TCREUR_Public/121220.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

          Thursday, December 20, 2012, Vol. 13, No. 253

                            Headlines



C R O A T I A

ZAGREBACKA BANKA: S&P Cuts Counterparty Credit Rating to 'BB+'


F R A N C E

DAPD MEDIA: French Court Order Liquidation of Sipa Press


G E R M A N Y

KIRCH MEDIA: Deutsche Bank Partially Liable Over Collapse
MANROLAND AG: Plauen Factory Faces Closure After Failed Talks
TALISMAN - 5: Fitch Lowers Rating on Class E Notes to 'Csf'


G R E E C E

* GREECE: S&P Raises Sovereign Credit Ratings to 'B-/B'


H U N G A R Y

E-STAR ALTERNATIVE: In Talks with Creditors & Suppliers


I T A L Y

ASSICURAZIONI GENERALI: Moody's Reviews 'Ba1' Pref. Stock Rating
* ITALY: Moody's Updates Key Collateral Assumptions in ABS Deals


L U X E M B O U R G

EUROPROP SA: Moody's Lowers Rating on Class C Notes to 'Caa3'
TMD FRICTION: S&P Cuts Long-Term Corporate Credit Rating to 'BB-'


N E T H E R L A N D S

EUROPEAN DIRECTORIES: Triton Capital Gets Control of Firm


P O L A N D

CIECH SA: S&P Assigns 'B' Long-Term Corporate Credit Rating
POLIMEX-MOSTOSTAL: Creditors Set to Approve Restructuring Plan


R O M A N I A

RAPID BUCHAREST: Files for Insolvency Over Mounting Debts


R U S S I A

EUROCHEM GLOBAL: Fitch Assigns 'BB' Rating to US$750MM LPNs
INTERNATIONAL BANK: Fitch Affirms 'B-' LT Issuer Default Rating
O'KEY LLC: Fitch Assigns 'B+' Rating to RUB3-Bil. Domestic Bond
VTB BANK: S&P Incorporates 'bb' SACP Into Long-Term Ratings


S P A I N

IM BANCO 2: S&P Lowers Rating on Class B Notes to 'BB (sf)'
* SPAIN: Moody's Updates Key Collateral Assumptions in ABS Deals
* SPAIN: Private Investors Agree to Buy 55% of Bad Bank Capital


T U R K E Y

ANADOLUBANK AS: Moody's Affirms 'Ba1' Long-Term Deposit Rating


U N I T E D   K I N G D O M

ALLANFIELD GROUP: Opts to Appoint Administrators
COMET: Government Launches Investigation Into Collapse
DECO 8: Fitch Downgrades Rating on Class E Notes to 'Csf'
DIVERSITY FUNDING 1: S&P Lowers Rating on Class C Notes to 'B+'
FINDUS: Writes Off GBP440 Million Following Debt-for-Equity Swap

JKS BRICKWORK: Director Banned for 8 Yrs Over GBP1MM Debts
* UK: 3 in 10 Cumbrian Construction Firms Face Collapse, R3 Says


X X X X X X X X

* EUROPE: Moody's Says Insurers Not Immune to Economic Crisis
* EUROPE: Carmakers Prepare for Deteriorating Market Conditions
* EUROPE: Permanent Bailout Fund May Act as Resolution Mechanism
* Upcoming Meetings, Conferences and Seminars


                            *********


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C R O A T I A
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ZAGREBACKA BANKA: S&P Cuts Counterparty Credit Rating to 'BB+'
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its long-term
counterparty credit rating on Croatia-based Zagrebacka banka dd
(ZB) to 'BB+' from 'BBB-'. The outlook is stable.

"The downgrade reflects the same action on Croatia on Dec. 14,
2012. The lowering of the long-term rating on the sovereign
reflects our view that structural and fiscal reforms implemented
so far have been insufficient to foster economic growth and place
public finances on a more-sustainable path," S&P said.

"According to our criteria, the long-term rating on ZB is capped
by the long-term foreign-currency rating on the sovereign.
Considering ZB's high exposure to the Croatian government through
holdings in government securities and lending to government
related entities, we don't believe that its rating can be higher
than the sovereign. Nevertheless, in case of downward pressure on
the bank's stand-alone profile (SACP), due to deterioration in
asset quality or pressure on its funding profile, we would apply
some uplift for expected support from the parent," S&P said.

"We consider ZB to be a 'strategically important' subsidiary of
UniCredit Bank Austria AG (A/Negative/A-1), the controlling
shareholder with a 84.21% stake. We believe ZB fits well with
UniCredit's objective to be a major player in commercial banking
in Central and Eastern Europe," S&P said.

"The SACP on ZB reflects its leading market position in the
Croatian domestic market and its adequate capitalization, in our
view. These factors are somewhat offset by continued negative
pressure on its funding profile and asset quality," S&P said.

The stable outlook mirrors that on the sovereign.

"If we lower the bank's SACP, in case of further pressure on its
funding profile or asset quality, it is unlikely to trigger a
downgrade, as we would start to factor in uplift to reflect group
support," S&P said.

A positive or negative rating action on the sovereign would have
the same impact on ZB's ratings.



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F R A N C E
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DAPD MEDIA: French Court Order Liquidation of Sipa Press
--------------------------------------------------------
The Seattle Times reports that a French court has ordered the
liquidation of the text service of the Sipa news agency and
placed its photo service in bankruptcy protection.

The report says Sipa announced the decision by the Paris
commercial court.  It came after Sipa's owners, Germany-based
dapd Media Holding, declared bankruptcy for some of its
subsidiaries in Germany in October and stopped financing Sipa's
operations.

According to the report, the French court ordered the liquidation
of the two companies that made up the Sipa text service, created
after dapd bought the French-language service of The Associated
Press this year.  The Sipa text operation employs 50 staff
journalists and about a dozen stringers.

A bankruptcy administrator will be assigned to the Sipa photo
service, called Sipa Press, to try to find new investors, the
report relays.

Sipa Press was created in 1973 by photojournalist Goksin
Sipahioglu, and now distributes thousands of photos a day in more
than 40 countries. It is France's No. 2 photo agency after Agence
France-Presse, The Seattle Times discloses.

As reported in the Troubled Company Reporter-Europe on Oct. 4,
2012, Deutsche Welle said German news agency dapd has filed for
insolvency protection.  According to Deutsche Welle, the agency
has been struggling eversince it was founded three years ago.
The German news agency companies "dapd nachrichtenagentur GmbH"
and "dapd nachrichten GmbH" said they can no longer perform
payments and filed for self-administered insolvency, Deutsche
Welle relates. The group announced in Berlin that six further
dapd companies were to make similar filings, Deutsche Welle
noted.  Deutsche Welle related that administrator spokeswoman
Brigitte von Haacke said the insolvency covers the news agency's
eight divisions and its 299 employees.



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G E R M A N Y
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KIRCH MEDIA: Deutsche Bank Partially Liable Over Collapse
---------------------------------------------------------
Karin Matussek at Bloomberg News reports the Munich Higher
Regional Court said Deutsche Bank AG was found partially liable
over the collapse of Leo Kirch's media group and must pay
damages, which will be determined later.

According to Bloomberg, the court ruled the lender and its former
Chief Executive Officer Rolf Breuer are liable for statements in
2002 before the Kirch group filed for bankruptcy.  The late media
magnate's heirs seek as much as EUR2 billion (US$2.6 billion),
Bloomberg discloses.

The case is one of several lawsuits continuing after Leo Kirch's
July 2011 death that allege the bank secretly plotted to bring
about the end of his media empire, Bloomberg notes.  Part of the
conspiracy, they argue, was a 2002 interview on Bloomberg
Television in which Breuer said "everything that you can read and
hear" is that "the financial sector isn't prepared to provide
further" loans or equity to Kirch, Bloomberg relates.

Presiding Judge Guido Kotschy said that after almost two years of
hearings, the court next will hear more testimony from expert
witnesses on how much to award in damages, Bloomberg notes.

The trial spawned its own criminal probe over Breuer's testimony
last year, Bloomberg discloses.  Former Deutsche Bank CEO Josef
Ackermann, former Chairman Clemens Boersig, and former board
member Tessen von Heydebreck are also under investigation over
their testimony in the case, Bloomberg says.  Deutsche Bank has
denied wrongdoing by any of its executives, Bloomberg notes.

The court ruled on Dec. 14 on appeal, overturning a lower court's
dismissal of the suit, Bloomberg states.  The judges said
Deutsche Bank can't fight the case further, Bloomberg relates.
Peter Heckel, a lawyer for the bank, said the bank will analyze
the written judgment and then decide whether to petition the top
court to allow a second appeal, Bloomberg notes.

                         About KirchMedia

Headquartered in Ismaning, Germany, KirchMedia GmbH --
http://www.kirchmedia.de/-- was the country's second largest
media company prior to its insolvency filing in June 2002.  The
firm's collapse, caused by a US$5.7 billion debt incurred during
an expansion drive, was Germany's biggest since World War II.
Taurus Holding is the former holding company for the Kirch
group.  The case is docketed under Case No. 14 HK O 1877/07 at
the Regional Court of Munich.


MANROLAND AG: Plauen Factory Faces Closure After Failed Talks
-------------------------------------------------------------
Sheenagh Matthews at Bloomberg News reports that insolvency
administrator Werner Schneider said Manroland AG's Plauen factory
will be closed after negotiations with a last potential investor
failed.

According to Bloomberg, Mr. Schneider said in an e-mailed
statement that the factory's capacity utilization was too low
with the "difficult" economic situation.

Manroland AG is an Offenbach-based printing-press maker.  The
German printing press maker filed for insolvency protection in
2011.



TALISMAN - 5: Fitch Lowers Rating on Class E Notes to 'Csf'
-----------------------------------------------------------
Fitch Ratings has downgraded Talisman - 5 Finance plc's classes C
to E notes and affirmed the others as follows:

  -- EUR142.3m class A (XS0278333736): affirmed at 'Asf'; Outlook
     Stable

  -- EUR35.9m class B (XS0278334460): affirmed at 'BBBsf';
     Outlook revised to Negative from Stable

  -- EUR26.1m class C (XS0278334973): downgraded to 'CCCsf' from
     'Bsf'; assigned a Recovery Estimate (RE) of 75%

  -- EUR19.6m class D (XS0278335277): downgraded to 'Csf' from
     CCCsf; assigned RE0%

  -- EUR4.0m class E (XS0278335863): downgraded to 'Csf' from
     'CCsf'; assigned RE0%

The significant deterioration in the performance of two of the
remaining five loans, which account for 37% of this CMBS, is
reflected in the downgrade of classes C to E and the revision of
class B's Outlook to Negative.

The EUR24.2 million Bird loan, which is secured by a mixed use
portfolio located in Berlin, Germany, was transferred to special
servicing in November 2010 following a breach of both interest
cover ratio (ICR) and loan to value (LTV) covenants.  The special
servicer has recently achieved a sale of all underlying assets
for this loan, which have resulted in gross proceeds of EUR10.6
million, and estimated losses of at least EUR13.6 million
(subject to senior costs) to be allocated on the January 2013
interest payment date (IPD).  This is in excess of Fitch's
previous expected loss of EUR8.9 million.

As highlighted at the time of the last rating action, the EUR60.3
million Fish loan has seen a sharp decline in performance with a
rise in vacancy to 15% and lease renewals completed at rental
levels well below those previously achieved.  Unsurprisingly,
this has translated into a drop in market value, with the June
2012 valuation (EUR45.2 million) reporting a market value decline
of 47% since its last valuation in 2006 and referencing large
capex to be spent to encourage new lettings.  Given the loan ICR
is low at 1.03x, any additional drop in rental income could also
see interest shortfalls which would put further strain on future
recoveries.  Losses resulting from the work out of this loan
could also affect the class C notes, unless the solid location of
the assets results in higher bids.

Of the two loans which were granted two year extensions to their
initial term, the EUR46.7 million Reindeer loan matures first in
January 2013.  The loans collateral, a portfolio of 20 retail,
residential and offices properties located throughout Finland,
was last valued in 2010 at EUR81.1 million, for a LTV of 57.6% on
the securitized A-note (68.6% whole loan LTV). Performance of the
collateral has been mixed, with vacancy rising to 18.6% (from c.
6% at the last valuation) despite operating income remaining
relatively stable and weighted average lease length to break
increasing to 2.91 years from approximately 1.2 years over the
same time.  Fitch's estimated LTV is somewhat higher, closer to
100%, which may limit refinancing opportunities.

The other two loans, the EUR43.7 million Monkey loan and the
EUR53.0 million Penguin loan, both mature in H213.  Fitch again
estimates higher leverage than reported levels; however both
assets produce strong levels of rental income, well in excess of
debt service payments.  This should allow some de-leveraging in
the tail period, facilitating full repayment via an open market
sale should refinancing options not be available at or
immediately after loan maturities.



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* GREECE: S&P Raises Sovereign Credit Ratings to 'B-/B'
-------------------------------------------------------
Standard & Poor's Ratings Services raised its long-term foreign
and local currency sovereign credit ratings on the Hellenic
Republic (Greece) to 'B-' from 'SD' (selective default). "We also
raised our short-term foreign and local currency sovereign credit
ratings on Greece to 'B' from 'SD'. As a result, we have raised
the ratings on all the outstanding issues, including those
guaranteed by Greece, to 'B-/B'. The outlook is stable," S&P
said.

The rating action reflects the completion on Dec. 17, 2012, of
Greece's distressed debt buyback, in tandem with approval by the
Eurogroup (the finance ministers of EU member states belonging to
the eurozone) of a loan disbursement to Greece under the second
economic adjustment program. "We view the eurozone member states'
decision to provide material cash flow relief to Greece as
indicative of their determination to restore stability to Greek
finances, and to preserve Greece's eurozone membership," S&P
said.

"Our criteria define the emergence from a sovereign default
(short of resuming payment on the defaulted instrument) as the
successful completion of an exchange offer or buyback. As the
Greek buyback applied to only part of an issue -- because some
holders declined to participate in the transaction -- we are
raising the ratings on the original securities that remain
outstanding. This reflects our opinion that Greece will likely
continue to pay full debt service
as originally contracted," S&P said.

"Under our criteria, the 'SD' credit ratings of a sovereign
government emerging from default are replaced by new ratings
reflecting our revised view of that sovereign's
creditworthiness," S&P said.

"We estimate EUR6.8 billion in foreign-law-governed bonds held in
the market was not tendered in the March 2012 Greek commercial
debt restructuring. If Greece's official debt were written-down
-- which could happen if Greece were to apply for a third
European Stability Mechanism program in 2013 or 2014 -- eurozone
official creditors may seek comparability of treatment for
holders of outstanding foreign-law-governed bonds," S&P said.

"Even after the buyback, Greece's end-2012 net debt-to-GDP ratio
of over 160% of GDP remains onerous. Nevertheless, subject to
Greece meeting program conditions, eurozone member states have
said they would significantly improve official lending terms to
the government. The improved terms would include maturity
extensions on bilateral and EFSF loans on top of a 10-year
deferral of Greek interest payments to the EFSF: an effective
write down of the Greek public debt stock in net present value
terms, assuming nominal GDP growth starts gradually recovering
from 2014," S&P said.

"The Economic Adjustment Program for Greece is scheduled to end
in 2014, based on the assumption that Greece will be able to
return to issuing medium- and long-term commercial debt by 2015.
In our view, however, Greece's access to long-term commercial
funding remains subject to numerous domestic and external
uncertainties," S&P said.

"The Eurogroup has released EUR34.3 billion to Greece, EUR16
billion of which will be used to increase Greek banks' regulatory
capital. The Greek government is likely to keep meeting a portion
of its financing needs by issuing Treasury bills, and we
anticipate the freshly recapitalized domestic banks will be
important buyers of these," S&P said.

"Greece's fiscal consolidation is largely premised on tax hikes
and improved tax collection, an extensive privatization program,
and wholesale cuts in government spending (adopted in November
2012). We believe these adjustments carry implementation risks
given the projected further output contraction in 2012 and 2013,
which will likely see social pressures persist," S&P said.

"Badly needed net equity inflows into the real economy have not
yet materialized in any material fashion. In this regard, the
government has repeatedly failed to meet its privatization
receipt targets -- one reason behind this year's increased
financing needs. At the same time, we believe a better-
capitalized banking system and indications of a gradual
restoration in private sector competitiveness could improve
prospects in 2013 for Greece's more competitive sectors,
particularly tourism," S&P said.

"The stable outlook balances our view of eurozone member states'
determination to support Greece's eurozone membership and the
Greek government's commitment to a fiscal and structural
adjustment against the economic and political challenges of doing
so," S&P said.

"We could raise our long-term rating on Greece if the government
follows through fully on its steps to comply with the EU/IMF
program, thereby restoring predictability to its policymaking as
well as contributing to a sustained economic recovery and
improved prospects of sustainable debt-servicing," S&P said.

"We could lower the ratings if we believe that there is a
likelihood of a distressed exchange on Greece's remaining stock
of commercial debt," S&P said.



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E-STAR ALTERNATIVE: In Talks with Creditors & Suppliers
-------------------------------------------------------
MTI-Econews reports that E-Star Alternative on Tuesday said it
invited creditors and suppliers for negotiations scheduled for
February 4, 2013.

E-Star filed for bankruptcy protection and a court launched the
procedure earlier in December, MTI-Econews relates.

E-Star recently terminated several contracts with local councils
in Hungary and Romania for non-payment, MTI-Econews recounts.
Afterward, short of financing to pay back bondholders, the firm
announced it would repurchase only some of the corporate
securities it had issued, and at a steep discount, MTI-Econews
notes.

As reported by the Troubled Company Reporter-Europe on Dec. 10,
2012, Bloomberg News related that E-Star said in a statement to
Budapest bourse the company filed for bankruptcy on inability to
meet payment obligations, upon which situation opens the right of
creditors to initiate liquidation proceedings.  The company aims
to reach an agreement with creditors under the bankruptcy
procedures to ensure future operation, Bloomberg disclosed.

E-Star Alternative is a Hungarian energy services company.



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ASSICURAZIONI GENERALI: Moody's Reviews 'Ba1' Pref. Stock Rating
----------------------------------------------------------------
Moody's Investors Service placed on review for possible downgrade
the Baa2 senior debt rating, the Baa3 (hyb) subordinated debt
rating and the Ba1 (hyb) preferred stock debt ratings of
Assicurazioni Generali SpA and Generali Finance B.V.. The
insurance financial strength ratings of the group's operating
entities are unaffected.

Ratings Rationale

The review for possible downgrade reflects an expected change in
the nature of protection afforded to Assicurazioni Generali SpA's
creditors following the reorganisation of the Italian operations
announced on Dec. 14. Currently Assicurazioni Generali SpA has a
dual function within the Generali group, acting as a primary
insurer in its own right, operating through branch offices in
Italy and other countries, and also acting as the parent company
of the Generali group. As a result, debt at the parent holding
company benefits from narrower notching than Moody's standard
practice for holding companies, as a result of (i) the stand-
alone capitalization and cash-flows generated by the parent's
insurance operations and (ii) the Generali group's overall
business diversification and sources of earnings and cash flows
available from its subsidiaries to the holding company, helping
service Generali's overall cash needs.

The reorganisation of the Italian operations envisages the
creation of a newco, Assicurazioni Generali Italia, and the
transfer of Assicurazioni Generali SpA's primary insurance
policyholder obligations to this newco. As a result,
Assicurazioni Generali SpA will become more of a pure holding
company, albeit it will retain the group's reinsurance business.
This change of nature of Assicurazioni Generali SpA may exercise
some pressure on the debt ratings issued or backed by the holding
company, since it will no longer operate as a primary insurer in
the Italian market. As a result, the scope of the cashflows
directly available to holding company creditors are likely to
reduce and its largely liquid base of diversified assets replaced
by a more concentrated, and less liquid, investment in a
regulated Italian insurance business. The review for debt ratings
at Assicuraziona Generali SpA will focus on the analysis of the
cash flows, profit and loss and balance sheet structure of the
holding company, as well as the nature of the any intragroup
contractual arrangements, including any reinsurance arrangements,
between the holding company and its subsidiaries

Moody's said that the Baa1 IFSR at Assicurazioni Generali SpA is
unaffected by the announcement. We expect policyholders to
continue to benefit from the franchise, operational and other
benefits of the broader Generali group, as well as from the
operational improvements expected in the Italian business.
Assicurazioni Generali Italia, which will be fully operational
from November 2013, will integrate the insurance businesses of
Assicurazioni Generali SpA and the other Italian entities
including Toro, Fata and Ina Assitalia and will control Alleanza,
Genertel and Banca Generali. The new organisational structure
will be based on a multi-channel model and will reduce current
fragmentation by consolidating businesses and brands with similar
customers, product ranges and distribution models. The company
has announced that 10 existing brands will be integrated through
the reorganisation into three companies in 2015, Assicurazioni
Generali Italia, Alleanza and Genertel, which will manage their
respective brands, business areas and distribution channels.
Generali expects the new structure to maximise Generali's market
potential and improve customer service capability in Italy.

The following ratings were placed on review for possible
dowgrade:

  Assicurazioni Generali S.p.A., -- Senior debt rating Baa2

  Assicurazioni Generali S.p.A. -- Subordinated debt rating Baa3
  (hyb)

  Assicurazioni Generali S.p.A. -- Preferred stock debt rating
  Ba1 (hyb)

  Generali Finance B.V. -- Guaranteed Senior debt rating Baa2

  Generali Finance B.V. -- Guaranteed Subordinated debt rating
  (P) Baa3

  Generali Finance B.V. -- Guaranteed Preferred stock debt rating
  Ba1 (hyb)

Methodology Used

The methodologies used in these ratings were Moody's Global
Rating Methodology for Life Insurers published in May 2010,
Moody's Global Rating Methodology for Property and Casualty
Insurers published in May 2010, and Moody's Guidelines for Rating
Insurance Hybrid Securities and Subordinated Debt published in
January 2010.


* ITALY: Moody's Updates Key Collateral Assumptions in ABS Deals
----------------------------------------------------------------
Moody's Investors Service has announced that it had revised key
collateral assumptions in 41 Italian ABS transactions backed by
portfolio of leases and loans to small and medium enterprises
(SME). In most cases, the new loss assumptions have had no rating
impact due to sufficient credit enhancement levels. However,
Moody's has taken individual rating actions on a small number of
transactions with insufficient credit enhancement. These rating
actions have already been announced in separate press releases.

These revisions follow Moody's review of the entire Italian lease
and SME ABS sectors and were mainly driven by ongoing collateral
performance deterioration fuelled by the deteriorating economic
environment in Italy. The revised assumptions relate to the
default probability of the underlying pools as well as the
expected recovery rates following a default.

Please click on this link
http://www.moodys.com/viewresearchdoc.aspx?docid=PBS_SF311128to
access the list of transactions with the updated assumptions.
This list includes the old and revised default probability and
recovery assumptions. Revised default probability assumptions are
shown both in the percentage of (1) original balance plus
replenishments, which corresponds to the cumulative defaults
expected over the entire life of the deal; and (2) pool current
balance, which corresponds to expected future defaults.

KEY DRIVERS UNDERLYING UPDATED ASSUMPTIONS

-- ASSESSMENT OF THE CREDIT QUALITY OF THE UNDERLYING POOLS

Moody's performed a review of all the transactions in the sector
and looked at different indicators to come up with the revised
assumptions.

To revise the default probability assumptions, Moody's took into
account the performance of each transaction through a roll rate
analysis based on the delinquency buckets information. The rating
agency assumed for each bucket a certain percentage of loans to
roll into default. Moody's also looked for each transaction at
the implied default probability rating of the underlying pool
over its remaining weighted average life. Finally, the rating
agency benchmarked assumptions of all transactions against each
other for consistency across the sector. Ultimately, Moody's new
default assumptions generally reflect an implied default
probability rating in the low Ba/high single B range for the best
performing pools, in the mid-single B range for the average deals
and in the low single B range for the worse performers. For the
most recent transactions that perform in line with expectations,
the mean default assumption on current balance was not updated in
order to keep the same implied default probability rating as at
closing over a weighted average life of the pool that also
remained constant since closing.

To revise the recovery rate assumptions, Moody's analyzed
historical recovery data for each transaction, as well as the
portfolio composition in terms of asset and guarantee types.
Moody's also harmonized recovery rates, assuming fixed recovery
values instead of stochastic ones.

-- OUTLOOK FOR ITALIAN LEASES AND SME TRANSACTIONS

Moody's updated assumptions also reflect its negative outlook for
Italian Leasing and SME collateral (see "European ABS and RMBS:
2013 Outlooks ", December 2012).

Delinquencies and defaults show a negative trend in the leasing
and SME sectors according to the latest Italian Leasing ABS
Indices published by Moody's in July 2012
(http://www.moodys.com/research/Italian-Leasing-ABS-Indices-July-
2012--PBS_SF304955). Moody's cumulative default index for leasing
deals (as a percentage of original balance plus cumulated
replenishments) rose to 5.6% in July 2012, showing a 16% year-on-
year increase from 4.82% in July 2011. The total delinquencies
index, as of current pool balance, showed a 14.6% quarter-on-
quarter increase to 6.3% in July 2012 from 5.5% in April 2012. As
far as Italian SME deals are concerned, the 90+ day delinquency
index rose sharply to 4.9% in October 2012 from 0.9% in October
2011.

The rating agency expects that continued weak domestic demand
will weaken SME revenues and increase borrower defaults. Moody's
expects Italian GDP to contract by 2.4% in 2012 (see "Credit
Opinion: Government of Italy", October 2012), which will likely
drive up leases and loans to SME in arrears.

-- OUTLOOK FOR THE ITALIAN ECONOMY IN GENERAL

Moody's expects that the Italian economy will contract and the
annual average unemployment rate will rise to 10.5% in 2012,
increasing by a further 0.5% in 2013.

On August 21, 2012, Moody's released a Request for Comment
seeking market feedback on proposed adjustments to its modeling
assumptions. These adjustments are designed to account for the
impact of rapid and significant country credit deterioration on
structured finance transactions. If the adjusted approach is
implemented as proposed, the rating of the notes affected by the
announcement may be negatively affected.



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EUROPROP SA: Moody's Lowers Rating on Class C Notes to 'Caa3'
-------------------------------------------------------------
Moody's Investors Service has downgraded the following classes of
Notes issued by EuroProp (EMC VI) S.A. (amounts reflect initial
outstandings):

    EUR380.25M Class A Notes, Downgraded to Ba3 (sf); previously
    on Feb 14, 2011 Downgraded to Baa2 (sf)

    EUR30M Class B Notes, Downgraded to Caa1 (sf); previously on
    Feb 14, 2011 Downgraded to B2 (sf)

    EUR35M Class C Notes, Downgraded to Caa3 (sf); previously on
    Feb 14, 2011 Downgraded to Caa2 (sf)

Moody's does not rate the Classes D, E, F and R Notes issued by
Europrop (EMC VI) S.A.

Ratings Rationale

The downgrade action on the Classes A, B and C Notes reflects
Moody's increased loss expectation for the pool since its last
review. This is primarily due to i) significantly lower values
for the largely secondary quality collateral properties, which
are not expected to recover over the short term, and ii) the
large percentage of loans (59% of current pool balance) with
maturity dates in the first half of 2013 that are not expected to
fully repay.

The key parameters in Moody's analysis are the default
probability of the securitized loans (both during the term and at
maturity) as well as Moody's value assessment for the properties
securing these loans. Moody's derives from those parameters a
loss expectation for the securitized pool. Based on Moody's
revised assessment of these parameters, the loss expectation has
increased since last review. This is mainly driven by the
significant value adjustment of the largest loan, Sunrise II Loan
(24.5% of the current portfolio balance), which is currently in
standstill. Additionally, based on recent investor reporting, two
loans have been worked out with a loss.

Moody's current weighted average A-loan and whole loan LTV is
124% and 132% respectively. In comparison, the UW A-loan LTV is
88.4% and the whole loan LTV is 104.1% as per October 2012
interest payment date (not yet reflecting the revaluations of the
properties securing the Sunrise II Loan and the Bonn Loan).
Moody's notes that for ten of the 15 remaining loans (74% of the
portfolio), the Moody's whole loan LTV ratios are above 100%,
translating into high probability of default at maturity (>50%).
All the loans, if not already defaulted at maturity, mature
between January 2013 and June 2015.

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

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

MOODY'S PORTFOLIO ANALYSIS

EuroProp (EMC VI) S.A. closed in June 2007 and represents the
securitization of initially 18 commercial mortgage loans. 17
loans were originated by Citibank N.A., London Branch and one
loan was originated jointly by Citibank International plc and
Deutsche Bank AG. Since closing, one loan has repaid (Tshuva
Loan; 4.1% of the initial pool balance) and two loans (Henderson
1 and Henderson 2 Loan; combined 2.9% of the initial pool
balance) have been worked out with a loss.

The currently remaining 15 loans are not equally contributing to
the portfolio: the largest loan (the Sunrise II Loan) represents
24.5% of the current pool balance, while the smallest loan (the
Bardowick Loan) represents 1.2%. Moody's uses a variation of the
Herfindahl Index to measure diversity of loan size, where a
higher number represents greater diversity. Large multi-borrower
transactions typically have a Herf of less than 10 with an
average of around 5. This pool has a Herf of 8.3, compared to 8.9
at closing. The pool however exhibits a high geographic
concentration with 113 of the remaining 114 properties located in
Germany. The single property located in France represents the
security for the Signac Loan (11.6% of current pool balance).

Currently, six loans are in default and in special servicing (59%
of current pool balance): (1) Sunrise II (24.5%) due non-payment
on its extended maturity date in July 2012, (2) Signac (11.6%)
due to its non-payment on its maturity date in July 2011 as well
as its ICR below 1.0x for the whole loan, (3) Epic Rhino (7.9%)
due to its ICR in respect of the senior and whole loan below
1.0x, (4) Bonn (6.8%) due to its non-payment on its maturity in
October 2011, (5) Epic Horse (6.4%) due to its ICR in respect of
the senior and whole loan below 1.0x, and (6) Project Ash (1.8%)
due to its non-payment on its maturity in October 2011.

Overall, nine loans (47.5% of the current pool) have maturity
dates during the first six months of 2013: Two loans in January
2013 (22.8%), six loans in April 2013 (16.8%) and one loan in May
2013 (7.9%).

The largest loan (Sunrise II; 24.5% of current pool balance) was
jointly originated by Citibank International and Deutsche Bank
with equal ranking shares. The other 50% of the whole loan has
been securitized in Deco 10 -- Pan Europe 4 plc, where it is
known as the Treveria II Loan. The loan was transferred into
special servicing due to the non-payment at its extended maturity
date in July 2012. Currently, the 50% share of the whole loan
balance is EUR102.1 million.

As part of the 1-year extension of the loan in July 2011, the
borrower presented a business plan including a capex schedule
alongside a disposal program over EUR40 million. Furthermore the
borrower covenanted to reduce the LTV from 83% to 75% through
asset disposals or equity injection by the end of the extension
period in July 2012. The LTV testing would be measured against
the U/W valuation as of December 2010 (EUR123 million
representing the 50% share of the Sunrise II loan). However, per
July 2012 the servicer confirmed that the borrower had failed to
sell any properties and the available surplus cash which was
applied to reduce the loan balance was insufficient to meet the
LTV target. Subsequently, the loan was transferred into special
servicing and the initial standstill agreement which expired in
August 2011 has been extended several times and is now due to
expire in January 2013. The interest rate swap of the loan
expired in July 2012 and is unlikely to be renewed.

The loan is secured by a portfolio of 48 retail properties
located across Germany. A new U/W valuation as of June 2012
resulted in a value of EUR83.91 million (representing the 50%
share of the Sunrise II Loan), a 32% reduction compared to the
previous December 2010 value. Based on the current loan balance
of EUR102.1 million this reflects an U/W LTV of 122%.

The largest part of the properties are retail warehouses (50%
based on area), followed by high street stores (41%) and a
shopping center (9%). Overall, the portfolio is characterized by
secondary assets predominantly located in small to medium sized
towns. The current weighted average vacancy rate (based on area)
in the portfolio is 13%. The vacancies are mainly driven by the
high street stores (20% vacancy) and the retail warehouses (10%
vacancy), while only 1% of the shopping center's lettable area is
vacant. The vacancy in the high street stores is driven by five
properties (out of 13) where each property's vacancy is greater
than 50%. The total portfolio has significant lease rollover risk
in the near to medium term. Over the next three years 60% of the
leases have a break option or will expire. In Moody's view this
is likely to reduce rental cash flows either due to tenants
vacating the property or negotiating lower renewal rents due to
the relatively strong negotiation position of the retailers given
the secondary locations and the already existing vacancies. Until
the expiry of the standstill agreement in January 2013, the
special servicer is in negotiations with the borrower for an
orderly handover of control of the portfolio.

The LTV based on Moody's current market value estimate is 148%
compared to 120% on the last rating action in 2011. In Moody's
view, the ability to fully repay the loan is limited by the high
leverage, the total loan size (EUR204.2 million), the secondary
quality of the assets with significant lease rollovers over the
next three years and the sponsor's indication not to inject
further equity. As a result, Moody's expects very large losses
for the loan (> 40%).

The second largest loan of the portfolio (Gutperle; 13.1% of
current pool balance) is performing. The loan with a current
outstanding whole loan balance of EUR60.8 million and a senior
loan balance of EUR54.4 million has its extended maturity date in
January 2013. The loan's initial maturity date was in January
2012. It is secured by two large logistics properties in
Offenbach-Queich and Minden and each property is leased to a
single tenant. The Offenbach-Queich property (92,000 square
meter) is leased to Daimler AG (rated A3 by Moody's) on three
longer term leases. Two leases expire in 2021 and one lease in
2017.

The Minden property (31,500 square meter) is leased to ESM Ertl
Systemlogistik Minden GmbH & Co. KG which occupies the property
since 1997. The lease expires on December 31, 2012.

In Moody's view, a key obstacle for the refinancing of the loan
is the upcoming lease expiry of the tenant at the Minden
property. The rental income from this property accounts for 36%
of the total rent generated by the two properties. There has been
no update on the status of the lease. In deriving a value,
Moody's factored the risk of the tenant not renewing and if
renewing at potentially lower rents in line with market
indicative rent levels. Given a Moody's whole loan LTV of 90%,
Moody's refinance default expectation has increased to the high
range (>75%) compared to Moody's previous assessment. However,
Moody's expected principal loss on this loan continues to be in
the low range (0% - 25%).

The third largest loan of the portfolio (Signac; 11.6% of current
pool balance) was transferred into special servicing due to the
non-payment at its maturity date in July 2011. The loan is
subject to an A/B split and is secured by a single office
property located in Gennevilliers, Paris. The loan's current
whole loan balance is EUR 61.9 million and the senior loan
balance is EUR 48.4 million. The loan's new repayment date is in
June 2015 which is identical with the approved terms of the
borrower's safeguard plan.

Following the vacation of the largest tenant prior to the
interest payment date in January 2012, the property's occupancy
rate has continued to decline. The current vacancy rate is 43.8%
and the property has a high lease rollover risk where
approximately 70% of the existing leases have either their expiry
date or a break option in 2013.

Following the loan's non-payment at maturity in July 2011, the
borrower pursued safeguard proceedings at the French courts. The
borrower's proposed terms under the safeguard plan were accepted
by the court in July 2012. Apart from the extended repayment
date, the safeguard plan specifies the reduction of the
outstanding whole loan balance by EUR3 million to be made in
three annual installments with the first one in June 2012 and an
increase in the interest rate margin payable over 3-month
EURIBOR. The current margin of 1.75% will step up to 2.00% in
January 2013 and to 2.25% in January 2014 for the remaining term.

According to the July 2012 investor report, court proceedings
have been issued against the loan originator Citibank N.A. by the
FCC Europrop Issuer. According to the report, defects have been
identified in respect of the underlying security of the loan. In
the Issuer's opinion these defects constitute a material breach
of certain loan warranties under the mortgage sale agreement.
Under the terms of the mortgage sale agreement, the originator is
obliged to repurchase the Signac Loan receivables together with
the Signac Loan related security in case of a material breach.
Citibank continues to deny the defects constitute a material
breach and therefore court proceedings are still pending.

Also a contingent claim has been filed by Citibank N.A. following
the court proceedings initiated by the Issuer. As a result of the
contingent claim, all funds payable under the safeguard plan are
being held in an escrow and will not be released until the court
with conduct of the safeguard plan considers the issue of the
contingent claim on a date yet to be fixed.

As part of the safeguard plan, the borrower aims to re-let the
vacant space with the aim to sell the property at a later stage.
Moody's believes that it continues to be challenging over the
short-term to re-let the space at an adequate rental level due to
the secondary office location in Paris and the level of local
competition. As a result, Moody's base case expects very large
losses for the loan (> 50%). In its analysis, Moody's also
considered a scenario in which the loan is repurchased by the
originator.

Since Moody's last assessment, the Epic Rhino and Epic Horse Loan
(fifth and seventh largest loan; combined 14.3% of the current
portfolio balance) have experienced further performance
deterioration. Both loans have been placed into special servicing
following their non-payments at maturity in April 2011. Since
then, their vacancy levels have steadily increased and the
vacancy of the property portfolio securing the Epic Rhino Loan
(7.9% of current pool balance) is 40.1% and the vacancy of the
property portfolio securing the Epic Horse Loan (6.4% of current
pool balance) is 31.0%. Both loans are secured by portfolios of
predominantly multi-family homes across Germany. The high
vacancies are respectively driven by the adverse conditions of
the properties. Due to the high vacancies within both portfolios
the vacancy costs significantly impact the borrower's cash flow
balance. As a result, there is only very limited cash available
to do any substantial refurbishment works. The current strategy
is to spend a minimum capex amount per unit or to attract tenants
with a rent free period in order to improve occupancy rates with
the aim to enhance value and sell the properties at a later
stage. Based on Moody's current assessment the Moody's LTV is
110% with respect of the Epic Rhino Loan and 149% in respect of
the Epic Horse Loan. In respect of both loans, Moody's expects
significant losses, ranging between 25% - 50%.

On November 28, 2012, an Issuer Notice provided updated on the
Bonn Loan (6.8% of current pool balance). The loan is in special
servicing due to its non-payment at maturity in October 2011.
According to the notice the standstill agreement has been
extended until 16 January 2013 and an updated valuation as of
September 2012 resulted in an U/W vacant possession value (VPV)
of EUR 29.2 million. Based on the new valuation, the whole loan
U/W LTV is at 120%. The loan is secured by an office property
located in Bonn. The property is single let to Deutsche Telekom
AG (rated Baa1 by Moody's). The tenant's lease expiry is
scheduled for March 2016. Moody's applied a blended value
approach incorporating the risk that the tenant vacates at lease
expiration. Based on Moody's assessment the current whole loan
LTV is 99%. Moody's expects low losses, ranging between 0% - 5%.

Portfolio Loss Exposure: Moody's expects large amount of losses
on the securitized pool, stemming mainly from the collateral
performance and the refinancing profile of the loans. As of the
October 2012 IPD, a total of six loans (59% of the current pool
balance) were already in special servicing and we expect
additional loans will eventually move to special servicing in
2013. Losses have already been realized on two loans. However,
the recovery proceeds from the Henderson 1 and Henderson 2 Loans
have not yet been allocated to the notes. Per issuer notice dated
12 October 2012, the single property of the Henderson 1 Loan
(1.5% of the initial portfolio balance) was sold for EUR5.4
million while the outstanding loan balance was approximately
EUR6.1 million. Per issuer notice dated 31 October 2012, the
single property of the Henderson 2 Loan (1.4% of the initial
portfolio balance) was sold for EUR2.3 million while the
outstanding loan balance was approximately EUR7.0 million.

Moody's had expected a combined loss of approximately 40% with
respect to the Henderson 1 Loan and Henderson 2 Loan which
appears to be approximately in line with the actual losses.

Rating Methodology

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

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

The updated assessment is a result of Moody's on-going
surveillance of commercial mortgage backed securities (CMBS)
transactions. Moody's prior assessment is summarized in a press
release dated 14 February 2011. The last Performance Overview for
this transaction was published on 12 December 2012.

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

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


TMD FRICTION: S&P Cuts Long-Term Corporate Credit Rating to 'BB-'
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its long-term
corporate credit rating on Luxembourg-based automotive supplier
TMD Friction Group S.A. (TMD) to 'BB-' from 'BB'.

"We also lowered our issue rating on TMD's EUR97 million senior
secured notes outstanding to 'BB-' from 'BB'. The'3' recovery
rating on the notes is unchanged, reflecting our expectation of
meaningful (50%-70%) recovery prospects in the event of a payment
default," S&P said.

"The downgrade primarily relates to our view that credit quality
at Nisshinbo Holdings Inc., TMD's parent, has slightly declined.
The corporate credit rating on TMD continues to reflect full
ownership by Nisshinbo, in line with our parent-subsidiary
criteria," S&P said.

"Although we do not rate Nisshinbo, based on public information
we view its credit profile in the 'bb' category, that is,
stronger than TMD's stand-alone credit profile (SACP), which we
continue to assess at 'b'. We view TMD as a strategically
important entity for Nisshinbo," S&P said.

"The stable outlook reflects our expectations for Nisshinbo's
credit profile and the parent-subsidiary link. We expect that
Nisshinbo will continue to integrate TMD operationally, therefore
reinforcing the ties between the two companies and supporting the
business profile. We also expect that Nisshinbo will assume any
financial obligation related to the redemption or the refinancing
of TMD's notes in the future," S&P said.

"We anticipate no upside for the corporate credit rating on TMD
over the next 12 months," S&P said.

"We could lower the corporate credit rating on TMD if support and
benefits from Nisshinbo's ownership declined to an extent that
they would no longer offer financial support to TMD if needed,"
S&P said.



=====================
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=====================


EUROPEAN DIRECTORIES: Triton Capital Gets Control of Firm
---------------------------------------------------------
Anne-Sylvaine Chassany at The Financial Times reports that
Triton, a private equity group that targets companies in northern
Europe, has seized control of European Directories, ending a long
debt restructuring.

Triton, which manages a EUR2.38 billion buyout fund and has a
taste for distressed investments, on Dec. 10 said the private
equity group will inject EUR15 million into the company, bringing
its stake to 50.1%, the rest of the shares being split among
senior lenders.

As part of the deal, debt is being reduced to EUR262 million, or
2.8 times earnings before interest, tax, depreciation and
amortization, from EUR893 million previously, the FT discloses.

Triton's injection is the final chapter of a two-year debt
restructuring for the company, the FT notes.

In 2010, lenders took control of European Directories, which
struggled to compete with online search engines, and tried to
sell it, the FT recounts.  This year, Triton, whose largest
offices are in Stockholm and Frankfurt, purchased 29% of its
debts on the secondary market with the aim of gaining control in
a debt-to-equity swap, the FT relates.

European Directories is an Amsterdam-based directories publisher.



===========
P O L A N D
===========


CIECH SA: S&P Assigns 'B' Long-Term Corporate Credit Rating
-----------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' long-term
corporate credit rating to Poland-headquartered soda ash producer
Ciech S.A. The outlook is stable.

"At the same time, we assigned our 'B' issue rating to the EUR245
million senior secured notes issued by Ciech Group Financing AB.
We are not rating the company's PLN320 million domestic notes and
PLN100 million revolving credit facility (RCF) due 2015," S&P
said.

"The final capital structure is broadly in line with the
preliminary capital structure, with only minor changes. Notably,
the euro-denominated senior secured notes increased by EUR20
million to EUR245 million and the zloty-denominated senior
secured notes decreased by PLN62.3 million to PLN320 million.
Overall, Ciech's gross debt increased by about EUR5.4 million
(PLN23 million), which we consider to be a negligible change from
the preliminary structure. There are no changes to either the
covenants stipulated in the RCF documentation, or to the security
and guarantee package in the bond documentation," S&P said.

"The ratings on Ciech continue to reflect our assessment of
Ciech's business risk profile as 'weak' and its financial risk
profile as 'aggressive,' in line with our preliminary
assessments," S&P said.

S&P's corporate credit rating on Ciech reflects its stand-alone
credit profile of 'b', without any uplift for extraordinary
support from the government of the Republic of Poland (foreign
currency A-/Stable/A-2, local currency A/Stable/A-1). Although
the Polish government owns 39% of Ciech, S&P views the likelihood
of it providing timely and sufficient extraordinary support to
Ciech in the event of financial distress as 'low,' as per its
criteria on government-related entities.

S&P bases its view of a 'low' likelihood of support on our
assessment of Ciech's:

-- "'Limited' role for the Polish government, reflecting S&P's
    view of Ciech's operations as non-strategic.  S&P's view is
    underpinned by the privatization plan that the Polish
    Ministry of Treasury published in March 2012, in which Ciech
    was not included in the state's portfolio of strategic
    companies.

-- "'Limited' link with the government because S&P understands
    that the government may dispose of its stake in Ciech in the
    near term. In addition, there is a lack of a formal mechanism
    for the government to provide timely extraordinary support to
    Ciech. That said, the Polish government participated in
    Ciech's 2011 capital increase, S&P said.

"In our view, Ciech's liquidity will remain "adequate" and its
soda ash business will continue to perform satisfactorily in
2013, notwithstanding the currently difficult economic climate in
Europe. We view an adjusted ratio of debt to EBITDA of up to 5x
as commensurate with the current rating," S&P said.

"Ratings upside could arise in 2013 if Ciech maintains
satisfactory profits in the soda ash business and achieves
adjusted debt to EBITDA of less than 4x on a sustainable basis.
Notably, an upgrade depends on Ciech effectively executing its
strategy of restructuring, disposing of non-core activities, and
reducing capex, which are key to our projection of the company
deleveraging in 2013," S&P said.

"Rating downside could arise if Ciech was unable to deleverage,
leading to adjusted debt to EBITDA of more than 5x. We envisage
that this could occur if margins in Ciech's soda ash business
were to deteriorate unexpectedly as a result of new capacity
additions and/or its inability to dispose of underperforming
activities," S&P said.


POLIMEX-MOSTOSTAL: Creditors Set to Approve Restructuring Plan
--------------------------------------------------------------
Warsaw Business Journal reports that in the coming days, Polimex-
Mostostal's creditors are expected to sign a restructuring plan
to save the debt-ridden company.

According to WBJ, the treasury-owned Agencja Rozwoju Przemyslu
will purchase some of the company's shares.

Polimex is yet another company on the verge of a financial cliff
caused by losses incurred during the construction of highways,
WBJ notes.

The company's debt amounts to PLN1.3 billion and it has to reach
agreements with its creditors to survive, WBJ states.  Polimex
has signed a so-called standstill agreement, giving it a few
months before negotiating a final restructuring agreement, WBJ
relates.

There are more than 30 creditors involved in the restructuring
process, including Bank Pekao, PKO BP, Millennium and Kredyt
Bank, WBJ discloses.

Polimex-Mostostal -- https://www.polimex-mostostal.pl/ -- is an
engineering and construction company that has been on the market
since 1945.  The Company is distinguished by a wide range of
services provided on general contractorship basis for the
chemical as well as refinery and petrochemical industries, power
engineering, environmental protection, industrial and general
construction.  The Company also operates in the field of road and
railway construction as well as municipal infrastructure.
Polimex-Mostostal is the largest manufacturer and exporter of
steel products, including platform gratings, in Poland.



=============
R O M A N I A
=============


RAPID BUCHAREST: Files for Insolvency Over Mounting Debts
---------------------------------------------------------
Reuters reports that troubled Romanian soccer club Rapid
Bucharest said on Tuesday they had filed for insolvency after
running up huge debts.

"We opened insolvency proceedings to save the club," Reuters
quotes Rapid's majority shareholder George Copos as saying.
"We're doing everything in our power to save Rapid."

Reuters notes that three-times Romanian champions Rapid and city
rivals Dinamo, who have won the league 18 times, are among nine
European clubs facing punishment from UEFA over payment arrears
to other teams, their staff or tax authorities.

According to the news agency, Rapid, who played in the Romanian
Cup final in May, have spent heavily in recent years but their
players have not been paid for several months.

"The difference between revenue and expenditure goes to
EUR5 million (US$6.54 million) per year," Reuters quotes Rapid
president Constantin Zotta as saying. "It's terrible."

Reuters notes that the move could mean the end of professional
football for Rapid as Romanian soccer regulations do not allow an
insolvent club to have a first-division license.

                  7 Clubs on the Brink of Collapse

Meanwhile, Romanian Football League president Dumitru Dragomir
said that seven first division clubs were on the brink of
collapse due to spiralling debts.

Reuters says Mr. Dragomir accused the government of not
supporting the sport. "We are the only country in the world that
pays VAT to the players," Reuters quotes Mr. Dragomir as saying.
"Taxes are paid two or three times."

According to the report, Dragomir did not name the teams but
local media said that Dinamo, Petrolul Ploiesti, Brasov,
Universitatea Cluj-Napoca, Turnu Severin and Gloria Bistrita were
the other clubs in danger.

Many of the clubs face considerable infrastructure difficulties
and are struggling to meet administrative, legal and financial
conditions laid down by European soccer's governing body UEFA,
Reuters relays.

Mr. Dragomir said he was concerned even for the top two teams in
the country - league leaders Steaua Bucharest, who are playing in
the Europa League, and champions CFR Cluj, who still have a slim
chance of progressing to the Champions League knockout stages,
Reuters adds.



===========
R U S S I A
===========


EUROCHEM GLOBAL: Fitch Assigns 'BB' Rating to US$750MM LPNs
-----------------------------------------------------------
Fitch Ratings has assigned Russia's EuroChem Global Investments
Limited issue of loan participation notes for the aggregate
principal amount of US$750 million 5.125% due 2017 a final senior
unsecured 'BB' rating.

The rating action follows a review of the final documentation
materially conforming to the draft documentation reviewed when
Fitch assigned the expected 'BB(EXP)' rating on 28 November 2012.

KEY DRIVERS:

Eurochem Borrower/Guarantor of the Notes

The transaction is structured in the form of a loan from the
issuer, EuroChem Global Investments Limited, an Ireland-based
private limited liability company established for this sole
purpose, to the borrower, Eurochem, pursuant to the terms of a
loan agreement.  The Notes are limited recourse obligations of
the issuer under a trust deed.  They are secured by a first-fixed
charge with full title guarantee in favor of the trustee for the
benefit of itself and the noteholders of certain of its rights
and interests under the loan agreement.

Potential Reorganization and Borrower Substitution

The documentation contains provisions for a potential future
corporate reorganization whereby the full ownership of Eurochem
and certain of its assets and liabilities (including the Notes)
will be transferred to a new offshore holding company, the new
parent.  The new parent will accede to the loan agreement as a
guarantor prior to the reorganization, and will replace Eurochem
as a borrower post reorganization, provided that at least 70% of
Eurochem's outstanding debt has been novated to it.  Fitch notes
that the structural subordination concerns arising from the
existence of outstanding debt at Eurochem's level would be
addressed through a full and unconditional guarantee from
Eurochem to the new parent.

Senior Unsecured Obligations of Eurochem

Proceeds will be used for refinancing and general corporate
purposes.  The Notes constitute direct, general, unconditional,
unsecured and unsubordinated obligations of Eurochem and will
rank pari passu with all its other unsecured and unsubordinated
indebtedness.  Other covenants include a negative pledge (with
permitted liens), limitation on indebtedness with a total debt-
to-consolidated EBITDA ceiling of 3.5:1 and limitation on
restrictions on distributions from subsidiaries. Events of
defaults include cross default to any debt of the borrower, the
guarantor and their respective subsidiaries with a US$50 million
threshold.  The documentation does not include a change of
control clause.

Subordination Not a Concern

Post issuance and refinancing, Fitch estimates that the pre-
export credit facility (PXF) of RUB39.6 billion (US$1.3 billion)
and collateralized margin loans of RUB0.8 billion (EUR15 million)
will represent around 40% of consolidated borrowings.  While not
immaterial, this is strongly mitigated by the fact that under the
base rating case, the secured debt to EBITDA ratio stands at 0.8x
at end-2012 and reduces rapidly once the PXF loan starts to
amortize in August 2013.

Fitch also notes that existing borrowings all benefit from
sureties from some of the group's Russian subsidiaries.  However,
the resulting prior-ranking status is weakened by limitations in
the enforceability of these sureties under the Russian legal
regime.

Concerns about Eurochem or the new parent's ability to upstream
cash to service the Notes are also addressed by a covenant which
precludes restrictions of distributions (dividends, loans or
assets) from the borrower/guarantor's subsidiaries.

RATING SENSITIVITY GUIDANCE:

Positive: Future developments that may, individually or
collectively, lead to positive rating action include:

  -- Completion of one of the potash projects, combined with a
     conservative financial profile.

An upgrade is currently considered unlikely due to the group's
large investment program and the shareholder's opportunistic
strategy.

Negative: Future developments that could lead to negative rating
action include:

  -- Shareholders distributions or shareholder-friendly actions
     detrimental to debt creditors or resulting in sustained
     increase in FFO net leverage above 2.5x.
  -- Sharp deterioration in fertilizer prices or demand with
     EBITDA margin sustained below 20%.


INTERNATIONAL BANK: Fitch Affirms 'B-' LT Issuer Default Rating
---------------------------------------------------------------
Fitch Ratings has affirmed International Bank of Saint
Petersburg's (IBSP) ratings, including its Long-term Issuer
Default Rating (IDR) at 'B-' with a Stable Outlook.  At the same
time, the agency has withdrawn the ratings as the bank has chosen
to stop participating in the rating process.  Therefore, Fitch
will no longer have sufficient information to maintain the
ratings.  Accordingly, the agency will no longer provide ratings
or analytical coverage of IBSP.

The affirmation reflects the limited changes in the bank's risk
profile over the past year.  IBSP's ratings are constrained by
its limited franchise, weak capital position and asset quality
concerns.

At end-11M12 the bank reported non-performing loans (loans more
than 90 days overdue) at a low 2.6% of total loan book.  However,
this should be considered together with the high 20% share of
restructured and rolled-over exposures.  At the same time,
statutory loan impairment reserves comprised only 4.5% of loans
at end-11M12. The regulatory capital ratio was a modest 11.4% at
the same date, meaning loan impairment reserves could have been
increased to only 8% of the loan book without breaching minimum
capital requirements.  In Fitch's view, this is a limited buffer,
given the uncertain prospects for the restructured exposures.

IBSP is medium-sized St. Petersburg-based bank focusing on
corporates customers.  The bank's controlling shareholder is
Sergei Bazhanov.

The rating actions are as follows:

  -- Long-term foreign currency IDR: affirmed at 'B-', Outlook
     Stable; withdrawn
  -- Short Term IDR: affirmed at 'B' withdrawn
  -- Long-term local currency IDR: affirmed at 'B-', Outlook
     Stable; withdrawn
  -- Viability Rating: affirmed at 'b-'; withdrawn
  -- Support Rating: affirmed at '5'; withdrawn
  -- Support Rating Floor: affirmed at 'No Floor'; withdrawn
  -- National Long-term rating: affirmed at 'BB-(rus)', Outlook
     Stable; withdrawn


O'KEY LLC: Fitch Assigns 'B+' Rating to RUB3-Bil. Domestic Bond
---------------------------------------------------------------
Fitch Ratings has assigned Russia-based retailer LLC O'KEY's
five-year RUB3 billion domestic bond a local currency senior
unsecured rating of 'B+' with a Recovery Rating of 'RR4', and a
National Long-term Rating of 'A+(rus)'.

The bond (02 series) is the first tranche issued under the RUB8
billion exchange-traded ruble bond issue program registered in
October 2012 and the rating is in line with the 'B+(EXP)' rating
assigned to the program.

The notes are structured as unsecured, with surety of CJSC
Dorinda, the group's key asset holder, and do not contain any
financial covenants.  They carry a coupon rate of 10.1% per annum
payable on a semi-annual basis and fixed up to the put option
date of 17 December 2015.  The bonds will mature on 12 December
2017.  Fitch understands that O'KEY will mainly use the bond
proceeds to fund a capex program.

KEY DRIVERS:

Strong Russian Hypermarket Operator
The ratings reflect O'KEY Group S.A.'s strong position in the
growing hypermarket food retail segment in Russia and its
management expertise.  The group's hypermarket format enables it
to take advantage of the shift in Russian food retailing towards
more modern retail chains.  The ratings also reflect the group's
small scale compared with other listed and international leading
food retail operators in Russia.

High-End Positioning
The group's operating performance is at the high end of the main
food retailers in terms of sales/sq. m and EBITDA margin.
However, Fitch believes that the group's exposure to the
hypermarket segment, its more upmarket product range and non-food
operations, plus its development in secondary cities make O'KEY
more vulnerable to a potential worsening of the macroeconomic
environment than discounters.

Tougher Competition Among Hypermarkets
Intensifying competition means more pressure on retailers'
operating margins in general.  However, Fitch expects that the
group's expansion will enable O'KEY to reinforce its purchasing
power over suppliers.

Negative Free Cash Flow
The company aims to be in 25 large cities by 2015 (17 as of end-
2011).  Rapid expansion requires investment in store openings as
the company grows through both owned and leased stores.
Consequently, Fitch expects the group's FCF to remain negative in
the coming years.  Its growth plans entail execution risks in the
medium term, such as finding new profitable locations with decent
infrastructure, being able to get local authorization on time or
find new logistics partners with the same good level of
execution.

Capex Partially Internally Financed

Fitch expects the group to finance around 58% of capex by
internal free cash flow.  O'KEY will need to raise new long-term
debt to sustain its developing program at the current level.
Fitch notes that a large part of capex is discretionary as it is
related to opening new stores, and that maintenance and committed
capex are relatively low.

Operating Leases Increase Leverage

O'KEY is expanding its hypermarkets and supermarkets through
owned and leased stores, with a 50/50 split over time.  As a
result, Fitch expects the group's operating leases to increase
with the expansion program.  Fitch expects O'KEY lease-adjusted
net debt/FFO to increase towards 3.5x on average in the next two
years, which is in line with the group's ratings.

RATING GUIDELINES

Future developments that may, individually or collectively, lead
to positive rating action include

  -- O'Key showing solid execution of its expansion plan
  -- The group's capacity to show positive like-for-like sales
     growth
  -- Maintaining the group's EBITDA margin of at least 7.5%-8%.

Fitch acknowledges that an improvement in the group's free cash
flow would be viewed as a supplementary rating positive factor.
Fitch also expects the group's size to reach at least EUR500m in
EBITDA terms.  In terms of leverage, for a 'BB-' rating Fitch
expects an adjusted net debt/FFO ratio falling permanently
towards 2.5x and FFO/fixed charge >3.5x.

Future developments that may, individually or collectively, lead
to negative rating action include:

  -- A sharp contraction relative to its peers of like-for-like
     sales and EBITDA margin erosion (7%) combined with FFO
     adjusted net leverage remaining above 4x (3.5x on EBITDAR
     basis).


VTB BANK: S&P Incorporates 'bb' SACP Into Long-Term Ratings
-----------------------------------------------------------
Standard & Poor's Ratings Services raised its short-term
counterparty credit ratings on Russia-based VTB Bank JSC to 'A-2'
from 'A-3'. At the same time it affirmed its 'BBB' long-term
counterparty credit ratings and 'ruAAA' Russia national scale
ratings on the bank. The outlook is stable.

"The upgrade follows a similar action on the Russian Federation
(foreign currency BBB/Stable/A-2; local currency BBB+/Stable/A-2;
Russia national scale 'ruAAA') and the revision of our criteria
on the linkage between the long-term and short-term ratings on
sovereigns. According to the criteria, a short-term rating on a
sovereign is derived uniquely from the long-term rating by
applying a linkage consistent with that applied to corporate
entities," S&P said.

"The ratings on VTB, which is 75.5% owned by the Russian
Federation, are based on our opinion of its status as a
government-related entity (GRE). In our opinion, the likelihood
that the state would provide timely and sufficient extraordinary
support to VTB if needed is very high, owing to VTB's very
important role in the economy and very strong links with the
government. We therefore incorporate three notches of uplift
above VTB's stand-alone credit profile (SACP) of 'bb' into the
long-term ratings on VTB," S&P said.

VTB's SACP reflects S&P's 'bb' anchor and our assessment of the
bank's "strong" business position, "moderate" capital and
earnings, "moderate" risk position, "average" funding, and
"adequate" liquidity, as its criteria define these terms.

"Our assessment of VTB's short-term liquidity position
incorporates our view of the bank's good access to government
funding, as shown by GRE funding, which comprised 32% of its
total liabilities as of June 30, 2012. In addition, the
granularity and diversity of VTB's customer deposit base has
improved and VTB's retail banking franchise has strengthened on
the back of its recent acquisitions of TransCreditBank (BBB-
/Stable/A-3) and Bank of Moscow (not rated)," S&P said.

"The stable outlook reflects our anticipation that VTB will
improve its capital adequacy over the medium term through Tier 1
capital increases and slower expansion of risk assets. We also
expect the Russian government to directly or indirectly support
VTB's capital building to ensure that the bank operates from an
adequate competitive footing in the industry. Russia plans to
sell up to 20% of its shares in VTB over the medium term,
depending on market conditions. Nevertheless, in our opinion the
state will maintain majority ownership and control over the bank
for several years, and VTB's very strong links with the
government will likely be maintained in the medium term," S&P
said.

"We would lower our ratings on VTB if over the next 18-24 months
the bank failed to improve its capital adequacy to a moderate
level, reflected in a risk-adjusted capital ratio of at least 5%,
or if VTB's link to the government weakened. If the government
were to relinquish its majority stake in VTB, we would consider
VTB's link to the state to have weakened under our methodology
and reduce the uplift included in the rating. A significant
deterioration of the operating environment for banks in Russia
could also lead to a downgrade," S&P said.

"We could raise the ratings if VTB's SACP improved, if we raised
the credit rating on the Russian Federation, and if VTB retained
its strong link to and important role for the Russian government.
A sustained improvement in VTB's risk position could lead to an
improvement in the SACP," S&P said.



=========
S P A I N
=========


IM BANCO 2: S&P Lowers Rating on Class B Notes to 'BB (sf)'
-----------------------------------------------------------
Standard & Poor's Ratings Services affirmed and removed from
CreditWatch negative its credit rating on IM Banco Popular MBS 2,
Fondo de Titulizacion de Activos' class A notes. "At the same
time, we have lowered and removed from CreditWatch negative our
rating on the class B notes," S&P said.

"The rating actions reflect our credit and cash flow analysis
based on the information provided by the trustee (September 2012)
and our review of the current counterparty risk in the
transaction," S&P said.

"On Dec. 23 2011, we placed our ratings in this transaction on
CreditWatch negative, following our rating actions on Banco
Popular Espanol S.A. acting as supporting entities. We took
further rating actions on Banco Popular Espanol in February, May,
and October 2012," S&P said.

"In September 2012, Banco Santander S.A. replaced Banco Popular
Espanol as bank account provider and BNP Paribas Securities
Services replaced Banco Popular Espanol as paying agent. Banco
Popular Espanol currently acts as swap provider in this
transaction," S&P said.

                    COLLATERAL CREDIT QUALITY

"The underlying collateral comprises first-lien mortgage loans
originated and serviced by Banco Popular Espanol to Spanish
borrowers with a high concentration in the Spanish regions of
Andalucia, Madrid, and Galicia. The underlying loans' features
include a high loan-to-value (LTV) ratio of 86% at closing (July
2010). The loans were granted mainly for the purchase of a
residential property (90% of the closing portfolio), but also
included commercial related loans made to Spanish and non-Spanish
residents (15% of the closing obligors, by portfolio balance,
were non-Spanish residents)," S&P said.

"While the evolution of long-term delinquencies (defined in this
transaction as loans being in arrears for more than 90 days,
excluding defaults) has stabilized recently -- after reaching its
peak in Q4 2011, and such evolution being in line with our
surveillance assumptions -- we have observed a rapid increase in
the level of cumulative defaults since Q2 2012. Defaults in this
transaction are defined as assets being delinquent for more than
12 months or classified as such by the trustee (Intermoney
Titulizacion S.G.F.T.). We believe that long-term delinquencies
will continue to accrue and roll over into defaults, while
recoveries are likely to take longer to be passed on to the
noteholders in light of the underlying borrowers' features and
current difficult Spanish real estate market conditions," S&P
said.

"Most of the underlying loans were originated from 2006 onward
and the underlying collateral featured a seasoning of 36 months
when we rated the notes in July 2010," S&P said.

"As of the September interest payment date, the level of
cumulative defaults experienced by the underlying portfolio was
1.97% of the closing portfolio balance. Nearly half of the
outstanding defaults are concentrated in the Andalucia region
(the current total exposure to the Andalucia region accounts for
33% of the outstanding pool) and defaults are concentrated in
loans originated in 2007. Based on the progression of
delinquencies and defaults, and the borrowers' features, we
expect long-term delinquencies and defaults to accrue further in
the portfolio that currently has a pool factor (the percentage of
the pool's outstanding aggregate principal balance) of 86%," S&P
said.

                        STRUCTURAL FEATURES

"The transaction features an interest-deferral trigger on the
class B notes, set at 5% of cumulative defaults over the closing
portfolio balance. While we do not expect the class B interest-
deferral trigger to be breached in the near term and therefore
benefit the senior class A notes by diverting class B related
cash flows toward the servicing of the class A notes, we expect
the performing balance available to service the notes to
decline," S&P said.

"The transaction benefits from a significant reserve fund.
Accounting for 8% of the portfolio, at the time we rated the
notes (July 2010), it is currently below its required level
(93.7% of the required level) and will be further depleted as the
credit quality of the underlying collateral worsens.
Nevertheless, the notes benefit from the incorporated swap
mechanism providing significant support, which in our view,
compensates for the lack of excess spread generated by the
underlying collateral," S&P said.

"Under the transaction documents, the swap calculations are based
on the outstanding amount of the notes and the swap counterparty
will guarantee the payment of the coupon due under the notes and
add 65 basis points of excess spread in the structure. If we were
to remove the credit given to the swap agreement in our analysis,
the results would show that the class B notes suffer from
negative carry as the spread generated by the underlying assets
would not be sufficient to service the class B interest payments.
The class A and B notes benefit from credit enhancement levels of
21.7% and 7.6%, if we account for the level of available
performing collateral and cash reserve in the transaction," S&P
said.

                      COUNTERPARTY RISK

"The rating actions also reflect our updated counterparty risk
analysis. Following our Oct. 15, 2012 downgrade of Banco
Santander (BBB/Negative/A-2) acting as bank account provider to
the transaction and in light of the current transaction
documents, the maximum rating achievable in this transaction is
'A- (sf)'. In accordance with our 2012 counterparty criteria, the
swap provider Banco Popular Espanol (BB/Negative/B) is ineligible
at its current rating level, and no remedial actions have taken
place to date to mitigate the counterparty risk of the swap
provider in the transaction. We have therefore performed our cash
flow analysis taking into account the latest observed and
forecasted credit quality performance of the underlying assets
and without giving credit to the swap at rating levels higher
than our long-term issuer credit rating on the swap provider,"
S&P said.

"The removal of the swap in our analysis has a limited effect on
our rating on the class A notes because of the transaction's
structural features. We have therefore affirmed and removed from
CreditWatch negative our 'A- (sf)' rating on the class A notes,
which is in line with the maximum achievable rating due to the
bank account provider," S&P said.

"The class B notes cannot maintain their current rating in our
analysis if they do not benefit from the support given by the
swap. As a consequence, we have lowered to 'BB (sf)' from 'A-
(sf)' and removed from CreditWatch negative our rating on the
class B notes. This is in line with the rating on the swap
provider and, under our 2012 counterparty criteria, directly
links our rating on the class B notes and our long-term issuer
credit rating on the swap provider. If we were to further lower
our rating on the swap provider, the rating on the class B notes
will be affected accordingly, all else being equal," S&P said.

           STANDARD & POOR'S 17G-7 DISCLOSURE REPORT

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

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

           http://standardandpoorsdisclosure-17g7.com

RATINGS LIST

IM Banco Popular MBS 2, Fondo de Titulizacion de Activos
EUR685 Million Residential Mortgage-Backed Floating-Rate Notes

Class             Rating
            To               From

Rating Affirmed and Removed From CreditWatch Negative

A           A- (sf)          A- (sf)/Watch Neg

Rating Lowered and Removed From CreditWatch Negative

B           BB (sf)          A- (sf)/Watch Neg


* SPAIN: Moody's Updates Key Collateral Assumptions in ABS Deals
----------------------------------------------------------------
Moody's Investors Service has announced that it had revised key
collateral assumptions in 94 Spanish asset-backed securities
(ABS) backed by portfolios of loans and leases to small- and
medium-sized enterprises (SME). In most cases, the new loss
assumptions have had no rating impact due to sufficient credit
enhancement levels. However, Moody's has taken individual rating
actions on a small number of transactions with insufficient
credit enhancement. These rating actions have already been
announced in separate press releases.

These revisions follow Moody's review of the entire Spanish SME
and small ticket lease ABS sector and were mainly driven by
ongoing collateral performance deterioration fuelled by the
deteriorating economic environment in Spain. The revised
assumptions relate to the default probability of the underlying
pools as well as the expected recovery rates following a default.

Please click on this link
http://www.moodys.com/viewresearchdoc.aspx?docid=PBS_SF311129to
access the list of transactions with the updated assumptions.
This list includes the old and revised default probability and
recovery assumptions. Revised default probability assumptions are
shown both in the percentage of (1) original balance plus
replenishments, which corresponds to the cumulative defaults
expected over the entire life of the deal; and (2) pool current
balance, which corresponds to expected future defaults (using a
standard 90+ day default proxy rather than the deal specific
write off definition, which is typically 12 or 18 months).

KEY DRIVERS UNDERLYING UPDATED ASSUMPTIONS

-- ASSESSMENT OF THE CREDIT QUALITY OF THE UNDERLYING POOLS

Moody's performed a review of all the transactions in the SME and
small ticket lease sector and looked at different indicators to
come up with the revised assumptions.

To revise the default probability assumptions, Moody's took into
account the underlying pool quality and the performance of each
transaction. In particular, Moody's paid attention to the actual
relative levels and trends of delinquencies and defaults, and how
these compared to previous expectations, using indicators
published in Moody's Spanish SME Indices. These indicators
include the default performance indicator (DPI) and loss
performance indicator (LPI). The rating agency also benchmarked
assumptions for all transactions against each other for
consistency across the sector. Ultimately, Moody's new default
assumptions generally reflect an implied default probability
rating in the low Ba range for the best performing pools, in the
mid-to-high single B range for the average deals and in the low
single B or even Caa range for the worst performers. For the most
recent transactions that perform in line with expectations,
Moody's did not update the mean default assumption on current
balance.

To revise the recovery rate assumptions, Moody's benchmarked the
previous recovery assumptions to lower levels, in order to
account for the increased difficulty in liquidating real estate
collateral in Spain. Moody's also harmonized recovery rates,
assuming fixed recovery values instead of stochastic ones. As a
result, fixed recovery rate assumptions now range from 30% to
60%.

-- OUTLOOK FOR SPANISH SME AND LEASES TRANSACTIONS

Moody's updated assumptions also reflect its negative outlook for
Spanish SME and Leasing collateral (see "European ABS and RMBS:
2013 Outlooks ", December 2012).

Delinquencies and defaults show a negative trend in the Spanish
SME sector according to the latest Spanish SME ABS Indices
published by Moody's in November 2012
(http://www.moodys.com/research/Spanish-SME-Indices-September-
2012--PBS_SF308121). Moody's cumulative default index for Spanish
SME deals (as a percentage of original balance plus cumulated
replenishments) rose to 2.3% in September 2012, showing a 46%
year-on-year increase from 1.6% in September 2011. The total
delinquencies index, as of current pool balance, showed a 64%
year-on-year increase to 4.6% in September 2012 from 2.8% in
September 2011.

The rating agency expects that continued weak domestic demand
will weaken SME revenues and increase borrower defaults. Moody's
expects Spanish GDP to contract by 1.4% in 2012 (see "Country
Statistics: Government of Spain", November 2012), which will
likely drive up leases and loans to SMEs in arrears.

-- OUTLOOK FOR THE SPANISH ECONOMY IN GENERAL

For 2013, Moody's expects that the Spanish economy will contract
a further 1.4% and that the annual average unemployment rate will
reach 26% (see "Country Statistics: Government of Spain",
November 2012).

On August 21, 2012, Moody's released a Request for Comment
seeking market feedback on proposed adjustments to its modelling
assumptions. These adjustments are designed to account for the
impact of rapid and significant country credit deterioration on
structured finance transactions. If the adjusted approach is
implemented as proposed, the rating of the notes affected by the
announcement may be negatively affected.


* SPAIN: Private Investors Agree to Buy 55% of Bad Bank Capital
---------------------------------------------------------------
Sharon Smyth at Bloomberg News reports that private investors
including Spanish banks and insurance companies agreed to
purchase 55% of the capital in Spain's bad bank, allowing the
government to keep the facility's debts off its books.

According to Bloomberg, fourteen new investors will join Banco
Santander SA and CaixaBank SA as stakeholders in Sareb, the bad
bank set up to purge soured real estate assets from the books of
lenders.  Bloomberg notes that an e-mailed statement from Sareb
on Monday said Deutsche Bank AG and Barclays Plc as well as
Bankinter SA, Ibercaja and Mapfre SA, are among the new
investors.

Spain is creating the EUR60 billion (US$79 billion) bad bank to
help lenders that took state aid such as the Bankia Group
jettison real estate assets that soured when the country's
property market crashed, Bloomberg discloses.  Forming Sareb is a
condition of Europe's bailout of the Spanish banking industry
agreed upon in July, Bloomberg states.

Spain's bank rescue fund, known as the FROB, said on Dec. 13 that
Santander, CaixaBank, Banco Sabadell SA, Kutxabank and Banco
Popular Espanol SA will be Sareb's main investors and Axa,
France's largest insurer, will put in EUR10 million through its
Spanish unit, Bloomberg recounts.

Bloomberg relates that Sareb's statement on Monday said
contributions to the bad bank include EUR431 million from FROB
and EUR524 million from the private investors in an initial
phase.

The private investors will subscribe to subordinated debt issued
by Sareb in coming weeks, Bloomberg says.



===========
T U R K E Y
===========


ANADOLUBANK AS: Moody's Affirms 'Ba1' Long-Term Deposit Rating
--------------------------------------------------------------
Moody's Investors Service has affirmed Anadolubank A.S.'s
Ba1/Not-Prime long-term local-currency deposit rating with
negative outlook as well as the bank's D+ standalone bank
financial strength rating (BFSR), which is equivalent to a
standalone credit assessment of ba1. Anadolubank's foreign-
currency deposit rating have also been affirmed at Ba2/Not-Prime
with stable outlook, as they are constrained by the ceiling for
foreign-currency deposits in Turkey.

At the same time, Moody's has withdrawn all of Anadolubank's
ratings at their current levels for its own business reasons. A
full list of affected ratings is included at the end of this
press release.

RATINGS RATIONALE

RATIONALE FOR THE AFFIRMATION

Moody's says that the affirmation of Anadolubank's ratings
reflects the bank's sound financial fundamentals, underscored by
its strong capitalization, adequate profitability and its good
asset quality with limited volatility, as well as the bank's
relatively limited exposure -- both on and off-balance sheet --
to its controlling shareholder and related companies.

At the same time, the bank's standalone credit assessment is
constrained by the bank's less favorable funding matrix, as
exemplified by the high local-currency loan-to-deposit ratio
(LTD) of around 145% according to September 2012 BRSA results
compared with around 120% for the system. In the rating agency's
opinion, this leaves Anadolubank's funding vulnerable to (1) any
unfavorable depositor behavior; and (2) the sensitivity to the
deposit-pricing strategy of larger competitors in the highly
competitive domestic market. However, Moody's acknowledges that
the bank's overall LTD ratio as of September 2012 is around 105%
and largely in line with the system average, which partially
offsets pressure arising from the bank's funding challenges.

Furthermore, in an environment of lower economic growth with
continuously rising competitive pressures, smaller banks like
Anadolubank with their limited niche franchise (with a focus on
the Turkish SME market) could be at a disadvantage in terms of
earnings and capital due to less-diversified franchise and
revenue streams. These challenges are reflected in the negative
outlook.

Moody's assessment of a low probability of systemic support for
Anadolubank does not result in any rating uplift for the assigned
ratings and is based on the bank's relatively limited size and
importance to the domestic financial system in Turkey.

RATIONALE FOR THE WITHDRAWAL

Moody's has withdrawn the rating for its own business reasons.
Please refer to the Moody's Investors Service's Policy for
Withdrawal of Credit Ratings, available on its Web site,
www.moodys.com.

LIST OF AFFECTED RATINGS

All of Anadolubank's ratings will be withdrawn at the current
rating levels of:

- BFSR: D+, negative

- Long-term local-currency deposits: Ba1, negative

- Long-term foreign-currency deposits: Ba2, stable

- Short-term local-currency and foreign-currency bank deposits:
   Not-Prime

Principal Methodologies

The principal methodology used in this rating was Moody's
Consolidated Global Bank Rating Methodology published in June
2012.



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


ALLANFIELD GROUP: Opts to Appoint Administrators
------------------------------------------------
Allanfield Group Plc on Dec. 18 disclosed that it has resolved to
appoint administrators and on December 17, 2012 filed notice of
intention to appoint Jason Daniel Baker --
jason.baker@frpadvisory.com -- and Philip Lewis Armstrong,
insolvency practitioners at FRP Advisory, as administrators to
the Company.

On Dec. 6, the Company announced the suspension of trading in its
shares.

The Company has identified a deficiency in its cash resources and
is seeking to understand how this has arisen.  In the absence of
any further facilities being made available to the Company from
its existing lenders or elsewhere, the Company is, or will
shortly be, unable to meet its liabilities as  they fall due and
the Board of the Company has therefore concluded that, in such
circumstances, the appointment of administrators is the most
appropriate course of action.

Allanfield Group Plc provides insurance broking services for the
commercial real estate market in the United Kingdom. It offers
property insurance.  The company was incorporated in 2011 and is
based in London, the United Kingdom.


COMET: Government Launches Investigation Into Collapse
------------------------------------------------------
Emma Rowley at The Telegraph reports that Vince Cable's
department has launched an investigation into the demise of
Comet, as it emerged that OpCapita and its backers charged Comet
millions for fees despite the chain racking up losses.

The failure of Comet is being investigated by the Government as
to whether it should take action, as anger mounted over the
collapse on the retailer's final day of business, the Telegraph
says.

Comet fell into administration last month in the most high-
profile retail failure since Woolworths in 2008, signaling an end
to the company's 79 years of trading, the Telegraph recounts.
The last 35 stores of what was a 235-strong chain were closed on
Tuesday by administrators Deloitte, the Telegraph discloses.

The end came as the Department for Business, Innovation and
Skills (BIS) announced a "fact finding" inquiry into the collapse
by the Insolvency Service, the Telegraph notes.  The move, the
Telegraph says, followed suggestions, voiced in Parliament, of
"malpractice".

Almost 7,000 jobs have been lost at Comet, the Telegraph
discloses.  According to the report, there is anger among the
retailer's staff at owner OpCapita for allowing the business to
fail months after the private investment firm bought Comet for
GBP2 and received a GBP50 million dowry from Kesa, the previous
owner.

"The Government needs to get to the bottom of this [insolvency],"
the Telegraph quotes Robert Halfon, the Conservative MP in whose
constituency, Harlow in Essex, Comet's distribution center sits,
as saying.

He had previously raised questions about Comet in the Commons,
noting that "many of the redundant workers are suggesting that
there has been malpractice" and calling for Vince Cable, the
Business Secretary, to investigate, the Telegraph relates.

According to the Telegraph, a spokesman for BIS said: "The
purpose of the inquiry is to investigate the circumstances
surrounding its insolvency and to establish whether further
action is required.  We are not in a position to comment further
at this stage.  To do so could prejudice the outcome of the
investigation and any future action.

"The Department for Business is already reviewing the overall
insolvency regulatory framework, to see whether it remains fit
for purpose in today's environment."

Headquartered in Rickmansworth, Comet is an electrical retailer.

Neville Kahn, Nick Edwards and Chris Farrington of Deloitte were
appointed Joint Administrators to Comet on Nov. 2, 2012.
Deloitte said like many other retailers, Comet has been hit hard
by the uncertain economic environment, slow consumer spending and
lack of consumer confidence.  Despite significant investment in
the business and the efforts of the experienced management team,
Comet has struggled to compete with online retailers which have
far lower overhead costs and can offer cheaper products, Deloitte
added.


DECO 8: Fitch Downgrades Rating on Class E Notes to 'Csf'
---------------------------------------------------------
Fitch Ratings has taken rating actions on DECO 8 - UK Conduit 2
plc's (DECO 8) commercial mortgage-backed notes, as follows:

  -- GBP82.4m class A1 (XS0251885603): affirmed at 'AAAsf';
     Outlook Stable
  -- GBP255.8m class A2 (XS0251886163): downgraded to 'CCCsf'
     from 'BBsf'; Recovery Estimate (RE) 90%
  -- GBP32.3m class B (XS0251886833): downgraded to 'CCCsf' from
     'Bsf'; RE0%
  -- GBP33.9m class C (XS0251887211): downgraded to 'CCsf' from
     'CCCsf'; RE0%
  -- GBP23.4m class D (XS0251887724): downgraded to 'CCsf' from
     'CCCsf'; RE0%
  -- GBP60.9m class E (XS0251889696): downgraded to 'Csf' from
     'CCsf'; RE0%
  -- GBP14.2m class F (XS0251890199): affirmed at 'Csf'; RE0%
  -- GBP2.8m class G (XS0251890868): affirmed at 'Dsf'; RE0%

The downgrades reflect the under-performance of the defaulted
Mapeley Beta portfolio as evidenced by the recent revaluation and
on-going concerns about the sponsor's business plan for the Lea
Valley loan.

The Mapeley Beta loan (the second-largest in the portfolio at
37%) is secured by 16 office properties located in secondary
locations across the UK.  In August 2012, the portfolio was
revalued at GBP134.3 million, from GBP241.8 million in October
2008, reflecting a 44% fall in value, and a revised loan-to-value
(LTV) ratio of 140.9%.  The loan is therefore in breach of its
LTV covenant and has been transferred to special servicing.
While Fitch expected such a drop in value (the Fitch LTV was
already 133.1%), the lease profile continues to deteriorate and
scope for improvements remain narrow, given the over-rentedness
of the portfolio and the unlikely sponsor support.  This will
continue to exert downward pressure on the portfolio's value and
on the expected recoveries for the loan.

On December 14, 2012, Fitch withdrew Solutus Advisors's servicer
rating as the agency believes that Solutus Advisors provided
incorrect and misleading information during the initial servicer
rating.  Solutus Advisors is the nominated special servicer for
eight out of 11 loans in the pool (85.9% of the pool).  Currently
only five loans have been transferred to special servicing, but
the agency expects two other loans not to repay at their
maturities and therefore a transfer event to occur.

Fitch noted in its last rating action on July 3, 2012, that Lea
Valley (43% of the pool) sponsor's business plan aims at reducing
debt through asset sales (GBP15 million per year from 2014
through to 2016).  Given the secondary nature of most of the
assets and the absence of investment demand for such properties,
Fitch questions the viability of this plan.  Moreover, links
between Solutus Advisors and the Lea Valley borrower have
recently been revealed to Fitch, and Fitch believes this could
undermine the desired level of independence of special servicing
should the loan eventually default (as expected by Fitch).

Following the repayment of Le Meridien Piccadilly loan and the
Wigmore Mannheim loan, the securitization is now exposed to the
weakest performing loans in the pool.  Beside the Mapeley Beta
and Lea Valley, the performance of the remaining nine loans has
remained stable since Fitch's last review (see "Fitch Takes
Various Actions on Deco 8", published on 3 July 2012).


DIVERSITY FUNDING 1: S&P Lowers Rating on Class C Notes to 'B+'
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered and removed from
CreditWatch negative its credit ratings on Diversity Funding No.
1 Ltd.'s class A, B, and C notes, following the application of
S&P's updated European commercial mortgage-backed securities
(CMBS) criteria. "At the same time, we have affirmed our ratings
on the class D, E, and F notes," S&P said.

"On Dec. 6, 2012, we placed our ratings on the class A, B, and C
notes on CreditWatch negative following an update to our criteria
for rating European CMBS transactions," S&P said.

"Our analysis reflects our November 2012 European CMBS criteria,
which became effective on Dec. 6, 2012," S&P said.

"There are currently 469 loans in the pool (down from 863 at
closing), backed by 927 properties (down from 1,685 at closing).
The majority of loans (63.6% by loan balance) amortize during the
loan term," S&P said.

"The loans are secured on secondary mixed properties--office,
retail, and industrial properties comprise 83% of the pool by
loan amount. The top 10 properties (by value) represent 10% of
the total portfolio value," S&P said.

"In the latest investor report (dated October 2012), the servicer
(Crown Mortgage Management Ltd.) has estimated that the balance
at risk from WatchList loans (those on the servicer's watchlist)
is GBP380.3 million, which equates to 55% of the total loan
balance. In addition, 34 loans are currently in arrears, the loan
balances of which equate to 22% of the total loan balance. The
weighted-average loan-to-value ratio is reported to be 75.7%, as
against 65.0% at closing," S&P said.

"We consider that the creditworthiness of the pool has
deteriorated and the likelihood of default of the underlying
loans has increased since closing," S&P said.

"Under our updated CMBS criteria, we have assigned an S&P Value
to each loan, which reflect our assessment of recoveries
following a default of all loans in the portfolio," S&P said.

"Our analysis indicates that the amount of available credit
enhancement for the class A, B, and C notes is insufficient to
cover our expectations of property value losses under the current
respective rating level scenarios. Therefore, we have lowered and
removed from CreditWatch negative our ratings on the class A, B,
and C notes," S&P said.

"Our analysis indicates that the rating on the class D notes can
be maintained. We have therefore affirmed our rating on the class
D notes," S&P said.

"The principal deficiency ledger (PDL) for the class E notes
represents 15% of the class E note balance. However, available
revenue receipts are currently covering interest payments and the
liquidity facility is available to cover any interest shortfalls
on the class E notes until the balance of the class E PDL exceeds
50% of the balance of the class E notes. Therefore, we have
affirmed our 'B- (sf)' rating on the class E notes," S&P said.

"The PDL for the class F notes is at 100% of the class F note
balance and interest is no longer paid on these notes. Therefore,
we have affirmed our 'D (sf)' rating on the class F notes," S&P
said.

"Diversity Funding No. 1 is secured by a portfolio of small loans
originated by Northern Rock and sold to Lehman Commercial
Mortgage Conduit in June 2007. The mortgage trustee purchased the
beneficial interest in the loan portfolio with the proceeds of
Diversity Funding No. 1's note issuance (in consideration for
a share in the trust property)," S&P said.

          STANDARD & POOR'S 17G-7 DISCLOSURE REPORT

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

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

           http://standardandpoorsdisclosure-17g7.com

RATINGS LIST

Class             Rating
            To               From

Diversity Funding No. 1 Ltd.
GBP1.145 Billion Variable Reference Rate Notes

Ratings Lowered and Removed From CreditWatch Negative

A           BBB+ (sf)        AA- (sf)/Watch Neg
B           BB-(sf)          BBB+ (sf)/Watch Neg
C           B+ (sf)          BB (sf)/Watch Neg

Ratings Affirmed

D           B (sf)
E           B- (sf)
F           D (sf)


FINDUS: Writes Off GBP440 Million Following Debt-for-Equity Swap
----------------------------------------------------------------
Louise Lucas at The Financial Times reports that Findus has
written off about GBP440 million following its debt-for-equity
swap earlier this year.

Findus, like other food manufacturers that ramped up in the era
of ready debt, has breached bank covenants and was forced to
refinance earlier this year, the FT relates.  Owner Lion Capital,
the consumer-focused private equity firm, fended off Triton
Partners which sought to snare Findus in June, the FT recounts.

However, doing so meant converting GBP240 million of mezzanine
debt into equity, the FT notes.  Lion, which bought Findus for
GBP1.1 billion in 2008, now owns about a third of the company,
the FT discloses.  As of end December, Findus had net debt of
GBP683.5 million and equity of GBP440 million, the FT says.

Strained finances, together with the tough economic climate for
food and drink manufacturers in much of western Europe, has
prompted speculation that Findus could yet become a takeover
target, the FT states.

However, Findus's owners reckon it is now on a viable financial
footing, with a fresh set of financial covenants, and capable of
riding out the downturn, according to the FT.

Findus is a maker of frozen peas and fish pies.


JKS BRICKWORK: Director Banned for 8 Yrs Over GBP1MM Debts
----------------------------------------------------------
Thomas James Brown, director of construction company JKS
Brickwork Contractors (S.E.) Limited, has been disqualified for
eight years for failing to keep proper accounts, so preventing
the recovery of GBP1 million of creditors' money.

The disqualification follows an investigation by Company
Investigations (South), part of the Insolvency Service.

Mr. Brown, 38, of Wapping, east London, has given an undertaking
to the Secretary of State for Business, Innovation and Skills,
not to act as a director of a limited company for eight years
with effect from Dec. 17, 2012.

JKS Brickwork, a construction and civil engineering company, went
into liquidation on Nov. 17, 2010, owing GBP1,053,147 to its
creditors.

The last annual accounts filed by the company were for the year
to Nov. 30, 2009. The company traded for 11 months beyond this
date but Mr. Brown failed to provide any records covering the
period from December 2009 to the time it went into liquidation.

The lack of records mean liquidators couldn't verify JKS
Brickwork's expenses during this time, which Mr. Brown claimed to
be GBP8,660,196. Nor could they verify the amount owed to the
company by its clients, which had been valued as GBP1,630,170 in
the previous year.

The liquidators have therefore been unable to track down the
money owed to JKS Brickwork's creditors and pay these debts.

Commenting on the disqualification, Mark Bruce, a Chief Examiner
at Company Investigations (South) in London, said:

"The maintenance of a company's financial records is a crucial
responsibility for a director, especially when that company is
experiencing financial difficulties.

"This investigation uncovered very significant assets and
expenses that could not be explained adequately to the
liquidator, which prevented him from doing his job properly for
the creditors. Bad book-keeping causes clear harm to creditors,
damages business confidence and threatens economic growth.

"Directors who do not take their responsibilities seriously when
dealing with records of a company must understand that they face
a significant ban as the Insolvency Service are hot on their
heels."


* UK: 3 in 10 Cumbrian Construction Firms Face Collapse, R3 Says
----------------------------------------------------------------
North West Evening Mail reports that R3, the insolvency trade
body, said three in 10 Cumbrian construction companies could fail
in the next 12 months.

According to the report, Jeremy Oddie, regional chairman of R3
and head of recoveries at accountant Mitchell Charlesworth, said
difficulties in raising funding for development, and cuts in
public spending, were key issues facing the industry.

North West Evening Mail quotes Mr. Oddie as saying that: "The
construction sector has been one of the worst affected in the
downturn. The 'crane count' in towns and cities clearly indicates
the fall in activity and there is still no relief in sight.

"Developers are finding it extremely difficult to raise funds for
commercial property and can often only do so on the back of an
anchor tenant.  At the same time, many public-sector projects
have been put on hold.

"There is some comfort for smaller builders though as the 'skip
count' indicates that home owners are choosing to upgrade their
properties rather than sell up and move in the current market.

"Overall times are tough for construction companies and many will
find it difficult to survive the winter."

R3's claim follows the recent Markit/CIPS Construction Purchasing
Managers' Index, which showed that new orders fell for a fifth
consecutive month in October, the report notes.



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


* EUROPE: Moody's Says Insurers Not Immune to Economic Crisis
-------------------------------------------------------------
Certain differences between the business models of European
banking and insurance entities have meant that the economic
dislocation from the 2008-09 global financial crisis and the on-
going euro area sovereign instability have thus far weighed less
on insurers than on banks, says Moody's Investors Service in a
new Special Comment published on Dec. 18. However, the rating
agency notes that insurers are not immune to a sharp
deterioration in European economic conditions. Further, Moody's
acknowledges that future financial crises may involve different
stresses that could impact insurers more than banks.

The new report is entitled "European Insurers' Performance During
Crisis Highlights Distinctions with Banks ".

"In the current crisis, certain business model characteristics
have thus far provided insurers with stronger credit resilience,
and we believe this will on average continue under the current
challenging operating environment", says Antonello Aquino, a
Moody's Senior Vice President and author of the report. "Over the
past five years, on average, the standalone credit assessments of
banks in the euro area have declined by five notches compared
with one notch for the Insurance Financial Strength Ratings",
adds Mr. Aquino.

Moody's acknowledges that a like-for-like comparison of the
credit profiles of banks and insurers faces many challenges.
However, the rating agency has identified several key factors
that are indicative of the insurance sector's relative resilience
during this crisis relative to banks:

* Minimal reliance on capital markets, particularly for funding

* Good levels of asset-liability matching and asset liquidity,
   leading to a low need to crystallize asset losses in periods
   of market stress

* Good underwriting profitability for property & casualty
   insurers, which are so far less challenged by the difficult
   macroeconomic conditions

* The ability of life insurers, under certain contracts, to
   share some investment losses with customers, providing an
   incremental off-balance-sheet capital buffer

Despite these relative strengths, Moody's notes that insurers are
not immune to a sharp deterioration in European economic
conditions and, in the past, they have been severely affected by
the combination of catastrophic events and financial market
disruptions. Currently, almost half of Moody's insurance ratings
in Europe carry a negative outlook or are on review for
downgrade. Furthermore, Moody's has downgraded insurers with
concentrations in countries where sovereign credit quality has
weakened. Further deterioration of the economic environment would
pressure many European insurers' ratings, especially those with
direct operating or asset exposures to these countries. Insurers
may also be more exposed than banks to future financial crises
with different stresses -- for example a significant equity
market shock or a period of sustained low interest rates would
weigh heavily on some insurers' credit profiles.


* EUROPE: Carmakers Prepare for Deteriorating Market Conditions
---------------------------------------------------------------
Fitch Ratings says that European auto manufacturers seem to be
taking different approaches to prepare for what should be further
deteriorating market conditions in Europe in 2013.  However,
despite the apparent differences, the recent strategic
announcements all boil down to eventually concentrating
manufacturers' efforts on investment or making sure they can
continue funding capex and R&D if underlying cash from operations
weaken.

Fiat Spa ('BB'/Negative) and Volkswagen AG ('A-'/Positive)
announced increased or accelerated investment in the next two to
three years, which will lead to higher cash outflows.  Three
other manufacturers, Daimler AG ('A-'/Stable), Peugeot SA (PSA,
'BB-'/Negative) and Renault SA ('BB+'/Stable), have gone in what
looks like the opposite direction having recently sold non-core
assets and bolstered their balance sheet through material cash
inflows.

However, Daimler and Renault have more headroom in their
financial profiles than PSA and will be able to reinvest the
proceeds of the asset sales in their automotive operations, hence
enhancing growth opportunities, rather than absorbing materially
negative funds from operations (FFO).  Alternatively, asset
disposals can also ensure that investment will not be reduced if
earnings and FFO are significantly hit by worsening market
conditions.

In December 2012, Daimler sold a 7.5% stake in EADS for EUR1.7
billion, and Renault disposed of its remaining 6.5% participation
in AB Volvo ('BBB'/Stable) for EUR1.5 billion.  As part of its
overall EUR1.5 billion asset sale program, including real estate
and other assets, PSA sold a 75% stake in its logistics division
Gefco for EUR800 million and a EUR100 million special dividend.

Fitch views positively the disposal of non-core assets which do
not structurally and materially enhance group's earnings and cash
generation.  In particular, Daimler's stake in EADS did not
provide any substantial financial interest to the group whereas
dividends received from Volvo, albeit positive for Renault, were
not pivotal to the latter's free cash flow.

However, the majority sale of Gefco will deprive PSA of Gefco's
recurring funds from operations and reduce its profitability in
the future.  Gefco's operating margins were 5.9% in 2011 and 3.3%
in H112, much higher than PSA's overall industrial margins of
1.4% and negative 0.9%, respectively.  Nonetheless, Fitch
acknowledges that this disposal bolsters the group's liquidity at
a time where it needs it critically to offset cash absorption and
losses from its underlying automotive business (negative
operating margins of 0.2% in 2011 and 3.3% in H112).

Likewise, Fitch assesses differently Volkswagen's and Fiat's
announcements to accelerate their capex and R&D programs.  While
this plan should benefit Volkswagen, increasing cash outflows
could put further pressure on Fiat given the limited headroom in
its current ratings.  Volkswagen is boosting its already broad
and successful product range and strengthening further its
dominant positions and market shares in Europe and other
international markets. Conversely, Fiat's increased spending
addresses years of underinvestment and the group's revised
strategy to reposition its brands more upscale.  While Fitch
believes that this strategy makes sense, it carries substantial
execution risk, particularly in the current extremely difficult
competitive environment where other companies follow the same
route, and given the group's poor track record in its previous
attempts to do so.

Free cash flow generation will be a critical rating factor in
2013 for auto manufacturers, particularly the most weakly
positioned companies, Fiat and PSA.  Fitch is concerned that its
current base case for cash generation through 2014 may be
reviewed downwards if the environment deteriorates more rapidly
than its current projections.  In particular, Fitch expects sales
to decrease by a further 2%-3% in Europe in 2013 -- the sixth
consecutive year of decline -- and the pricing environment to
remain challenging.  Higher than expected cash flow deterioration
would in turn have a negative impact on these groups' credit
profiles and ratings.


* EUROPE: Permanent Bailout Fund May Act as Resolution Mechanism
----------------------------------------------------------------
Angela Cullen and Jeff Black at Bloomberg News report that
European Central Bank Executive Board member Joerg Asmussen said
Europe's permanent bailout fund could act as a resolution
mechanism as well as providing capital to ailing banks, as long
as certain conditions are met.

A so-called Single Resolution Mechanism "would have the legal and
financial capacity, as well as the independence, to ensure that
viable banks survive and non-viable banks are closed down,"
Bloomberg quotes Mr. Asmussen as saying on Tuesday.  Such a body
could "concentrate decisions on resolution and act pre-emptively
and quickly, helping to preserve the value of banks and save
money for taxpayers."

Europe is seeking to sever the link between its banks and state
finances by creating a so-called banking union that marries
central supervision by the ECB with a joint pot of money to aid
stricken lenders, Bloomberg notes.  European leaders have already
signed a deal to establish ECB supervision as the first pillar,
and said public money for recapitalization will be available next
year, when further work on a resolution mechanism is also
scheduled, Bloomberg relates.

Mr. Asmussen, as cited by Bloomberg, said that while public funds
to recapitalize and wind down banks must be available, costs
incurred should "first and foremost be covered by the private
sector."  According to Bloomberg, he said that a resolution fund
should be created through levies on the banking sector.

Bloomberg notes that while the ECB has a target deadline of March
2014 to actually start supervising banks, joint recapitalization
funds could be unlocked earlier if euro-area ministers agree and
the ECB steps in to oversee, according to the compromise brokered
in Brussels last week.

At the same time, Mr. Asmussen laid out four conditions that
should be met before joint European support can be used,
Bloomberg discloses.

According to Bloomberg, Mr. Asmussen said that banks applying for
funds should undergo a "thorough and independent economic
evaluation," and have a viable business model to establish the
case for aid.  Private sector funds should be tapped first, and
failing that, money from individual member states should be
sought before joint aid from the fund, known as the European
Stability Mechanism, could be released, Bloomberg notes.


* Upcoming Meetings, Conferences and Seminars
---------------------------------------------

Jan. 24-25, 2013
   AMERICAN BANKRUPTCY INSTITUTE
      Rocky Mountain Bankruptcy Conference
         Four Seasons Hotel Denver, Denver, Colo.
            Contact:   1-703-739-0800; http://www.abiworld.org/

Feb. 7-9, 2013
   AMERICAN BANKRUPTCY INSTITUTE
      Caribbean Involvency Symposium
         Eden Roc Renaissance, Miami Beach, Fla.
            Contact:   1-703-739-0800; http://www.abiworld.org/

Feb. 17-19, 2013
   AMERICAN BANKRUPTCY INSTITUTE
      Advanced Consumer Bankruptcy Practice Institute
         Charles Evans Whittaker Courthouse, Kansas City, Mo.
            Contact:   1-703-739-0800; http://www.abiworld.org/

Feb. 20-22, 2013
   AMERICAN BANKRUPTCY INSTITUTE
      VALCON
         Four Seasons Las Vegas, Las Vegas, Nev.
            Contact:   1-703-739-0800; http://www.abiworld.org/

Apr. 10-12, 2013
   TURNAROUND MANAGEMENT ASSOCIATION
      TMA Spring Conference
         JW Marriott Chicago, Chicago, Ill.
            Contact: http://www.turnaround.org/

Apr. 18-21, 2013
   AMERICAN BANKRUPTCY INSTITUTE
      Annual Spring Meeting
         Gaylord National Resort & Convention Center,
         National Harbor, Md.
            Contact:   1-703-739-0800; http://www.abiworld.org/

June 13-16, 2013
   AMERICAN BANKRUPTCY INSTITUTE
      Central States Bankruptcy Workshop
         Grand Traverse Resort, Traverse City, Mich.
            Contact:   1-703-739-0800; http://www.abiworld.org/

July 11-13, 2013
   AMERICAN BANKRUPTCY INSTITUTE
      Northeast Bankruptcy Conference
         Hyatt Regency Newport, Newport, R.I.
            Contact:   1-703-739-0800; http://www.abiworld.org/

July 18-21, 2013
   AMERICAN BANKRUPTCY INSTITUTE
      Southeast Bankruptcy Workshop
         The Ritz-Carlton Amelia Island, Amelia Island, Fla.
            Contact:   1-703-739-0800; http://www.abiworld.org/

Aug. 8-10, 2013
   AMERICAN BANKRUPTCY INSTITUTE
      Mid-Atlantic Bankruptcy Workshop
         Hotel Hershey, Hershey, Pa.
            Contact:   1-703-739-0800; http://www.abiworld.org/

Aug. 22-24, 2013
   AMERICAN BANKRUPTCY INSTITUTE
      Southwest Bankruptcy Conference
         Hyatt Regency Lake Tahoe, Incline Village, Nev.
            Contact:   1-703-739-0800; http://www.abiworld.org/

Oct. 3-5, 2013
   TURNAROUND MANAGEMENT ASSOCIATION
      TMA Annual Convention
         Marriott Wardman Park, Washington, D.C.
            Contact: http://www.turnaround.org/

Nov. 1, 2013
   AMERICAN BANKRUPTCY INSTITUTE
      NCBJ/ABI Educational Program
         Atlanta Marriott Marquis, Atlanta, Ga.
            Contact:   1-703-739-0800; http://www.abiworld.org/

Dec. 2, 2013
   BEARD GROUP, INC.
      19th Annual Distressed Investing Conference
          The Helmsley Park Lane Hotel, New York, N.Y.
          Contact:   240-629-3300 or http://bankrupt.com/

Dec. 5-7, 2013
   AMERICAN BANKRUPTCY INSTITUTE
      Winter Leadership Conference
         Terranea Resort, Rancho Palos Verdes, Calif.
            Contact:   1-703-739-0800; http://www.abiworld.org/




                            *********

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

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

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

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


                            *********


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

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

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

This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.

Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.

The TCR Europe subscription rate is US$625 per half-year,
delivered via e-mail.  Additional e-mail subscriptions for
members of the same firm for the term of the initial subscription
or balance thereof are US$25 each.  For subscription information,
contact Peter Chapman at 240/629-3300.


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