TCREUR_Public/121214.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

                           E U R O P E

           Friday, December 14, 2012, Vol. 13, No. 249



TORM A/S: Regains Compliance With NASDAQ Listing Rules


* GEORGIA: Fitch Affirms 'BB' Long-Term IDRs; Outlook Stable


DECO 7: S&P Downgrades Rating on Class E Notes to 'D'
DECO 9: Fitch Cuts Ratings on Three Note Classes to 'CCsf'
TALISMAN 1: S&P Affirms 'D' Rating on Class G Notes
WGF: EUR71 Million Loss Prompts Insolvency Filing


* GREECE: Finance Ministers Okay EUR49.1-Bil. Bailout Tranche


* HUNGARY: Moody's Reviews Ratings of Seven Banks for Downgrade


DECODE GENETICS: Amgen to Acquire Business in $415 Million Deal


RMF EURO: S&P Downgrades Rating on Two Note Classes to 'B+'


* CITY OF RIGA: S&P Raises Issuer Credit Ratings From 'BB+/B'


EUROPROP SA: Fitch Cuts Ratings on Four Loan Classes to 'Csf'


* NETHERLANDS: Moody's Says Banking System Outlook Remains Neg.


EKSPORTFINANS ASA: Silver Point Files Suit Over Alleged Default


KREDYT BANK: S&P Affirms 'BBpi' Counterparty Credit Rating


* TOMSK OBLAST: S&P Affirms 'BB' Issuer Credit Rating
* UDMURTIA REPUBLIC: Fitch Rates RUB5.2-Bil. Bond Issue 'BB+'

S L O V A K   R E P U B L I C

UNICREDIT BANK: Moody's Changes Outlook on 'D+' BFSR to Negative


HIPOCAT 9: Fitch Affirms Rating on Class E Notes at 'Csf'
TDA TARRAGONA 1: S&P Cuts Ratings on Two Note Classes to 'BB+'


YAPI VE KREDI: Moody's Assigns 'Ba1' Subordinated Debt Rating


* DNEPROPETROVSK REGION: Fitch Withdraws 'B' Currency Ratings

U N I T E D   K I N G D O M

DRIVE ASSIST: In Administration; 259 Jobs Affected
ELSTER GROUP: S&P Affirms 'BB-' Corporate Credit Rating
G24 INNOVATIONS: Goes Into Administration
HIBU PLC: S&P Raises Long-Term Corporate Credit Rating to 'CC'
HMV GROUP: Likely to Breach Banking Agreements in January

INVENSYS PLC: Moody's Affirms 'Ba1' CFR/PDR; Outlook Positive


* EUROPE: Moody's Says CMBS Credit Quality to Decline in 2013
* BOOK REVIEW: Performance Evaluation of Hedge Funds



TORM A/S: Regains Compliance With NASDAQ Listing Rules
TORM A/S TRMD has received confirmation from NASDAQ Listing
Qualifications that the Company's American Depository Receipts
(ADRs) have closed (bid) at US$1.00 per ADR or greater for ten
consecutive trading days.  Accordingly, the Company has regained
compliance with the NASDAQ Stock Market listing rules.

TORM -- is a leading carrier of refined
oil products as well as a significant player in the dry bulk
market.  The Company operates a fleet of approximately 110 modern
vessels in cooperation with other respected shipping companies
sharing TORM's commitment to safety, environmental responsibility
and customer service.  TORM was founded in 1889.  The Company
conducts business worldwide and is headquartered in Copenhagen,


* GEORGIA: Fitch Affirms 'BB' Long-Term IDRs; Outlook Stable
Fitch Ratings has affirmed Georgia's Long-term foreign and local
currency Issuer Default Ratings (IDR) at 'BB-'. The Outlooks on
the ratings are Stable.  The agency has also affirmed the Country
Ceiling at 'BB' and the Short-term foreign currency IDR at 'B'.
The senior unsecured debt rating has been affirmed at 'BB-'.

The affirmation reflects Georgia's strong economic growth (the
fastest among Fitch-rated Emerging Europe sovereigns in 2012), in
spite of a weak global economy, as well as moderate and falling
government debt and deficits.

This provides a strong starting point for the new government of
Prime Minister Bidzina Ivanishvili.  His Georgian Dream coalition
won control of parliament in October 2012 following parliamentary
elections, ending ten years of dominance by the United National

Georgian Dream's unexpected victory creates tests for the
country's democratic institutions.  Mikheil Saakashvili swiftly
conceded defeat but is scheduled to remain in post as president
until presidential elections in October 2013 in a tense
cohabitation with Mr. Ivanishvili.  The prime minister becomes
the most powerful politician in Georgia under constitutional
changes which take effect next year.  Public prosecutors have
placed some members of the previous administration under
investigation for alleged abuses, which has worsened tensions
between government and opposition, and also triggered statements
of concern from foreign diplomats.

The new government has signaled it will leave economic policy
fundamentals largely unchanged.  The election outcome produced
little reaction on the currency market, risk spreads or bank
deposits. However, some post-election policy statements have
generated uncertainty among investors.  Coupled with uncertainty
over political developments, this may lead to a slowdown in
private sector borrowing and investment in Q412 and H113.

Real GDP is on course to grow by 7% in 2012 and despite a likely
slowdown in investment, Fitch still expects growth to exceed 5%
in 2013-2014.  Inflation has averaged close to 0% in 2012,
allowing the National Bank of Georgia (NBG) to ease monetary
policy.  Inflation will rise going into 2013 but will stay below
the NBG's upper limit of 6%.

The 2013 budget retains the 3% of GDP deficit target (2012: 3.4%
of GDP) planned by the previous administration and enshrined in
fiscal rules.  Government debt will fall below 30% of GDP in
2013.  However, the budget reduces some investment spending items
while increasing social, agricultural and education spending by
2%-3% of GDP. Reducing the share of capital spending could reduce
growth potential and make the budget less flexible over the
medium term.

Fiscal financing presents few risks over 2013-2014 given the
strong pipeline (US$1.5 billion, 9.4% of GDP) of multilateral
financing available and government deposits worth 3.8% of GDP.
The government has set aside deposits to fund US$335 million in
repayments of IMF budget support over 2013-14.

Georgia's rating is constrained by one of the highest current
account deficits (CAD) among Fitch-rated countries, at an
estimated 12% of GDP, although this is partly driven by (and 50%
financed by) foreign direct investment and should be constant in
GDP terms compared with 2011.  Fitch does not expect significant
CAD narrowing in 2013.

Rating Outlook is Stable

The main factors that could lead to a negative rating action are:

  -- Deterioration in political stability: the period of
     cohabitation between president and PM through to October
     2013 presents potential risks to political stability.

  -- Inappropriate fiscal and monetary policy settings: A
     departure from prudent fiscal and monetary policymaking is a
     low risk but would be damaging for the rating.  Policy
     uncertainty could start to damage the economy and affect
     inflows of borrowing and FDI, needed to finance the CAD,
     putting pressure on the rating. Policies that reduced the
     attractiveness of Georgia's business environment could
     impair economic performance.

  -- External financing risks: a renewed widening in the CAD
     combined with a fall in capital inflows might lead to a
     weakening in the exchange rate or pressure on reserves.  If
     severe enough, this could present a risk to the rating.

The main factors that could lead to a positive rating action are:

  -- Continued GDP growth, fiscal discipline and moderation of
     external imbalances: continued strong GDP growth, fiscal
     discipline and moderation of the external imbalances would
     put upward pressure on the rating.

  -- A successful completion of the transition would demonstrate
     that Georgia can channel political change within its
     constitutional framework.


  -- Fitch assumes an absence of serious conflict between the PM
     and president.

  -- The rating judgement is based on Georgia maintaining strong
     growth, which in turn assumes that further major economic
     shocks from the eurozone crisis are avoided.  Fitch
     forecasts the eurozone to grow by 0.4% in 2013, having
     contracted by 0.1% in 2012.

  -- Fitch assumes that Georgia maintains access to IMF
     precautionary funding by keeping to agreed targets.  A
     departure from these targets could expose external finances
     to greater risks.

  -- Fitch also assumes that the government adheres to its budget
     deficit targets in 2013 and respects the provisions of the
     Economic Freedom Act over the medium term, which mandate
     deficits below 3% of GDP except in exceptional

  -- The agency does not expect that there will be a resumption
     of military conflict between Georgia and Russia or the
     disputed territories.


DECO 7: S&P Downgrades Rating on Class E Notes to 'D'
Standard & Poor's Ratings Services lowered its credit ratings on
DECO 7 - Pan Europe 2 PLC's class A2 to E notes. "At the same
time, we have affirmed our ratings on the class F, G, and H
notes," S&P said.

"The revaluation of the Karstadt Kompakt loan triggered an
appraisal reduction and the special servicer calculated an
appraisal reduction amount of EUR65 million. As a result, the
amount that can be drawn under the liquidity facility at each
interest payment date (IPD) has reduced. Therefore, in the
quarters when there are insufficient funds from asset sales to
pay the interest due on the notes, the issuer's drawing on the
liquidity facility is limited -- to 59%, according to our
calculations," S&P said.

"The Procom and Schmeing loans both matured in October 2012 and
failed to repay, resulting in an event of default and transfer to
special servicing. The liquidity facility cannot cover these
increased costs and this will likely cause further cash flow
disruptions. Furthermore, the excess amounts owed to the class X
notes are not available to cover interest shortfalls in the
transaction," S&P said.

"As a result of these factors, at the October 2012 IPD, the class
B to F notes experienced interest shortfalls given the reduced
amount of available loan interest entering the transaction. We
anticipate that these shortfalls are likely to recur and may
potentially increase in size due to increased special servicing
fees and third party expenses, as well as further deferred
interest," S&P said.

"We have therefore lowered our ratings on the class A2 and B
notes to reflect the increased risk of cash flow disruptions and
potential interest shortfalls. In line with our methodology on
minor interest shortfalls, we have lowered our ratings on the
class C and D notes to 'B- (sf)' and 'CCC- (sf)' given that they
represent less than 1% of their note balances. In our opinion,
we believe that there is a chance previous unpaid interest could
be repaid as a result of asset sales on the Karstadt loan. We
have lowered to 'D (sf)' our rating on the class E notes in light
of continued interest shortfalls on the previous three IPDs and
expected future principal losses," S&P said.

"We have affirmed our ratings on the class F, G, and H notes due
to continued interest shortfalls and expected principal losses,"
S&P said.

DECO 7 - Pan Europe 2 is a European commercial mortgage-backed
securities (CMBS) transaction that closed in March 2006. Deutsche
Bank AG (London branch) originated services the transaction,
which is backed by five loans secured over properties in Germany
and the Netherlands.


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

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


Class                         Rating
                      To                 From

DECO 7 - Pan Europe 2 PLC
EUR1.556 Billion Commercial Mortgage-Backed Variable- and
Floating-Rate Notes

Ratings Lowered

A2                    BB+ (sf)            BBB+ (sf)
B                     BB- (sf)            BBB- (sf)
C                     B- (sf)             BB (sf)
D                     CCC- (sf)           B (sf)
E                     D (sf)              CCC- (sf)

Ratings Affirmed

F                     D (sf)
G                     D (sf)
H                     D (sf)

DECO 9: Fitch Cuts Ratings on Three Note Classes to 'CCsf'
Fitch Ratings has downgraded DECO 9 - Pan Europe 3 plc's (DECO 9)
class A2 to F notes and affirmed the others as follows:

  -- EUR196.5m class A1 (XS0262559296) affirmed at 'AAAsf';
     Outlook Stable
  -- EUR312.0m class A2 (XS0262561276) downgraded to 'BBsf' from
     'Asf'; Outlook Negative
  -- EUR39.0m class B (XS0262561946) downgraded to 'Bsf' from
     'BBBsf'; Outlook Negative
  -- EUR37.6m class C (XS0262562753) downgraded to 'CCCsf' from
     'BBsf'; assigned Recovery Estimate (RE) RE90%
  -- EUR15.2m class D (XS0262563215) downgraded to 'CCsf' from
     'BB-sf'; assigned Recovery Estimate (RE) RE0%
  -- EUR21.5m class E (XS0262563728) downgraded to 'CCsf' from
     'Bsf'; assigned Recovery Estimate (RE) RE0%
  -- EUR34.2m class F (XS0262564452) downgraded to 'CCsf' from
     'CCCsf'; assigned Recovery Estimate (RE) RE0%
  -- EUR6.7m class G (XS0262565004) affirmed at 'CCsf'; assigned
  -- EUR10.0m class H (XS0262565939) affirmed at 'CCsf'; assigned
  -- EUR4.8m class J (XS0262566234) affirmed at 'CCsf'; assigned

The downgrade of the class A2 to F notes reflects the weaker than
expected sales performance of collateral securing the defaulted
Treveria I loan, combined with ongoing deterioration for both
this loan and the Dresdner Office Portfolio (DOP) loan.  The
remaining loan, PGREI, has been stable since the last rating
action, in February 2012.

Recent collateral revaluations for Treveria (45% of the
transaction) and DOP (34%) report market value declines (from the
respective previous valuation dates) of 23% and 10% respectively.
Vacancy remains high, and on a weighted average basis has risen
to 21% from 17% at the time of the last rating action.  This is
largely due to the repayment in full of three loans with
occupancy rates between 92% and 100%, to which the 31% vacancy in
DOP stands in marked contrast.

The largest loan in the portfolio is a 50% syndicated piece from
the EUR475m Treveria A-loan (also syndicated in Europrop (EMC)
S.A. (Compartment 1), where it is known as the Sunrise loan).  It
is secured over 52 retail, mostly secondary quality properties,
spread across Germany.  Europrop's legal maturity is in April
2013, well before Deco 9's July 2017 maturity.  While this
suggests a potential conflict of interests between creditors of
the two CMBS, the special servicer has not undertaken a fire sale
of the kind that, in Fitch's view, would be needed to realize
value in time for Europrop. Moreover Fitch does not expect such a
liquidation to be attempted now.  In support of this, Fitch notes
that only 12 of the 52 assets have been notarised for sale as of
October 2012.

Based on the terms of these notarized sales, proceeds for several
of them will be significantly below the latest valuation (2011).
Even based on this valuation, reported collateral value stands at
EUR355.8 million, well below the EUR501.3 million Treveria whole
loan balance and indicative of significant losses in due course.
Fitch's estimate of value is lower, on account of the lower than
expected sales prices and the level of overrentedness.  Vacancy
stands at 23%, and given the poor quality of the stock, letting
up space will be challenging.

The DOP loan matures in January 2013.  The servicer is in
discussions with the borrower, although to Fitch's knowledge no
statement has been made as to whether the loan will be repaid at
that time.

Three of the top five properties (some 50% of market value) have
been mostly vacant for over a year, with the other two mainly let
to the same single tenant (Commerzbank; 'A+'/Stable/'F1+') on
leases that include breaks in one and four years.

Commerzbank accounts for 20% of area and 36% of current total
rental income, having taken over Dresdner's leases at the time of
the takeover.  Recently it has been rationalizing its presence
and is therefore expected to exercise most of the break options
on its leases.  Although leverage is manageable, neither the size
of the loan nor the level of uncertainty regarding future income
bode well for a refinancing next month.  Rather Fitch expects a
program of asset sales to be commenced alongside a period of

TALISMAN 1: S&P Affirms 'D' Rating on Class G Notes
Standard & Poor's Ratings Services affirmed its 'D(sf)' credit
ratings on Talisman 1 Finance PLC's class G commercial mortgage-
backed notes.

"In 2011, the issuer fully redeemed the class D, E, and F notes
as a result of the sale of the Berlin property from the Alpha
loan. Consequently, EUR4.2 million of the balance of the class G
notes was written-off due to principal losses, and we lowered our
rating on this class of notes to 'D (sf)'," S&P said.

"In January 2012, we received a special notice stating that the
issuer is investigating a letter from the prime B lender,
claiming reimbursement of deductions on the repayment of the
Prime Whole Loan. The cash manager, under the issuer's
instructions, is holding in the collection account an amount
(EUR1.1 million) relating to the final repayment of principal on
the Alpha Loan, the last outstanding loan," S&P said.

"The final distribution of the funds collected in January 2012
will not be made until the claim is resolved. However, because
our rating on the class G notes is already at 'D (sf)' due to
principal losses, in our opinion, the outcome is not rating
dependent. Consequently, we have affirmed our 'D (sf)' rating on
the class G notes," S&P said.

Talisman 1 Finance is a German commercial mortgage-backed
securities (CMBS) transaction, which closed in 2005, with notes
totaling EUR554.35 million. The notes have a legal final maturity
in January 2014.


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

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


WGF: EUR71 Million Loss Prompts Insolvency Filing
Property Investor Europe reports that WGF has filed for
insolvency in the form of debtor-in-possession -- management
remains but under court-appointed supervision -- after reporting
a EUR71 million loss for 2011.

According to PIE, a delay in publication of 2011 accounts has led
to its bonds being suspended earlier this week.

WGF is a Dusseldorf private real estate group.


* GREECE: Finance Ministers Okay EUR49.1-Bil. Bailout Tranche
Stephanie Bodoni at Bloomberg News reports that euro-area finance
ministers approved EUR49.1 billion (US$64 billion) of rescue
payments to Greece to keep the recession-wracked country solvent.

According to Bloomberg, finance chiefs at a meeting in Brussels
on Dec. 13 rubber stamped the next tranches of aid after wrapping
up a 14-hour negotiation on banking union at 4:30 a.m.  Of the
funds, EUR34.3 billion will be released within the next few days
with the remaining money doled out in the first quarter.

The Greek government this week said it plans to pay EUR11.29
billion to buy back EUR31.9 billion of bonds to reduce its debt
burden and retain the support of the EU and the International
Monetary Fund, Bloomberg relates.

To repurchase all the debt tendered, Greece needed approval to
spend more than the EUR10 billion loan from Europe's bailout fund
earmarked for the buyback, Bloomberg notes.


* HUNGARY: Moody's Reviews Ratings of Seven Banks for Downgrade
Moody's Investors Service has placed on review for downgrade the
standalone credit assessments, and the debt and deposit ratings
of seven Hungarian banks. The review is prompted by Moody's view
that the ongoing adverse environment in which the banks operate
has the potential to cause further erosion of the banks'
standalone credit risk profiles. The affected banks are: OTP Bank
NyRt, OTP Mortgage Bank, K&H Bank, Budapest Bank, FHB Mortgage
Bank, Erste Bank Hungary and MKB Bank.

Focus of the Review

Moody's review will consider the degree to which (1) the
macroeconomic environment in Hungary and contagion from the
ongoing euro area crisis will affect banks and their parents; (2)
the Hungarian government's recently approved tax measures, which,
combined with the risk of further policy measures, prompt
additional pressure on banks; (3) the banks can continue to
generate sustainable earnings; and (4) the asset-quality
deterioration affects banks.

Moody's anticipates that these rating drivers apply to all the
above banks; however, idiosyncratic features of each rated bank,
reflected by their current ratings, will also play an important
role in the conclusion of the review, and in determining the
extent to which the current ratings may be affected.

Additionally, the deposit and senior debt ratings that continue
to benefit from a likelihood of parental or systemic support will
remain sensitive to any further changes in Moody's support

The full list of affected ratings can be found at the end of this
press release.



Moody's expects the Hungarian economy to contract by 1.4% in
2012, with very little growth, if any, in 2013. As domestic
demand remains subdued, with unemployment likely to exceed 11% in
2013, economic growth will depend on export industries and the
strength of external demand, which continues to be dampened by
the effects of the euro area crisis.

In this difficult operating environment, banks will continue to
deleverage sharply. In 2011, corporate and retail lending
declined by about 6% and 10%, respectively, followed by 6% and
14% respective declines in H1 2012. The sharper decrease in
retail loans also reflects the effects of borrowers' early
repayment of their foreign-currency mortgages.

In Moody's view, the downsizing of the banks' balance sheets will
remain a negative influence on economic activity, which, in turn,
feeds back negatively in their asset quality and profitability.

Finally, the persistently fragile euro area environment exposes
the Hungarian banking system to additional credit risks given
that it is largely foreign-owned (at 79% of total capital as of
2012) and has historically benefited from substantial liquidity
and capital support from parent banks. However, the ongoing
financial challenges of Western European banks -- the main
foreign owners of the Hungarian banks -- indicate, in Moody's
view, increasing uncertainty as to the responsiveness of the
parent banks towards their Hungarian operations, which have
recently seen significant retrenchment of parental funding.


The Hungarian government's unorthodox measures introduced since
2010 -- combined with a weak economy and rapidly growing loan-
loss charges -- have recently led to significant losses for the
Hungarian banks, impairing their ability to lend. The
government's measures include a large bank levy on assets, a
temporary moratorium on residential evictions and an early
repayment scheme for foreign-currency mortgages in the context of
unfavorable market conditions.

Moody's notes that the recent approval of the financial
transaction tax (FTT) on banks, effective from January 2013,
combined with Hungary's decisions to maintain the bank levy in
2013, will likely cause the banking system to remain loss-making
in 2013, further impairing the banks' lending capacity.


Moody's notes that banks' 2012 performance remains weak, as
evidenced by HUF10.5 billion of system losses for the first nine
months of 2012. Also, net interest income, which represents a
strength of the Hungarian banks, decreased by 6.5% in September
2012 year-on-year, mainly reflecting the increase in funding

Moody's believes that four key factors will likely continue to
weigh on the banks' operations and sustain the ongoing weakness
in the banks' internal capital generation (1) the significant and
increasing tax burden; (2) sustained high loan-loss charges,
reflecting economic pressures; (3) deleveraging, which also
constrains revenue-generating capacity; and (4) lower net
interest income.


The recessionary environment in Hungary supports Moody's
expectations of ongoing asset-quality deterioration into 2013.
Banks' non-performing loans (NPLs) reached 20.9% in the corporate
portfolio, with a 49% coverage ratio, and 16.2% in the retail
portfolio, with a 47% coverage ratio. Moody's considers banks'
coverage of NPLs to be modest (on average), given the weak
economic environment in Hungary.

The expected ongoing deterioration in the corporate portfolio is
underpinned by the banks' significant exposure to the weak
commercial real-estate sector, and the fragile small and medium
enterprise sector. For the retail portfolio, the high
differential in the exchange rate between the Hungarian Forint
and the Swiss Franc at the time of loan origination continues to
represent an element of pressure. Although the start of some
debtor-assistance programs may help to temper the deterioration,
Moody's believes that the banks will likely achieve this through
some loan restructuring.

Finally, whilst municipal debt accounted for just 3% of the total
banking system assets at year-end 2011, the share of NPLs and
restructured loans in this segment continued to rise to 10.4%,
but provisions did not match the rate of deterioration.

At the end of October 2012, the Hungarian government announced
its intention to take over HUF612 billion of local-government
debt, almost 50% of total local-government debt. Moody's
acknowledges that there is uncertainty as to how the government
will treat this portion of debt, with respect to the banks.

Additional Considerations

Moody's notes that following the general and rapid deleveraging
of banks, current average capital position within the banking
system do not show signs of deterioration, thus far. However,
capital remains particularly modest for most of the rated banks
under Moody's central and adverse scenarios and funding is now
more costly and remains particularly challenging in foreign-

List of Affected Ratings

Moody's has taken the following rating actions:

OTP Bank NyRt

All of the following ratings were placed on review for downgrade

- Local-currency long-term deposit rating of Ba1

- Foreign-currency long-term deposit rating of Ba2

- Foreign-currency long-term senior unsecured debt rating of Ba1

- Foreign-currency long-term subordinated debt rating (Lower
   Tier 2) of Ba2

- Foreign-currency long-term junior subordinated debt rating
   (Upper Tier 2) of Ba3 (hyb)

- D+ BFSR (corresponding to ba1 standalone credit assessment)

OTP Mortgage Bank

All of the following ratings were placed on review for downgrade

- Local-currency long-term deposit rating of Ba1

- Foreign-currency long-term deposit rating of Ba2

- D+/ba1 BFSR

K&H Bank

All of the following ratings were placed on review for downgrade

- Local-currency and foreign-currency long-term deposit ratings
   of Ba2

- D-/ba3 BFSR

Budapest Bank

All of the following ratings were placed on review for downgrade

- Local-currency long-term deposit rating of Ba1

- Foreign-currency long-term deposit rating of Ba2

- D-/ba3 BFSR

FHB Mortgage Bank

All of the following ratings were placed on review for downgrade

- Local-currency and foreign currency long-term deposit rating
   of Ba3

- E+/b1 BFSR

Erste Bank Hungary

All of the following ratings were placed on review for downgrade

- Local-currency and foreign currency long-term deposit rating
   of Ba3

- E+/b2 BFSR

MKB Bank

All of the following ratings were placed on review for downgrade

- Local-currency and foreign currency long-term deposit rating
   of B2

- Foreign-currency long-term senior unsecured debt rating of B2

- Foreign-currency subordinated debt rating (Lower Tier 2) of

- E+/b3 BFSR

The principal methodology used in these ratings was Moody's
Consolidated Global Bank Rating Methodology published in June

Headquartered in Budapest, Hungary, OTP Bank NyRt reported
consolidated total assets of HUF9,830 billion as of September 30,

Headquartered in Budapest, Hungary, OTP Mortgage Bank reported
consolidated total assets of HUF1,583 billion as of June 30,

Headquartered in Budapest, Hungary, K&H Bank reported
consolidated total assets of HUF2,357 billion as of September 30,

Headquartered in Budapest, Hungary, Budapest Bank reported
consolidated total assets of HUF895 billion as of September 30,

Headquartered in Budapest, Hungary, FHB Mortgage Bank reported
consolidated total assets of HUF751 billion as of September 30,

Headquartered in Budapest, Hungary, Erste Bank Hungary reported
consolidated total assets of HUF3,245 billion as of December 31,

Headquartered in Budapest, Hungary, MKB Bank reported
consolidated total assets of HUF2,686 billion as of June 30,


DECODE GENETICS: Amgen to Acquire Business in $415 Million Deal
Amgen Inc. and deCODE Genetics on Dec. 10 related that they have
entered into a definitive agreement under which Amgen will
acquire deCODE Genetics, a global leader in human genetics,
headquartered in Reykjavik, Iceland.  The all-cash transaction
values deCODE Genetics at US$415 million, subject to customary
closing adjustments, and was unanimously approved by the Amgen
Board of Directors.

"deCODE Genetics has built a world-class capability in the study
of the genetics of human disease," said Robert A. Bradway,
president and CEO at Amgen. "This capability will enhance our
efforts to identify and validate human disease targets.  This
fits perfectly with our objective to pursue rapid development of
relevant molecules that reach the right disease targets while
avoiding investments in programs based on less well-validated

Founded in 1996, deCODE Genetics is a global leader in analyzing
and understanding the link between the genome and disease
susceptibility. Using its unique expertise and access to a well-
defined population in Iceland, deCODE Genetics has discovered
genetic risk factors for dozens of diseases ranging from
cardiovascular disease to cancer.

"One of the ways to truly realize the full value of human
genetics, is to make our research synergistic with drug
development efforts where target discovery, validation and
prioritization efforts can be accelerated," said Kari Stefansson,
M.D., Dr. Med., founder and CEO at deCODE Genetics.  "We believe
Amgen's focus and ability to incorporate our genetic research
into their research and development efforts will translate our
discoveries into meaningful therapies for patients."

This transaction does not require regulatory approval, and is
expected to close before the end of 2012.

Based in Thousand Oaks, Calif., Amgen (NASDAQ:AMGN) -- is a biotechnology pioneer since 1980.

                     About deCODE Genetics

deCODE Genetics Inc., nka DGI Resolution, Inc., sought chapter 11
protection (Bankr. D. Del. Case No. 09-14063) on Nov. 16, 2009,
disclosing US$69.9 million in assets and US$314 million in
liabilities, and represented by lawyers at Richards, Layton &
Finger, P.A., in Wilmington, Del.  The bankruptcy court confirmed
a liquidating chapter 11 plan on May 27, 2010.  That plan
estimated that unsecured creditors would recover about 3% on
their prepetition claims, and appointed Walker, Truesdell, Roth &
Associates as the liquidating trustee.  The liquidating trustee
is represented by lawyers at Young Conaway Stargatt & Taylor,
LLP, in Wilmington, Del.


RMF EURO: S&P Downgrades Rating on Two Note Classes to 'B+'
Standard & Poor's Ratings Services took various credit rating
actions on RMF Euro CDO S.A.'s class A, B-1, B-2, and C notes.

Specifically, S&P has:

-- raised to 'AAA (sf)' from 'AA+ (sf)' its rating on the class
    A notes;

-- lowered to 'B+ (sf)' from 'BB+ (sf)' its ratings on the class
    B-1 and B-2 notes; and

-- affirmed its 'CCC- (sf)' rating on the class C notes.

"The rating actions follow our assessment of the transaction's
performance using data from the latest available trustee report,
in addition to our credit and cash flow analysis. We have taken
into account recent developments in the transaction and reviewed
it under our relevant criteria for transactions of this type,"
S&P said.

"We note that 12.01% of the remaining pool now comprises
defaulted assets (those rated 'CC', 'C', 'SD' [selective
default], and 'D') -- an increase since our previous review on
Nov. 30, 2011, when none of the assets were in default. At the
same time, the proportion of the pool rated in the 'CCC' category
(assets rated 'CCC+', 'CCC', and 'CCC-') has decreased to 2.51%
of the remaining pool, from 7.11% since our November 2011
review," S&P said.

"We subjected the transaction's capital structure to a cash flow
analysis to determine the break-even default rate (BDR) for each
rated class of notes at each rating level. We incorporated
various cash flow stress scenarios, using various default
patterns, in conjunction with different interest-rate stress
scenarios," S&P said.

"Our cash flow analysis indicates that the level of credit
enhancement available to the class A notes has increased by more
than 7%, as the outstanding principal amount of class A notes has
decreased by 47%. Following our credit and cash flow analysis, we
have raised to 'AAA (sf)' from 'AA+ (sf)' our rating on the class
A notes," S&P said.

The level of credit enhancement available to the class B-1 and B-
2 notes has decreased to 10.50% due to defaults in the portfolio.

"According to our analysis, the class C notes do not currently
have any credit enhancement remaining and their repayment depends
on recoveries realized on defaulted assets. As a consequence, we
have affirmed our 'CCC- (sf)' rating on the class C notes, which
reflects our view that these notes are currently vulnerable to
non-payment," S&P said.

"Our ratings on the class B-1 and B-2 notes are constrained by
the application of the largest obligor test, a supplemental test
that we introduced in our 2009 cash flow collateralized debt
obligation (CDO) criteria. This test addresses event and model
risk that might be present in the transaction. Although the BDRs
generated by our cash flow model indicated higher ratings, the
largest obligor test constrains our ratings on the class B-1 and
B-2 notes at 'B+ (sf)'. We have therefore lowered to 'B+ (sf)'
from 'BB+ (sf)' our ratings on the class B-1 and B-2 notes," S&P

The Bank of New York Mellon (AA-/Negative/A-1+) acts as account
bank and custodian in this transaction. Under our 2012
counterparty criteria, The Bank of New York Mellon is
appropriately rated to support the ratings in this transaction.

RMF Euro CDO is a cash flow collateralized loan obligation (CLO)
transaction that securitizes loans to primarily speculative-grade
corporate firms.


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

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


Class       Rating         Rating
            To             From

EUR300 Million Fixed- and Floating-Rate Notes

Rating Raised

A           AAA (sf)       AA+ (sf)

Ratings Lowered

B-1         B+ (sf)        BB+ (sf)
B-2         B+ (sf)        BB+ (sf)

Rating Affirmed

C           CCC- (sf)


* CITY OF RIGA: S&P Raises Issuer Credit Ratings From 'BB+/B'
Standard & Poor's Ratings Services raised its long- and short-
term foreign and local currency issuer credit ratings on the City
of Riga to 'BBB/A-2' from 'BB+/B'. The outlook remains positive.

"The ratings on the Latvian capital city of Riga are supported by
a relatively wealthy and growing economic base, the city
management's track record of structural budgetary consolidation
and prudent debt management, as well as strong budgetary
performance and positive liquidity position. The ratings are
constrained, in our view, by the consolidating but uneven Latvian
institutional framework, which limits the city's budgetary
flexibility and predictability, and its high debt burden," S&P

"Riga's wealth is average when compared internationally, but
strong regionally, in our view. We estimate that its GDP per
capita exceeds the country average by about 80% and reached about
US$23,000 in 2011. According to our base-case scenario, Latvia's
economy is set to grow by 4% on average in 2012-2015. We expect
Riga to benefit from this economic recovery given its status as
the country's economic engine. It generates an estimated 58% of
the national GDP and has 32% of Latvia's population," S&P said.

Riga's financial management team has proven capable and willing
to swiftly and significantly adjust its budget in case of adverse
economic conditions and strong revenue decline, as observed in
2009 and 2010. The city's financial performance was therefore
strong in 2009-2011, with an average operating surplus of 10% of
operating revenues, and a minor surplus after capital accounts.

"Thanks to rising revenues fuelled by economic recovery we assume
only a moderate weakening of the city's budgetary performance in
2012-2015, despite gradually catching up spending and increasing
interest payments, in our base-case scenario. During this period,
in our view, Riga's average operating balance will remain at a
sound 8.6% of operating revenues, while the average balance after
capital accounts will slightly reduce to a modest 2.8% of total
revenues," S&P said.

"The ratings on Riga factor in its very limited revenue
flexibility. Under the Latvian intergovernmental system, the city
has no influence over 90% of revenues. We also consider that
Riga's ability to further cut its expenditures is very limited at
present, following heavy cuts in 2009 and 2010," S&P said.

"Riga's financial-policy predictability is also constrained by
the ongoing reforms to the shared personal income tax, which
accounts for about 65% of the city's operating revenues. About
80% of this tax is allocated to local budgets, but the exact
quotas are defined annually. The central government has initiated
a gradual reduction of the rate from 25% in 2012 to 20% in 2015.
In 2013, Riga will receive almost no compensation for the
reduction of the PIT rate, while the compensation the central
government could provide to local governments beyond 2014 is
still being negotiated. In our base case we expect that after
2014 the loss will be adequately covered by the expanding tax
base, and either by additional transfers from the central
government budget or additional flexibility in managing property
taxes," S&P said.

"Riga has sizable investment requirements, but national
restrictions on borrowing considerably constrain its debt-raising
capacity. As a consequence, Riga has previously raised debt
through off-balance-sheet financing schemes. In this way, it
funded the multistage Southern Bridge construction and, less so,
housing construction and public transport fleet renewal. We
include this debt in our calculation of tax-supported debt under
our methodology. Our base-case scenario anticipates that tax-
supported debt will reach a high 123% of consolidated operating
revenues in 2012, and will remain broadly flat in 2013-2015 due
to expected borrowings at company level," S&P said.

"We expect Riga's interest payments to rise significantly because
in 2010 it started making payments on its amortizing obligations
related to the Southern Bridge project. As a consequence, our
base-case scenario anticipates interest payments rising to about
6% of operating revenues in 2013, from a low 2% in 2010. Although
we expect interest payments to decline again after peaking in
2013-2014, we anticipate that they will remain at about 5% of
operating revenues in the medium-to-long-term," S&P said.

"Under our criteria, we view Riga's liquidity as 'positive,'
based on its high cash holdings and what we view as limited
access to external liquidity," S&P said.

"At the end of November 2012, we estimated the city's
consolidated available cash had averaged about Latvian lats (LTL)
97 million over the past 12 months. This excludes the city's
deposits in Latvijas Krajbanka (not rated) because we understand
this amount is currently frozen after the bank started bankruptcy
proceedings in February 2012. In our base-case scenario we expect
the city's average cash holdings to decrease slightly in 2013 by
about LTL10 million, but remain well in excess of its debt
service falling due in the next 12 months, which we assess at
about LTL46 million. This amount includes the redemption of
principal and interest payments on the multistage financing of
the Southern Bridge," S&P said.

"Riga limits its counterparty risk through its cash management
policy, and holds more than 80% of its cash at Nordea Bank AB
(AA-/Negative/A-1+)," S&P said.

"Although we note that the city can take loans at favorable
conditions from the state treasury to cofinance its investment
projects, we view Riga's access to external liquidity as limited,
according to our criteria. We consider the domestic banking
sector to be exposed to high levels of risk, which are reflected
in our Banking Industry Country Risk Assessment (BICRA) score of
'8'," S&P said.

"The positive outlook reflects our view that Latvia's good
economic growth will persist through 2012-2013 and will raise
Riga's revenues. Combined with tight spending policies, this may
further strengthen the city's budgetary performance and lower its
debt burden," S&P said.

"We could consider an upgrade within the next 24 months if we
raise the sovereign credit rating on Latvia and if, in line with
our upside scenario, Riga's revenues grow faster than envisaged
in our base-case scenario. This would likely lead to budgetary
performance improving to a positive balance after capital
accounts over 2012-2015, on average. As a consequence, the city's
interest payments could then slip below 5% of operating revenues
and tax-supported debt may decrease to below 100% of consolidated
operating revenues, which would alleviate the debt burden on the
city," S&P said.

"We may revise the outlook back to stable within the next 24
months, if, in line with our base-case scenario, the city
maintains a recurring moderate deficit after capital accounts,
while -- due to borrowings made by municipal companies -- the
city's tax-supported debt remains at about 120% of consolidated
operating revenues. Such an outlook revision might also occur if
we revised the outlook on the sovereign rating to stable," S&P


EUROPROP SA: Fitch Cuts Ratings on Four Loan Classes to 'Csf'
Fitch Ratings has downgraded Europrop (EMC) S.A. (Compartment 1)
as follows:

  -- EUR122.3m class A (XS0260127161): downgraded to 'CCsf' from
     'BBsf'; assigned Recovery Estimate 'RE20%'
  -- EUR40.9m class B (XS0260129373): downgraded to 'Csf' from
     'CCCsf'; assigned 'RE0%'
  -- EUR28.1m class C (XS0260130207): downgraded to 'Csf' from
     'CCsf'; assigned 'RE0%
  -- EUR30.5m class D (XS0260130975): downgraded to 'Csf' from
     'CCsf'; assigned 'RE0%'
  -- EUR15.8m class E (XS0260132088): downgraded to 'Csf' from
     'CCsf'; assigned 'RE0%'

The downgrades are driven by the slow pace of asset disposals
(three sales) since the last rating review (May 2012), coupled
with the short term to legal final maturity of the notes (April
2013).  Moreover, gross property sales prices of notarized assets
out of the collateral pool securing the remaining loan (a 50%
pari passu interest in the whole Sunrise A-loan) have in some
cases lagged significantly below the allocated loan amounts.

A total of 52 assets with a "syndicated" market value (taking 50%
of the reported value) of EUR177.9 million remain in the
collateral pool, against EUR237.5 million of securitized debt.
Of this, 12 assets are notarized for sale, which suggests a
reasonable degree of confidence that these sales can complete in
time for bond maturity.  Fitch does not expect many of the other
assets (if any) will be sold in time to distribute proceeds for
the April 2013 payment date, which explains the low recovery
estimates even for the class A notes.

The EUR475.0 million Sunrise A-loan is secured over 52 mostly
secondary retail properties spread across Germany.  This A-loan
was carved out of a EUR501.3 million whole loan, and subsequently
syndicated between Europrop and another CMBS, DECO 9 - Pan Europe
3 plc.  This arrangement complicates the workout process since
the special servicer responsible has a duty of care to two CMBS
transactions' constituencies with different terms and conditions.
Given that DECO 9 matures in 2017, the disposal process will have
been drawn up with these creditors also in mind, which likely
discouraged a fire-sale in order to meet Europrop's short
remaining term.

The whole loan defaulted in July 2010 for breach of various loan
covenants and was subsequently transferred to special servicing
(now performed by Situs United Kingdom). However, at the same
time some of the underlying borrowers entered into insolvency
proceedings, which delayed the commencement of workout
proceedings by several months.

Initially, a sale was intended for the portfolio as a whole, but
this strategy was later abandoned.  Indicative bids on the
portfolio would have covered the repayment of some but not all
outstanding tranches, prompting the then special servicer to
pursue a piecemeal asset sale strategy.  For 46 assets,
individual initial price indications were received in April 2012,
the sum of which ranged from EUR196.6 million to EUR333.9
million.  Although only 50% would have been applied to Europrop,
this would have redeemed a material amount of debt.

As it was, only three have been sold, and although a further 12
are notarized, this is a disappointing outcome for Europrop's
bondholders, as reflected in the rating action.  However, sales
efforts are on-going and Fitch expects that the class A
noteholders will go on to receive significant further recovery
proceeds, albeit after April 2013.


* NETHERLANDS: Moody's Says Banking System Outlook Remains Neg.
The outlook for the Netherlands' banking system remains negative,
says Moody's Investors Service in a new Banking System Outlook
published on Dec. 12. The outlook principally reflects the
difficult operating environment that will persist throughout Q4
2012 and 2013, which, combined with structural economic
weaknesses, will negatively impact the banks' financial profiles
over the 12-18 month outlook period. The structural weaknesses
include (1) the high household indebtedness; (2) the banking
system's high leverage; and (3) banks' high reliance on wholesale
funding. In addition, commercial-real estate portfolios, and to a
lesser extent, residential mortgages, will be the drivers of
higher loan losses.

The new report is entitled "Banking System Outlook: The

"The main driver of our negative outlook on the Dutch banking
system is the domestic operating environment, which will remain
difficult for financial institutions. This reflects the currently
weak macroeconomic conditions in the Netherlands and associated
risks resulting from the high leverage of domestic households",
says Stephane Herndl, a Moody's Assistant Vice President-Analyst
at Moody's.

Moody's says that the Netherlands' export-oriented economy is
deeply integrated within the European Union and is therefore
exposed to contagion from the ongoing euro area debt crisis, and
regional economic weakness.

"Dutch banks' asset quality has remained strong in recent years.
However, there are risks of increasing deterioration within the
domestic commercial real estate sector, which is undergoing a
period of severe stress, and, to a lesser extent, within
residential mortgage portfolios, driven by the weakening domestic
economy", says Mr. Herndl.

Despite recent improvements in regulatory capital ratios, Dutch
banks' leverage remains very high; in Moody's view, even
incremental increases in credit losses would be credit negative
for the banks' asset quality.

Dutch banks' heavy reliance on wholesale funding exposes them to
negative changes in market sentiment. However, Moody's notes that
the banks have generally retained access to wholesale funding,
particularly covered bonds and securitization markets, as a
result of the strong past performance of the underlying
collateral. Dutch banks also have large liquidity buffers; a
sizeable portion of these buffers comprises own-securitizations,
which may be less readily marketable in the event of stress but
would facilitate access to central bank funding, if needed.

Moody's expects pressure on pre-provision profitability as
funding costs rise and competition for domestic retail business
intensifies. The rating agency also anticipates that the cost of
risk will rise from its current low levels, primarily as a result
of the stress affecting the domestic commercial real estate
sector, and to a lesser extent, the domestic home loan market.

Despite the introduction of the Dutch Intervention Act, the
probability of systemic support remains high for depositors and
senior bondholders of the four largest banks of the system. This
reflects the rating agency's view that the tools extended by the
Act, such as the transfer of assets to 'bad-banks' would be
difficult to deploy in the case of large and systemically
important banks, and that the most likely form of support would
be nationalization.


EKSPORTFINANS ASA: Silver Point Files Suit Over Alleged Default
Mikael Holter at Bloomberg News reports that Eksportfinans ASA
said a U.S. investor filed a complaint in a Japanese court
demanding JPY400 million (US$4.8 million), based on an allegation
that the Norwegian lender defaulted on its Samurai bonds.

According to Bloomberg, Eksportfinans said in a statement
yesterday that the complaint was sent to the Tokyo District Court
by Silver Point Capital Fund LP and Silver Point Capital Offshore
Master Fund LP, and forms part of a total claim of JPY8.6

The lender, which is being wound down after the Norwegian
government withdrew its support, said Nov. 7 it will resist such
claims, rejecting speculation it had defaulted, Bloomberg

Eksportfinans spokeswoman Elise Lindbaek said lawyers in Tokyo
and London are reviewing the claim, which was received on
Wednesday, Bloomberg notes.  Ms. Lindbaek, as cited by Bloomberg,
said that Eksportfinans can't provide more details on what the
next step in the process will be.

Eksportfinans said in November that the company had a loss of
NOK12.9 billion (US$2.3 billion) for the first nine months,
Bloomberg recounts.

Headquartered in Oslo, Eksportfinans ASA operates as an export
lending institution that provides financing for a range of
exports and for the internationalization of Norwegian industry.


KREDYT BANK: S&P Affirms 'BBpi' Counterparty Credit Rating
Standard & Poor's Ratings Services affirmed and then withdrew its
unsolicited public information 'BBpi' counterparty credit rating
on Kredyt Bank S.A., a commercial bank based in Poland (foreign
currency A-/Stable/A-2; local currency A/Stable/A-1).

The withdrawal reflects that Kredyt Bank will cease to exist as a
legal entity, following its merger with Poland's Bank Zachodni
WBK S.A. (not rated), likely in early 2013.

"The affirmation reflected our unchanged view that the bank's
business position, capital and earnings, funding, and liquidity
are neutral rating factors, while its risk position is a negative
rating factor. Consequently, we had affirmed the bank's stand-
alone credit profile in the 'bb' category," S&P said.

"At the time of withdrawal, we did not factor in any group
extraordinary support into the rating based on Kredyt Bank's
subsidiary status in the Belgium-based KBC Bank N.V. (A-
/Stable/A-2). This is because we classified the bank as a
'nonstrategic' subsidiary of KBC, under our criteria. KBC had
recently agreed with Spain-based Banco Santander S.A.
(BBB/Negative/A-2) to merge Kredyt Bank with Bank Zachodni WBK
and indicated it will reduce its ownership stake from 87.2% of
the former Kredyt Bank to 16.4% of the new bank after the merger
and then gradually divest the remaining stake," S&P said.


* TOMSK OBLAST: S&P Affirms 'BB' Issuer Credit Rating
Standard & Poor's Ratings Services affirmed its 'BB' issuer
credit rating and 'ruAA' national scale rating on the Russian
region Tomsk Oblast. The outlook is stable.

"At the same time, we assigned a 'BB' issue rating to the
oblast's proposed senior unsecured five-year amortizing bond of
up to RUB5 billion (about US$160 million), partly to be placed in
late 2012. The recovery rating on the proposed debt is '3'
indicating our expectation of meaningful (50%-70%) recovery for
bondholders in the event of a payment default," S&P said.

"The ratings on Tomsk Oblast incorporate our view of its limited
financial flexibility and predictability, exacerbated by
relatively large infrastructure needs and the dependence of its
revenues on volatile commodity markets. Offsetting these factors
are our expectation of the oblast's ability to deliver moderate
budgetary performance and Tomsk's modest debt burden," S&P said.

"Like many other Russian regions, Tomsk Oblast has limited
control over its revenues, the predominant share of which
comprise centrally regulated taxes and federal subsidies. Also,
the oblast faces high infrastructure needs over the long term,
further constraining its budgetary flexibility," S&P said.

"Moreover, the oblast's creditworthiness suffers from low
predictability of its financial indicators. Despite the growth of
services, the regional economy remains dependent on the oil and
gas sector, which accounts for about 25% of its gross regional
product and 30% of budget revenues. This exposes Tomsk's economy
to volatility in global commodity markets and limited visibility
concerning Russia's tax regime for the natural resource
extraction sector. The oblast, backed by the federal government,
strives to foster diversification of the local economy by using
its developed educational and scientific base. We therefore
assume that these efforts will only have a visible impact on the
oblast's tax base in the long term," S&P said.

"In addition, Tomsk's budgetary performance will be challenged by
the federal government's recent decision to significantly raise
regional public-sector salaries. This will subject Tomsk to
significant long-term spending pressure because the federal
government is unlikely to fully compensate it for the higher
imposed expenditures, which will somewhat undermine the oblast's
performance after solid financial results in 2010-2011," S&P

"Nevertheless, in our base-case scenario we assume that Tomsk
Oblast will be able to deliver a moderate budgetary performance
in 2013-2015, with operating surpluses of 1.5% of operating
revenues and deficits after capital accounts of 2%-2.5% of
adjusted total revenues on average. This scenario is based on the
oblast's positive track record in containing costs, the
relatively conservative three-year budget proposed by its new
governor (zero deficits in 2014-2015), and continued moderate
support from the federal budget. Also in case of stress the
oblast has the flexibility to postpone certain capital
expenditures," S&P said.

"Despite a minor increase, the oblast's low tax-supported debt
(which includes direct debt and guarantees) is likely to remain
below 30% of consolidated operating revenues through to 2015,"
S&P said.

"The stable outlook reflects our base-case expectation that,
despite significant salary-related spending pressure triggered by
federal decisions, the oblast will deliver a moderate
performance, backed by cautious spending policies and some
federal support. The outlook also factors in the continuation of
the oblast's shift to medium- and long-term borrowings and
existing management of committed facilities," S&P said.

"We could lower the rating over the next 12 months if rising
spending pressure were to lead to a significant weakening of the
oblast's budgetary performance, resulting in operating deficits
in the medium term and higher debt. A change in liquidity
policies that caused the debt-service coverage ratio to fall
below 120%, could also be negative for the ratings," S&P said.

"On the other hand, a structurally stronger budgetary
performance, with operating surpluses consistently exceeding 5%
of operating revenues, and cash reserves that cover debt service
within the next 12 months, as envisaged in our upside case, could
be positive for the rating. Economic growth that translated into
higher wealth levels would also be positive for the ratings in
the longer term," S&P said.

* UDMURTIA REPUBLIC: Fitch Rates RUB5.2-Bil. Bond Issue 'BB+'
Fitch Ratings has assigned the Russian Republic of Udmurtia's
RUB2.5 billion domestic bond issue (ISIN RU000A0JTF76), due
December 5, 2017, a Long-term local currency rating of 'BB+' and
a National Long-term rating of 'AA(rus)'.

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

The bond issue has a variable coupon and amortizing structure.
The proceeds from the bond issue will be used to refinance
maturing debt and to fund the budget deficit.

S L O V A K   R E P U B L I C

UNICREDIT BANK: Moody's Changes Outlook on 'D+' BFSR to Negative
Moody's Investors Service has changed to negative from stable,
the outlook for UniCredit Bank Slovakia's bank financial strength
rating (BFSR) of D+ (equivalent to a ba1 standalone credit
assessment) and the Baa2 long-term deposit ratings.

Moody's says that the negative outlook reflects (1) the bank's
weakening financial performance, as reflected in declining
profitability and asset quality pressure; and (2) the integration
risks and uncertainties associated with the announced merger with
UniCredit Czech Republic.

Ratings Rationale


During the first nine months of 2012, UniCredit Slovakia reported
a 43% year-on-year decline in net income to EUR12.9 million (or
0.5% of risk weighted assets). This was mainly a result of (1) a
58% increase in loan-loss provisioning; (2) a 10% reduction in
net interest income; and (3) a 10% increase in operating costs,
driven mainly by the newly introduced bank levy. The decline in
the net interest income was due to a combination of lower
revenues affected by the low interest rate environment and higher
funding costs due to intensifying price-driven deposit

Moody's notes that the bank recorded non-performing loans (NPLs)
equal to 3.98% of gross loans in Q3 2012. However, the
improvement relative to the NPL ratio of 7.5% in June 2012 is
solely due to the bank selling a large NPL, for which, post-
disposal, it retains a significant off-balance-sheet exposure. In
addition, the bank's coverage ratio of on and off-balance-sheet
NPLs (44.2% in Q3 2012), although increased year-on-year, remains
well below the 78.2% average for the banking system in Slovakia.
Moody's believes that further provisioning expenses might be
needed because the bank's focus on corporate lending (71% of the
loan book as of Q3 2012) -- a worse-performing asset class
relative to retail lending in Slovakia -- exacerbates the bank's
asset-quality pressures. In addition, Moody's notes that the
bank's very high corporate borrower concentrations exposes the
bank to significant asset-quality risks.

Moody's therefore expects that lower income, the introduction of
a bank levy and pressure on loan loss provisioning will continue
to suppress the bank's profitability for the rest of 2012 and in

Moody's says that it continues to view the bank's capitalization
as satisfactory, with a capital adequacy ratio of 14.6% as of
September 2012. In addition, the deposit ratings continue to
benefit from Moody's view of a high probability of parental and
systemic support, resulting in a two-notch uplift from its
standalone credit assessment of ba1 to its Baa2 long-term deposit


In November 2012, the board of Italy's Unicredit SpA (Baa2
deposits negative; BFSR C-/BCA baa2 negative) approved a plan to
merge its subsidiaries in the Czech Republic and Slovakia into a
single cross-border bank headquartered in the Czech Republic. The
integration is said to be primarily driven by the search of cost
synergies, as well as better capital and liquidity management
within the group. The integration is subject to the approval by
the Czech and Slovak central banks, and the Unicredit group plans
to complete the transaction by the end of 2013. Whilst longer-
term Moody's acknowledges that the merger could have some
positive implications for the newly established Czech-based bank,
in the short to medium term, Moody's believes there are
integration challenges and regulatory uncertainties associated
with the merger of the two banks, as well as potential risk that
the market position in Slovakia could weaken following the
transformation of the subsidiary into a branch network.

What Could Move The Ratings UP/DOWN

Given the negative outlook, upwards pressure on standalone credit
assessment and the long-term deposit ratings is unlikely.
However, Moody's says that upwards pressure on these ratings
could develop from (1) a substantial and sustainable improvement
in the financial performance of the bank; and (2) a significant
reduction in corporate borrower concentrations. Downwards
pressure on the standalone credit assessment and deposit ratings
could result from further deterioration of the bank's financial
performance and weakening franchise in Slovakia. In addition,
downwards rating pressure on Unicredit SpA's ratings and/or
Slovakia's government debt ratings could affect Unicredit
Slovakia's deposit ratings.

The principal methodology used in this rating was Moody's
Consolidated Global Bank Rating Methodology published in June


HIPOCAT 9: Fitch Affirms Rating on Class E Notes at 'Csf'
Fitch Ratings has affirmed 14 tranches of Hipocat 7, 8 and 9, a
series of Spanish RMBS transactions.  The agency has also removed
ten tranches from Rating Watch Negative (RWN).

The affirmations reflect the sufficient levels of credit
enhancement available for the rated notes despite the weakening
performance of the assets in all three transactions.

The removal of the RWN on notes rated above 'BBBsf' follows the
implementation of remedial actions on ineligible counterparties.
The role of account bank and paying agent has been transferred to
Barclays Bank Plc ('A'/Stable/'F1') from Banco Santander
('BBB+'/Negative/'F2') in all deals, in line with the transaction
documentation.  In Fitch's view, Barclays Bank Plc is deemed an
eligible counterparty to support ratings of structured finance
transactions of 'AA-sf'.

The transactions comprise of loans originated by non-rated entity
Catalunya Banc to borrowers located mainly in the Catalonia
region of Spain.  The mortgage products offered feature a grace
period option, allowing borrowers on up to five occasions and
never for a period exceeding 12 months or in aggregate 36 months,
to enter a grace period on the repayment of principal and
interest on their mortgages.  The main criterion to qualify for
this forbearance option is to be current on existing mortgage

In its analysis of the transaction, the agency assumes that
borrowers who exercise this option are eventually more likely to
default on their mortgages and so applied more conservative
default assumptions to these borrowers.

Performance across the transactions has deteriorated
significantly as a result of the current adverse macroeconomic
environment within Spain.  As of October 2012, the portion of
arrears by more than three months excluding defaults increased to
between 2.3% and 3.7% compared to between 1% and 1.5% six months

In addition, the volume of borrowers utilizing their grace period
option has also risen to between 6.3% and 9.5% compared to 6.1%
and 8.2% six months ago.

The credit enhancement available to the rated notes however was
deemed sufficient to withstand the respective rating stresses and
as such Fitch has affirmed the notes in these transactions.  The
Negative Outlooks on the junior and Hipocat 9 mezzanine notes
reflects Fitch's concern about the arrears trend and the general
outlook for the Spanish mortgage market.

The rating actions are as follows:

Hipocat 7

  -- Class A2 (ES0345783015) affirmed at 'AA-sf'; removed from
     RWN Outlook Negative;
  -- Class B (ES0345783023) affirmed at 'AA-sf'; removed from
     RWN; Outlook Negative
  -- Class C (ES0345783031) affirmed at 'AA-sf'; removed from
     RWN; Outlook Negative
  -- Class D (ES0345783049) affirmed at BBB+sf'; removed from
     RWN; Outlook Negative

Hipocat 8

  -- Class A2 (ES0345784013) affirmed at 'Asf'; removed from RWN;
     Outlook Stable.
  -- Class B (ES0345784021) affirmed at 'Asf'; removed from RWN;
     Outlook Stable.
  -- Class C (ES0345784039) affirmed at 'Asf'; removed from RWN;
     Outlook Stable.
  -- Class D (ES0345784047) affirmed at BBsf'; Outlook Negative.

Hipocat 9

  -- Class A2a (ES0345721015) affirmed at 'Asf'; removed from
     RWN; Outlook Stable
  -- Class A2b (ES0345721023) affirmed at 'Asf'; removed from
     RWN; Outlook Stable
  -- Class B (ES0345721031) affirmed at 'Asf'; removed from
     RWN; Outlook Stable
  -- Class C (ES0345721049) affirmed at 'BBBsf'; Outlook
  -- Class D (ES0345721056) affimed at 'CCCsf'; Recovery estimate
  -- Class E (ES0345721064) affirmed at 'Csf'; Recovery estimate

TDA TARRAGONA 1: S&P Cuts Ratings on Two Note Classes to 'BB+'
Standard & Poor's Ratings Services lowered and removed from
CreditWatch negative its credit ratings on TDA Tarragona 1, Fondo
de Titulizacion de Activos' class A and B notes for counterparty

"The downgrades follow the application of our 2012 counterparty
criteria," S&P said.


Banco Santander S.A. (BBB/Negative/A-2) acts as the guaranteed
investment contract (GIC) provider and Cecabank S.A.
(BB+/Negative/B) acts as the swap provider for TDA Tarragona 1.
Cecabank is a newly created commercial bank following the
transfer by Confederacion Espa¤ola de Cajas de Ahorros (CECA) to
Cecabank of most of its assets and liabilities.

"On Nov. 12, 2012, we lowered our ratings on TDA Tarragona 1's
class A and B notes as more than 60 days had elapsed since our
April 30, 2012 lowering of our short-term rating on Banco
Santander, which is below the minimum eligible rating under our
2012 counterparty criteria. As the 60-day remedy period had
expired and under our 2012 counterparty criteria, we lowered our
ratings on the class A and B notes to be commensurate with the
issuer credit rating (ICR) on Banco Santander as transaction
account provider. At the same time, we placed on CreditWatch
negative our ratings on TDA Tarragona 1's class A and B notes,
due to the link between the ratings on the notes and the rating
on the downgraded swap counterparty under our 2012 counterparty
criteria, pending further analysis," S&P said.

"The downgrades follow our March 29, 2012 downgrade of CECA to
below the level required by the transaction documents and our
Nov. 23, 2012 assignment of 'BB+/B' ratings to Cecabank, the swap
provider in this transaction. We have applied our 2012
counterparty criteria," S&P said.

"Under the transaction documents, if the swap counterparty's
rating falls below 'BBB+', the transaction enters a 60-day remedy
period, in which the swap counterparty should replace itself with
a 'BBB+' rated entity or find an 'BBB+' rated guarantor," S&P

"As the issuer has taken no remedy actions since our March 29,
2012 of CECA, we have conducted our cash flow analysis assuming
that the transaction does not benefit from any support from the
interest rate swap provider. In this scenario and under our 2012
counterparty criteria, the class A and B notes cannot achieve a
higher rating than our 'BB+' ICR on Cecabank. We have therefore
concluded that the class A and B notes cannot maintain their
current ratings and have lowered to 'BB+ (sf)' from 'BBB (sf)'
and removed from CreditWatch negative our ratings on these
classes of notes," S&P said.


"The transaction's collateral performance and structural features
do not currently constrain our ratings on the class A and B
notes. Rather, the application of our 2012 counterparty criteria
limits our ratings on these notes," S&P said.

"Based on the November 2012 trustee investor report, the
transaction has a pool factor (the percentage of the pool's
outstanding aggregate principal balance) of 67.49%. Of the
outstanding pool balance, 8.06% is in arrears for more than 30
days (compared with 6.17% in November 2011), which is above our
current expectations for delinquencies and defaults in this
transaction," S&P said.

"As of the end of October 2012, the ratio of cumulative defaults
(defined in this transaction as loans delinquent for more than 12
months) over the original loan balance increased to 4.21% from
2.88% a year earlier. We expect cumulative defaults to continue
to increase due to the high amount of delinquent loans, as long-
term delinquencies continue to turn into defaults," S&P said.

"A cash reserve and the excess spread left by the interest rate
swap provide credit enhancement available to the notes in this
transaction. When we first rated this transaction in April 2011,
the issuer had partially drawn on the reserve fund to cover for
collateral loans that had defaulted since closing in November
2008. Since then, the reserve fund has been depleted further. As
of the November 2012 interest payment date, the reserve fund was
at 27.08% of the level required by the transaction documents,"
S&P said.

"The interest swap agreement provides protection against adverse
interest-rate resetting and interest-rate movements, and
guarantees a margin of 55 basis points over three-month Euro
Interbank Offered Rate (EURIBOR). The notional amount of the swap
(the balance used to calculate the interest due) is based on the
outstanding balance of the notes. The swap structure provides
substantial credit enhancement to the notes in this transaction,"
S&P said.

"TDA Tarragona 1 securitizes a portfolio of residential mortgage
loans secured over Spanish properties. The transaction closed in
November 2007, but we first rated it in April 2011. Caixa
D'Estalvis de Tarragona (Caixa Tarragona) originated the
underlying loans that are secured by Spanish mortgages," S&P


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

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



Class             Rating
           To                From

TDA Tarragona 1, Fondo de Titulizacion de Activos
EUR397.4 Million Mortgage-Backed Floating-Rate Notes

Ratings Lowered and Removed From CreditWatch Negative

A          BB+ (sf)          BBB (sf)/Watch Neg
B          BB+ (sf)          BBB (sf)/Watch Neg


YAPI VE KREDI: Moody's Assigns 'Ba1' Subordinated Debt Rating
Moody's Investors Service has assigned a first-time Ba1 foreign-
currency subordinated debt rating to the subordinated debt
issuance by Yapi ve Kredi Bankasi AS. The debt instrument is
expected to be eligible for Tier 2 capital treatment under
Turkish law. The outlook is negative.

Ratings Rationale

Moody's definitive rating for this debt obligation confirms the
provisional rating assigned on November 20, 2012. In Moody's
view, per the terms and conditions of the notes, the notes will
be unconditional, subordinated and unsecured obligations and will
rank pari passu with all Yapi Kredi's other subordinated
unsecured obligations. The rating of the notes is in line with
Yapi Kredi's subordinated unsecured foreign-currency debt rating.

YapiKredi's subordinated debt rating is positioned one notch
below the bank's baa3 adjusted standalone credit assessment, and
does not incorporate any rating uplift from systemic (government)
support. The bank's adjusted standalone credit assessment is one
notch higher than its ba1 standalone credit assessment, and
incorporates one notch of rating uplift. The uplift reflects
Moody's assumption of a moderate probability of support from
UniCredit SpA (Baa2, deposits, negative; BFSR C-/BCA baa2,
negative), which holds a 40.9% stake in YapiKredi.

The negative outlook on the subordinated debt rating, reflects
the negative outlook on UniCredit's C- BFSR, the reference point
and input for imputed parental support, according to Moody's
Joint Default Analysis (JDA).

Moody's believes that at present, there is a strong prudential
bank-supervisory framework in Turkey. The regulator has extensive
intervention tools available to preserve a bank's solvency and
financial stability within the banking system, although within
Turkey, imposing losses on bank creditors outside of a
liquidation scenario is untested. However, if future regulatory
intervention is required to support Turkish banks, Moody's
believes that the Turkish frameworks for bank resolution could
develop further, similar to the policy initiatives in numerous
banking systems, particularly in Europe.

These frameworks provide for burden sharing of bank bailouts with
bank creditors, in particular affecting junior classes of bank
securities. As a result, YapiKredi's subordinated debt rating
does not incorporate any uplift from systemic support.

What Could Move The Rating UP/DOWN

Currently, there is no upwards pressure on the subordinated debt
rating, reflected by the negative outlook. As the subordinated
debt rating is notched off the bank's adjusted standalone credit
assessment, any weakening of the bank's standalone credit
strength and/or that of its parent Unicredit will result in a
similar rating action on the subordinated debt.

Principal Methodologies

The principal methodology used in this rating was Moody's
Consolidated Global Bank Rating Methodology published in June


* DNEPROPETROVSK REGION: Fitch Withdraws 'B' Currency Ratings
Fitch Ratings has withdrawn Dnepropetrovsk Region's Long-term
foreign and local currency ratings of 'B'/Stable, Short-term
foreign currency rating of 'B' and National Long-term rating of

The ratings have been withdrawn as the issuer has chosen to stop
participating in the rating process. Fitch will no longer provide
ratings or analytical coverage for the Dnepropetrovsk Region.

U N I T E D   K I N G D O M

DRIVE ASSIST: In Administration; 259 Jobs Affected
BBC News reports that Drive Assist UK Ltd. has made 259 people
redundant after going into administration.

According to BBC, administrators said job losses included two
other firms it owns, Sol Car Rentals in Tamworth, and Millennium
Motor Group in Nottingham.

BBC relates that Alastair Beveridge --
-- of Zolfo Cooper said administration was "the only option
available" because the firm had lost a major customer which "had
resulted in increasing cash flow pressures."

Drive Assist UK Ltd, which has its headquarters in Tamworth,
supplies cars on short-term hire to people after accidents.  The
company employs 640 people at 14 offices.

ELSTER GROUP: S&P Affirms 'BB-' Corporate Credit Rating
Standard & Poor's Ratings Services affirmed its 'BB-' corporate
credit rating on Elster Group SE and removed the ratings from
CreditWatch, where they were placed with negative implications on
June 19, 2012, following Elster's announcement that it was in
talks to be acquired by Melrose PLC (not rated). "Subsequently,
are withdrawing our corporate credit rating on Elster at the
issuer's request. The outlook at the time of the withdrawal was
stable. All of the debt Standard & Poor's rated has been redeemed
in full. As a result, we have withdrawn all our issue-level and
recovery ratings on the company's notes," S&P said.

"The affirmation reflects our assessment that credit quality
remains stable with Elster's new ownership," said Standard &
Poor's credit analyst Carol Hom. Melrose acquired Elster on Aug.
28, 2012. Elster has redeemed in full its outstanding EUR250
million senior notes due 2018.

G24 INNOVATIONS: Goes Into Administration
Nick Servini at BBC News reports that G24 Innovations has gone
into administration.

According to BBC, administrators Wilkins Kennedy said they hoped
to save the business as a going concern and preserve jobs.

A Wilkins Kennedy spokesman said joint administrators were
appointed on Dec. 3, BBC relates.

"The company's affairs, business and property are now being
managed by the joint administrators," BBC quotes the spokesman as
saying.  "The purpose of the administration is to save the
business as a going concern and preserve the jobs of the
employees and by doing so achieve a better result for the
company's creditors as a whole than would be likely if the
company were wound up."

G24 Innovations is a solar power company, which employs 40 staff
in Cardiff.  The company designs flexible solar panels capable of
powering mobile phones.

HIBU PLC: S&P Raises Long-Term Corporate Credit Rating to 'CC'
Standard & Poor's Ratings Services raised to 'CC' from 'SD'
(selective default) its long-term corporate credit rating on
U.K.-based international publisher of classified directories hibu
PLC. The outlook is negative.

"The upgrade follows hibu's announcement, on Dec. 7, 2012, that
it has reached an agreement with the lenders of its 2006 credit
facilities agreement to settle all of these lenders' claims. In
particular, under this settlement, the 2006 lenders will receive
a payment in cash equal to 39% of the total amount outstanding to
them under the 2006 facilities agreement. This payment, which we
understand hibu made on Dec. 11, 2012, will be the full and final
settlement of all the lenders' claims under the 2006 facilities
agreement," S&P said.

hibu is in the process of restructuring its balance sheet with
the aim of reducing leverage in a mutually agreeable way with the
main stakeholders. The group's decision not to pay upcoming
interest and required debt amortization under its 2009 facility
agreement, after failing to make a timely payment on the 2006
facility, is in the context of ongoing negotiations for the
approval of a consensual restructuring agreement by stakeholders
involved. "We understand that upcoming payments on the 2009
facility agreement are not due until February 2013," S&P said.

"Under our criteria, we consider the extension of a due payment
of interest or principal as tantamount to a default if the
payment falls later than five business days after the scheduled
due date. This is irrespective of any grace period stipulated in
the debt documentation," S&P said.

"We will follow the progress of hibu's pending debt restructuring
over the coming months. If and when hibu emerges from any form of
reorganization, we will reassess the ratings, taking into account
hibu's business prospects, the factors that precipitated any
default, the new capital structure, and any gains the group
achieves through the reorganization process," S&P said.

"In our view, if hibu were to postpone the due interest payment
on the 2009 facility beyond the fifth business day following the
scheduled due date, we would lower our long-term corporate credit
rating to 'D' (default)," S&P said.

"In our opinion, hibu's rating momentum is still on a downward
trend and its capital structure is likely to become
unsustainable, especially in light of the adverse trading
environment. hibu's upcoming debt maturity wall in 2014 and
ongoing negotiations with various stakeholders for a balance
sheet restructuring lead us to believe that management could
implement credit-dilutive restructuring measures, which we would
view as tantamount to a default under our criteria," S&P said.

"In view of the continuous pressure on hibu's revenues and
profits, and the status of current discussions with the various
stakeholders, we believe that an outlook revision to stable is
unlikely over the next few months," S&P said.

HMV GROUP: Likely to Breach Banking Agreements in January
Rachel Cooper at The Telegraph reports that HMV Group has warned
it could breach its banking agreements in January as sales took a
tumble in a weak market.

According to the Telegraph, HMV said current trading conditions
meant the business was facing "material uncertainties" and warned
of a "probable covenant breach at the end of January 2013," but
added it was in "constructive discussions" with its banks and was
keeping them fully informed on current trading.

First-half sales at HMV slipped 13.5% to GBP288.6 million, while
like-for-like sales fell 10.2%, with the chain saying it had been
affected by a "poor release schedule" across the summer months as
suppliers avoided events such as the Diamond Jubilee, the
Telegraph says.

Losses before tax stood at GBP37.3 million in the 26 weeks to
Oct. 27, compared to GBP48.1 million in the same period last
year, the Telegraph discloses.

United Kingdom-based HMV Group plc is engaged in retailing of
pre-recorded music, video, electronic games and related
entertainment products under the HMV and Fopp brands, and the
retailing of books principally under the Waterstone's brand.  The
Company operates in four segments: HMV UK & Ireland, HMV
International, HMV Live, and Waterstone's.

INVENSYS PLC: Moody's Affirms 'Ba1' CFR/PDR; Outlook Positive
Moody's Investors Service left the positive outlook on Invensys
plc corporate family rating unchanged while also affirming
Invensys' Ba1 corporate family rating and probability of default

Ratings Rationale

The recent announcement of Invensys to dispose of its rail
division to Siemens for a total amount of GBP1,742 million
improves Invensys' positioning in the Ba1 rating category
strongly as it enables Invensys to fully cover its sizeable
pension deficit, payout a sizeable dividend and have cash
available to further develop its remaining businesses. However,
the Ba1 rating continues to reflect i) the company's still
relatively low and recently declining operating margins (6.6% on
a LTM basis and around 8-9% on average over the past five years,
based on Moody's adjusted data), ii) positive albeit modest and
declining free cash flow generation -- 4% of revenues on an LTM
basis and approximately 5% of revenues on average over the past
five years, based on Moody's adjusted data --, but also iii) a
very solid financial profile -- on an Moody's adjusted basis --
and strong liquidity, particularly in view of the planned
disposal of the Rail business.

The positive outlook on the rating reflects Moody's expectation
that despite the disposal of the higher but declining margin Rail
business, Invensys will still be able to improve and sustain
operating margins in the 10-15% range and to generate meaningful
free cash flow in a 5-10% range in percentage of revenues. Pro-
forma for the sale of Invensys Rail, the company's low adjusted
leverage gives it significant strategic flexibility to boost its
most profitable businesses, in particular its industrial software
activities. Future potential M&A activity to boost such
activities would not change Moody's positive outlook, provided
that the company's main debt ratios remain in line with the
current rating category -- for instance, for the Ba rating
category Moody's expects an interest coverage in a 3-4x range.

Moody's views Invensys' very low prospective leverage as an
enhancing factor of the group's overall credit risk profile.
Management's commitment to maintain a low leverage on a Moody's
adjusted basis is a further positive factor in Moody's
evaluation, and could allow the company to achieve a higher
rating even if its operating margins and free cash flow
generation remain at the low end of the expected ranges (see

Assuming the successful completion of the sale of Invensys' Rail
business, the group will generate approximately GBP 1.8 billion
in revenues, of which 72% from industrial software, systems and
equipment, and 28% of from commercial equipment and appliance
controls. The largest end markets will be consumer cyclicals, oil
and gas and general industries, each representing 20-25% each of
the revenues of the new and smaller group. Emerging markets will
represent approximately 35% of revenues and 52% of the order
book. The retained businesses enjoy EBIT margins varying from
mid-single-digit in appliances to the mid-twenties in industrial
software applications. Growth rates also vary substantially
across businesses, from 16% in software to a decline of 14% in
appliances (2012 data versus 2011). In industrial software, the
company has a leading niche market position which should allow it
to continue to grow rapidly leveraging on its positions in
emerging markets and through small bolt-on acquisitions.

Moody's recognizes the progress made by Invensys over the past
five years in streamlining the company, focusing on the three
businesses of rail, controls and operations management whilst
improving its operating performance and (adjusted) credit
metrics. However, Invensys' cash flow generation has weakened
over the same period of time and the group has faced significant
challenges in managing a large nuclear power project in China.
The problems with the installation of safety systems at Chinese
nuclear power stations had an impact on profit of GBP40 million
last year plus an additional write-off of GBP20 million related
to the Rail division. This has exposed the company's relatively
small size in a market increasingly characterized by large and
complex orders, both technically and financially.

The company's cash flow generation has weakened since 2009 when
it generated GBP261 million of cash from operations and GBP199
million of free cash flow after capex (both on a Moody adjusted
basis). In FY 2011/12, CFO and FCF amounted to GBP123 million and
GBP18 million respectively. In the first six months of FY
2012/13, the company's CFO was a negative GBP8 million and FCF
was a negative GBP49 million. However, Moody's notes that the
recent performance of the company reflects major project
milestones and temporary customer payment delays in the Rail
division. Moody's therefore expect such effects to be reversed in
the second half of the year and the disposal of Invensys Rail to
have a positive effect on the company's cash flow generation.

The pension agreement outlined in relation to the planned
disposal of Invensys Rail would result in cash savings of over
GBP40 million per annum, thus more than halving the company's
top-up cash payments, and further enhancing the group's free cash
flow generation in the medium term. In FY 2014, free cash flow is
expected to be constrained by cash outflows of approximately
GBP60 million related to tax and restructuring payments arising
in relation with the planned disposal. The company expects annual
cost savings of around GBP25 million from April 2014. Following
the disposal of Invensys Rail, Moody's expects the remaining
businesses to generate positive free cash flows before
restructuring expenses and other cash outflows related to the
disposal in a 5-10% range in percentage of revenues.

Invensys' adjusted debt ratios remained strong for the current
rating category and will be further strengthened by the planned
disposal. In the financial year ended March 2012, Moody's
adjusted interest cover was 3.5x (EBITA to Interest expense) and
4.3x on a cash basis (FFO + Interest expense to Interest
Expense), down from 4.8x and 5.8x in the previous year. Also, the
ratio of FFO to debt was around 25%, down from approximately 35%
a year before. Pro-forma for the sale of the rail business, the
group's adjusted debt would be slashed and its debt-based metrics
would substantially improve -- for instance, Moody's estimates
that pro-forma LTM RCF to gross debt would be well over 60%
assuming that most operating leases remain with the group. Even
on a gross debt basis, Invensys' debt metrics would therefore
remain well above the requirements for the current rating
category, giving the company substantial strategic flexibility
and underpinning the currently positive outlook of its ratings.

Liquidity was more than adequate at the end of September 2012,
with no outstanding debt maturities and a debt free net cash
position of GBP175 million, down from GBP262 million in March,
and two five-year bank facilities totaling GBP600 million signed
in March 2012, of which GBP250 million is available for cash
drawings and GBP350 million is available for the issuance of
guarantees. The announcement of the sale of the rail business
will boost the company's liquidity with approximately GBP372
million of the expected sale proceeds to be retained by the group
to accelerate its strategic development through investment in the
business and acquisitions.

Invensys's net pension liability rose to GBP490 million from
GBP426 million in March reflecting lower discount rates applied
in the calculation of the funding deficits. The bulk of the
group's plan assets remain invested in fixed income instruments.
Annual top-up cash payments amount to approximately GBP60-70
million. Assuming successful completion of the sale of the rail
business, Invensys would make a GBP400 million contribution to
the UK Pension Scheme, thus drastically reducing the reported net
pension liability, and make an additional GBP225 million
contribution to a be held in trust and to be used as a reserve
for future potential funding requirements.

Moody's expects Invensys to continue to benefit from its
relatively large exposure to emerging markets -- representing
well over half of its order book -- and thus somewhat insulated
from the weak European markets. Invensys' diversified business
profile, with software, consulting, and appliance controls,
should also contribute to mitigate the effect of any potential
further deterioration in the business cycle.

The rating could be upgraded if Invensys i) sustainably improves
its operating margins over time above 10%; ii) generates
meaningful levels of free cash flow - before growth investments
and dividends -- in a 5-10% range in percentage of revenues;
whilst iii) maintaining a solid financial profile with, for
instance, an interest cover of at least 4 times on a Moody's
adjusted basis. Moody's notes that the company already has debt
metrics exceeding the requirements for the current rating but
also that its profitability and free cash flow generation ability
remain in line with the Ba rating category. The Ba1 rating and
positive outlook factor in Invensys' strong debt metrics and
expectations of operational improvements.

The rating is unlikely to be lowered based on the current
operational and debt metrics. That said, it could be lowered if
operating margins structurally remained at the low end of the 5-
10% range and if its free cash flows -- before growth investments
and dividends -- remained at the low end of the 0-5% range in
percentage of revenues. Potential future M&A activity is unlikely
to trigger any negative rating action given the company's
currently and prospectively strong financial profile.

The principal methodology used in rating Invensys plc was the
Global Manufacturing Industry Methodology published in December

Invensys is a UK-listed technology company providing products and
solutions for process control in a broad range of industries. Its
revenue for the year ending March 2012 was about GBP 2.54
billion. The company comprises three divisions -- operations
management, which provides hardware and software systems to
control installations such as petrochemical plants; the rail
business, which makes signaling systems; and controls, which
provides controls for household and commercial appliances, such
as washing machines. On November 28th, Invensys announced that it
agreed to sell its Invensys Rail business to Siemens for GBP1,742
million in cash to refocus on industrial software, systems and


* EUROPE: Moody's Says CMBS Credit Quality to Decline in 2013
The credit quality of European commercial mortgage-backed
securities (CMBS) pools will deteriorate in 2013, says Moody's
Investors Service in a Special Report published on Dec. 12.
Further losses on secondary properties will be unavoidable and
exacerbated by the European CMBS EUR16 billion refinancing wall,
which will peak in 2013. Overall new issuance will be muted in
the year ahead.

The new report is entitled "European CMBS: 2013 Outlook".

"The majority of European CMBS collateral pools are increasingly
vulnerable to deteriorating asset quality and losses," says Ramzi
Kattan, a Moody's Assistant Vice President -- Analyst and author
of the report.

While prime properties in core liquid markets are being
successfully refinanced or worked out at minimal loss, it is
becoming more difficult to avoid losses on the remaining
secondary properties located in riskier and less liquid markets.
Over the next five years, the rating agency estimates that
European CMBS pool-level losses will be as high as EUR10 billion.
Moody's expects that the constrained lending environment for
European commercial real estate debt will persist for years to

Moody's notes that the European CMBS refinancing wall will reach
its peak in 2013 when 135 loans totalling EUR16 billion will
require refinancing. Around 60% of CMBS loans will not repay in
2013. While most European CMBS collateral is experiencing credit
deterioration and benefits from very limited access to commercial
real estate (CRE) lending, a small number of loans and
transactions with strong institutional sponsors, good quality
property or moderate leverage have outperformed or repaid on
time. These loans and transactions could help to reduce the
enormity of the refinancing issue.

Moody's expects that new issuance will remain low in 2013.
Moreover, the rating agency anticipates that most collateral
pools will gradually transform into shrinking portfolios of
distressed or non-performing loans over the coming years.

* BOOK REVIEW: Performance Evaluation of Hedge Funds
Edited by Greg N. Gregoriou, Fabrice Rouah, and Komlan Sedzro
Publisher: Beard Books
Hardcover: 203 pages
Listprice: $59.95
Review by Henry Berry

Hedge funds can be traced back to 1949 when Alfred Winslow Jones
formed the first one to "hedge" his investments in the stock
market by betting that some stocks would go up and others down.
However, it has only been within the past decade that hedge funds
have exploded in growth.  The rise of global markets and the
uncertainties that have arisen from the valuation of different
currencies have given a boost to hedge funds.  In 1998, there
were approximately 3,500 hedge funds, managing capital of about
$150 billion.  By mid-2006, 9,000 hedge funds were managing $1.2
trillion in assets.

Despite their growing prominence in the investment community,
hedge funds are only vaguely understood by most people.
Performance Evaluation of Hedge Funds addresses this shortcoming.
The book describes the structure, workings, purpose, and goals of
hedge funds.  While hedge funds are loosely defined as "funds
with no rules," the editors define these funds more usefully as
"privately pooled investments, usually structured as a
partnership between the fund managers and the investors."  The
authors then expand upon this definition by explaining what sorts
of investments hedge funds are, the work of the managers, and the
reasons investors join a hedge fund and what they are looking for
in doing so.

For example, hedge funds are characterized as an "important
avenue for investors opting to diversify their traditional
portfolios and better control risk" -- an apt characterization
considering their tremendous growth over the last decade.  The
qualifications to join a hedge fund generally include a net worth
in excess of $1 million; thus, funds are for high net-worth
individuals and institutional investors such as foundations, life
insurance companies, endowments, and investment banks.  However,
there are many individuals with net worths below $1 million that
take part in hedge funds by pooling funds in financial entities
that are then eligible for a hedge fund.

This book discusses why hedge funds have become "notorious as
speculating vehicles," in part because of highly publicized
incidents, both pro and con.  For example, George Soros made $1
billion in 1992 by betting against the British pound.
Conversely, the hedge fund Long-Term Capital Management (LTCP)
imploded in 1998, with losses totalling $4.6 billion.
Nonetheless, these are the exceptions rather than the rule, and
the editors offer statistics, studies, and other research showing
that the "volatility of hedge funds is closer to that of bonds
than mutual funds or equities."

After clarifying what hedge funds are and are not, the book
explains how to analyze hedge fund performance and select a
successful hedge fund.  It is here that the book has its greatest
utility, and the text is supplemented with graphs, tables, and

The analysis makes one thing clear: for some investors, hedge
funds are an investment worth considering.  Most have a
demonstrable record of investment performance and the risk is
low, contrary to common perception.  Investors who have the
necessary capital to invest in a hedge fund or readers who aspire
to join that select club will want to absorb the research,
information, analyses, commentary, and guidance of this unique

Greg N. Gregoriou teaches at U. S. and Canadian universities and
does research for large corporations.  Fabrice Rouah also teaches
at the university level and does financial research.  Komlan
Sedzro is a professor of finance at the University of Quebec and
an advisor to the Montreal Derivatives Exchange.


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.

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