TCREUR_Public/130104.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

                           E U R O P E

            Friday, January 4, 2013, Vol. 14, No. 3



INTERNATIONAL BANK: Fitch Cuts LT Issuer Default Rating to 'BB'


DECO 10-PAN: S&P Cuts Ratings on Two Note Classes to 'CCC-'


KASPI BANK: Fitch Raises LT Issuer Default Rating to 'B'


* PORTUGAL: President Balks at Draconian Terms of EU-IMF Bail-Out


ABSOLUT BANK: Fitch Likely to Cut LT Issuer Default Rating to 'B'
BANK NATIONAL: Fitch Assigns 'bb+' Viability Rating


AYT GENOVA: S&P Affirms 'BB-(sf)' Rating on Class D Notes
ELECTROPAZ: Placed Under State Control by Bolivian Government

U N I T E D   K I N G D O M

HEY GREEN: Difficult Trading Conditions Prompt Administration
SECOND BYTE: In Administration, Cuts 26 Jobs
* UK: Retail Sector Bankruptcies Up 6% in 2012, Deloitte Says
* UK: Alix Partners Says Large Banks Face Bankruptcy Cycle Risk


* EMEA CMBS Loan Refinancing Challenges to Persist, Fitch Says
* BOOK REVIEW: Corporate Venturing -- Creating New Businesses



INTERNATIONAL BANK: Fitch Cuts LT Issuer Default Rating to 'BB'
Fitch Ratings has downgraded International Bank of Azerbaijan's
(IBA) Long-term Issuer Default Rating (IDR) to 'BB' from 'BB+'
and removed the rating from Rating Watch Negative (RWN).  The
Outlook on the IDR is Stable.  At the same time, the agency has
upgraded IBA's Viability Rating (VR) to 'b-' from 'f'.


The downgrade of IBA's IDRs and the revision of its Support
Rating Floor reflect the continued track record of quite limited
capital support from the Azerbaijan's authorities.  In Fitch's
view, support in 2012 has continued to be slow, limited in volume
and skewed towards Tier 2 capital instruments with weak loss
absorption capacity.

The Central Bank of Azerbaijan's recent provision of AZN100
million of subordinated debt followed other incremental capital
contributions made to IBA earlier in 2012.  Fitch estimates that
this chain of capital injections, together with the planned
completion of an AZN50 million equity contribution by the bank's
minority, private shareholders, will enable IBA to maintain its
statutory capital adequacy at around the 12% minimum level at
end-2012.  However, IBA's ratio will at best remain only very
slightly above the regulatory limit, pressured by its limited
ability to deleverage and the potential need for recognition of
additional credit impairment.


IBA's IDRs continue to be driven by Fitch's view that there is a
moderate probability of support for the bank, if needed, from the
Azerbaijan authorities.  This view factors in IBA's majority
(50.2%) state ownership, its large domestic franchise (the bank
accounts for 35% of sector assets), substantial funding from
state-owned corporations (30% of deposits at end-Q312), the
bank's relatively small size relative to the sovereign's
available resources and the potentially significant reputational
damage for the authorities in case of IBA's default.

Fitch believes that the authorities are likely to continue to
provide small-scale capital support, and also make liquidity
available, as required.  IBA's overdraft facility from the
central bank has been recently increased to AZN150 million from
AZN100 million.  In addition, the bank's draft medium-term
financial plan foresees AZN200 million of additional equity
injections to be completed by end-2015.


IBA's ratings may be downgraded further if (i) the Azerbaijan
authorities fail to provide timely capital and/or liquidity
support to IBA in case of renewed pressure on the bank's stand-
alone credit profile, or (ii) a downgrade of Azerbaijan's 'BBB-'
sovereign Long-term IDRs.  A downgrade may also follow if the
state's share falls below 50%, although Fitch views IBA's
privatization as unlikely to happen before 2014, at the earliest.
Upside potential for the ratings is very limited.


The upgrade of the VR to 'b-' reflects IBA's expected return to
compliance with regulatory capital requirements in 2013, an
increase in provisioning against problem loans (with statutory
impairment reserves now more aligned with those under IFRS) and a
small improvement in Fitch Core Capital (FCC/risk weighted assets
rose to 5.8% at end-H112 from 4.4% at end-2010).  Completion of
the AZN50 million equity placement among the private shareholders
(following the AZN50 million contributed by the Ministry of
Finance in Q112) will also be supportive, and Fitch is informed
that AZN40 million of this has already been paid in during H212.
However, the agency expects that this capital will be largely
consumed by loan growth, given the further credit needs of some
of the bank's problematic project finance exposures.


IBA's VR continues to reflect its weak asset quality, capital and
performance and tight liquidity.  However, the rating also
reflects the stability of the bank's funding to date, and the
currently supportive operating environment, reflected in robust
growth of the non-oil economy.

Non-performing loans (NPLs) at end-Q312 comprised 17% of IBA's
loan book, while an additional 24% of loans were restructured.
At the same time, IBA's statutory impairment reserves (both
specific and general) were equal to only 12% of the portfolio,
suggesting potential for further recognition of credit losses.
In addition, IBA has financed AZN0.9bn of quite speculative
investments (mostly connected with construction and real estate)
in Russia, which carried an impairment reserve of only 26% at
end-H112, resulting in a net value equal to about 2x FCC.  The
bank expects that further financing of at least AZN0.3bn will be
required to complete the construction projects and ultimately
dispose of the assets.

In Fitch's view, the recoverability of the problem assets (loans
and investments) will be quite lengthy (beyond one year) and may
require absorption of considerable additional credit losses.  The
bank's weak performance (despite some improvement, in H112 pre-
impairment profit net of accrued interest not received in cash
was barely positive) means that it will be difficult to absorb
any such losses through the income statement, resulting in
potential further pressure on capital.

In the absence of any meaningful amortization of the loan book,
IBA is increasingly dependent on timely prolongation/refinancing
of existing wholesale debt, which comprised 27% of non-equity
funding at end-Q312.  IBA's total liquidity cushion at end-Q312
was equal to AZN305 million (11% of customer deposits), while
wholesale funding maturities total AZN630 million in H113 and
AZN200 million in H213.  IBA expects a large AZN380 million bank
deposit falling due in H113 to be rolled over (as has been the
case in the past), and also has plans to refinance the remaining
wholesale funding.  In assessing IBA's liquidity position, Fitch
takes some comfort from the stability, to date, of customer
deposits, the availability of liquidity support from the central
bank and continued access to international funding during 2012.


The VR could be downgraded if there was (i) a further marked
deterioration in asset quality, reflected in a weakening of
underlying credit exposures or an increase in NPLs; (ii) further
heightened pressure on capitalization as a result of asset
quality deterioration and/or higher leverage; or (iii) a sharp
tightening of the liquidity position, for example as a result of
the inability to refinance/extend maturing wholesale debt.  An
upgrade of the VR is unlikely in the foreseeable future, and
would require a resolution of asset quality problems or a
recapitalization of the bank.

The rating actions are as follows:

  -- Long-term foreign currency IDR: downgraded to 'BB' from
     'BB+', Outlook Stable
  -- Short-term foreign currency IDR: affirmed at 'B', off RWN
  -- Viability Rating: upgraded to 'b-' from 'f'
  -- Support Rating: affirmed at '3', off RWN
  -- Support Rating Floor: revised to 'BB' from 'BB+', off RWN

In accordance with Fitch's policies the issuer appealed and
provided additional information to Fitch that resulted in a
rating action that is different from the original rating
committee outcome.


DECO 10-PAN: S&P Cuts Ratings on Two Note Classes to 'CCC-'
Standard & Poor's Ratings Services lowered its credit ratings on
DECO 10-Pan Europe 4 PLC's class C to E notes.  "At the same
time, we have placed on CreditWatch negative its ratings on the
class A2 and B notes.  S&P's rating on the class A1 notes remains
unaffected by the rating actions."

On the October interest payment date (IPD), both the class E and
class D notes suffered interest shortfalls. It appears that the
shortfall was caused by an increase in expenses, particularly
third-party expenses and servicer fees. The unpaid interest on
the class D notes to the amount of EUR26,709 is shown as accrued
interest in the October cash manager's report, while the class E
notes' unpaid interest is reported as extinguished.

The Treveria II loan was revalued on June 30, 2012, which
resulted in an updated valuation figure of EUR167,810,000 and a
loan-to-value (LTV) ratio of 121%. As a result of the
revaluation, an appraisal reduction occurred, which resulted in
an appraisal reduction factor of 31.7%.  This could limit the
availability of the liquidity facility to cover interest
shortfalls occurring on that loan, thereby increasing the risk of
future interest shortfalls.  In light of this new valuation
figure, we also anticipate that potential future losses have
increased in connection with this loan.

In S&P's view, with eight loans maturing in 2013, the risk of
future interest shortfalls has increased due to further asset
sales thereby increasing the risk of negative carry, higher
third-party expenses, and future potential appraisal reductions.
"In our opinion, the transaction is now exposed to greater
principal loss expectations as well as cash flow disruptions,"
S&P said.

"We have therefore lowered our ratings on the class C to E notes
to reflect the increased risk of interest shortfalls. In
addition, we have placed our ratings on the class A2 and B notes
on CreditWatch negative as a result of our view of reduced
creditworthiness under our various rating scenarios. Our ratings
on the class A1 notes remain unaffected by the rating actions.

DECO 10-Pan Europe 4 is a European commercial mortgage-backed
securities (CMBS) transaction that closed in 2006 and is backed
by 10 loans secured on properties in Germany, Switzerland, and
the Netherlands.


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

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


Class             Rating                Rating
                  To                    From

DECO 10 - Pan Europe 4 PLC
EUR1.039 Billion Commercial Mortgage-Backed Floating-Rate Notes

Ratings Lowered

C                 B (sf)                BB (sf)
D                 CCC- (sf)             BB- (sf)
E                 CCC- (sf)             B (sf)

Ratings Placed On CreditWatch Negative

A2                A (sf)/Watch Neg      A (sf)
B                 BBB (sf)/Watch Neg    BBB (sf)

Rating Unaffected

A1                A (sf)


KASPI BANK: Fitch Raises LT Issuer Default Rating to 'B'
Fitch Ratings has upgraded Kazakhstan-based Kaspi Bank's Long-
term Issuer Default Rating (IDR) to 'B' from 'B-', and Viability
Rating (VR) to 'b' from 'b-'.  The Outlook is Stable.

Simultaneously, the agency has withdrawn the bank's ratings as
Kaspi has chosen to stop participating in the rating process.
Therefore, Fitch will no longer have sufficient information to
maintain the ratings, and accordingly will no longer provide
ratings or analytical coverage.

Rating Rationale - IDRs and Viability Rating

The upgrade of the Long-term IDR and VR reflect Kaspi's
strengthened market positions in consumer retail lending and
deposit-taking, its improved and currently strong performance and
reduced deposit concentrations.  The ratings are also supported
by the bank's so far satisfactory retail asset quality, currently
comfortable liquidity and satisfactory capitalization, and the
broadly favorable operating environment.

However, the ratings also take into account the risks associated
with the bank's rapid growth, some uncertainty about how the
bank's consumer lending business will perform through the cycle,
asset quality weaknesses in the corporate portfolio and the lack
of information available to Fitch regarding the bank's ownership

Rating Drivers - IDRs and Viability Rating

Kaspi's rapid mass-market retail lending growth (59% in 9M12
after 70% in 2011) has enabled it to become the leading bank in
Kazakhstan by outstanding volume of unsecured consumer loans.
This has been made possible by the rapid roll-out of effective
sales channels, good access to retail deposit funding and limited
focus of potential competitors on this market segment.  Strong
growth has improved scale efficiencies and deepened the bank's
franchise, although also gives rise to significant credit and
operational risks.  At end-9M12, retail loans comprised 58% of
the portfolio, SMEs 10% and corporates 32%.

Non-performing loans (NPLs; overdue by more than 90 days)
remained flat at about 15% of total gross loans throughout the
year to end-9M12, which in part reflects limited write-offs
(typical for Kazakhstani banks).  Loan impairment charges between
2009 and 9M12 have been in the 5%-7% range, which is consistent
with strong bottom line performance, given the high net interest
margin, improved fee income and better efficiency.  Pre-
impairment profit was equal to 10.4% of average assets
(annualized) in 9M12, and net income 3.7%.

At the same time, Fitch has some concerns about asset quality in
both the retail and corporate books.  The rapid growth of the
retail book and the high proportion of less affluent customers on
the market suggest that portfolio performance could be vulnerable
to adverse macroeconomic developments (although Fitch does not
currently expect these) or a seasoning of the book.  Furthermore,
a significant amount of corporate and SME loans carried on the
balance sheet through the crisis continue to generate large
interest accruals not being received in cash.

Strong pre-impairment profit has allowed Kaspi to build up loan
impairment reserves (LIRs), which at end-9M12 covered NPLs by
114%.  Solid earnings retention has supported capitalization,
with the Fitch core capital ratio standing at 14.5%,
notwithstanding rapid growth.  At the same time, Fitch views
capitalization as only satisfactory given rapid ongoing growth,
significant problems in the corporate book which are not all
captured in the NPL numbers, and considerable accrued interest on
the balance sheet, which accounted for 46% of equity at end-9M12.

Kaspi is funded primarily by customer deposits, which accounted
for 80% of liabilities at end-9M12, with retail comprising 80% of
these.  The two bank's largest deposit customers accounted for
19% of deposits at end-9M12, down from 36% at end-9M11.

Rating Sensitivities - IDR and VR
The Outlook on the Long-term IDR is Stable.  The bank's credit
profile could further benefit from an extended track record of
sound performance as the loan book seasons and growth moderates,
and improved performance of its corporate and SME books in a
supportive economy.  A deterioration in performance as the loan
book seasons, potentially leading to a weakening of
capitalization, would be negative.

Rating Drivers and Sensitivities - Support Rating and Support
Rating Floor

The Support Rating of '5' and Support Rating Floor of 'No Floor'
reflect uncertainty about the ability and/or willingness of the
bank's shareholders and the Kazakh authorities to provide support
in case of need.  Continued increase in the bank's retail deposit
market share would raise the likelihood of government support for
the bank, in Fitch's view.

The rating actions are as follows:

  -- Long-term IDR: upgraded to 'B' from 'B-'; Outlook Stable;
  -- Short-term IDR: affirmed at 'B'; withdrawn
  -- Viability Rating: upgraded to 'b' from 'b-'; Outlook Stable;
  -- Support Rating: affirmed at '5'; withdrawn
  -- Support Rating Floor: affirmed at 'No Floor'; withdrawn


* PORTUGAL: President Balks at Draconian Terms of EU-IMF Bail-Out
Ambrose Evans-Pritchard at The Telegraph reports that Anibal
Cavaco Silva, Portugal's president, has ordered a legal inquiry
into the country's austerity policies and threatened a showdown
with creditors over the draconian terms of its European Union-
International Monetary Fund bail-out.

According to the Telegraph, Mr. Cavaco Silva called for urgent
action to halt the "recessionary spiral", warning Europe's
leaders that the current course had become "socially

In a speech to the nation, Mr. Silva said Portugal would "honor
its international obligations", but in the same breath called for
a tough line with the European Union-International Monetary Fund
Troika over the pace of fiscal tightening under Portugal's
EUR78 billion (GBP63 billion) loan package, the Telegraph

"Fiscal austerity is leading to declining output and lower tax
revenue.  We must stop this vicious circle," the Telegraph quotes
Mr. Cavaco Silva as saying, cautioning the Troika that there
would be no way out of the crisis until policy was set in the
interests of the "Portuguese people" as well as foreign


ABSOLUT BANK: Fitch Likely to Cut LT Issuer Default Rating to 'B'
Fitch Ratings says it would likely downgrade Absolut Bank's Long-
term Issuer Default Rating (IDR) to the 'B' category (from 'BB+')
if the sale of the bank to Russian non-state pension fund
Blagosostoyanie goes through.  The Rating Watch Negative (RWN) on
Absolut's Long-term IDR already reflects the potential for the
rating to be downgraded if it is sold to a weaker shareholder and
will be resolved once a transaction is completed.

The level of Absolut's rating following a sale to Blagosostoyanie
would probably depend, among other things, on (i) how the
transaction's structure and any revisions to strategy and
business model impact the bank's standalone profile; (ii) Fitch's
view of the ability and willingness of the new shareholder to
provide support, in case of need; and (iii) the nature of any
future joint development with KIT Finance Investment Bank (OJSC)
('B'/ Stable/'b-'), which is also owned by Blagosostoyanie, given
KIT-Finance's weak intrinsic credit profile.  Fitch's current
view of Absolut's standalone profile is reflected in its 'b'
Viability Rating (VR).

On December 24, Absolut's owner, Belgium's KBC Bank (KBCB; 'A-'/
Stable), announced that it had reached an agreement to sell its
99% stake in Absolut to a group of Russian companies that manage
Blagosostoyanie's assets.  The sale price is EUR0.3 billion, and
Blagosostoyanie will also replace about EUR0.7 billion of non-
equity funding provided by KBCB to Absolut.  KBCB's announcement
indicated that the transaction should be completed by Q213,
subject to receipt of regulatory approvals.  Although
Blagosostoyanie has sought to structure the proposed acquisition
to conform with Russian legislation on investment of pension fund
assets, the reported intention of the Russian financial markets
regulator, the Federal Financial Markets Service, to investigate
the transaction introduces some uncertainty with respect to its
completion.  In Fitch's view, KBCB is likely to continue
providing support to Absolut up to the moment of sale.

Fitch will conduct a full review of Absolut's ratings if and when
the sale is completed.  The agency expects that the planned
change of owner would lead to Absolut's Long-term IDR being
downgraded to the 'B' category as a result of the reduced
probability of shareholder support, in case of need.  At the same
time, some limited support from Blagosostoyanie and entities
affiliated with the fund, including JSC Russian Railways
('BBB'/Stable) may be factored into the ratings, as is the case
with KIT Finance.

Absolut's VR of 'b' reflects the bank's improved asset quality,
currently sizeable liquidity cushion and its solid capitalization
following recent deleveraging.  Fitch understands that Absolut
will not make an equity distribution prior to the sale.  At the
same time, the VR also considers the weak pre-impairment
profitability and limited franchise.  To a large degree,
Absolut's VR already takes into account uncertainties and
potential challenges arising from the potential change of

Blagosostoyanie has indicated that it plans to continue Absolut's
development as a full-service commercial bank model with a retail
focus, and to ensure continuity of the bank's management.  At the
same time, there is some uncertainty about the bank's future
profile given the profitability and franchise challenges that it
faces, and Fitch's understanding that the fund may be able to
help the bank gain access to some new customers.

Blagosostoyanie was the second-largest non-state pension fund in
Russia with RUB261.5 billion of assets at end-9M12. Corporate
retirement plans, predominantly those relating to employees of
the fund's founding entity, Russian Railways, comprised about 69%
of these assets. Blagosostoyanie's largest strategic investments
are financial and transportation industry companies.

Absolut is a medium-sized Russian commercial bank. At end-11M12,
it ranked 26th among local banks with RUB103bn of total assets,
according to Fitch's 'Russian Banks Datawatch 11M12', available

Absolut's current ratings are:

  -- Long-term foreign currency IDR: 'BB+'; RWN
  -- Short-term foreign currency IDR: 'B'
  -- National Long-term Rating: 'AA(rus)'; RWN
  -- Viability Rating: 'b'
  -- Support Rating: '3'; Rating Watch Negative
  -- Senior unsecured debt rating: 'AA(rus)'; RWN

BANK NATIONAL: Fitch Assigns 'bb+' Viability Rating
Fitch Ratings has assigned Russia's Bank National Clearing Centre
(NCC) Long-term Issuer Default Ratings (IDRs) of 'BBB-' with a
Stable Outlook and a Viability Rating (VR) of 'bb+'.

NCC is a key operating subsidiary of the Moscow Exchange Group
(MEG), which was formed as a result of the merger of the MICEX
and RTS exchanges, and is the largest and virtually the only
major stock exchange in Russia.  NCC is a central clearing
counterparty (CCP) on foreign exchange (FX), securities and
derivatives markets. I n its role as an intermediary between
market participants, NCC acts as a counterparty for each trade
and is ultimately responsible for the performance of trading
obligations notwithstanding the failure of one or more clearing


NCC's IDRs reflect the support that Fitch believes it is likely
to receive, if needed, from the Central Bank of Russia (CBR)
and/or other government authorities.  In assessing the likelihood
of CBR/state support, Fitch considers the high systemic
importance of NCC due to its major role in ensuring the proper
functioning of local financial markets and its unique
infrastructure.  A failure of NCC to perform its functions fully
and in a timely fashion could lead to serious confidence-related
issues and have a material negative impact on the whole Russian
financial system.

The support-driven IDRs also consider liquidity support
mechanisms which the CBR has already put in place for NCC because
of its unique role, namely unlimited USD/RUB swap lines and a
collateralized liquidity facility.  The ratings also consider the
regulator's potential readiness to provide further liquidity
support should it be needed.

The one-notch difference between NCC's Long-term IDRs and those
of the Russian sovereign ('BBB') reflect Fitch's moderate
concerns about the timeliness of potential support, because NCC
and its counterparties are operating in potentially volatile and
leveraged markets and any material delays in provision of support
may effectively result in economic losses for counterparties.
The rating differential also considers the limited state
ownership of NCC and the lack of any CBR/state written
commitment/obligation to provide support.  Support has not been
required to date, and so there is no track record to draw on.


NCC's IDR's could be upgraded or downgraded if there was a
similar change in Russia's sovereign ratings.  Any failure or
prolonged delay by the CBR/state to provide support, if needed,
could also result in a downgrade of the ratings.


NCC's VR of 'bb+' reflects its strong ability to withstand severe
market stresses.  This is due to high liquidity, sound collateral
mitigation of market risks, good capitalization, and robust
earnings.  At the same time the VR is constrained by high
operating risks, the weak Russian legal environment for trading
derivatives (although this may improve significantly in H113) and
contingent risks related to the broader MEG.

The challenges and uncertainty from the recent consolidation of
clearing of MEG's other businesses (in particular, equities and
commodities futures and options) with NCC (Fitch understands they
would account for about 10% of total opened positions), as well
as a possible shift to partial collateralization from a full pre-
deposit basis for some lines of business, and an extension of
settlement terms from T+0 up to T+2 (or even longer for some
products) may increase risks.  However, Fitch takes comfort from
NCC's extensive track record and experience in managing
collateral-based risks.

NCC has never faced a loss due to an inability to close out
counterparties' positions.  In Fitch's view, NCC's collateral
levels provide sufficient coverage of potential replacement costs
arising from counterparty defaults.  However, the current legal
environment may limit NCC's ability to enforce collateral under
derivatives transactions in certain situations (specifically, in
case of a counterparty bankruptcy), although most legal
inefficiencies could be resolved with the adoption of new
regulations planned for review by the State Duma in Q113.

NCC's loss absorption capacity is significant.  The prudential
capital adequacy ratio (N1) stood at 21.3% as at end-3Q12,
comfortably above the regulatory minimum of 10%.  Fitch estimates
that this capital buffer could allow NCC to withstand a stress
more severe than that of September 2008.  Robust earnings
generation (RUB2.9bln net income in 9M12, annualized ROE of 35%)
further mitigates risk.

NCC has a solid liquidity cushion and no debt. Liabilities
consist of interest-free accounts of trading parties (mainly used
for pledging of collateral), which are not particularly volatile.
These also proved to be countercyclical with NCC reporting an
inflow of customer funding in the crisis of 2008 due to the loss
then of confidence among market participants, who became less
willing to deal with each other directly.  In any case, due to
NCC's policy to hold assets in cash and liquid securities rated
above 'BB-', which can be repoed with the CBR, customer accounts
were 88% covered by available liquidity at end-Q312.  In this
calculation, Fitch excludes RUB22 billion that may be used for a
future share buyback (see below) and RUB24 billion of accounts
with a foreign subsidiary of a large Russian bank, which may be
fiduciary, in Fitch's view.

The risks of the broader MEG mainly relate to its capital and
governance. For example, MEG's Fitch core capital (FCC) eroded
massively (FCC/risk weighted assets ratio of 1.2% at end-H112) as
a result of what Fitch considers an expensive merger with RTS,
resulting in substantial goodwill on MEG's balance sheet.  An
additional RUB22 billion of equity was reclassified to
liabilities due to a put option which MEG provided to former RTS
shareholders for their 14.5% stake in MEG, exercisable if they
are not able to sell their shares through a planned group IPO in
2013.  However, if the IPO is successful, MEG's equity will be
restored by this amount. Capital should be replenished gradually
through sound earnings (consolidated net income of RUB4.2 billion
in 1H12).  Therefore the risk of NCC's capital being withdrawn by
MEG to support the broader group is limited.  There is some risk
of NCC's liquidity being used to pay the put option if it is
exercised, but this would not be critical for NCC's liquidity.


The VR could be upgraded if Fitch's concerns about group
capitalization reduce as a result of a successful IPO or earnings
retention, and improvements in the Russian legal and regulatory
environment reduce risks related to transactions with
derivatives.  A track record of loss-avoidance in case of
counterparty bankruptcies, demonstrating consistent court
practice in respect to collateral, would also be positive.

Losses driven by insufficient collateralization, repetitive or
prolonged IT-system outages, frequent/substantial utilization of
CBR liquidity facilities or a significant decrease in loss
absorption capacity could put downward pressure on the rating.

The rating actions are as follows:

  -- Long-term foreign currency IDR: assigned 'BBB-'; Outlook
  -- Long-term local currency IDR: assigned 'BBB-'; Outlook
  -- Short-term IDR: assigned 'F3'
  -- Support Rating: assigned '2'
  -- Support Rating Floor assigned 'BBB-'
  -- Viability Rating: assigned 'bb+'
  -- National Long-term rating: assigned 'AA+(rus)'; Outlook


AYT GENOVA: S&P Affirms 'BB-(sf)' Rating on Class D Notes
Standard & Poor's Ratings Services affirmed all of its credit
ratings in AyT Genova Hipotecario X Fondo de Titulizacion
Hipotecaria. At the same time, it raised its rating on AyT
Genova Hipotecario XI Fondo de Titulizacion Hipotecaria's class B
notes and have affirmed its ratings on the class A2, C, and D

Levels of credit enhancement available to the rated notes in both
transactions have increased since our last review in November
2010, due to the transactions' deleveraging. The performance of
the underlying collateral has so far been relatively stable.

"We used data from the latest available investor reports for our
analysis (September 2012 for AyT Genova Hipotecario X and
November 2012 for AyT Genova Hipotecario XI). The ratio of
cumulative defaults (loans in arrears for more than 18 months)
over the original collateral balance was 0.73% compared with
0.21% in November 2010 for AyT Genova Hipotecario X. For the same
period, this was 0.89% compared with 0.38% for AyT Genova
Hipotecario XI."

Since S&P's last review, long-term delinquencies (defined in the
transaction documents as loans in arrears for more than 90 days)
have increased to 0.70% from 0.65% for AyT Genova Hipotecario X,
and to 0.77% from 1.33% for AyT Genova Hipotecario XI.

As of the latest interest payment dates (September 2012 for AyT
Genova Hipotecario X and November 2012 for AyT Genova Hipotecario
XI), the reserve funds for both transactions were not at their
required levels. "We note that AyT Genova Hipotecario X has a
larger reserve fund than AyT Genova Hipotecario XI, as in 2010
the issuer increased the required amount to EUR36 million from
EUR12 million (the required amount at closing)," S&P said.

"Based on the increasing defaults and delinquencies that we have
observed in the underlying portfolios of both transactions, the
transactions' structural features (such as triggers, reserve
funds, and swaps), and the increase in the level of credit
enhancement available to the rated notes, we have affirmed all
of our ratings on AyT Genova Hipotecario X's classes of notes,"
S&P said.

"For AyT Genova Hipotecario XI, our credit and cash flow analysis
indicates that the level of credit enhancement available to the
class B notes is now commensurate with a higher rating than
currently assigned. This is partly due to the increased reserve
fund for this transaction, which has provided a higher level of
credit enhancement for the senior notes," S&P related.

"Our rating on AyT Genova Hipotecario XI's class B notes is also
constrained by our sovereign rating on the Kingdom of Spain (BBB-
/Negative/A-3) and the application of our nonsovereign ratings
criteria, in which we rate issuers or transactions in the
European Monetary Union up to six notches above the sovereign
rating. We have therefore raised to 'AA- (sf)' from 'A (sf)' our
rating on this class of notes. In our opinion, the level of
credit enhancement available to the class A2, C, and D notes is
commensurate with the current ratings on these classes of notes.
We have therefore affirmed these ratings," S&P said.

The transaction documents, for both transactions, relating to the
swap counterparty and bank account provider are in line with
S&P's 2012 counterparty criteria. Under the transaction
documents, the counterparties will take remedy actions within a
certain period if the counterparty losses the rating required
under the documents.

AyT Genova Hipotecario X and AyT Genova Hipotecario XI are
Spanish residential mortgage-backed securities (RMBS)
transactions backed by pools of first-ranking mortgages secured
over owner-occupied residential properties in Spain. Barclays
Bank S.A. (BBB-/Negative/A-3) originated the underlying
collateral between November 2001 and November 2006 for AyT Genova
Hipotecario X, and between June 2007 and December 2007 for AyT
Genova Hipotecario XI.


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 Reports
included in this credit rating report are available at


Class            Rating
           To              From

AyT Genova Hipotecario X Fondo de Titulizacion Hipotecaria
EUR1.05 Billion Mortgage-Backed Floating-Rate Notes

Ratings Affirmed

A2         AA- (sf)
B          A (sf)
C          BBB+ (sf)
D          BB- (sf)

AyT Genova Hipotecario XI Fondo de Titulizacion Hipotecaria
EUR1.2 Billion Mortgage-Backed Floating-Rate Notes

Rating Raised

B          AA- (sf)        A (sf)

Ratings Affirmed

A2         AA- (sf)
C          BBB+ (sf)
D          BB- (sf)

ELECTROPAZ: Placed Under State Control by Bolivian Government
BBC News reports that Bolivia has brought Electropaz and Elfeo,
two Spanish-owned electricity supply companies, under state

According to BBC, President Evo Morales accused the subsidiaries
of the Spanish company, Iberdrola, of overcharging consumers in
rural areas.

Mr. Morales said rural households had been paying three times
more for their electricity than people in urban areas, BBC

BBC relates that Mr. Morales said, "We were forced to take this
measure," he said, describing the electricity charges as "unfair
and unequal."

Mr. Morales, as cited by BBC, said that an independent arbiter
will decide in up to 180 days how much compensation Iberdrola
will get for its assets.

In its first reaction to the Bolivian government decision,
Iberdrola said it hoped to be paid a fair price for the
companies, BBC notes.

Iberdrola owned 89.5% of Electropaz, which operates in Bolivia's
largest city, La Paz, and surrounding areas, and 92.8% in Elfeo,
based in the Oruro region, BBC discloses.

According to BBC, armed police guarded the companies'
headquarters and plants in both cities as Mr. Morales announced
their nationalization.

U N I T E D   K I N G D O M

HEY GREEN: Difficult Trading Conditions Prompt Administration
Laurence Kilgannon at Insider Media reports that Hey Green Hotel
has been placed on the market after difficult trading conditions
forced its operator into administration.

Hey Green Hotel, originally built in 1710 by John France as a
corn mill on the edge of Marsden Moor and Saddleworth Moor, hosts
more than 100 events each year, mainly weddings and civil
partnerships, according to Insider Media.

BDO partners Dermot Power and Patrick Lannagan were appointed
joint administrators over Hey Green Ltd.

The report notes that the hotel employed 29 staff but six
employees have been made redundant.

The hotel continues to trade and is currently being operated by
Hey Green Hotels Ltd, under a license granted by the joint

Hey Green Hotel is a historic 18th century West Yorkshire hotel
The company operated the hotel which is set within 13 acres of
private grounds in Marsden.

SECOND BYTE: In Administration, Cuts 26 Jobs
Scunthorpe Telegraph reports that Second Byte IT will close its
business and make 6 jobs redundant after falling into voluntary

Ash Newcombe, director of Second Byte IT, based on Mercia Way,
Scunthorpe, said the decision was made because of a change in the
market, according to Scunthorpe Telegraph.

"A board meeting was held with an insolvency firm and the
decision was made that the company would go into voluntary
receivership . . . .  This way we can manage the process and make
sure it is done properly . . . .  Parts of the business will
remain functioning until Christmas, but the majority will close
before," the report quoted Mr. Newcombe as saying.

The business strives to get long-term unemployed people back into
work and employs 26 people, including four jobs in the Click-PC
store, which offers refurbished computers and games machines at
low prices, the report notes.

Dean Buckley, manager at the store, said it was sad to see the
store closing down, the report relates.

The Second Byte IT social enterprise owns Click-PC. It is based
on Market Hill.

* UK: Retail Sector Bankruptcies Up 6% in 2012, Deloitte Says
Xinhua reports that global auditing firm Deloitte on Wednesday
said the number of retail companies falling into bankruptcy
procedures in Britain increased by 6% in 2012 compared with the
previous year.

According to Xinhua, a research of the business advisory firm
Deloitte found that a total of 194 retailers entered
administration, which means the firms were in insolvencies, in
2012, compared with 183 in 2011 and 165 in 2010.

"These figures are a stark reminder of the difficulties which
continue to face the high street," Xinhua quotes Lee Manning,
restructuring services partner at Deloitte, as saying.

Mr. Manning predicted further distress situation for the retail
sector next year as constrained household budgets and the
structural challenges facing the sector, Xinhua relates.

"There will always be a need for physical retail space but at
present, too many retailers have too many stores and 2013 is
likely to be marked by further closure programs, both within and
outside of formal insolvency processes," Mr. Manning, as cited by
Xinhua, said.

According to the research, a total of 1,833 businesses went into
administration in Britain in 2012, compared with 2,010 last year,
a fall of 9%, Xinhua notes.

Almost all of the sectors tracked in the Deloitte analysis saw a
decline in the number of business failures last year, including
some of those sectors most affected by the economic difficulties
of the past five years, Xinhua discloses.

However, other sectors beside retail which underwent notable
increases in insolvencies include financial services, up from 30
to 47, and the mining and energy sector, up from 22 to 28, Xinhua

* UK: Alix Partners Says Large Banks Face Bankruptcy Cycle Risk
Harry Wilson at The Telegraph reports that Alix Partners, one of
the most influential advisers to senior banking executives, said
large banks risk getting caught in "perpetual" cycle of
bankruptcy like aerospace companies and carmakers unless they
radically alter the way they do business.

Alix Partners warns that global investment banks must tackle
head-on issues such as bonuses and their addiction to the
"steroids" of debt-fueled growth, the Telegraph discloses.

"Just look at the auto manufacturing and commercial aviation
industries, where over the past two decades, changes in
regulatory and operating environments combined to render formerly
solid businesses into perpetual wards of the bankruptcy court,"
the Telegraph quotes the consultants as saying.

Alix said that investment banks still pay their staff far too
much, pointing out that the "overpayment effect" last year was
US$18 billion (GBP11 billion), or close to 30% of the world's top
15 banks' combined pre-tax profits, the Telegraph relates.

Senior bankers agree lenders must change their ways if they are
survive, the Telegraph notes.

According to the Telegraph, the head of one major British bank
said he agreed with the findings and that those businesses, which
did not adapt to the new world, would "die".


* EMEA CMBS Loan Refinancing Challenges to Persist, Fitch Says
This year will start off rather inauspiciously for EMEA CMBS,
according to the latest index results from Fitch Ratings.

Fitch's quarterly index shows 36 loans coming due in Q113, with
all but one maturing in January. The chances of the loans
refinancing are also slim, according to Fitch's Associate
Director Mario Schmidt. "22 maturing loans have a Fitch loan-to-
value ratio above 80%, making refinancing doubtful," said
Mr. Schmidt. "For the 13 of these CMBS loans that are believed to
be in negative equity, the prospects are particularly grim."

In 10 cases, the rated bonds will mature three years later,
which, according to Mr. Schmidt, places the servicer or special
servicer under extra time pressure. This may restrict the use of
forbearance, and therefore lead to more property disposals.

The Maturity Index stands at 47.2% in January 2013, slightly up
from 44% in October 2012. This indicates that 47.2% of the
balance of the loans that have reached maturity has been repaid.

The EMEA Commercial Mortgage Market Index is part of Fitch's
quarterly structured finance index reports.

* BOOK REVIEW: Corporate Venturing -- Creating New Businesses
Authors: Zenas Block and Ian C. MacMillan
Publisher: Beard Books, Washington, D.C. 2003
(reprint of 1993 book published by the President and Fellows of
Harvard College).
List Price: 371 pages. $34.95 trade paper, ISBN 1-58798-211-0.

Creating new businesses within a firm is a way for a company to
try to tap into its potential while at the same time minimizing
risks.  A new business within a firm is like an entreprenuerial
venture in that it would have greater flexibility to
opportunistically pursue profits apart from the normal corporate
structure and decision-making processes.  Such a business is
different from a true entrepreneurial venture however in that the
business has corporate resources at its disposal.  Such a company
business venture has to answer to the company management too.
Corporate venturing -- to use the authors' term -- offers
innovative and stimulating business opportunities.  Though
venturing is in a somewhat symbiotic relationship with the parent
firm, the venture would never threaten to ruin the parent firm as
a entrepreneur might be financially devastated by failure.

Block and MacMillan contrast an entreprenuerial enterprise with
their subject of corporate venturing, "When a new entrepreneurial
venture is created outside an existing organization, a wide
variety of environmental factors determine the fledgling
business's survival.  Inside an organization . . . senior
management is the most critical environmental factor."  This
circumstance is the basis for both the strengths and limitations
of a corporate venture.  In their book, the authors discuss how
senior management working with the leadership of a corporate
venture can work in consideration of these strengths and
weaknesses to give the venture the best chances for success.  If
the venture succeeds beyond the prospects and goals going into
its formation, it can always be integrated into the parent
company as a new division or subsidiary modeled after the regular
parts of a company with the open-ended commitment, regular hiring
practices, and reporting and coordination, etc., going with this.
As covered by the authors, done properly with the right
commitment, sense of realism and practicality, and preliminary
research and ongoing analysis, corporate venturing offers a firm
new paths of growth and a way to reach out to new markets, engage
in fruitful business research, and adapt to changing market and
industry conditions. The principle of corporate venturing is the
familiar adage, "nothing ventured, nothing gained."  While it is
improbable that a corporate venture can save a dying firm, a
characteristic of every dying firm is a blindness about
venturing.  Just thinking about corporate ventures alone can
bring to a firm a vibrancy and imagination needed for business

Ideas, insights, and vision are the essence of corporate
venturing.  But these are not enough by themselves. Corporate
venturing is based as much on the right personnel, especially the
top leaders.  The authors advise to select current employees of a
firm to lead a corporate venture whenever feasible because they
already have relationships with senior management who are the
ultimate overseers of a venture and they understand the corporate
culture.  In one of their several references to the corporate
consultant and motivational speaker Peter Drucker, the authors
quote him as identifying only half jokingly the most promising
employees to lead the corporate venture as "the troublemakers."
These are the ones who will be given the "great freedom and a
high level of empowerment" required to make the venture workable
and who also are most suited to "adapt rapidly to new
information." Such employees for top management of a venture are
not entirely on their own.  The other side of this, as Brock and
MacMillan go into, is for such venture management to earn and
hold the trust and confidence of the firm's top management and
work within the framework and follow the guidelines set for the

Corporate venturing is an operation which is a hybrid of the
standard corporate interests and operations and an independent
business with entrepreneurial flexibility mainly from focus on
one product or service or at most a few interrelated ones,
simplified operations, and streamlined decision-making.  From
identifying opportunities and getting starting through the
business plan and corporate politics, Brock and MacMillan guide
the readers into all of the areas of corporate venturing.

Zenas Block is a former adjunct professor with the Executive MBA
Program at the NYU Stern School of Business.  Ian C. MacMillan is
associated with Wharton as a professor and a director of a center
for entrepreneurial studies.


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

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

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

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


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

Troubled Company Reporter-Europe is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., 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 2013.  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$775 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,
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