relation to its equity stake which may be
exercised from June 18, 2013 to June 18, 2016) . In Moody's view,
INTER RAO's cash and short-term bank deposits of around RUB80.4
billion in the middle of 2012, which significantly exceeded its
total reported debt of RUB47.3 billion, make the company
reasonably flexible in managing its financial profile and
liquidity position within the current rating category in the
short term.

Although INTER RAO's unadjusted short-term debt obligations were
rather small (RUB9.3 billion, or around 20% of total unadjusted
debt in the middle of 2012), the company has sizable liabilities
due up to the end of September 2013 under both restructuring-
related transactions and acquisitions of the recent past. In
light of INTER RAO's significant investment program and negative
free cash flow, Moody's positively noted that the company had
around RUB85.7 billion under undrawn credit facilities in the
middle of 2012, which should support its liquidity profile.
Moody's expects INTER RAO's access to state-owned banks to
continue to mitigate investment-driven pressures on the company's

In the longer term, Moody's expects INTER RAO to deliver a better
financial performance in line with its strategy, benefiting from
synergies associated with its enlarged and reasonably diversified
utility business and state's support. At the same time, Moody's
positively notes management's commitment to maintaining
unadjusted debt/EBITDA below 3.0x.

The stable outlook on INTER RAO's rating reflects Moody's view
that, based on the state's support, the company will manage its
financial profile in line with the current rating category, with
debt/EBTDA not exceeding 3.0x, FFO interest coverage and RCF/debt
not weakening below 5.0x and 30%, respectively, including Moody's

What Could Change The Rating Up/Down

Moody's does not expect upward pressure on the rating until there
is a better visibility with regard to the mid- to long-term
evolution of both (1) INTER RAO's financial profile; and (2) the
company's asset configuration and shareholder structure.

INTER RAO's rating could be negatively impacted if there were a
negative shift in the evolving regulatory and market framework
and the company failed to limit a deterioration of its financial
profile, reflected in debt/EBITDA above 3.0x, FFO interest
coverage below 5.0x and RCF/debt below 30% on a sustainable
basis. The company's inability to maintain adequate liquidity
could also pressure the rating. Negative pressure on the rating
could also result from Moody's assessment of a material reduction
in the probability of state support.

Principal Methodology

The methodologies used in this rating were Unregulated Utilities
and Power Companies published in August 2009, and Government-
Related Issuers: Methodology Update published in July 2010.

Headquartered in the city of Moscow, Russia, INTER RAO is a
Russian major electric utility engaged in thermal electricity
generation and retail electricity sales in Russia, cross-border
electricity trading and electric utility operations abroad. INTER
RAO generated RUB536.2 billion (US$18.2 billion) in 2011. The
company is controlled by the Russian government, which directly
and indirectly (through state-controlled entities) owns 59.9% of
the company.

* LIPETSK REGION: Fitch Assigns 'BB/B' Currency Ratings
Fitch Ratings has assigned Russia's Lipetsk Region Long-term
foreign and local currency ratings of 'BB', a Short-term foreign
currency rating of 'B' and a National Long-term rating of 'AA-
(rus)'.  The Outlooks for the Long-term ratings are Stable.  The
rating action also affects the region's outstanding domestic
bonds of RUB2.9bn.

The region's ratings reflect its satisfactory, yet improving
operating performance, moderate, albeit increasing direct risk,
and prudent management.  However, the ratings also factor in the
volatile budgetary performance due to the regional economy's high
concentration and increasing operating expenditure pressure.

Fitch notes that sustaining an operating balance over 12% of
operating revenue, and the maintenance of debt coverage (direct
risk/current balance) in line with average debt maturity would
lead to upgrade.  Conversely, the region's continued budget
imbalance leading to direct debt increase and deterioration of
debt coverage above 10 years would lead to a downgrade.

Fitch forecasts that the region's operating balance will hover
around 8%-10% of operating revenue in 2012-2014.  In 2011 the
region's operating margin accounted for 4.9%, decreasing from
9.1% in 2010.  Fitch believes that this was a temporary
deterioration caused by one-off current transfers to companies,
which facilitated operating expenditure growth.

In 2011 the region recorded a 5% deficit before debt variation,
and Fitch expects the widening of the latter to 10.6% of total
revenue in 2012.  The reason is the increased capex which was
postponed from the previous year and the region's planned RUB1bn
capital injection to the special economic zone.  Fitch believes
the region will cope with the pressure over operating expenditure
caused by the increase of salaries for public employees and
additional responsibilities in the healthcare sector.

2012's deficit will be mostly financed by new borrowing, which
will increase the region's direct risk.  However Fitch forecasts
that the region's direct risk will remain moderate at about 30%
of full-year current revenue compared to 23% in 2011.  The region
has two refinancing peaks in 2013 and 2014 when it needs to repay
about one-third of the total risk annually.  The region intends
to roll-over the debt rather than use accumulated cash reserves
for its repayment.  The region also plans to substitute most of
the bank loans by amortizing five-year domestic bonds, which will
make the maturity profile smoother.

The region has a strong economy heavily weighted towards ferrous
metallurgy. The sector is represented by OJSC Novolipetsk Steel
('BBB-'/Stable/'F3') - one of the largest steel-makers in Russia.
This company's tax contribution accounted for 31% of the region's
total tax revenue in 2011.  This makes the region vulnerable to
the fluctuations on the domestic and international steel market.

The administration makes efforts to diversify the economy by
developing a network of special economic zones.  Fitch believes
this will improve the operating performance's predictability, but
only over a long-term perspective.  The administration's prudent
approach to the budget policy resulted in the accumulation of the
reserves in the favorable years and its depletion during the
negative phases of economic cycles.

Lipetsk Region is located in the centre of the European part of
Russia.  The region contributed 0.7% of the Russian Federation's
GDP in 2010 and accounted for 0.8% of the country's population.

S E R B I A   &   M O N T E N E G R O

NOVA AGROBANKA: Postanska Stedionica Takes Over Assets & Clients
Aleksandar Vasovic at Reuters reports that Serbia's state-run
Postanska Stedionica (PS) bank took over the assets and 260,000
clients of troubled Nova Agrobanka on Monday, October 29.

Nova Agrobanka was formed as a bridge bank in May after the
collapse of Agrobanka, which lost its license over an unaudited
2011 loss of RSD29.7 billion (US$113.4 million), Reuters
recounts.  The state held a 20% stake in Agrobanka, the report

In a statement posted on its Web site, PS said all private and
corporate clients of Nova Agrobanka would be allowed to freely
manage their assets and savings at all times, Reuters relates.

According to Reuters, a number of senior Agrobanka officials have
been questioned by police on suspicion of extending loans without
adequate insurance.

Nova Agrobanka is a Serbian bank.


BANKIA SA: Blames EUR2.6-Bil. 3Q Loss on Heavy Writedowns
Tobias Buck at The Financial Times reports that Bankia SA has
revealed a third-quarter loss of EUR2.6 billion, as the
nationalized Spanish lender said total losses for the year had
reached EUR7.05 billion.

Created through a merger of ailing Spanish saving banks in 2010,
Bankia has suffered more than any of its rivals from the collapse
in the Spanish property market, the FT notes.

According to the FT, the bank said on Friday its latest loss was
again the result of heavy writedowns and provisions linked to its
property portfolio, which amounted to EUR4.02 billion in the
third quarter.

Since the start of the year, Bankia has been forced to take
writedowns totaling EUR11.5 billion, the FT relates.  The
lender's non-performing loan ratio also moved higher, and now
stands at 13.3%, up from 11% in June, the FT states.

Bankia SA is a Spain-based financial institution principally
engaged in the banking sector.  The Bank represents a universal
banking business model based on multi-brand and multi-channel
management, offering its products and services to various
customer segments, such as individuals, small and medium
enterprises, large corporations, as well as public and private
institutions.  The Company's business is structured into seven
areas: Retail Banking, Business Banking, Private Banking, Asset
Management and Bancassurance, Capital Markets and Holdings.

INAER AVIATION: S&P Cuts Long-Term Corp. Credit Rating to 'B'
Standard & Poor's Ratings Services lowered to 'B' from 'B+' its
long-term corporate credit rating on Inaer Aviation Group S.L.U.,
a leading provider of mission-critical aviation services
worldwide. The outlook is stable.

"At the same time, we lowered our issue rating on the group's
senior secured revolving credit facility (RCF) to 'B+' from 'BB-
'. The recovery rating on this facility is unchanged at '2',
indicating our expectation that lenders would receive substantial
(70%-90%) recovery in the event of a payment default," S&P said.

"We also lowered our issue rating on Inaer's EUR470 million
senior secured notes to 'B-' from 'B'. The recovery rating on the
notes is unchanged at '5', indicating our expectation of modest
(10%-30%) recovery in the event of a payment default," S&P said.

"The rating actions reflect our view that Inaer is unlikely to
materially improve its credit metrics within the next 12 months
to levels that we consider commensurate with a 'B+' rating. At
financial year-end 2011 (ended Dec. 30, 2011), Inaer's Standard &
Poor's-adjusted funds from operations (FFO) to debt was 5.5%,
which is at the low end of the range for the 'B+' rating. In
our opinion, this result reflects the timing of the Bond
acquisition in the first half of the year (which increased
overall debt levels, but only included around six months FFO).
However, we believe that the group's current operating
performance, albeit stable, is unlikely to meet our expectation
of more than 9% FFO to debt, even if a full year of benefits from
the Bond acquisition are considered. For the 12 months ending
June 30, 2012, adjusted FFO to debt was about 5.7%. In 2013, we
forecast that this ratio will be about 7.0%, which falls short of
the high single-digit percentage that we consider commensurate
with the 'B+' rating. The group's fast-paced growth through
acquisitions complicates year-on-year financial comparisons," S&P

"We understand that the group is in the process of moving its
headquarters to the U.K. (London) from Spain, and that it has
recently rebranded its corporate name as Avincis Mission Critical
Services," S&P said.

"In our view, Inaer will continue to deliver resilient
operational and financial performance over the short to medium
term, and its liquidity should remain sufficient to support its
debt service and ongoing operational needs," S&P said.

"We could raise the rating if the group's revenues and
profitability show significant growth, due to potentially
additional scale benefits and/or more contract wins. Because of
the lack of significant amortizing debt in the capital structure,
we believe that an improvement in credit metrics will mostly be
driven by an improved operating performance. We would consider
adjusted FFO to debt of more than 9%, on a sustainable basis, to
be commensurate with an upgrade to 'B+', all other things being
equal," S&P said.

"We believe that downside rating risk is most likely to arise
from further deterioration in economies of Inaer's key markets,
notably Spain and Italy. This could lead us to revise downward
the group's business risk profile to 'fair' from our current
assessment of 'satisfactory,' and may result in us lowering the
rating. Downside rating risk could also arise if liquidity were
to weaken materially--for example, because of greater negative
free operating cash flow than we currently forecast, which could
stem from deteriorating operating performance or excessive
capital expenditure," S&P said.

* SPAIN: Bad Bank to Buy Distressed Loans From Lenders
David Roman at Dow Jones Newswires reports that Spain's so-called
bad bank will buy billions of euros worth of distressed loans and
foreclosed property from commercial lenders for around half the
book value, a discount that could weigh on the finances of its
weakest banks as the government decides whether to seek
assistance from the euro zone's bailout fund.

New details of the government-run asset-management firm's plans
were released Monday as Prime Minister Mariano Rajoy insisted
again that Spain, the frailest of Europe's large economies,
doesn't need a new bailout at the moment, Dow Jones relates.

Spain agreed in June to receive up to EUR100 billion
(US$129 billion) in European aid for its troubled banks, Dow
Jones recounts.  The bad bank, known by its Spanish-language
acronym SAREB, was set up as a condition of that bailout; all
banks that receive European aid will be obligated to transfer
assets to the bad bank, Dow Jones notes.

SAREB, which is set to begin operations on Dec. 1, will absorb
soured investments that have dragged down the balance sheets of
Spanish banks since the collapse of the country's housing market
four years ago, Dow Jones discloses.

According to Dow Jones, Fernando Restoy, head of Spain's bank-
bailout fund, said SAREB will likely purchase about EUR60 billion
of toxic assets using Spanish resources and some of the funds
allocated under the bank-bailout agreement.

Mr. Restoy, as cited by Dow Jones, said it will apply an average
63% discount on land and housing units and an average 46%
discount on real estate loans, and will aim to sell the assets to
investors over the next 15 years, with a return on investment of
at least 14% for any investors in the bad bank.

The EU bailout offers Spain aid worth up to EUR100 billion, but
only a small portion of this would go into the bad bank, with the
rest used to recapitalize many of the country's banks, Dow Jones

* SPAIN: Catalan Region Calls for Secession Amid Economic Turmoil
Matt Moffett at The Wall Street Journal reports that in protests
large and small, hundreds of thousands of Catalans are embracing
a stark proposition: Only by breaking ties with Spain and
becoming an independent country can Catalonia free itself from
economic malaise.

"Madrid has been draining us dry for too long," the Journal
quotes Josep Casadella, a corporate human-resources
administrator, as saying.

According to the Journal, Catalonia's president, Artur Mas,
called the marriage between his region and the Spanish capital
one of "mutual fatigue" in a speech, likening it to the way
"northern and southern Europe have grown weary of one another."

Catalonia's turmoil represents a major threat to European
leaders' hope of containing Europe's crisis by stabilizing Spain,
which is home to the euro zone's fourth-largest economy but is
also vying with Greece for the highest unemployment rate in the
euro zone, around 25%, the Journal notes.  Policy makers had
hoped that EU aid would keep Spain afloat while investors digest
losses in Greece, which is even more troubled, the Journal

Spain's financial markets are quivering at the mere talk of
secession of Catalonia, which produces almost 19% of Spain's
economic output and 21% of its taxes, the Journal says.
Investors fear the revolt will undermine Prime Minister Mariano
Rajoy's plan to get a grip on spending, particularly in the 17
regional governments that have been a big source of Spain's
deficit, according to the Journal.

If pro-independence parties triumph at the ballot box in next
month's regional election, Catalonia's leader, Mr. Mas, will face
pressure to make good on a vow to place an independence
referendum before voters, the Journal notes.  National
authorities say that would be illegal, the Journal states.  Some
analysts believe he would satisfied simply with a more favorable
revenue-sharing deal, the Journal discloses.  The Journal relates
meanwhile, impelled by swelling support for secession, he has
become bolder, asserting publicly several times that "Catalans
demand the instruments of State."

"We are convinced that an independent Catalonia is perfectly
viable economically," the Journal quotes Albert Carreras,
Catalonia's finance secretary, as saying.  "Rather, we question
whether Spain is viable if Catalonia were independent."


* CITY OF KYIV: S&P Puts 'B-' Issuer Credit Rating on Watch Neg.
Standard & Poor's Ratings Services placed its 'B-' long-term
issuer credit rating on the city of Kyiv on CreditWatch with
negative implications.

"The CreditWatch placement reflects our concern about Kyiv's
slower-than-expected progress in implementing its plan to
refinance a US$250 million U.S. dollar-denominated loan
participation note (LPN) due on Nov. 26, 2012, with a domestic
bond of Ukrainian hryvnia (UAH) 3.5 billion (US$440 million),"
S&P said.

"By Oct. 26, 2012, only UAH0.5 billion had been raised, and that
sum had already been used to partially repay one of the bank
loans (UAH0.75 billion). Given the absence of an alternative debt
repayment scenario, we understand that the central government's
support might be needed. This could come in the form of support
from the state banks in placing the remaining UAH3 billion
portion of the bond or from direct central-government financing,"
S&P said.

"Due to weak budgetary performance and very negative liquidity,
our existing base-case factors in refinancing as the most
probable and reliable plan to repay the LPN. This is supported by
Kyiv's positive track record, demonstrated in particular in 2011,
when the city refinanced its US$200 million LPN. However, time
pressure leaves the city less room to maneuver, which increases
the likelihood of technical or other difficulties in placing a
sufficient amount of the domestic bond," S&P said.

The rating on Kyiv city reflects Ukraine's "volatile and
underfunded" institutional framework, which constrains the city's
financial flexibility. It also reflects Kyiv's high debt service,
"very negative" liquidity, and material debt burden, with
associated foreign-exchange risks. However, the city's importance
as the administrative and economic center of Ukraine
(B+/Negative/B; Ukraine national scale 'uaA+'), and Kyiv's fairly
diversified economy, with wealth exceeding the national average
severalfold, support the rating.

"We expect to resolve the CreditWatch placement within the next
few weeks," S&P said.

Future rating actions would depend on progress in implementation
of the debt-refinancing plan.

"If the city has not managed to secure refinancing by mid-
November, we will likely take a negative rating action," S&P

"Should the city secure enough funds to repay the LPN, we would
affirm the ratings at their existing level," S&P said.

U N I T E D   K I N G D O M

BOWEN TRAVEL: In Administration, Cuts Jobs
Travel Weekly News reports that travel agency chain and coach
tour operator Bowen Travel Group has gone into administration.

Staff were informed of developments and all the shop managers
were asked to bring their keys which were taken off them,
according to Travel Weekly News.

The report relates that insolvency specialist Deloitte have
applied to the courts for an administration order.

Hays Travel Managing Director John Hays told Travel Weekly News
that he had taken a call from BGT chief executive Ronald Graham
on making him aware that Deloitte had been called in to try to
save the business.

"We knew some time ago that Bowen's were struggling and they were
trying to dispose of the business and we, alongside other people,
were trying to save it but they couldn't get the sale away," the
report quoted Mr. Hays as saying.

Bowen Travel Group is a Hays Independence Group member. It has 38
travel agencies across the West Midlands, Lincolnshire and
Northamptonshire.  It also operates three coach holiday brands -
Bowen's, Appleby's and York's - under umbrella brand BGT Travel.

DECO 6: Moody's Lowers Rating on Class C Notes to 'C'
Moody's Investors Service has taken a rating action on the
following classes of Notes issued by Deco 6 -- UK Large Loan 2
plc (amounts reflect initial outstanding):

    GBP259.9M Class A2 Notes, Downgraded to Caa2 (sf); previously
    on Jan 18, 2012 Downgraded to B1 (sf)

    GBP43M Class B Notes, Downgraded to Ca (sf); previously on
    Jan 18, 2012 Downgraded to Caa3 (sf)

    GBP49.1M Class C Notes, Downgraded to C (sf); previously on
    Jan 18, 2012 Downgraded to Ca (sf)

Ratings Rationale

The downgrade action on the Class A2, B and C Notes reflects
Moody's increased loss expectation for the pool since its last
review. This is primarily due to lower property values that
Moody's attributes to the collateral.

The key parameters in Moody's analysis are the default
probability of the securitized loans (both during the term and at
maturity) as well as Moody's value assessment for the properties
securing these loans. Moody's derives from those parameters a
loss expectation for the securitized pool.

Based on Moody's reassessment of the underlying property values,
the pool's weighted-average (WA) securitized loan LTV ratio is
201% and on a whole loan basis it is 204%. This compares with the
prior review WA LTV of 131% on the securitized pool and 133% on a
whole loan basis. The value re-assessment is driven by i) the
upward yield pressure for secondary properties in Europe and ii)
the adverse lease rollover profile of the Mapeley loan.

The ratings of the Classes of Notes are sensitive to 1) the work-
out strategies for both loans, 2) the current and expected
ongoing weak refinancing market for non-prime properties and 3)
challenging occupational market trends for non-prime properties.
The Mapeley loan (63% of the current pool) is marked by a severe
value decline on the underlying portfolio. Sizeable out of the
money swap mark-to-market (MtM) costs also exist that rank senior
to noteholders. With the Special Servicer pursuing a liquidation
strategy up to loan maturity in July 2015, Moody's anticipates
these costs must be incurred over the loan life to maximize
recoveries. For the Brunel loan, Moody's considered in its
analysis, two work-out scenarios including the acceptance of a
discounted payoff and a repositioning of the property through
active asset management.

In general, Moody's analysis reflects a forward-looking view of
the likely range of commercial real estate collateral performance
over the medium term. From time to time, Moody's may, if
warranted, change these expectations. Performance that falls
outside an acceptable range of the key parameters such as
property value or loan refinancing probability for instance, may
indicate that the collateral's credit quality is stronger or
weaker than Moody's had anticipated when the related securities
ratings were issued. Even so, a deviation from the expected range
will not necessarily result in a rating action nor does
performance within expectations preclude such actions. There may
be mitigating or offsetting factors to an improvement or decline
in collateral performance, such as increased subordination levels
due to amortization and loan re- prepayments or a decline in
subordination due to realised losses.

Primary sources of assumption uncertainty are the current
stressed macro-economic environment and continued weakness in the
occupational and lending markets. Moody's anticipates (i) delayed
recovery in the lending market persisting through 2013, while
remaining subject to strict underwriting criteria and heavily
dependent on the underlying property quality, (ii) strong
differentiation between prime and secondary properties, with
further value declines expected for non-prime properties, and
(iii) occupational markets will remain under pressure in the
short term and will only slowly recover in the medium term in
line with anticipated economic recovery. Overall, Moody's central
global macroeconomic scenario is for a material slowdown in
growth in 2012 for most of the world's largest economies fueled
by fiscal consolidation efforts, household and banking sector
deleveraging and persistently high unemployment levels. Moody's
expects a mild recession in the Euro area.


Deco 6 -- UK Large Loan 2 plc closed in December 2005 and
represents the securitization of initially four mortgage loans
originated by Deutsche Bank AG, London Branch. Currently two
loans remain in the pool and the loans are secured by first-
ranking legal mortgages over 21 office and retail properties. The
pool exhibits an above average concentration in terms of
geographic location (100% United Kingdom, based on Underwriter
(UW) market value) and property type (54% retail, 46% office).
Moody's uses a variation of Herf to measure diversity of loan
size, where a higher number represents greater diversity. Large
multi-borrower transactions typically have a Herf of less than 10
with an average of around 5. This pool has a Herf of 1.9, the
same as at Moody's prior review.

The prepayment of two loans has reduced the pool balance by 51%
since closing. As of the July 2012 interest payment date (IPD),
the transaction's total balance was GBP272.1 million. This
reduction mainly resulted from the prepayment of the largest loan
at closing (the Canary Wharf loan) in March 2006. The prepayment
proceeds were applied modified pro-rata. In October 2011, the
GBP95.0 million St. Enoch Shopping Centre loan prepaid, with
proceeds also applied modified pro-rata. As a result, the
remaining outstanding balance of Class A1 (GBP61.5 million)
repaid along with GBP33.7 million of the A2 Class. Going forward,
the sequential payment trigger in the transaction has been
breached with all principal proceeds allocated sequentially to
the notes.

Both remaining loans were in special servicing at last review
after being transferred due to coverage covenant breaches. The
Mapeley loan (63% of the pool) transferred in October 2011 and is
specially serviced by Hatfield Philips International Limited, and
The Brunel Shopping Centre loan (37% of the pool) transferred in
June 2011 and is specially serviced by Solutus Advisors Limited.

Moody's anticipates that both loans will likely pay interest in
full in the short term. Coverage on the Brunel loan has
significantly improved to greater than 2.5x, after converting to
a floating interest rate at its April 2012 maturity date. The
Mapeley loan remains current despite a reported Interest Coverage
Ratio (ICR) below 1.0x and declining reported net rental income.
Available at the borrower level is also a GBP11.6 million cash
reserve that can assist loan payment requirements. Over the
medium to long term, meeting the required interest payments will
be challenging given the significant projected income decline as
well as the reserve that can be diverted to other uses.

Appraisal reductions are believed to have led to interest
shortfalls that spiked to the Class B Notes in April 2012. With
only GBP745 paid to the Class B Notes, if interest had not been
paid on the outstanding senior notes, a Note Event of Default
would have occurred. During this IPD, the Liquidity Facility
Available Balance was GBP22.0 million (adjusted for appraisal
reductions) and the maximum aggregate principal amount available
for drawdown was GBP23.2 million. The difference was a drawing
for the mortgage loan shortfall on the Brunel loan of GBP1.2

During the July IPD, appraisal reductions increased to GBP127.3
million (47% of the outstanding principal balance) from GBP22.8
million, reducing potential drawings from the liquidity facility
from the GBP23.2 million (a stepped reduction based on the
principal amount outstanding) to a minimum liquidity commitment
of GBP9.0 million. A current drawing of GBP687,000 remains
outstanding due to the ongoing Brunel loan mortgage shortfall
resulting in a Liquidity Facility Available Balance of GBP8.3
million. While the shortfall peaked at GBP1.2 million in April
2012, it has reduced to the current level due to repayments from
excess cash flow from the Brunel loan. Continued surplus cash
should repay most of the drawings in the next IPD.

Lower projected cash inflow for the Mapeley loan may require use
of the facility in the medium term. While the maximum amount
available for drawdown is subject to the GBP9.0 million floor,
uncertainty exists on the ability to draw on the facility due to
the appraisal reduction workings.

The largest loan is the Mapeley loan (63% of the pool) which is a
GBP170.9 million loan secured by an office portfolio located in
regional towns spread throughout England, Scotland and Wales.
Currently, the portfolio consists of 20 properties which are let
to more than 20 tenants, with the top-3 tenants contributing
approximately 65% of total rental income. Significant
deterioration has occurred largely due to the second largest
tenant vacating the Delta Point property at the end of 2011,
which has negatively impacted rental cash flows. The current
portfolio vacancy is 27.5% and will be further impacted with the
portfolio's WA lease to expiry or break of 2.3 years. While the
loan remains current, covering the nearly GBP10 million in annual
interest payments will be challenging with the Special Servicer
projecting a 12-month forward looking net rental income of GBP
6.1 million. This forecasted number incorporates the upcoming
expiry of leases and contrasts with the annual contracted rent of
GBP 12.5 million. To buffer this anticipated shortfall, a
borrower level cash reserve of GBP11.6 million can be used to
fund loan and property expenses. A loan interest shortfall
appears unlikely in the short term; however, given that these
funds can be diverted to cover other property-related initiatives
and expenses, the amount could rapidly exhaust.

The workout strategy defined by the Special Servicer is
enforcement and asset management with a goal to dispose of the
portfolio up to the July 2015 loan maturity. To date, the loan
has been accelerated and a Fixed Charged Receiver was appointed
over 18 assets in England and Wales and a Scottish Receiver over
the asset located in Scotland. The Special Servicer most recently
appointed a new Asset Management Company over the 19 assets. The
transfer of one property's security was not recorded at
securitization but was expected to complete by end of September.
Moody's did not receive an update as to whether this occurred but
the action will allow the appointment of an LPA Receiver.

Property disposals in line with the Special Servicer's
liquidation strategy would trigger swap termination costs. The
estimated MtM on the swap is roughly GBP15 million and ranks
senior to noteholder payments.

The most recent appraisal of the underlying Mapeley properties is
as of December 2011, and values the portfolio value at GBP74.7
million (a value decline of GBP170.0 from securitization). Based
on this valuation, an appraisal reduction of GBP104.5 million has
been realised. The valuation's severe fall in market value is
largely attributed to decreases in both passing rent and the
average remaining length of leases, the deteriorating physical
condition of the secondary properties and weakening local
investment markets. Whereas Moody's prior review included
significant value deterioration citing similar factors as above,
the most recent portfolio valuation incorporates further stress
observed in the market. Moody's market value of GBP73.2 million
aligns with the most recent valuation producing a Moody's LTV of
233%, compared to 139% at last review. Based on Moody's current
value assessment, Moody's project a loss range of 50-75% on this

The Brunel Shopping Centre loan (37% of the pool), which matured
in April 2012, is secured by a shopping centre located in Swindon
town centre, approximately 80 miles west of London. The loan,
with a securitised balance of GBP101.3 million and whole loan
balance of GBP107.1 million, transferred to special servicing in
June 2011 due to a DSCR breach. The ICR on the whole loan has
markedly increased to 2.65x as of the July IPD, from 0.96x at
last review. The coverage improvement resulted from the fixed
rate interest rate swap expiring at the April 2012 loan maturity.
The loan has now converted to a floating interest rate and the
lower interest payments have started repaying the unpaid interest
and liquidity draws from the January and April IPD's. Per the Q2
2012 Quarterly Investor report from the Special Servicer, the
shopping centre vacancy climbed to 12%, compared to 6% at last
review. Despite increased vacancy, gross rent remains stable
around GBP1.9 million per quarter. Based on the most recent 2011
valuation of GBP87.3 million, an appraisal reduction of GBP22.8
million has been realised. The Special Servicer recently replaced
the Asset Manager and is also currently assessing an offer by the
Sponsor to buy the property at a discount. Moody's whole loan LTV
ratio of more than 150% compares to 123% at last review. The
current value reflects both weakening secondary property values
over the next two years, along with a depressed retail climate.
Moody's therefore projects a loss range of 25-50% on this loan.

Portfolio Loss Exposure: Moody's expects a very large amount of
losses on the securitized portfolio, stemming mainly from the
adverse performance of the loans in special servicing which make
up 100% of the pool. The likelihood of higher than expected
losses on the portfolio has resulted in the rating action. Given
the existing credit enhancement and their respective payment
priority in the capital structure (given sequential trigger
breach), the Class A2 Notes have been downgraded to a level
commensurate with Moody's loss expectations. For the Class B & C
Notes, the prospect for repayment of principal has further
diminished; therefore, the ratings have been lowered to Ca and C,

The methodology used in this rating was Moody's Approach to Real
Estate Analysis for CMBS in EMEA: Portfolio Analysis (MoRE
Portfolio) published in April 2006.

Other factors used in this rating are described in European CMBS:
2012 Central Scenarios published in February 2012.

The updated assessment is a result of Moody's on-going
surveillance of commercial mortgage backed securities (CMBS)
transactions. Moody's prior assessment is summarized in a press
release dated January 18, 2012. The last Performance Overview for
this transaction was published on September 4, 2012.

In rating this transaction, Moody's used both MoRE Portfolio and
MoRE Cash Flow to model the cash-flows and determine the loss for
each tranche. MoRE Portfolio evaluates a loss distribution by
simulating the defaults and recoveries of the underlying
portfolio of loans using a Monte Carlo simulation. This portfolio
loss distribution, in conjunction with the loss timing calculated
in MoRE Portfolio is then used in MoRE Cash Flow, where for each
loss scenario on the assets, the corresponding loss for each
class of notes is calculated taking into account the structural
features of the notes. As such, Moody's analysis encompasses the
assessment of stressed scenarios.

Moody's ratings are determined by a committee process that
considers both quantitative and qualitative factors. Therefore,
the rating outcome may differ from the model output.

HIBU PLC: Creditors May Seek Liquidation
Michael Stothard at The Financial Times reports that a group of
senior creditors in debt-laden Hibu plc are threatening to push
the company into liquidation, after the company failed to repay a
GBP65 million tranche of debt.

Last week, the company, formerly known as Yell, said that it
would suspend all further payments of principal and interest
until it could restructure its GBP2.2 billion net debt pile, the
FT relates.

But, in an exchange late last week, creditors with a stake in a
GBP65 million tranche of senior debt issued in 2006 -- which was
supposed to be repaid in full on Monday -- threatened to go to
court to seek a winding up of the company up if the payment was
not made, the FT discloses.  According to the creditors, no
payment has been forthcoming, the FT notes.

Such a move would threaten a much larger group of creditors --
including Soros Fund Management, Royal Bank of Scotland, HSBC,
Gruss Asset Management and GE Capital -- which hold around GBP2.2
billion worth of debt issued in 2009, the FT states.

The 2006 creditors, which includes Barclays, are likely to argue
in court that they should be paid out first, as their debt comes
due first, the FT says.  Moody's said that upcoming payments on
the 2009 facility agreement are not due until February 2013, the
FT notes.

The FT relates that Hibu issued a statement on Monday confirming
that some lenders "may seek to launch litigious actions" but
adding that the company did "not believe that any legal action by
any 2006 lender to recover such amounts has merit".

The company also announced that a committee of investors with
major stakes in the 2009 debt had agreed to support a waiver of
debt repayments, the FT recounts.

According to the FT, people with knowledge of the discussions
said the non-payment of the GBP65 million to the 2006 investors
was one condition for receiving these waivers on the larger part
of the debt.

Yell Group is a provider of digital services connecting local
consumers and merchants.

IGLO FOODS: Moody's Assigns 'B1' Corp. Family Rating
Moody's Investors Service has assigned a B1 corporate family
rating (CFR) and B2 probability of default rating (PDR) to Iglo
Foods Finco Limited (Iglo Foods, or the company), the ultimate
holding company of the subsidiary guarantors to the group's
senior credit facilities. Concurrently, Moody's has also assigned
a B1 rating to Iglo Foods' outstanding senior secured credit
facilities. Iglo Food's senior secured credit facilities are
expected to approximately total an equivalent EUR1.8 billion in
senior secured loans after the proposed issuance of an additional
equivalent EUR250 million senior secured loan facility due 2018.
The outlook on the ratings is stable. This is the first time
Moody's has assigned a rating to Iglo Foods.

Proceeds from the transaction (the proposed issuance of an
additional equivalent EUR250 million senior secured loan facility
due 2018) will be used as a shareholder distribution through the
partial repayment of outstanding shareholder loans.

Ratings Rationale

Pro forma the transaction, Moody's expects that the company will
achieve a Moody's-adjusted debt/EBITDA ratio of around 5.5x for
financial year-end December 2012. The B1 CFR assigned to Iglo
Foods primarily reflects this high pro forma leverage expectation
and Iglo's exposure to European consumers negatively impacted by
a weak macroeconomic environment. "While the frozen food market
has performed relatively steadily through the recent economic
downturn, we believe growth will be muted in the coming
quarters/years. Against this backdrop, we are concerned with Iglo
Foods' high level of debt obligations," says Anthony Hill, a
Moody's Vice President -- Senior Analyst and lead analyst for
Iglo Foods.

However, the ratings are supported by the company's (1) position
as a leading manufacturer of premium frozen foods in the UK,
Germany, and Italy with a track record of maintaining a solid
market share position; (2) established and strong brand image
associated with high quality, healthy food in its core segments
of frozen fish, vegetables, and poultry; and (3) resilient
business model, as demonstrated by the solid operating
performance and healthy margins, translating into positive cash
flow generation despite the challenging trading environment.

Iglo Foods' adjusted EBITDA margins have been solid at around
18.5% in 2011, 17% in 2010, and 17.5% in 2009. Additionally Iglo
Foods' cash flow generation has been solid underpinned by
generally positive working capital with limited seasonality
effects, and modest capital expenditures. For example, over the
3-year period to December 2011 Iglo Foods, on a Moody's-adjusted
basis, has been able to convert approximately 82% of its EBITDA
into free cash flow.

In addition to the company's historic and projected solid free
cash flow generation, Iglo Foods' solid liquidity profile is also
supported by the company's (1) expected post-transaction cash
balance of around EUR230 million; (2) committed and largely
undrawn revolving credit facility (RCF) of EUR125 million; and
(3) sufficient headroom under covenants, which Moody's
understands will be set with at least 25% headroom for each
measured date.


The stable rating outlook reflects Moody's expectation that Iglo
will maintain its current operating performance. While adjusted
leverage is high for the rating category, the rating agency
expects that the company will reduce its indebtedness over the
next 12 months and maintain its solid liquidity profile. Moody's
has also assumed that any debt-funded acquisition activity will
be small in nature.

What Could Change The Rating Up/Down

Positive pressure on the rating could materialize if Iglo Foods
maintains its solid liquidity profile and a Moody's-adjusted
EBITDA margin above 20%; and improves its financial profile such
that its adjusted debt/EBITDA ratio falls to towards 5.0x.

Moody's could downgrade the ratings if Iglo Foods' liquidity
profile and debt protection ratios deteriorate as a result of a
weakening of its operational performance, any acquisitions, or a
change in its financial policy. Quantitatively, Moody's could
consider downgrading the ratings if Iglo Foods' Moody's-adjusted
EBITDA margin falls below 15%; or debt/EBITDA ratio rises towards
6.0x; or if the Moody's-adjusted free cash flow/debt ratio falls
to less than 5%.

Principal Methodology

The principal methodology used in rating Iglo Foods Finco Limited
and Iglo Foods Finco (Jersey) Plc was the Global Packaged Goods
Industry Methodology published in July 2009. Other methodologies
used include Loss Given Default for Speculative-Grade Non-
Financial Companies in the U.S., Canada and EMEA published in
June 2009.

Iglo Foods Holdings Limited, headquartered in Middlesex, UK, is a
branded frozen foods producer to the retail market for much of
Western Europe. For fiscal year-end December 31, 2011, Iglo Foods
reported revenues of approximately EUR1.6 billion.

IGLO FOODS: S&P Affirms 'B+' Corp. Credit Rating; Outlook Stable
Standard & Poor's Ratings Services affirmed its long-term
corporate credit rating on U.K.-based frozen foods producer Iglo
Foods Holdings Ltd. (Iglo) at 'B+'. The outlook is stable.

"At the same time, we assigned our issue rating of 'B+' and
recovery rating of '3' to the new term loan I issued by Iglo
Foods Midco Ltd. The recovery rating of '3' indicates our
expectation of meaningful (50%-70%) recovery prospects in the
event of a payment default," S&P said.

"Finally, we assigned our issue rating of 'B+ and recovery rating
of '3' to the proposed senior secured extended term loans F and G
issued by Iglo Foods Midco," S&P said.

"The affirmation follows Iglo's issuance of term loan I and use
of the proceeds to pay down some shareholder loans as part of its
recapitalization plan. The affirmation reflects that Iglo's cash
interest coverage will not weaken materially as a result of the
recapitalization, and that we will continue to assess Iglo's
financial risk profile as 'highly leveraged,'" S&P said.

"The new capital structure will include a higher portion of cash-
paying debt. Despite this change, we project that Iglo's ratio of
cash interest to Standard & Poor's-adjusted EBITDA (cash interest
coverage) will fall to slightly less than 3.0x following the
recapitalization. Iglo's cash interest coverage has historically
been close to 3.0x and we consider a range of 2.0x-2.5x to be
compatible with the 'B+' rating. We base our forecast for cash
interest coverage on our projection of low single-digit growth in
revenues and a gradual margin expansion of about 150-200 basis
points over the next 18 months," S&P said.

"In our view, Iglo will maintain its resilient operating
performance despite competition from discounters and private
labels, input cost inflation, and low growth prospects in the
European frozen foods industry," S&P said.

"We could lower the ratings if the group's leading market
positions and premium pricing ability weaken. This could happen
if a lack of innovation and/or a weakening of the group's brand
power resulted in the commoditization of its products. This
could, in our view, hamper Iglo's ability to charge premium
prices for some of its products and maintain its margins in an
environment of rising input costs. We could also lower the
ratings if the group refinances the rest of its shareholder loans
into cash-paying loans or bonds such that cash interest coverage
falls to less than 2x," S&P said.

"We could consider an upgrade if adjusted leverage falls to, and
remains at, less than 5x. We consider that Iglo would most likely
achieve such a large reduction in leverage with a change to its
financial policy. We currently consider an upgrade to be
unlikely," S&P said.

KERLING PC: S&P Affirms 'B' Corp. Credit Rating; Outlook Negative
Standard & Poor's Ratings Services revised its outlook to
negative from stable on U.K.-based polyvinyl chloride (PVC) and
caustic soda producer Kerling PLC. "At the same time, we affirmed
our 'B' long-term corporate credit rating on Kerling," S&P said.

"Additionally, we affirmed our 'BB-' issue rating on the group's
EUR40 million senior secured revolving credit facility (RCF). The
recovery rating on the RCF is '1', indicating our expectation of
very high (90%-100%) recovery for creditors in the event of a
payment default," S&P said.

"We also affirmed our 'B' issue ratings on the EUR785 million
secured loan notes and EUR75 million senior secured loan notes.
We revised downward the recovery ratings on both issues to '4'
from '3', indicating that we now expect average (30%-50%)
recovery prospects for creditors in the event of a payment
default," S&P said.

"The outlook revision reflects Kerling's weak operating
performance in the first nine months of 2012, and our forecast of
continued challenging operating conditions in the European PVC
industry in 2013. We estimate that on Sept. 30, 2012, Kerling's
Standard & Poor's-adjusted debt was slightly up at EUR1.2 billion
(net reported financial debt of EUR0.89 billion), compared with
EUR1.1 billion the previous year. At the same time, adjusted debt
to EBITDA was about 7.3x, a material increase from 6.0x on
Dec. 31, 2011. In 2012, we forecast Kerling's adjusted debt to
EBITDA exceeding 7.5x, which is significantly more than the 5.5x-
6.0x range we consider commensurate with the current rating," S&P

"In addition, although we continue to assess Kerling's liquidity
as 'adequate' as defined in our criteria -- given its long-term
debt maturities -- we believe that the currently undrawn EUR40
million RCF may not be available if Kerling's leverage were to
increase further. Consequently, we do not factor it into our
liquidity analysis as an available funding source," S&P said.

"Notwithstanding our assumption of persisting weak operating
conditions in the European PVC industry, we anticipate that
Kerling's EBITDA will recover to about EUR210 million in 2013.
However, under our updated base-case credit scenario, we think
that the group will not be able to reduce debt prior to 2014,"
S&P said.

"Should Kerling's profits and PVC operating margin not improve in
the coming quarters, we would likely revise downward our
assessment of Kerling's 'fair' business risk profile to 'weak.'
Key business risks are very challenging industry conditions due
to weak European construction markets, continuing excess
capacity, and significant competition, with some competitors
suffering from recurring losses or negative free cash flow. We
also note that Kerling's profit margin has material exposure to
volatile and high ethylene prices," S&P said.

"We could lower the rating if we see no prospects for a material
recovery in Kerling's operating performance and leverage metrics
in 2013, from the weak levels that we project in our base case
for 2012. Rating pressure could also result from a tightening of
Kerling's available liquidity," S&P said.

"We could revise the outlook to stable if Kerling's EBITDA
improved substantially to significantly more than EUR200 million
in 2013. Furthermore, in such a scenario, we would also consider
Kerling's ability to deleverage, maintain 'adequate' liquidity,
and generate sustainable adequate free operating cash flow over
the medium term," S&P said.

LONMIN PLC: Mulls US$800-Mil. Rights Issue to Avert Debt Breach
The Telegraph reports that Lonmin plans to raise US$800 million
in a rights issue to reduce the company's debt and avoid a
possible covenant breach.

The company had warned it would need to carry out a rights issue
following a violent industrial dispute at its Marikana mine in
South Africa that left 47 dead and brought operations to a
standstill for six weeks, with strikes spreading to other mines
across the country, the Telegraph relates.

According to the Telegraph, Lonmin said that as a result of those
events, operating costs had increased and debt levels would rise
"significantly" over the coming months as the group increases
production to rebuild its stock.

Debt levels will rise significantly over the coming months to
fund the production ramp up and stock pipeline rebuild -- may
breach covenants at March 31, 2013 absent additional equity and
amendments to existing bank facilities, the Telegraph says.  The
miner, as cited by the Telegraph, said that increase in debt
could see it breach covenants on a US$700 million syndicated bank
loan and a further ZAR1.98 billion (GBP150 million) facility
unless additional equity was found and amendments were made to
existing bank facilities.

Lonmin Plc is a United Kingdom-based company.  The principal
activities of the Company during the fiscal year ended
September 30, 2011 (fiscal 2011), were mining, refining and
marketing of Platinum Group Metals (PGM).  The Company has three
operating segments: PGM Operations, Evaluation and Exploration.
It runs a vertically integrated operational structure from mine
to market.  Its Mining operations extract ore, which its process
division converts into refined PGMs, for delivery to its

LTI: In Administration Amid Spiralling Losses
Jenny Waddington and Tina Junday at Coventry Telegraph report
black cab maker LTI has gone into administration amid spiralling

Cabbies in the city said ongoing faults with their taxis have
made them lose confidence in the firm, according to Telegraph.
The report relates that the LTI owners Manganese Bronze's
announcement came a week after the firm was forced to recall 400
black cabs due to a steering box fault found in its TX4 models.

The report notes that city councilors and local MEPs now calling
for help to save the business and the plight of 300 workers who
now face the axe.

MYTHEN RE: S&P Assigns Prelim. 'B+' Rating to Class A Notes
Standard & Poor's Ratings Services assigned its preliminary issue
credit ratings to the class A and C dollar-denominated, variable-
rate, principal-at-risk notes to be issued by Mythen Re Ltd.,
sponsored by Swiss Reinsurance Co. Ltd. (Swiss Re), the ceding

"The notes will be exposed to major North Atlantic hurricane risk
in selected states within the U.S. between November 2012 and
November 2016 (four full hurricane seasons) as modeled by AIR
Worldwide Corp. The class A notes will also be exposed to
mortality risk in England and Wales between January 2012 and
December 2016, as modeled by Risk Management Solutions Inc.," S&P

"The preliminary ratings are based on the lower of the rating on
the catastrophe risk ('B+' for the class A notes and 'B-' for the
class C notes); the issuer credit rating on the International
Bank for Reconstruction and Development (IBRD; AAA/Stable/A-1+)
as the issuer of the assets in the collateral accounts; and the
risk of nonpayment by the ceding reinsurer, Swiss Re (AA-
/Stable/A-1+)," S&P said.

RBS CAPITAL: Moody's Corrects Ratings of Hybrid Securities
Moody's Investors Service has corrected the ratings of hybrid
securities issued by RBS Capital Trusts A, B, C, D, I, II, III
and IV to B1(hyb) from B3(hyb). Due to an internal administrative
error, these upgrades were inadvertently omitted from the June
21, 2012 rating action on RBS May-Pay securities.

The list of securities being corrected is as follows:

Issuer; ISIN; Current Rating

RBS Capital Trust A; ISIN XS0149161217; B1 (hyb)

RBS Capital Trust B; ISIN XS0159056208; B1 (hyb)

RBS Capital Trust C; ISIN XS0237530497; B1 (hyb)

RBS Capital Trust D; ISIN XS0277453774; B1 (hyb)

RBS Capital Trust I; ISIN US749274AA41; B1 (hyb)

RBS Capital Trust II; ISIN US74927PAA75; B1 (hyb)

RBS Capital Trust III; ISIN US74927QAA58; B1 (hyb)

RBS Capital Trust IV; ISIN US74927FAA93; B1 (hyb)

* UK: Moody's Says Water Sector License Uncertainty Credit Neg.
Moody's Investors Service notes that on October 26, 2012, the
Water Services Regulation Authority, Ofwat -- the economic
regulator for water companies in England and Wales, published
revised proposals to modify company licenses. If implemented,
these proposals would provide Ofwat with future flexibility to
move activities accounting for up to 40% of companies' total
revenues outside of the established price control framework.

Continuing uncertainty around key features of their licenses is
credit negative for water and sewerage companies in England and
Wales. That uncertainty will come into greater focus if companies
-- a number of which oppose the changes -- do not accept the
proposed amendments by the November 23, 2012 deadline, in which
case Ofwat is expected to use its powers to refer the matter to
the Competition Commission (CC). Ofwat has said that it expects
any referral to the CC to be made in December 2012 with the
Commission likely to decide within six months whether the
proposed modifications should be made.

The regulator's proposals have been made in the context of
Ofwat's continuing review of the way in which it will set future
price limits and the draft Water Bill published in July 2012. The
exact consequences for companies of planned changes, including
separate price limits for retail and wholesale activities and
increased competition, will become clear only once the regulator
sets out detailed proposals for the next price review in 2014.
However, Moody's expects the reforms to result in negative credit
pressure developing over the medium to long term, particularly
for companies that are unable to adapt to a changing environment.

Ofwat's new proposals to modify water companies' licenses follow
draft license changes published in December 2011. These earlier
proposals were rejected by all of the incumbent water companies,
largely on the grounds that the changes were unnecessarily broad
and created uncertainty which would undermine the stability and
predictability of the regulatory regime to the detriment of
operators' ability to raise capital. Since March 2012, Ofwat has
consulted widely and engaged in extensive discussions with the
companies in an attempt to reach a common agreement. However,
according to Ofwat, it was unable to reach agreement with the
companies collectively and it is now necessary for each
individual company to make a decision on the planned license

In its revised proposals, issued under section 13 of the Water
Industry Act 1991, Ofwat has committed to maintain wholesale
price controls linked to the Retail Price Index (RPI), to
allocate companies' Regulatory Capital Value (RCV) to the
wholesale function and to continue to calculate an RPI based
return on the RCV as the main cost recovery mechanism for the
monopoly network activities. The regulator has pointed out that
important safeguards will remain in place including its primary
duty to enable efficient companies to finance their activities
and the right of appeal to the CC in respect of future price
control decisions. The regulator proposes, however, to remove the
current reference in the license to five-yearly price review,
arguing that longer or shorter periods may, in the future, be
appropriate for different activities.

It appears that the biggest area of dispute between the companies
and the regulator is around future flexibility. Ofwat considers
it important that the services and activities covered by the
proposed wholesale controls can be adjusted over time, so that it
can create the right incentives and adjust the framework as
appropriate. To provide this flexibility, the regulator has
proposed that in any price control it would be able to move
activities accounting for up to 20% of total revenue outside of
the wholesale price control. There would also, it is proposed, be
a further cumulative cap on activities moved outside of the
wholesale business set at 40% of total revenue.

The degree of flexibility that Ofwat is seeking is surprising
given its estimate that about 90% of companies' assets (on a
current cost basis) would remain as part of wholesale activities.
Moody's also notes that the credit profile of a company where 40%
of revenue is subject to as yet undefined price controls and/or
competition will be different to that of the rated water
companies on Oct. 29.

It will be a tough decision for the companies, but Moody's
believes that a number may decide not to accept Ofwat's proposed
changes -- on the basis that they provide the regulator with
undesirable flexibility -- preferring to let the CC determine the
matter. Moody's notes that a CC referral will be time consuming,
expensive and unlikely to benefit the company's relationship with
Ofwat, at an important time.

Moody's would not ordinarily view a CC referral as credit
negative; the Commission is an integral part of the regulatory
framework in the UK and an important risk mitigant. However, as
already mentioned, a referral would sustain current uncertainty
and the perception of increased regulatory risk in the sector and
that is credit negative. That the companies and regulator have
been unable to reach agreement on this matter will, in addition,
not reassure investors.

If companies accept Ofwat's proposed changes then their licenses
will be amended in line with the proposals. If companies do not
accept the changes and are referred to the CC then their licenses
will be amended following, and in line with, the Commission's
decision. Ofwat has said that it will then propose amendments to
the licenses of all other companies to conform to the
Commission's decision.


Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par.  Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable.  Those sources may not,
however, be complete or accurate.  The Monday Bond Pricing table
is compiled on the Friday prior to publication.  Prices reported
are not intended to reflect actual trades.  Prices for actual
trades are probably different.  Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind.  It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.

Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than US$3 per
share in public markets.  At first glance, this list may look
like the definitive compilation of stocks that are ideal to sell
short.  Don't be fooled.  Assets, for example, reported at
historical cost net of depreciation may understate the true value
of a firm's assets.  A company may establish reserves on its
balance sheet for liabilities that may never materialize.  The
prices at which equity securities trade in public market are
determined by more than a balance sheet solvency test.

A list of Meetings, Conferences and Seminars appears in each
Thursday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged.  Send announcements to

Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals.  All titles are
available at your local bookstore or through  Go to order any title today.


S U B S C R I P T I O N   I N F O R M A T I O N

Troubled Company Reporter-Europe is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland
USA.  Valerie U. Pascual, Marites O. Claro, Rousel Elaine T.
Fernandez, Joy A. Agravante, Ivy B. Magdadaro, Frauline S.
Abangan and Peter A. Chapman, Editors.

Copyright 2012.  All rights reserved.  ISSN 1529-2754.

This material is copyrighted and any commercial use, resale or
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 * * *