TCREUR_Public/130314.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, March 14, 2013, Vol. 14, No. 52



* CYPRUS: Has to Exhaust All Other Aid Sources, Merkel Ally Says


BACCHUS 2007-1: Moody's Affirms 'Ca' Rating on Two Note Classes


ATU AUTO-TEILE-UNGER: Moody's Cuts CFR to Caa2; Outlook Negative
HESS AG: In Talks with Potential Investors


IRISH BANK: Union Agrees to Withdraw Industrial Action Threat
* IRELAND: Minister Noonan Announces End of Bank of Guarantee


AGOS-DUCATO: S&P Lowers Counterparty Ratings to 'BB+/B'
* ITALY: Faces "Full Credit Emergency"; Firms Lack Funding


CAIXA GERAL: S&P Retains Watch Neg. on 'CCC-'-Rated Jr. Sub. Debt


STEEL CAPITAL: Fitch Assigns 'BB(EXP)' Rating to LPNs


LJUBLJANSKA BANKA: Moody's Cuts Long-Term Deposit Rating to Caa2


BANCO POPULAR: Fitch Upgrades Rating on Preference Shares to 'B'
IBERIA LINEAS: Spanish Unions Expect to Back Mediator's Proposal
PESCANOVA: Uncovers Discrepancies Between Accounts & Bank Debt


ARCELIK AS: Fitch Affirms 'BB+' Long-Term Issuer Default Ratings


AVANGARDCO INVESTMENTS: Fitch Affirms 'B' Issuer Default Rating
UKRLANDFARMING PLC: S&P Assigns 'B-' Corp. Rating; Outlook Neg.
UKRLANDFARMING PLC: Fitch Assigns 'B(EXP)' Rating to Eurobond

U N I T E D   K I N G D O M

ATP OIL: Gulf Island to Seek Bluewater Cheviot Balance Repayment
GLOBAL SHIP: Lenders OK Waiver on Leverage Ratio Test
LADBROKES PLC: Playtech Deal No Impact on EBITDAR, Fitch Says
NORTH WEST ELECTRICITY: S&P Gives 'BB+' LT Corp. Credit Rating
OCON: In Administration as Parent Fails to Bailout Firm

* UK: Banks Have GBP50-Bil. in Undeclared Losses, PIRC Says


* Upcoming Meetings, Conferences and Seminars



* CYPRUS: Has to Exhaust All Other Aid Sources, Merkel Ally Says
Brian Parkin at Bloomberg News reports that a close party ally of
German Chancellor Angela Merkel said Cyprus will only be eligible
for an international bailout if it exhausts all other sources of
financial aid.

"There is a clear, agreed sequence of events for aid," Bloomberg
quotes Michael Meister, deputy parliamentary floor leader of
Merkel's Christian Democratic Union party, as saying in an e-mail
from Berlin.  "The first issue with any coordinated aid to Cyprus
is systemic relevance to the euro zone.  Cyprus has to make a
case for this before we roll out other questions."

Mr. Meister, as cited by Bloomberg, said that if the Cypriot
government meets the necessary criteria, the so-called troika of
the European Central Bank, the International Monetary Fund and
the European Commission has to present an agreed draft of a
memorandum for Cyprus.

"IMF participation in the draft is crucially important to us,"
Bloomberg quotes Mr. Meister as saying.

Bailout negotiations have lumbered along for nine months as
Cyprus held an election and German officials questioned whether
the country was big enough to matter to the fate of the euro,
Bloomberg discloses.  Cyprus makes up barely 0.2% of the euro-
zone economy, Bloomberg notes.

According to Bloomberg, debate over the estimated EUR17.5 billion
(US$23 billion) package may come to a head at a Brussels summit
today, March 14, when the new Cypriot president, Nicos
Anastasiades, confronts European leaders for the first time.
Mr. Anastasiades ran with Ms. Merkel's endorsement and has been
open to the idea of selling state-owned companies, a key demand
by creditors, Bloomberg relates.

Mr. Meister said that the troika's memorandum must outline which
financial and economic measures are required for the
Mediterranean island's public finances to be sustainable in the
long run, taking into account the role of Russia as a major
investor, Bloomberg notes.


BACCHUS 2007-1: Moody's Affirms 'Ca' Rating on Two Note Classes
Moody's Investors Service has taken action on the ratings of the
following notes issued by Bacchus 2007-1 plc:

EUR9.094M Class Z Combination Notes due 2023, Downgraded to Aa1
(sf); previously on Nov 23, 2012 Aaa (sf) Placed Under Review for
Possible Downgrade

EUR6M Liquidity Facility Notes, Affirmed Aaa (sf); previously on
Feb 4, 2008 Assigned Aaa (sf)

EUR88M (currently EUR76.4M) Revolving Credit Facility due 2023,
Affirmed Aa2 (sf); previously on Nov 15, 2011 Upgraded to Aa2

EUR218.2M (currently EUR189.4M) Class A Senior Secured Floating
Rate Notes due 2023, Affirmed Aa2 (sf); previously on Nov 15,
2011 Upgraded to Aa2 (sf)

EUR35.4M Class B Senior Secured Floating Rate Notes due 2023,
Affirmed Baa2 (sf); previously on Nov 15, 2011 Upgraded to Baa2

EUR25.5M Class C Senior Secured Deferrable Floating Rate Notes
due 2023, Affirmed Ba3 (sf); previously on Nov 15, 2011 Upgraded
to Ba3 (sf)

EUR25M (currently EUR26.7M) Class D Senior Secured Deferrable
Floating Rate Notes due 2023, Affirmed Caa3 (sf); previously on
Nov 15, 2011 Upgraded to Caa3 (sf)

EUR12.2M (currently EUR14.4M) Class E Senior Secured Deferrable
Floating Rate Notes due 2023, Affirmed Ca (sf); previously on Aug
3, 2009 Downgraded to Ca (sf)

EUR3M Class Y Combination Notes due 2023, Affirmed Ca (sf);
previously on Nov 15, 2011 Confirmed at Ca (sf)

The ratings of the Combination Notes address the repayment of the
Rated Balance on or before the legal final maturity. For Classes
Y, the 'Rated Balance' is equal at any time to the principal
amount of the Combination Note on the Issue Date minus the
aggregate of all payments made from the Issue Date to such date,
either through interest or principal payments. The Rated Balance
may not necessarily correspond to the outstanding notional amount
reported by the trustee.

Bacchus 2007-1 plc, issued in April 2007, is a Collateralized
Loan Obligation backed by a portfolio of mostly high yield
European loans. The portfolio is managed by IKB Deutsche
Industriebank AG. This transaction will end its reinvestment
period in April 2013. It is predominantly composed of senior
secured loans.

Ratings Rationale:

Moody's is downgrading the Class Z combination notes, consisting
of Class F notes (equity piece) from Bacchus 2007-1 PLC and a
stripped French Treasury (Obligation Assimilable du Tresor
Securities or 'OAT strip'), following the downgrade of the French
government bond rating to Aa1 from Aaa. This action concludes the
downgrade review of the notes announced in November 2012.

Moody's affirms the ratings of the Liquidity Facility Notes, the
Revolving Credit facility and the Class A, B,C, D and E notes
given their respective OC levels, the exposure of the deal to
assets rated B3 and below, assets exposed to refinancing risk,
participation risk and increase in the number of defaulted assets
since the last rating action.

Moody's notes that the Class A notes have been paid down by
approximately 13.1% or EUR28.8 million since the last rating
action in November 2011, with a current outstanding balance of
189.4 million. As a result of the deleveraging, the
overcollateralization ratios of Class A/B and C have increased.
As of the latest trustee report dated January 31, 2013, the Class
A/B OC is the only overcollateralization test that is currently
being satisfied. Class A/B and Class C overcollateralization
ratios have increased due to deleveraging and are reported at
120.13% and 110.28% respectively, versus November 2011 levels (on
which the last rating action was based) of 116.01% and 106.6%. In
contrast, the overcollateralization rations of Class D and E
continue to fail and have decreased to 101.56% and 97.42% versus
98.65% and 95.05% as of the last rating action. Reported WARF has
remained stable at 3365 currently compared to 3570 in November

In its base case, Moody's analyzed the underlying collateral pool
to have a performing par and principal proceeds balance of
EUR355.2 million, a weighted average default probability of
25.47% (consistent with a WARF of 3587), a weighted average
recovery rate upon default of 48.89% for a Aaa liability target
rating, a diversity score of 38.01 and a weighted average spread
of 3.33%. The default probability is derived from the credit
quality of the collateral pool and Moody's expectation of the
remaining life of the collateral pool. The average recovery rate
to be realized on future defaults is based primarily on the
seniority of the assets in the collateral pool. For a Aaa
liability target rating, Moody's assumed that 97.22% of the
portfolio exposed to senior secured corporate assets would
recover 50% upon default, while the remainder non first-lien loan
corporate assets would recover 10%. In each case, historical and
market performance trends and collateral manager latitude for
trading the collateral are also relevant factors. These default
and recovery properties of the collateral pool are incorporated
in cash flow model analysis where they are subject to stresses as
a function of the target rating of each CLO liability being

In addition to the base case, because of the concentration of
participation loans with IKB as the sole counterparty (3.42% as
per the most recent Trustee report), Moody's ran stressed bi-
variate risk scenarios and supplemented its base case analysis
with scenarios assuming 10% recovery rate instead of 50% for the
proportion of senior secured participation loans, stressed IKB
rating and assuming weighted average spread at covenanted value.

Moody's notes that this transaction is subject to a high level of
macroeconomic uncertainty, which could negatively impact the
ratings of the notes, as evidenced by (1) uncertainties of credit
conditions in the general economy and (2) the large concentration
of speculative-grade debt maturing between 2014 and 2016 which
may create challenges for issuers to refinance. CLO notes'
performance may also be impacted either positively or negatively
by (1) the manager's investment strategy and behavior and (2)
divergence in legal interpretation of CDO documentation by
different transactional parties due to embedded ambiguities.

Sources of additional performance uncertainties:

(1) Portfolio Amortization: The main source of uncertainty in
this transaction is the pace of amortization of the underlying
portfolio once it enters the amortization phase on April 18,
2013. Pace of amortization could vary significantly subject to
market conditions and this may have a significant impact on the
notes' ratings. In particular, amortization could accelerate as a
consequence of high levels of prepayments in the loan market or
collateral sales by the Collateral Manager or be delayed by
rising loan amend-and-extent restructurings. Fast amortization
would usually benefit the ratings of the notes.

(2) Recovery of defaulted assets: Market value fluctuations in
defaulted assets reported by the trustee and those assumed to be
defaulted by Moody's may create volatility in the deal's
overcollateralization levels. Further, the timing of recoveries
and the manager's decision to work out versus sell defaulted
assets create additional uncertainties. Moody's analyzed
defaulted recoveries assuming the lower of the market price and
the recovery rate in order to account for potential volatility in
market prices.

(3) Moody's also notes that around 78.2% of the collateral pool
consists of debt obligations whose credit quality has been
assessed through Moody's credit estimates. Further information
regarding specific risks and stresses associated with credit
estimates are available in the report titled "Updated Approach to
the Usage of Credit Estimates in Rated Transactions" published in
October 2009.

The principal methodology used in this rating was "Moody's
Approach to Rating Collateralized Loan Obligations" published in
June 2011.

Moody's modeled the transaction using the Binomial Expansion
Technique, as described in Section of the "Moody's
Approach to Rating Collateralized Loan Obligations" rating
methodology published in June 2011.

Under this methodology, Moody's used its Binomial Expansion
Technique, whereby the pool is represented by independent
identical assets, the number of which is being determined by the
diversity score of the portfolio. The default and recovery
properties of the collateral pool are incorporated in a cash flow
model where the default probabilities are subject to stresses as
a function of the target rating of each CLO liability being
reviewed. The default probability range is derived from the
credit quality of the collateral pool, and Moody's expectation of
the remaining life of the collateral pool. The average recovery
rate to be realized on future defaults is based primarily on the
seniority and jurisdiction of the assets in the collateral pool.

The cash flow model used for this transaction is Moody's EMEA
Cash-Flow model.

This model was used to represent the cash flows and determine the
loss for each tranche. The cash flow model evaluates all default
scenarios that are then weighted considering the probabilities of
the binomial distribution assumed for the portfolio default rate.
In each default scenario, the corresponding loss for each class
of notes is calculated given the incoming cash flows from the
assets and the outgoing payments to third parties and
noteholders. Therefore, the expected loss or EL for each tranche
is the sum product of (i) the probability of occurrence of each
default scenario; and (ii) the loss derived from the cash flow
model in each default scenario for each tranche. Therefore,
Moody's analysis encompasses the assessment of stressed

In addition to the quantitative factors that are explicitly
modeled, qualitative factors are part of the rating committee
considerations. These qualitative factors include the structural
protections in each transaction, the recent deal performance in
the current market environment, the legal environment, specific
documentation features, the collateral manager's track record,
and the potential for selection bias in the portfolio. All
information available to rating committees, including
macroeconomic forecasts, input from other Moody's analytical
groups, market factors, and judgments regarding the nature and
severity of credit stress on the transactions, may influence the
final rating decision.


ATU AUTO-TEILE-UNGER: Moody's Cuts CFR to Caa2; Outlook Negative
Moody's Investors Service downgraded to Caa2 from Caa1 the
corporate family rating of A.T.U. Auto-Teile-Unger Investment
GmbH & Co. KG ("ATU") and to Caa2-PD from Caa1-PD the probability
of default rating, while affirming the Caa3 rating of the
issuer's EUR143 million senior subordinated floating rate notes.
At the same time, Moody's has downgraded to Caa1 from B3 the
EUR375 million senior secured notes as well as the EUR75 million
senior secured floating rate notes issued by A.T.U. Auto-Teile-
Unger Handels GmbH & Co. KG. The outlook on all the existing
ratings has been changed to negative from stable.

Ratings Rationale:

"The rating action has been triggered by the increased
refinancing risk for the outstanding bonds totaling EUR 593
million, falling due between May and October 2014 as well as the
company's weaker-than-expected operating performance in H1 of its
FY2012/13 ending June 2013." says Oliver Giani, lead analyst at
Moody's for ATU. "The weak operating performance during the past
two years has not only resulted in elevated leverage ratios, but
also makes ATU's refinancing more challenging."

Although ATU's management has been exploring various options to
ensure a long-term financing structure ahead of final maturity,
no viable and concrete refinancing plan is visible at this stage,
given the maturity of the EUR450 million notes in less than 15

Driven by economic uncertainty and extremely weak consumer
sentiment in the automotive after sales market, ATU's sales went
down by 1.6% to EUR1,220 million for the last twelve months ended
December 2012. ATU reported a net debt-to-LTM EBITDA ratio of
6.0x as of December 2012, compared to 6.2x one year ago. However,
due to weakened EBITDA as adjusted by Moody's (which includes
restructuring costs), adjusted debt/EBITDA has been deteriorating
to 8.4x as of year-end 2012 from 7.9x one year ago and 7.2x per
year-end 2010. According to Moody's base case projections,
leverage will stay high at above 8.0x in the next few years, as
Moody's does not expect positive free cash flow generation which
could be used to reduce debt, nor does Moody's expect any
significant improvement in EBITDA. ATU's weak performance in the
past two years makes it more challenging to secure the necessary
refinancing in the coming months.

Moody's acknowledges that ATU gained some market shares and is
well on track to improve its cost base, which has largely offset
the decline in top-line to keep EBITDA in the range of EUR 90-100
million (adjusted by ATU). However, this was not sufficient to
cover the high interest burden and increased capex during the
past two years. Moody's expects ATU's cash flow generation and
debt service capacity to remain quite limited in the near term.

As of December 2012, ATU had a cash position of EUR23 million and
a super-senior revolving credit facility ("RCF") maturing in
March 2014, which was drawn from time to time to cope with the
seasonal swing in working capital. As of December 2012, the
EUR45 million RCF was not utilized. Moody's notes that drawings
under this facility are dependent on a minimum EBITDA covenant,
under which the company had adequate headroom as of December
2012. The company had no short-term debt maturity except the
EUR450 million notes due in May 2014. Moody's cautions that it
might be challenging for ATU to renew its RCF before the
resolution of the refinancing issue, leading to a potential
deterioration of ATU's liquidity profile. Overall, Moody's
considers ATU's liquidity profile to be rather weak.

The negative outlook reflects Moody's increased concerns about
ATU's ability to secure a long-term financing structure ahead of
final maturity. It also reflects the deteriorating trend in
leverage during the past two years, which is unlikely to recover
in the next few years.

Any indication, that the refinancing cannot be achieved before
final maturity, or the company plans to engage in a distressed
exchange, would put pressure on the ratings. Downward pressure
would also arise if the group's restructuring efforts prove to be
insufficient to maintain an earnings level and the leverage would
continue to increase. Likewise a deterioration of ATU's liquidity
profile would create downward pressure.

Moody's would revise the outlook to stable if ATU is able to
timely and sustainably refinance its upcoming debt maturities,
and avoid any further deterioration in its leverage ratio and
liquidity profile. The rating could be upgraded in case of a
reduction in the overall debt level leading to a more sustainable
capital structure.

The principal methodology used in these ratings was the Global
Retail Industry published in June 2011. Other methodologies used
include Loss Given Default for Speculative-Grade Non-Financial
Companies in the U.S., Canada and EMEA published in June 2009.

Based in Weiden, Germany, ATU is Germany's leading operator of
brand-independent car workshops with integrated specialist auto
retail stores. As of December 2012, ATU operated a network of 645
branches, 598 of which are located in Germany, others in Austria,
the Czech Republic, the Netherlands, Switzerland and Italy. In
2012, ATU generated EUR1.2 billion revenues through its
approximately 12,000 employees. The vast majority of sales
(around 80%) are generated in the vehicle workshops through
servicing and repairs, with the remaining approximately 20%
generated through the sale of auto parts and accessories in
stores and online. ATU is owned by private equity firm KKR and

HESS AG: In Talks with Potential Investors
Maria Sheahan at Reuters reports that Hess AG is holding talks
with potential investors with a view to finding a buyer for the
scandal-hit company soon.

According to Reuters, Hess said on Tuesday it had received
expressions of interest from several strategic and financial
investors, whom it did not name, and that it had held talks with
several of them.

The firm, whose search for a buyer is being led by consultancy
Ebner Stolz, said it aimed to be sold as a whole if possible,
Reuters notes.

Hess's insolvency filing in February came just months after its
stock market debut, Reuters recounts.

The filing followed the launch of an investigation into suspected
fraud which scuppered Hess's chances of raising urgently-needed
funds, Reuters discloses.

Hess AG is a German street light maker.


IRISH BANK: Union Agrees to Withdraw Industrial Action Threat
Ciaran Hancock at The Irish Times reports that the Irish Bank
Officials Association agreed on March 10 not to ramp up its
threat of industrial action at Irish Bank Resolution Corporation
to allow the special liquidators additional time to consider the
union's demands for extended contracts and improved redundancy

The IBOA is seeking contract extensions for its 500 members at
IBRC beyond the three months offered to them in February in the
wake of the Government's shock decision to liquidate the bank,
the Irish Times discloses.

The union, the Irish Times says, is also seeking suitable
redundancy terms for the staff, who had expected to be working on
the wind-down of IBRC for a number of years.  As it stands, they
are entitled only to statutory redundancy terms, according to the
Irish Times.

At a meeting on Monday night between executives of the IBOA and
IBRC's special liquidators, Kieran Wallace and Eamonn Richardson
of KPMG, a 48-hour standstill was agreed to allow for
consideration of these issues, the Irish Times relates.  It is
not clear what solace the special liquidators might ultimately be
able to offer staff at IBRC, as they are bound by the legislation
surrounding the bank's liquidation, the Irish Times notes.

Any decision to extend contracts or offer improved redundancy
terms is likely to require a level of Government sign off, the
Irish Times states.

"We are hopeful about the possibility of extending the contracts
and we will be in further dialogue on redundancy terms," the
Irish Times quotes IBOA chief executive Larry Broderick as

Under the Government's plan, the IBRC liquidators will have the
bank's loans valued before selling the assets into the market,
the Irish Times discloses.  If the offers received do not at
least match the valuations, the loans can then be transferred to
the National Asset Management Agency, which would seek to run
them down at maximum value to the exchequer, the Irish Times

A time frame of six months has been placed on this process with
any transfers to NAMA to begin in late August, the Irish Times

Anglo Irish Bank was an Irish bank headquartered in Dublin from
1964 to 2011.  It went into wind-down mode after nationalization
in 2009.  In July 2011, Anglo Irish merged with the Irish
Nationwide Building Society, with the new company being named the
Irish Bank Resolution Corporation.

Standard & Poor's Ratings Services said that it lowered its long-
and short-term counterparty credit ratings on Irish Bank
Resolution Corp. Ltd. (IBRC) to 'D/D' from 'B-/C'.   S&P also
lowered the senior unsecured ratings to 'D' from 'B-'.  S&P then
withdrew the counterparty credit ratings, the senior unsecured
ratings, and the preferred stock ratings on IBRC.  At the same
time, S&P affirmed its 'BBB+' issue rating on three government-
guaranteed debt issues.

The rating actions follow the Feb. 6, 2013, announcement that the
Irish government has liquidated IBRC.

* IRELAND: Minister Noonan Announces End of Bank of Guarantee
Richael O'Brien at reports that Minister
Noonan has announced the end of the bank guarantee, with no new
liabilities to be covered from March 28, 2013.

According to, the end of the ELG scheme has
been signaled for some time, and Minister Noonan feels that "the
time is right and the banking system in Ireland is normal enough
to proceed without the guarantee."

The Irish Government Eligible Liabilities Guarantee (ELG) Scheme
is a temporary measure which was introduced in response to the
financial crisis, discloses.  It guarantees
amounts in excess of EUR100,000 (amounts up to EUR100,000 are
covered by the separate Deposit Guarantee Scheme (DGS)) per
qualifying depositor per institution held in Irish banks that
participate in the scheme, as well as the full amount of the
deposits held in those banks if they do not qualify for the DGS, notes.

A blanket bank guarantee of bank liabilities was introduced in
2008 for a period of two years, recounts.

When the blanket guarantee expired in 2010, it was replaced by
the ELG Scheme, relates.  No new deposits
made after March 28, 2013 will be covered by the scheme, however,
all existing and future qualifying deposits made up to March 28
will be automatically covered until the date of maturity, discloses.  Therefore, if a qualifying
deposit has a fixed term of less than 5 years, the deposit will
be covered until the end of that term, even if that is beyond
March 28, states.  On-demand deposits, which
currently have an on-going, daily guarantee, are deemed to mature
daily, and as such, their guarantee will expire on
March 28, says.


AGOS-DUCATO: S&P Lowers Counterparty Ratings to 'BB+/B'
Standard & Poor's Ratings Services said it lowered its long- and
short-term counterparty credit ratings on Italian consumer
finance provider Agos-Ducato SpA (Agos) to 'BB+/B' from 'BBB-/A-

At the same time, S&P placed its 'BB+' long-term counterparty
credit rating on Agos on CreditWatch with negative implications.

The downgrade reflects S&P's view of the more severe than
expected deterioration in Agos' asset quality in the second half
of 2012. S&P now thinks Agos' credit losses will remain higher
than S&P's estimate of the Italian industry average and that it
will likely post a net loss in 2012.

S&P expects nonperforming assets (NPAs) to continue to rapidly
accumulate in 2013 due to the consumer finance segment's
vulnerability to the recession.  Furthermore, the performance of
Agos' loan portfolio is weaker than the Italian industry average
as a result of eased underwriting standards in the past and the
poor results of the legacy portfolio inherited from Ducato, in
S&P's view.  S&P understands that Agos' net inflow of NPAs in
2012 accumulated at rates well above those of 2011.  S&P
estimates that Agos' net inflow of NPAs reached about 5.4% in
2012.  S&P expects Agos' cost of risk to remain high at about 500
basis points (bps) in 2013, maintaining coverage close to 90%.

S&P has therefore revised its assessment of Agos' risk position
to "moderate" from "adequate," as S&P's criteria define these

Given Agos' high credit losses and the likelihood that these will
result in a net loss in 2012, S&P now estimates that Agos' risk-
adjusted capital (RAC) ratio will fall below S&P's expectations
of about 4.2%-4.5% by the end of 2013, unless its shareholders
inject capital.  In addition, S&P understands that the Bank of
Italy has requested the company to maintain a minimum total
capital ratio of 7%.  In S&P's view Agos will need to increase
its capital to meet this target.  S&P expects that shareholders
will provide support to the company to restore its regulatory
capital position, although questions remain on the amount and the
type of instruments.

The negative CreditWatch listing mainly reflects the current
uncertainties S&P sees concerning shareholders' plans to restore
Agos' capital position in the next 12-18 months.

S&P expects to resolve the CreditWatch placement within three
months, when it has sufficient visibility on the amount of Agos'
2012 losses, and has analyzed the characteristics and amount of
capital instruments that it expects the company would likely
issue.  S&P will also review management's plans to return to

S&P could lower the rating by at least one notch in the absence
of material measures which would allow Agos' capitalization,
under S&P's RAC framework, to increase sustainably above 4% by

Conversely, S&P could affirm the rating and remove it from
CreditWatch if, all else being equal, S&P sees pronounced
improvement in the company's capital position.

* ITALY: Faces "Full Credit Emergency"; Firms Lack Funding
Ambrose Evans-Pritchard at The Telegraph reports that Italy's
industry chiefs have warned that the country faces a "full credit
emergency" as thousands of companies run out of critical funding,
threatening a slide into deeper depression.

Confindustria, the business federation, said 29% of Italian firms
cannot meet "operational expenses" and are starved of liquidity,
the Telegraph relates.  According to the Telegraph, the
federation said that a "third phase of the credit crunch" is
underway that matches the shocks in 2008-2009 and again in 2011.

In a research report, the group said the economy was caught in a
"vicious circle" where banks are too frightened to lend, driving
more companies over the edge, the Telegraph relates.  A thousand
are going bankrupt every day, the Telegraph says.

The Telegraph notes that Franco Bernabe, the head of Telecom
Italia, echoed the warnings, lamenting that firms are literally
"dying from lack of liquidity".  He called on the Bank of Italy
to take bolder action to head off disaster, the Telegraph
discloses.  "The Italian economy is being suffocated.  The
country must intervene rapidly to reinject funds into the
economy", the Telegraph quotes Mr. Bernabe as saying.

Late payments have become a chronic problem across the board in
Italy, with 47,000 official complaints last year, the Telegraph
discloses.  The research group CGIA di Mestre said half of small
companies cannot pay their staff on time, the Telegraph notes.

According to the Telegraph, S&P said the default rate for Italian
non-investment grade bonds jumped to 9.5% last year from 5.7% in
2012 as local banks shut off funding.  It was even worse in
Spain, doubling to 14.3%, the Telegraph says.

The combined effect of a worsening credit crunch and political
paralysis in Rome is becoming a dangerous cocktail, with the risk
of social revolt increasing as the months drag on, the Telegraph


CAIXA GERAL: S&P Retains Watch Neg. on 'CCC-'-Rated Jr. Sub. Debt
Standard & Poor's Ratings Services said it had revised its
outlooks on two Portuguese banks, Caixa Geral de Depositos S.A.
(CGD) and Banco Santander Totta S.A. (Totta), to stable from
negative.  The outlooks on the five other banks S&P rates remain
negative.  At the same time, S&P has affirmed its long- and
short-term counterparty ratings on all seven banks.

The 'CCC-' ratings on CGD's junior subordinated debt and BPI's
hybrid instruments remain on CreditWatch, where they were placed
with negative implications on Feb. 22, 2013.

The rating actions follow the revision of S&P's outlook on
Portugal to stable from negative on March 6, 2013.  The sovereign
rating action reflects additional evidence that European
institutions will continue to support Portugal's adjustment
program, given the government's commitment to budgetary and
structural reforms.  It did not stem from S&P's expectations of
an improvement of economic conditions in the country.  Actually,
S&P expects the Portuguese economy to contract further this year
than S&P originally anticipated and continue to hurt banks' asset
quality and, consequently, their profitability.  S&P expects
Portugal's real GDP to decline by 1.5% in 2013 (whereas S&P
previously forecast a 1% drop), before increasing modestly in
2014 and 2015.

S&P revised its outlooks on CGD and Totta to stable from negative
because of the potential for extraordinary support from their
100% owners, the Portuguese government and Banco Santander S.A.,
respectively.  S&P believes this would largely mitigate the
effect of weak economic conditions on the banks'

Although CGD's business and financial positions remain under
pressure, a weakening of its stand-alone credit profile (SACP) by
up to two notches would not automatically lead to a downgrade.
This is because S&P regards CGD as a government-related entity
that, according to S&P's criteria, has a very high likelihood of
receiving timely and sufficient support from the government if
needed.  If CGD's SACP were to weaken, S&P would likely start
incorporating extraordinary government support into the ratings.
Such deterioration could result from higher economic risks in
Portugal, leading S&P to lower its anchor of 'bb', the starting
point for rating Portuguese banks.  It could also occur if the
deterioration of CGD's asset quality exceeded the system average,
or if S&P thought its restructuring (following state aid) eroded
the stability of its business and franchise and/or represented a
significant managerial challenge for the bank.  Although unlikely
at this point, S&P could lower the ratings on CGD if Portugal
were downgraded by more than one notch or S&P expected a very
material deterioration of CGD's SACP.  S&P could upgrade CGD if
it raised the sovereign ratings or if, albeit a remote
possibility, CGD's SACP improved.

S&P regards Totta as a highly strategic subsidiary of Banco
Santander.  Under S&P's criteria, it could therefore assign Totta
a higher rating (up to one notch below the rating on its parent).
However, S&P limits the long-term rating on Totta to that on
Portugal because S&P don't think Totta would receive sufficient
parental support to allow it to overcome a sovereign stress
scenario in Portugal.  Consequently, the outlook on Totta mirrors
that on the sovereign ratings.  S&P could raise or lower the
ratings on Totta should S&P take a similar rating action on the

In contrast, S&P has maintained its negative outlooks on Banco
Espirito Santo S.A. (BES), Banco BPI S.A. (BPI), and Banco
Comercial Portugues S.A. (Millennium bcp) to reflect the
pressures S&P continues to see on these banks' creditworthiness,
due to the still difficult economic environment S&P envisage for
Portugal. The negative outlooks on BES' core subsidiary Banco
Espirito Santo de Investimento and on BPI's core subsidiary Banco
Portugues de Investimento S.A. reflects those on their respective
parents. Despite the stable outlook on the sovereign rating, S&P
believes the country's creditworthiness is not strong enough for
S&P to add or increase the rating uplift for potential government
support above the banks' SACPs.  This means that a worsening of
their SACPs would likely lead to downgrades.

The negative outlooks also reflect bank-specific trends that may
still negatively impact S&P's view of these banks' financial
and/or business profiles.  Weaker-than-anticipated asset quality
deterioration at individual banks could result in a lowering of
these banks' SACPs.  S&P believes that Millennium bcp is
particularly vulnerable to the weak environment and faces higher
strategic challenges, both domestically and in Greece.  S&P could
also revise its assessments of Millennium bcp's and BPI's SACPs
downward if S&P believed the banks' restructuring would weaken
their business positions.

S&P could revise the outlook on Millennium bcp, BPI, and BES to
stable if S&P saw the risks in the operating environment abating,
leading to the stabilization of the banks' financial profiles.
In particular, this would be demonstrated by a lower risk of
weaker-than-anticipated economic performance and higher-than-
expected credit losses, and asset quality deterioration that
remained in line with S&P's already weak expectations.
Additionally, for BPI and Millennium bcp, S&P would need to see
that the restructuring plans were not weakening their business
positions.  In particular for Millennium bcp, S&P would also need
to see the bank adequately addressing its strategic challenges.

S&P's ratings on CGD's junior subordinated debt and BPI's hybrid
instruments remain on CreditWatch with negative implications to
reflect S&P's view of the very strong likelihood that the
European Commission will ban coupon payments on these instruments
in the coming months.  S&P has observed such bans for other
financial institutions that, like CGD and BPI, have received
state aid.


Ratings Affirmed; Outlook Action
                                        To                 From
Banco Santander Totta S.A.
Counterparty Credit Rating             BB/Stable/B
Certificate Of Deposit                 BB/B               BB/B
Senior Unsecured                       BB                 BB
Commercial Paper                       B                  B

Caixa Geral de Depositos S.A.
Counterparty Credit Rating             BB-/Stable/B       BB-
Certificate Of Deposit                 BB-/B              BB-/B
Senior Unsecured                       BB-                BB-
Subordinated                           B-                 B-

Caixa Geral Finance Ltd.
Preference Shares (1)                  C                  C

Ratings Affirmed

Banco Espirito Santo S.A.
Banco Espirito Santo de Investimento S.A.
Counterparty Credit Rating             BB-/Negative/B
Certificate Of Deposit                 BB-/B

Banco Espirito Santo S.A.
Senior Unsecured                       BB-
Subordinated                           B
Commercial Paper                       B

Banco BPI S.A.
Banco Portugues de Investimento S.A.
Counterparty Credit Rating             BB-/Negative/B
Certificate Of Deposit                 BB-/B

Banco BPI S.A.
Senior Unsecured                       BB-
Subordinated                           B-

Banco Comercial Portugues S.A.
Counterparty Credit Rating             B+/Negative/B
Certificate Of Deposit                 B+/B
Senior Unsecured                       B+

BCP Finance Co.
Preference Shares (3)                  C

Ratings Remaining On CreditWatch

Caixa Geral de Depositos S.A.
Caixa Geral de Depositos Finance
Junior Subordinated                    CCC-/Watch Neg

BPI Capital Finance Ltd.
Preference Stock (2)                   CCC-/Watch Neg


(1) Guaranteed by Caixa Geral de Depositos S.A.
(2) Guaranteed by Banco BPI S.A.
(3) Guaranteed by Banco Comercial Portugues S.A.

NB: This list does not include all the ratings affected.


STEEL CAPITAL: Fitch Assigns 'BB(EXP)' Rating to LPNs
Fitch Ratings has assigned Steel Capital S.A.'s USD-denominated
loan participation notes a 'BB(EXP)' expected foreign currency
senior unsecured rating.

Steel Capital S.A. is a special purpose financing vehicle. The
LPN's will be issued on a limited recourse basis for the sole
purpose of funding a loan by Steel Capital S.A. to OAO Severstal
(Severstal, 'BB'/Stable). Severstal plans to use the net proceeds
from the notes for general corporate purposes, including the
refinance of upcoming debt maturities.

Fitch will assign the notes a final rating upon receipt of final
documentation materially conforming to the information already
received. A full list of Severstal's ratings is at the end of
this release.


- Vertical Integration

Severstal's core business segment -- Russian Steel -- benefits
from full economic self-sufficiency both in iron ore and coking
coal. This contributes to low-cost upstream operations. According
to Fitch's estimates, the cash cost of slab production at the
Cherepovets steel mill is comparable with other integrated steel
producers in Russia and is 30%-35% lower than the global average.

- Performance of North American Assets is Likely to Improve

The company finalized investment projects at its North American
steelmaking facilities, Deaborn and Columbus, in 2011-H112, which
will likely improve their competitiveness and operating
performance in FY2013 (in FY2012 Severstal International, the
company's business segment, which includes Deaborn and Columbus,
fixed USD6.9m of operating loss).

- Exposure to Lucchini SpA is Limited

Severstal owns 49.2% stake in Lucchini SpA (Lucchini). Fitch
understands that Severstal is not obliged to issue guarantees in
favour of Lucchini's creditors, or provide any kind of collateral
to Lucchini's creditors under the debt restructuring agreement
signed in 2012. However, Severstal continued supplying Lucchini
with raw materials. In January 2013 Lucchini officially declared

At end-H112 Severstal's exposure to Lucchini was limited to
US$41 million of accounts receivable which were restructured with
the same conditions as bank indebtedness. At end-2012 accounts
receivable from Lucchini were fully written off. Severstal
stopped supplies of raw materials to Lucchini in 2013 other than
on advance payment basis


Severstal's liquidity position is assessed as acceptable with
US$1.7 billion of cash in hand and US$0.8 billion of unutilized
committed bank long-term loans compared with USD1.4bn of short-
term borrowings at end-2012.

Fitch expects Severstal to show 11%-12% EBIT margin in FY2013
(9.9% in FY2012) with a slight increase to 12%-13% in FY2014.
Funds from operations (FFO) adjusted gross leverage is expected
to increase to 2.6x-2.8x by end-2013 (2.2x at end-2012) with a
further decrease to 2.4x-2.6x by end-2014.


Positive: Future developments that could lead to positive rating
actions include:

- EBIT margin higher than 15% on average and not below 7.5%
   at any point of the business cycle

- Neutral to positive free cash flow generation across the cycle

- FFO adjusted gross leverage sustainably below 1.5x

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

- EBIT margin below 10% on a sustained basis

- FFO adjusted gross leverage above 3.0x on a sustained basis


  Foreign currency Long-term Issuer Default Rating (IDR): 'BB';

  Outlook Stable

  Foreign currency Short-term IDR: 'B'

  Foreign currency senior unsecured rating: 'BB'

  Local currency Long-term IDR: 'BB'; Outlook Stable

  National Long-term Rating: 'AA-(rus)'; Outlook Stable


LJUBLJANSKA BANKA: Moody's Cuts Long-Term Deposit Rating to Caa2
Moody's Investors Service downgraded Nova Ljubljanska banka's
long-term deposit rating to Caa2 from B2, with a negative
outlook. The subordinate and junior subordinate (hyb) ratings
were downgraded to C from Caa2 and Caa3, respectively.

Concurrently, NLB's standalone E bank financial strength rating
has been affirmed. However, Moody's has lowered the bank's
baseline credit assessment to ca from caa1 within E standalone

The downgrades were prompted by Moody's assessment that NLB's
credit profile has been further weakened by (i) the necessity of
a further capital injection to maintain capital adequacy above
European Banking Authority (EBA) regulatory guidelines; ii)
ongoing material losses undermining its already weak capital
base; and iii) expectation of further losses in 2013 and the lack
of immediate prospects of returning to profitability or reversing
the negative asset quality trend.

Ratings Rationale:

Moody's says that the lowering of the bank's BCA to ca from caa1
primarily reflects the high likelihood that further external
capital assistance will be required, for the bank in order to
remain above EBA regulatory guidelines as well as maintain its
business activities and market shares.

The group announced large losses of EUR273 million for 2012 which
have eroded its capital base, despite the fact that it had
already been supported by the earlier capital injection of EUR383
million made by the Republic of Slovenia in July 2012.

As a result, with a Tier 1 capital ratio of 8.77% as at end-2012,
the bank remains below the EBA regulatory guidelines, prompting
it to request an additional capital injection. In addition,
Moody's said that it expects further losses to undermine the
already weak capital base in 2013.

The bank's asset quality deteriorated considerably in 2012, with
non-performing loans reaching 28.2% of total loans as at end-
2012, from 21.3% the year before. High corporate loan
concentrations pose additional challenge to NLB's asset quality
in common to other rated peers in Slovenia. Moody's notes that
corporate indebtedness remains high in Slovenia and is unlikely
to improve markedly in the current year, and that this has
contributed to the rapid decline in asset quality for the bank.

Moody's says that it continues to incorporate two notches of
uplift in the bank's supported long-term deposit rating of Caa2.
This is based on its assessment of a high probability of systemic
support in the event of need and the previous track record of
capital injections made by the Slovenian government. However, at
the same time Moody's takes into account constraints placed on
the government's fiscal position by providing systemic support to
multiple leading banks which are experiencing similar problems
with their capital. This assessment drives the negative outlook
on the bank's long-term supported ratings.

The bank's subordinate and junior subordinate (hyb) ratings are
notched off from the bank's BCA and have therefore been
downgraded to C, the lowest rating category.

What Could Move The Ratings Up/Down

Given the recent multi-notch downgrade of the ratings (and the
negative outlook), upwards pressure is unlikely to develop in the
near term. However, in the medium term, upwards pressure on the
ratings could materialize if NLB (i) brings its capital buffers
to comfortable and sustainable levels to support its franchise
and lending operations; (ii) reverses the declining asset-quality
trends; and (iii) returns to profitability.

At the current very low level of the standalone BCA of ca,
Moody's does not expect any further downwards pressure. On the
deposit ratings however, downwards pressure on NLB debt ratings
could be triggered by rising uncertainty regarding the likelihood
of systemic support with the recapitalization of the bank.

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


BANCO POPULAR: Fitch Upgrades Rating on Preference Shares to 'B'
Fitch Ratings has upgraded Banco Popular Espanol, SA's
('BB+'/Stable/'bb+') preference shares, issued through its
vehicles, to 'B' from 'B-' and removed them from Rating Watch
Positive (RWP).

Rating Action Rationale

The rating action follows the approval to amend the trigger on
the coupon omission of the notes from the availability of
"Distributable Profits" to "Distributable Profits and Reserves".
The change lowers the coupon omission trigger to the prevailing
regulatory capital minima and will therefore make it harder for
the issuer not to pay coupons on the notes. Popular is now able
to pay coupons out of distributable reserves and not just out of
the previous year's income.

Rating Drivers

According to Fitch's criteria, the notching of hybrid instruments
reflects an assessment of relative loss severity and an
assessment of incremental non-performance risk relative to that
captured by the anchor rating, usually the Viability Rating (VR).

In this case, Fitch applies two notches for loss severity as
recoveries are expected to be poor relative to the average. In
relation to the non-performance risk, Fitch applies two extra
notches for non-performance risk given the high relative risk of
non-performance from the combination of residual coupon-deferral
risk and the potential vulnerability to a distress debt exchange.
In total, Popular's preference shares are now notched four times
from its VR.


Popular's preference shares' ratings are sensitive to any rating
action on its VR.

The rating actions are:

BPE Preference Shares International Limited:

-- Preference shares (ISIN: KYG717151099 and KYG1280W1015)
    upgraded to 'B' from 'B-', removed from RWP

Popular Capital, S.A.:

-- Preference shares (ISIN: DE0009190702; DE000A0BDW10;
    XS0288613119 and ES0170412003) upgraded to 'B' from
    'B-', removed from RWP

IBERIA LINEAS: Spanish Unions Expect to Back Mediator's Proposal
Miles Johnson and Rose Jacobs at The Financial Times report that
International Airlines Group moved a big step closer to resolving
strikes at Iberia after Spanish unions indicated they would back
a mediator's proposal to temper job losses at the lossmaking

The main unions representing Iberia ground staff said on Monday
that they had agreed in principle to accept proposals put forward
by a Spanish government-appointed mediator to end the strikes,
and were confident they would be passed at a union meeting on
Tuesday, the FT relates.  According to the FT, a final meeting
between unions and the mediator, Gregorio Tudela, a professor at
Madrid's Autonomous University, was set to take place yesterday.

The proposal, accepted by the board of Iberia, which makes up IAG
alongside British Airways, recommends that the number of job
losses in its planned restructuring should fall from a planned
3,807, or just under a fifth of its workforce, to 3,141, the FT
discloses.  The compromise would also offer a higher level of
redundancy payment to fired workers, the FT notes.

Spanish unions have held two five-day strikes, at a cost of EUR3
million a day according to the company, after talks between the
carrier and labor representatives over the carrier's
restructuring plans broke down at the start of the year, the FT
recounts.  Unions were planning a third round of five days of
strikes for later this month, the FT discloses.

However, Sepla, Spain's powerful pilots union, said that while it
was considering the proposals, it would not do so without a clear
commitment from the company to guarantee further cuts would not
be made in the future, the FT notes.

"There needs to be a plan for the future, and to restore the
flights and jobs that Iberia has lost," the FT quotes Ana
Serrano, spokeswoman for Sepla as saying.  "If not, there is not
much sense agreeing with them.  A decision will be made this week
or the next."

Last month IAG reported a near EUR1 billion pre-tax loss for 2012
after taking a EUR343 million impairment charge on Iberia, with
the Spanish carrier's operating loss widening from EUR61 million
in 2011 to EUR896 million, the FT recounts.

Iberia Lineas Aereas de Espana, S.A., commonly known as Iberia,
is the flag carrier airline of Spain.  Based in Madrid, it
operates an international network of services from its main bases
of Madrid-Barajas Airport and Barcelona El Prat Airport.

PESCANOVA: Uncovers Discrepancies Between Accounts & Bank Debt
Sonya Dowsett and Paul Day at Reuters report that Pescanova said
on Tuesday it had found discrepancies between its accounts and
its bank debt.

Pescanova said in a statement to the stock exchange that its
auditor, BDO Auditores, was looking into the issue, Reuters

"We have detected discrepancies between our accounts and bank
debt figures, discrepancies which could be significant and we're
in the process of revision and consolidation," Reuters quotes the
company as saying.  "The moment we know the size of the
discrepancies, we will immediately inform the (market

The company, a big employer in the northwestern region of
Galicia, also did not report earnings by an end of February
deadline as required by law, Reuters notes.

Pescanova had debt worth EUR1.52 billion at the end of September
last year, Reuters discloses.

As reported by the Troubled Company Reporter-Europe on March 7,
2013, Spain's stock market regulator suspended trading in
Pescanova's shares after the company failed to release results
before an end of February deadline.

Pescanova is a Galicia-based fishing company.  It catches,
processes and packages fish on factory ships.

Pescanova on Feb. 1 filed for insolvency having failed to sell
part of its salmon farming business.  The company, which had debt
worth EUR1.52 billion (US$1.99 billion) at the end of September
last year, struggled in the last months to make its investments
into farmed crustaceans and fishes profitable.


ARCELIK AS: Fitch Affirms 'BB+' Long-Term Issuer Default Ratings
Fitch Ratings has affirmed Arcelik A.S.'s Long-term foreign and
local currency Issuer Default Ratings (IDR) at 'BB+' and National
Long-term rating at 'AA(tur)' The Outlook is Stable.


Stable Financial Performance

Arcelik's 2012 financial results were broadly stable and within
Fitch's expectations. Strong revenue growth driven by market
share gains was tempered by flat profitability margins as a
result of cost pressures, especially from raw materials. Free
cash flow (FCF) was negative, albeit better than expected, due to
working capital needs resulting from the top line growth. Fitch
expects Arcelik to demonstrate a slight improvement in its 2013
financial metrics, but remain at levels in line with the present

High Working Capital Needs

Although much reduced from 2011 levels, Arcelik still had a high
working capital to sales ratio due to the Turkish market practice
of the manufacturer financing a portion of customer purchases.
The company is addressing its working capital management and
Fitch believes there is scope to substantially cut the cash drain
through improved inventory and receivables focus. Effective
working capital management remains key to Arcelik achieving
positive FCF generation.

Strong Growth in International Markets

Arcelik has achieved strong top line growth in the past two years
outside Turkey, taking advantage of more price-conscious
consumers in Western Europe as well as its previous marketing and
distribution network expansion efforts. Further growth in
developed markets in the short to medium term is likely as the
company continues to capitalize on its present momentum and
current market trends, although this may place pressure on
profitability as the company focuses on expanding market share.
We note that the company retains relatively limited geographic
diversity, which restricts the ratings.

Stable Adjusted Leverage

Arcelik's reported leverage is negatively impacted by its higher
than average working capital needs, as a significant portion of
durable goods are sold on credit in Turkey. While this is partly
financed by Arcelik, the consumer credit risk is covered by bank
letters of credit. Fitch adjusts Arcelik's debt by netting off
the debt portion of trade receivables above 60 days of revenues
(approximately TRY1.7 billion at end-2012) to enable a more
accurate peer comparison. On this basis, Arcelik's FFO-adjusted
leverage was 2.3x at end-2012 (from 2.1x at end-2011), but is
expected to improve to under 2x at end-2013.

Rating Sensitivities

Positive: Future developments that could lead to positive rating
actions include:

- Significant improvement in business profile
- Reduced structural FX risks
- Receivable-adjusted FFO gross leverage ratio below 1x
- FFO margins consistently above 10%
- FCF margin above 2% on a sustainable basis

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

- Receivable-adjusted FFO gross leverage ratio above 2.0x
- EBITDA margins below 10.5%
- Consistently negative FCF


AVANGARDCO INVESTMENTS: Fitch Affirms 'B' Issuer Default Rating
Fitch Ratings has taken the following rating actions on
Avangardco Investments Public Limited's ratings:

- Long-term foreign currency Issuer Default Rating (IDR)
   affirmed at 'B' with Stable Outlook

- Long-term local currency IDR of 'B' placed on Rating Watch
   Positive (RWP)

- National long-term Rating of 'A+(ukr)' placed on RWP

- Foreign currency senior unsecured rating affirmed at 'B' and
   Recovery Rating affirmed at 'RR4'

These rating actions follow the announcement that Avangardco's
key operating subsidiaries will provide an unconditional and
irrevocable suretyship on a joint and several basis to its
parent's UkrLandFarming PLC proposed new Eurobond issue, and
therefore the closer legal ties between Avangardco and its
parent, which adds to the strategic importance of Avangardco to
the whole group.

Key Rating Drivers

Local Currency IDR expected to be equalized with its Parent's
Fitch expects to upgrade Avangardco's local currency (LC) IDR to
'B+' upon completion of ULF's bond placement and confirmation of
greater legal ties stemming from cross-default clauses and a debt
guarantee structure binding the consolidated group together.
Strategic ties are expected to remain strong, with Avangardco
providing ULF substantial revenue and profit diversification,
being an integral part to ULF's strategy of increasing its
presence across the agricultural value chain. Fitch acknowledges
that Avangardco's management teams and treasury functions remain
separated from ULF and that trading relations between the two
companies are limited.

Standalone profile consistent with a 'B+' LC rating

On a standalone basis, Avangardco's local currency IDR would also
support a 'B+' rating in Fitch's view reflecting its scale and
leading market position, including a rising export presence, low
leverage and finalization of the key expansion phase, diminishing
related-party transactions aside from US$12 million of cash
maintained in related-party banks (6% of the group's reported
cash and cash equivalents) as of end December 2012. Further scope
for an upgrade of Avangardco's LC IDR would however be
constrained by ULF's rating level and is ultimately dependant on
ULF and Avangardco's efforts to embrace greater transparency and
adherence to high-standard corporate governance practices.

Weak Diversification, Strong Market Positions

Limited diversification beyond its two main product lines of eggs
and egg products weighs negatively on Avangardco's business
profile. Despite its dominance in the domestic industrialized egg
market, limited scope for organic growth exists in Ukraine, with
the exception of dry or liquid egg products for prepared meals or
other value-added product lines. Fitch however recognizes
Avangardco's leadership as the number one egg producer in
Eurasia, and a leading player globally.

Exports Critical to Strategy

In 2012 exports represented 20% of group sales, approximately
US$128 million. Avangardco is somewhat reliant on export markets
to channel increased expected egg production due to the limited
upside in the domestic market. The main export markets remain
North Africa, the Middle East and Asia; however there are further
opportunities from the EU's recent decision to open its egg and
poultry market to imports from Ukraine (albeit subject to import
tariffs). This should contribute to the group's focus on exports
while allowing greater diversification of sales by channel and

High Profitability under Pressure

Avangardco reported a strong EBITDA margin in 2012 of 39.8%, only
100bp lower than 2011 despite high grain prices reflecting the
group's early purchasing of grain, partnerships with local
farmers and adequate pricing power. High prices of corn and
oilseeds, if combined with failure to channel additional
production capacity externally could create overcapacity in the
domestic egg market and downward price pressure causing erosion
of profit margins.

Improving Financial Flexibility

As expected free cash flow (FCF) has been negative in 2012 (US$69
million) due to high capex of US$322 million in the first stage
of the expansion capacity at Avis, Chornobaivske, and Imperovo
Foods. Fitch expects funds from operations (FFO) adjusted gross
leverage to decline gradually towards 1x by end-2014 from 1.4x in
2012. Moderate leverage along with expected positive free cash
generation, especially from 2014 will increase Avangardco's
financial flexibility.

Limited Impact from Guarantee to ULF on Avangardco's Bondholders

The announcement made by the company that it will provide an
unconditional and irrevocable suretyship on a joint and several
basis to its parent's planned new Eurobond issue is considered
neutral for Avangardco's unsecured creditors. Previously Fitch
had stated that Avangardco's low leverage, with very low secured
debt, and an expanding asset base were reflected into superior
recovery prospects for bondholders. Fitch estimates that, even
including the burden of the new guarantee (estimated for the
amount of the planned new bond for ULF at US$500 million) as a
contingent liability, net leverage would be 2.7x; this is below
Avangardco's debt incurrence maximum leverage test of 3x. In this
case, Fitch still expects above-average recovery prospects for
unsecured creditors at Avangardco level, capped at 'RR4' (31%-
50%) for the Ukraine jurisdiction, hence the affirmation of the
foreign currency senior unsecured rating at 'B'.

Ratings Sensitivities

The following developments would lead to Fitch's resolution of
the Rating Watch Positive on the Local Currency Long-term IDR and
the Long-term National Rating with an upgrade respectively to
'B+' and 'AA+(ukr)':

- Confirmation of strengthening legal ties between Avangardco
   and ULF.

- Confirmation that conservative financial policies, enabling
   Avangardco to generate positive FCF and a strong financial
   flexibility would be maintained.

An upgrade of the foreign currency IDR would be possible only if
Ukraine's Country Ceiling was upgraded (currently 'B').

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

- An increase in FFO adjusted leverage (gross) to 3.0x (both for
   ULF and Avangardco) on a continuing basis

- FFO fixed charge cover weakening below 4x

- Diminishing liquidity cushion ahead of the maturity of its
   Eurobond due in October 2015

UKRLANDFARMING PLC: S&P Assigns 'B-' Corp. Rating; Outlook Neg.
Standard & Poor's Ratings Services said it assigned its 'B-'
long-term corporate credit rating to Ukrainian agribusiness
company UkrLandFarming PLC.  The outlook is negative.

S&P also assigned its 'B-' issue rating to the group's proposed
unsecured notes of $500 million.  The recovery rating on the
proposed notes is '4', indicating S&P's expectation of average
(30%-50%) recovery in the event of a payment default.

The rating reflects S&P's assessments of UkrLandFarming's
business risk profile as "weak" and its financial risk profile as
"highly leveraged."

"We base our view of UkrLandFarming's weak business risk on the
company's exposure to supply and demand of commodity-type
products within the volatile agribusiness industry.  In addition,
the company generates its revenues and earnings within Ukraine,
where all its operating assets are located.  We consider the
company's exposure to Ukraine as a key risk factor.  We view
UkrLandFarming's corporate governance as "weak," owing to the
dominance of its owner and CEO, Oleh Bakhmatuk, the lack of
independence of the board of directors, and material related-
party transactions.  There is also limited information as to the
credit quality of the private financial institutions and other
assets owned by Mr. Bakhmatyuk," S&P said.

UkrLandFarming's solid market positions in its key business
segments and its overall position as a large agribusiness player
in Ukraine underpin its business risk profile.  The company has
built a track record of profitable growth since its inception in
2008.  UkrLandFarming maintains a high EBITDA margin at about
40%, through economies of scale and relatively low costs.

"In our financial risk profile assessment, we integrate our view
that the company will continue to maintain an aggressive
financial policy with substantial negative free operating cash
flow, given its growth-oriented strategy and acquisitive nature.
Total sales stood at EUR1.9 billion in 2012, versus US$60 million
in 2009, following a series of acquisitions.  UkrLandFarming is
also increasing the scale of its investments to generate organic
growth, which could, in our view, be difficult to sustain.  We
factor in our view of the company's liquidity, which we consider
to be less than adequate, based on our estimate of the ratio of
expected liquidity sources to uses over the next year.
UkrLandFarming has meaningful debt maturities over the next
several years," S&P added.

S&P expects UkrLandFarming's revenues in key business segments--
crops and eggs at subsidiary AvangardCo--to continue increasing
over time.  S&P forecasts sales exceeding US$2 billion in 2013.
S&P believes the company will generate further sales growth
through higher volumes, notably through rising export volumes in
the crops segments and at AvangardCo, and a relatively favorable
pricing environment for UkrLandFarming's key agricultural
products, such as corn.  The likely increase in UkrLandFarming's
export volumes will, in S&P's opinion, broaden the geographic
diversity of its operating income.

The negative outlook reflects the possibility of a downgrade of
UkrLandFarming if S&P saw that its liquidity deteriorated due to
overexpansion, in the context of insufficient corporate
governance and material related-party transactions.  S&P could
also lower its rating on UkrLandFarming if:

   -- It faced unexpected and far-reaching regulation changes
      that undermine its business or financial risk profile.

   -- S&P anticipated deterioration in its profitability and
      credit metrics, including leverage (debt to EBITDA) of more
      than 3x.  This could result from a potential poor future
      harvest due to extreme weather conditions, or a steep drop
      in crop prices, especially corn.  S&P estimates that
      leverage would exceed 3x if EBITDA fell by 40%.

A revision of the outlook to stable, all else being equal, would
depend on pronounced improvement in UkrLandFarming's corporate
governance structure, discontinuation of related-party
transactions, and moderation of its expansion strategy.

UKRLANDFARMING PLC: Fitch Assigns 'B(EXP)' Rating to Eurobond
Fitch Ratings has assigned UkrLandFarming PLC's planned Eurobond
an expected rating of 'B(EXP)' and an expected Recovery Rating of
'RR4(EXP)'. The final ratings are contingent upon receipt of
final documents conforming to information already received by

Fitch rates ULF's Long-term foreign currency Issuer Default
Rating (IDR) at 'B' with a Stable Outlook. This rating is capped
by Ukraine's Country Ceiling of 'B'. ULF's Long-term local
currency IDR is 'B+' and its National Long-term rating
'AA+(ukr)'. ULF's existing ratings reflect its leading market
positions in agribusiness despite high regulation risks and
exposure to volatile selling prices translating into high
business risks. The financial risk profile is however more
conservative, driven by solid profitability and expectation of
steady free cash flow (FCF) generation in future years despite
high capex planned for 2013.

The ratings capture the group's moderate leverage with funds from
operations (FFO)-adjusted net leverage at 1.8x (2012) or 2.1x
excluding US$176 million of cash and deposits placed in related-
party banks as of December 31, 2012, although we also recognize
the group's historic reliance on short-term debt financing
(largely addressing seasonal working capital needs) and certain
corporate governance concerns relative to other rated Ukrainian
agribusiness entities.

Key Rating Drivers

Consolidated Group Profile

The ratings factor ULF group's consolidated profile reflecting
the evidence of strengthening legal ties as the key group
subsidiaries, including the largest operating entities of
Avangardco, are expected to guarantee ULF's planned Eurobond.
This feature adds to the cross-default provisions between
Avangardco and ULF inserted in some of ULF's key loan agreements.
We also note that ULF does control Avangardco's profits, albeit
with the limitations of this subsidiary to upstreaming cash set
by a debt incurrence leverage test of 3.0x. As of FY12,
Avangardco's EBITDA of USD250m -based on Fitch's computation-
represented 24% of ULF's consolidated profits.

Adequate Recovery Prospects

The planned US$500 million bond issue will rank as a senior
unsecured obligation of ULF, and benefit from upstream guarantees
(which are suretyships under Ukrainian law) from several
operating subsidiaries, including Avangardco. Fitch understands
that such guarantors accounted for approximately 84% of net
assets and 85% of consolidated EBITDA for 2012. The Eurobond
would rank below senior secured debt and other subsidiary debt
(including Avangardco's Eurobond) representing however a moderate
1.0x of priority debt/2013 forecast EBITDA. This leaves adequate
recoveries for the planned Eurobond and other unsecured
creditors. However, Fitch applies a soft cap at 'RR4' for issuers
domiciled in Ukraine.

Ratings Sensitivities

Positive: Future developments that could lead to positive rating
actions include:

- A positive rating action on the local currency IDR would
   require ULF to improve its corporate governance practices,
   particularly in the area of transactions with related-party

- In terms of financial guidelines, a higher IDR depends on
   ULF maintaining its FFO margin above 30%, a positive FCF
   and the funding of its expansion plan mainly through internal
   cash flows, thus allowing FFO adjusted leverage (gross) below
   1.5x on a continuing basis.

An upgrade of the foreign currency IDR would be possible only if
the Country Ceiling for Ukraine was upgraded (currently 'B').

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

- A contraction of FFO below USD300m

- An increase in FFO adjusted leverage (gross) to 3.0x on a
   continuing basis

- FFO fixed charge cover weakening below 4x

- Weakening liquidity measured as FCF for 2014 plus unrestricted
   cash and available undrawn bank lines at the beginning of the
   year divided by short-term debt maturities, below 0.8x on a
   continuing basis. This calculation excludes grain inventory in
   silos which Fitch understands is unhedged for price risk.

U N I T E D   K I N G D O M

ATP OIL: Gulf Island to Seek Bluewater Cheviot Balance Repayment
Gulf Island Fabrication, Inc. on March 11 disclosed that on
July 13, 2012, the Company received notice from its customer,
Bluewater Industries, requesting (i) a slowdown of work on ATP
Oil & Gas (UK) Limited's Cheviot project ordered pursuant to a
master service contract between Bluewater and the Company, and
(ii) an amendment to the scheduled payment terms under the
Contract.  On August 16, 2012, the Company entered into a binding
agreement with Bluewater, an engineering consulting firm engaged
by ATP UK to oversee the fabrication of the Cheviot project, to
amend and restate the Contract and suspend the project. Among
other things, the Agreement outlines the revised payment terms
for the contracts receivable balance and the limitations on
Bluewater's ability to request an extended suspension of work.
Specifically, Bluewater must pay US$200,000 on or before the last
day of each calendar month through February 28, 2013, with the
remaining outstanding Balance due on or before March 31, 2013.
In addition, if Bluewater has fully paid the Balance on or prior
to March 31, 2013, Bluewater has the option to extend the
suspension of work on the Cheviot project to June 30, 2013, after
which Bluewater will have no further rights to request a
suspension of work.  If Bluewater fails to make timely payments
pursuant to the revised payment plan, the Company has the right
to terminate the Contract, and it will continue to retain title
to any project deliverables.   The Company also entered into a
security agreement with Bluewater pursuant to which Bluewater
granted it a security interest in certain of its equipment
currently located on our facilities.  As of March 11, 2013, all
installments under the Agreement had been paid.

In August 2012, ATP Oil & Gas, Inc., the parent company of ATP
UK, filed a voluntary petition for relief under Chapter 11 of the
United States Bankruptcy Code.  Although ATP is not the Company's
customer and ATP UK is not a party to the bankruptcy, the Company
believes ATP has historically financed the operations of its
subsidiaries, including ATP UK.  On January 22, 2013, ATP filed
an emergency motion to sell all or substantially all of its
deepwater assets, including 100% of its equity ownership in ATP
UK.  The motion has since been approved by the court and ATP is
currently seeking qualified bidders to purchase these assets.
The sale hearing is expected to take place between March 26, 2013
and April 16, 2013.  The Company does not know whether or not ATP
will be successful in its efforts to sell these assets or whether
a purchaser of ATP UK would fund the Cheviot project.  However,
in the absence of a sale of ATP UK to a purchaser desiring to
complete the Cheviot project or utilize the structure in another
location, it does not appear that Bluewater will be able to pay
the remaining Balance on March 31, 2013.  In the event Bluewater
is unable to continue to meet its obligations under the
Agreement, we may attempt to recover or partially recover the
unpaid Balance through the disposition of project deliverables
and the enforcement of our security interest.

As of December 31, 2012, US$56.8 million has been billed on the
Cheviot project and the outstanding Balance was approximately
US$31.3 million.  The Company recorded a US$14.5 million reserve
on the Balance as of December 31, 2012 and we believe the
outstanding Balance, less the US$14.5 million reserve, is
collectible through the disposition of project deliverables and
the enforcement of its security interest in the event of a
default by Bluewater.  The Cheviot project represents revenue
backlog of US$30.0 million and labor backlog of 308,000 man-
hours, both of which are excluded from the Company's backlog at
December 31, 2012.

The disclosure was made in Gulf Island Fabrication's earnings
release fourth quarter ended Dec. 31, 2012, a copy of which is
available for free at

                           About ATP Oil

Houston, Tex.-based ATP Oil & Gas Corporation is an international
offshore oil and gas development and production company focused
in the Gulf of Mexico, Mediterranean Sea and North Sea.

ATP Oil & Gas filed a Chapter 11 petition (Bankr. S.D. Tex. Case
No. 12-36187) on Aug. 17, 2012.  Attorneys at Mayer Brown LLP,
serve as bankruptcy counsel.  Munsch Hardt Kopf & Harr, P.C., is
the conflicts counsel.  Opportune LLP is the financial advisor
and Jefferies & Company is the investment banker.  Kurtzman
Carson Consultants LLC is the claims and notice agent.

ATP disclosed assets of US$3.6 billion and US$3.5 billion of
liabilities as of March 31, 2012.  Debt includes US$365 million
on a first-lien loan where Credit Suisse AG serves as agent.
There is US$1.5 billion on second-lien notes with Bank of New
York Mellon Trust Co. as agent.  ATP's other debt includes US$35
million on convertible notes and $23.4 million owing to third
parties for their shares of production revenue.  Trade suppliers
have claims for US$147 million, ATP said in a court filing.

An official committee of unsecured creditors has been appointed
in the case.  Evan R. Fleck, Esq., at Milbank, Tweed, Hadley &
McCloy, in New York, represents the Creditors Committee as

GLOBAL SHIP: Lenders OK Waiver on Leverage Ratio Test
Global Ship Lease, Inc. on March 11 disclosed that while the
Company's stable business model largely insulates it from
volatility in the freight and charter markets, a covenant in the
credit facility with respect to the Leverage Ratio, which is the
ratio of outstanding drawings under the credit facility and the
aggregate charter free market value of the secured vessels,
causes the Company to be sensitive to significant declines in
vessel values.  Under the terms of the credit facility, the
Leverage Ratio cannot exceed 75%.  The Leverage Ratio has little
impact on the Company's operating performance as cash flow is
largely predictable under its business model.

Due to the continuing excess supply of capacity, there has been a
decline in charter free market values of containerships in recent
months.  The Company anticipated that the Leverage Ratio as at
November 30, 2012 would, if tested, exceed 75%.  Therefore, it
has agreed with its lenders a further waiver for two years of the
requirement to perform the Leverage Ratio test.  The next
scheduled test will be as at December 1, 2014.  During the waiver
period, the fixed interest margin to be paid over LIBOR is 3.75%,
prepayments are based on cash flow, subject to a minimum of $40
million on a rolling 12 month basis, rather than a fixed amount,
and dividends on common shares cannot be paid.  It has also been
agreed that all secured vessels will be included in the Leverage
Ratio test, whether they are subject to a charter or not.

In the three months ended December 31, 2012, a total of US$11.1
million of debt was prepaid leaving a balance outstanding of
US$425.7 million.  In the year ended December 31, 2012, a total
of US$57.9 million of debt was prepaid.


Under the terms of the waiver of the requirement to perform the
Leverage Ratio test, Global Ship Lease is not currently able to
pay a dividend on common shares.

                         Net Income/Loss

Net income for the three months ended December 31, 2012 was
US$8.1 million after a US$4.7 million non-cash interest rate
derivative mark-to-market gain.  For the three months ended
December 31, 2011 net income was US$10.9 million, after US$4.0
million non-cash interest rate derivative mark-to-market gain.
Normalized net income was US$3.5 million for the three months
ended December 31, 2012 and US$6.8 million for the three months
ended December 31, 2011, which excludes the effect of the non-
cash interest rate derivative mark-to-market gains.

Net income was US$31.9 million for the year ended December 31,
2012 after a US$9.7 million non-cash interest rate derivative
mark-to-market gain.  For the year ended December 31, 2011, net
income was US$9.1 million after the $13.6 million non-cash
impairment charge and a US$0.9 million non-cash interest rate
derivative mark-to-market loss.  Normalized net income was
US$22.2 million for the year ended December 31, 2012, and US$23.6
million for the year ended December 31, 2011.

The disclosure was made in Global Ship's earnings release for the
three months ended Dec. 31, 2012, a copy of which is available
for free at

                      About Global Ship Lease

London, England-based Global Ship Lease (NYSE: GSL, GSL.U and
GSL.WS) -- is a containership
charter owner.  Incorporated in the Marshall Islands, Global Ship
Lease commenced operations in December 2007 with a business of
owning and chartering out containerships under long-term, fixed
rate charters to world class container liner companies.

Global Ship Lease owns 17 vessels with a total capacity of 66,297
TEU with a weighted average age at June 30, 2010, of 6.3 years.
All of the current vessels are fixed on long-term charters to CMA
CGM with an average remaining term of 8.6 years.  The Company has
contracts in place to purchase two 4,250 TEU newbuildings from
German interests for approximately US$77 million each that are
scheduled to be delivered in the fourth quarter of 2010.  The
Company also has agreements to charter out these newbuildings to
Zim Integrated Shipping Services Limited for seven or eight years
at charterer's option.

As reported in the Dec. 1, 2012, edition of the TCR, Global Ship
Lease disclosed that it had entered into an agreement with its
lenders to waive until Nov. 30, 2012, the requirement under its
credit facility to conduct loan-to-value tests.  The credit
facility requires that loan-to-value, which is the ratio of
outstanding borrowings under the credit facility to the aggregate
charter-free market value of the secured vessels, cannot exceed

The Company's balance sheet at Sept. 30, 2012, showed US$907.84
million in total assets, US$549.46 million in total liabilities
and US$358.38 million in total stockholders' equity.

LADBROKES PLC: Playtech Deal No Impact on EBITDAR, Fitch Says
Fitch Ratings says that the transaction announced by Ladbrokes
plc ('BB+'/Stable) whereby its online gaming business will
partner with Playtech Ltd., will not cause any deterioration to
Ladbrokes' 2012 lease adjusted net debt / EBITDAR of 2.8x. This
is a result of sustainable improvements in performance delivered
in 2012 by Ladbrokes and installment payments for the
remuneration of Playtech, which are well diluted over 2013-2019,
subject to achieving EBITDA contribution and including an equity

Fitch views the transaction as an important step towards the
completion of the company's process of relaunching -- mostly with
internal resources rather than major M&A activity -- its online
gaming operations. Ladbrokes' online business will come out
stronger from this enlargement of offer and software capability
but remains smaller than major online competitors and
William Hill Online.

Ladbrokes displayed encouraging results in 2012 that suggest how
actions taken on its UK retail estate -- in particular the strong
performance of its machines -- and on the management of its odds,
are returning its operations to resilient financial performance
amidst the persistence of subdued consumer spending in the UK.
Excluding the impact of Euro 2012 Championship, Fitch calculates
that Ladbrokes' UK retail unit reported over-the-counter (OTC)
net revenue growth of 2.3% yoy for FY12 with operating profit up
14.8%. Consolidated EBITDA, excluding GBP30 million of profits
from high rollers and Euro 2012, was up almost 6% to GBP261
million. The company continued to generate solid free cash flow
(FCF) of GBP73 million despite capex running at a historically
high level of GBP95 million and dividends maintaining a 50% pay-

Over 2013-2015, Ladbrokes should benefit from a step up of
revenues arising from the capex disbursed on the enlargement of
the retail estate, the continuing growth of weekly revenues from
gaming machines, a more effective online gaming offer and
liability management. All this should enable annual FCF
generation to remain at least at GBP50 million. In addition,
depending on how much of the incremental EBITDA targeted from the
Playtech joint venture will not be re-absorbed by higher
structural costs and marketing investment for the online unit,
there will be contribution from the new operations.

Consequently, Fitch expects internally generated resources to be
sufficient to cover the planned possible installment payments for
the transaction with Playtech and does not anticipate adverse
effects on Ladbrokes' Issuer Default Rating from the transaction.

Fitch is in the process of conducting its annual review on
Ladbrokes and targets publishing a fuller analysis on the company
by the end of March.

NORTH WEST ELECTRICITY: S&P Gives 'BB+' LT Corp. Credit Rating
Standard & Poor's Ratings Services said that it assigned its
'BB+' long-term corporate credit rating to U.K.-based
intermediate holding company North West Electricity Networks
(Holdings) Ltd. (NWENH). NWENH derives cash flows solely from
distributions from its indirect subsidiary--the electricity
distribution utility Electricity North West Ltd. (ENW;
BBB+/Stable/A-2).  The outlook on NWENH is stable.

At the same time, S&P assigned its 'BB+' issue rating to the
proposed GBP180 million notes to be issued by NWEN Finance PLC, a
finance special-purpose vehicle, which is a wholly owned
subsidiary of NWENH.  The recovery rating on the notes is '4',
indicating S&P's expectation of average (30%-50%) recovery in
the event of a payment default.

The rating on NWENH is based on S&P's corporate ratings criteria,
and on S&P's view of the consolidated group's credit quality,
which S&P assesses at 'BBB+'.  The consolidated group includes
cash flows generated entirely by the regulated utility ENW, and
consolidated debt up to and including the parent company North
West Electricity Networks (Jersey) (above NWENH).  S&P's view of
the consolidated group is based on ENW's "excellent" business
risk profile and "significant" financial risk profile.  The
"excellent" business risk profile is underpinned by ENW's low-
risk regulated regional monopoly activities, offset by regulatory
reset risk every five years.  Financial risk is constrained by
the consolidated group's high level of leverage and negative
discretionary cash flows, partly offset by structural

S&P understands that NWENH is proposing to refinance its existing
GBP141 million bank debt with a GBP180 million bond.  The
refinancing does not affect S&P's view of the consolidated
group's credit quality because group debt levels will be more or
less unchanged.  S&P anticipates that the group will build
financial headroom on S&P's rating guideline of 10% Standard &
Poor's-adjusted funds from operations (FFO) to debt in the final
years of this regulatory period (ending March 31, 2015), with the
exception of 2013-2014, when headroom will be low due to a
payment of GBP30.4 million under interest-rate swaps linked to
the regulatory revenue profile.

The ratings on NWENH are constrained by the risk posed by the
U.K. regulatory ring-fencing regime to the creditors of holding
companies that rely entirely on cash flows from a regulated
operating company to service their own debt.  This is because
under the license conditions, the regulator might restrict upward
payments from the regulated operating subsidiary to the holding
company.  To reflect the threat and consequences of regulatory
intervention, S&P typically applies a two-notch differential
between the ratings on the operating and holding companies if the
credit quality of the consolidated group is in the 'BBB'

There is a three-notch differential between the long-term rating
on NWENH and S&P's assessment of the consolidated group's credit
quality owing to the additional restrictions on distributions
that arise from lock-up covenants embedded in the finance
documentation of NWENH's intermediate subsidiary, North West
Electricity Networks (NWEN).  Such lock-up events include
leverage exceeding 85% in terms of net debt to regulatory capital
value (RCV) and adjusted interest coverage of less than 1.1x.
The need to comply with covenant tests means that cash outflows
from NWEN to NWENH are less predictable and could be volatile.
In S&P's base-case forecasts, it anticipates that NWEN will
operate with some headroom under its lock-up covenants, and
therefore S&P currently envision a low probability of a dividend

In S&P's view, the consolidated group will maintain its focus on
low-risk regulated electricity distribution and maintain a
consolidated financial risk profile in line with the ratings.
Furthermore, S&P anticipates that NWENH will maintain "adequate"
stand-alone liquidity and sufficient bank arrangements to cover
12 months of its interest charges.

S&P could raise the rating on NWENH if the group's financial risk
profile strengthens, which S&P anticipates could occur toward the
end of this regulatory period.  S&P believes that FFO to adjusted
debt of about 15% on a sustainable basis is commensurate with a
higher rating.  However, an upgrade would depend on the owners
adopting more moderate financial policies in terms of leverage
and dividends.  If S&P was to raise the rating on ENW, it would
likely raise the rating on NWENH.  At the same time, S&P could
consider a lower rating differential than the current three
notches, all else being equal, if S&P perceived a lower risk of
activation of the regulatory ring-fence, or if S&P sees more
headroom under NWEN's covenants than in S&P's base-case

The ratings on NWENH could come under pressure if the group's
consolidated financial risk profile were to weaken, in
particular, if FFO to debt were to fall to less than 10%.  This
could occur as a result of additional leverage, the adoption of a
more aggressive dividend policy than S&P currently anticipates,
or adverse regulatory developments.  S&P do not consider these
scenarios as likely, however.  If S&P revised its assessment of
the consolidated group's credit quality downward, it would likely
lower the rating on NWENH.  S&P could also increase the notching
differential applicable to NWENH if it considers that there is a
higher risk of activation of the regulatory ring-fence.  At the
same time, S&P will assess the risk of triggering NWEN's lock-up
covenant, which could further constrain the rating on NWENH.  In
addition, S&P could lower the ratings on NWENH by one notch if
NWENH fails to maintain sufficient liquidity arrangements to
cover 12 months of its interest charges.

OCON: In Administration as Parent Fails to Bailout Firm
Manchester Evening News reports that Ocon crashed into
administration because its parent company was unable to bail it

The accountancy group Mazars was officially appointed on March 7
and has issued a statement outlining what led to Ocon's failure,
according to Manchester Evening News.  The report relates that
the firm was part of the Opal Group, which is also based in
Manchester and specializes in student housing schemes.

The report discloses that Opal's most recent accounts revealed it
had been struggling to refinance GBP886 million of debt with a
syndicate of 14 banks.

Tim Askham and Robert Adamson, of Mazar, issued a statement
saying the board of Ocon had carried out an "urgent review of its
financial position during February."

"This followed trading losses in the previous year, continuing
losses on current contracts and difficulties in procuring new
contracts. . . . The review identified the funds needed for Ocon
to be able to complete its contracts but these could not be
obtained via its parent, Oal Group, which was unable to support
the plan. . . . Ocon had some 50 staff and in addition engaged
numerous external contractors. Construction activity on sites
ceased a week ago and redundancy consultations with all staff
have been underway since. . . . The administrators are now
urgently engaging with clients and contractors to ensure an
orderly hand over of current works so that buildings can
nevertheless be completed to schedule," the statement said, the
report relates.

* UK: Banks Have GBP50-Bil. in Undeclared Losses, PIRC Says
Louise Armitstead at The Telegraph reports that a shareholder
group has warned British banks may be harboring a black hole of
as much as GBP50 billion in undeclared losses that do not show up
in their accounts but hamper their efforts to lend.

PIRC has calculated the amount of bad debts the banks may have to
write off in coming years but have yet to subtract from profits,
together with other items such as deferred bonuses not booked,
the Telegraph notes.

HSBC, which is the biggest bank by assets, was shown to have
GBP10.4 billion of hidden losses, the Royal Bank of Scotland has
GBP9.4 billion, and Barclays has GBP7.3 billion, the Telegraph
discloses.  Lloyds Banking Group has GBP2.5 billion and Standard
Chartered GBP2.2 billion, the Telegraph says.  Together the
undeclared losses total GBP31.8 billion, the Telegraph states.

The research shows the distorting impact the accounting rules,
which allow bad loans to remain hidden, have on bank results, the
Telegraph discloses.  PIRC applied old-style UK GAAP accounting
rules, which applied for 100 years until 2005, to the figures
released in the 2012 banks' accounts, the Telegraph notes.

Apart from Basel rules that require banks to declare half the
expected losses over a year, bad loans and expected losses do not
appear in the banks' accounts under International Financial
Reporting Standards (IFRS), the Telegraph states.

According to the Telegraph, Tim Bush, head of financial analysis
at PIRC and long-term critic of IFRS, said: "The 12 months
expected loss is neither here nor there.  It is clear that bad
loans in RBS and HBOS on lending in 2006 and 2007 took four or
five years to come through, the 12 month view can still make
unprofitable lending appear profitable.  The FASB model is the
model that is preferred by the Fed and already explains why the
US banking system is now functioning properly, whereas the IASB
banking world is not."

The warning follows regulatory pressure to force the UK's banks
and building societies to disclose their hidden losses, which
supervisors at the Bank of England have suggested could total as
much as GBP60 billion, the Telegraph notes.  Lenders have just
weeks left to clarify present the regulators with plans to fill
the holes, the Telegraph discloses.


* Upcoming Meetings, Conferences and Seminars

Apr. 10-12, 2013
      TMA Spring Conference
         JW Marriott Chicago, Chicago, Ill.

Apr. 18-21, 2013
      Annual Spring Meeting
         Gaylord National Resort & Convention Center,
         National Harbor, Md.
            Contact:   1-703-739-0800;

June 13-16, 2013
      Central States Bankruptcy Workshop
         Grand Traverse Resort, Traverse City, Mich.
            Contact:   1-703-739-0800;

July 11-13, 2013
      Northeast Bankruptcy Conference
         Hyatt Regency Newport, Newport, R.I.
            Contact:   1-703-739-0800;

July 18-21, 2013
      Southeast Bankruptcy Workshop
         The Ritz-Carlton Amelia Island, Amelia Island, Fla.
            Contact:   1-703-739-0800;

Aug. 8-10, 2013
      Mid-Atlantic Bankruptcy Workshop
         Hotel Hershey, Hershey, Pa.
            Contact:   1-703-739-0800;

Aug. 22-24, 2013
      Southwest Bankruptcy Conference
         Hyatt Regency Lake Tahoe, Incline Village, Nev.
            Contact:   1-703-739-0800;

Oct. 3-5, 2013
      TMA Annual Convention
         Marriott Wardman Park, Washington, D.C.

Nov. 1, 2013
      NCBJ/ABI Educational Program
         Atlanta Marriott Marquis, Atlanta, Ga.
            Contact:   1-703-739-0800;

Dec. 2, 2013
      19th Annual Distressed Investing Conference
          The Helmsley Park Lane Hotel, New York, N.Y.
          Contact:   240-629-3300 or

Dec. 5-7, 2013
      Winter Leadership Conference
         Terranea Resort, Rancho Palos Verdes, Calif.
            Contact:   1-703-739-0800;


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,
contact Peter Chapman at 215-945-7000 or Nina Novak at

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