TCREUR_Public/130516.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, May 16, 2013, Vol. 14, No. 96



HYPO ALPE-ADRIA: May Avert Insolvency Amid EU Negotiations


* GREECE: Fitch Upgrades LT Foreign & Local IDRs to 'B-'


BANCA MONTE: Posts EUR100.7-Mil. Net Loss in First Quarter 2013


CENTRAL EUROPEAN: Bankruptcy Court Approves Reorganization Plan
LOT POLISH: EU Commission Approves US$127-Mil. Rescue Loan


ABSOLUT BANK: Moody's Extends Review for Downgrade on Ba3 Ratings
ROSPROMBANK: Moody's Lowers National Scale Rating to ''
ROSPROMBANK: Moody's Lowers Long-Term Deposit Ratings to 'Caa2'


* SLOVENIA: Bailouts of Ailing Banks Set to Begin Next Month


FONDO DE TITULIZACION 5: Moody's Assigns Ca Rating on C Notes


UKRLANDFARMING: Tap Issue No Impact on Fitch's 'B' Notes Rating

U N I T E D   K I N G D O M

ATMOSPHERE BARS: In Administration; Nearly 500 Jobs at Risk
BOTANIC INNS: NAMA Deal Secures 300 Jobs After Administration
MAN STRATEGIC: Fitch Affirms 'BB' Subordinated Debt Rating
PENDRAGON PLC: Fitch Assigns 'B+' Rating to GBP175MM Bond
TATA STEEL: $1.6-Bil. Write-Down No Impact on Moody's Ba3 Rating

* UK: Moody's Looming Reforms Credit Negative for Water Sector
* UK: Fitch Says BTL Mortgage Market Growth May Hit Performance


* Fitch Says Stabilizing Rating Trends Support EMEA Corp. Bond
* Tata Steel Charge Highlights Industry's European Troubles
* Upcoming Meetings, Conferences and Seminars



HYPO ALPE-ADRIA: May Avert Insolvency Amid EU Negotiations
Boris Groendahl at Bloomberg News reports that Austria's central
bank said Hypo Alpe-Adria-Bank International AG will likely avoid
a EUR16 billion (US$21 billion) insolvency as policy makers
negotiate with the European Commission over the nationalized

"The government is on a very good path with the Commission,
therefore I don't think that there is an immediate threat,"
Bloomberg quotes Andreas Ittner, a director at the nation's
central bank, as saying in Vienna on Tuesday.

According to Bloomberg, Mr. Ittner said a EUR16 billion loss was
possible if Hypo Alpe was forced by the Commission into immediate
repayment of government aid that would trigger insolvency,
confirming a figure first published by Profil magazine last

Hypo Alpe is the third-biggest lender in the nations of the
former Yugoslavia, which have the potential to complicate the
situation by seizing local assets, Bloomberg says, citing
Austrian policy makers.

Joaquin Almunia, the European Union's top antitrust official,
told Austria in March that its restructuring plan for Hypo Alpe
wasn't good enough to justify retaining about EUR2.2 billion of
state aid the lender has received since 2008, and he may order
Hypo Alpe to pay it back, Bloomberg recounts.  A task force led
by former central bank governor Klaus Liebscher is aiming to
satisfy Mr. Almunia by drafting a new plan, Bloomberg discloses.

Repaying the EUR2.2 billion right away could force Hypo Alpe into
insolvency, according to a central bank document that was first
reported by Profil and also obtained by Bloomberg News.  The
Balkan countries where Hypo Alpe is active may nationalize its
local arms in the case of an insolvency, freezing as much as
EUR10.4 billion the parent company lent to the units, Bloomberg
says, citing the document.

Hypo Alpe, Bloomberg says, is seeking buyers for its businesses
in Austria, Italy and the former Yugoslavia, where it trails only
Nova Ljubljanska Banka dd and UniCredit SpA (UCG) in terms of
total assets.  Another unit owns non-performing assets that will
be wound down, including Croatian hotel loans, leasing deals
across eastern Europe and assets seized as loan collateral, such
as shopping malls, yachts and tractors, Bloomberg states.

The sale of the Austrian unit, which had EUR4.1 billion of assets
at the end of last year, is in the "final phase," Bloomberg
quotes Hypo Alpe spokesman Nikola Donig as saying.

Hypo Alpe originally proposed to sell the Austrian business next
year and dispose of the ex-Yugoslav unit, with 10 billion euros
of assets, by 2016, Bloomberg says, citing the central bank
document.  The document, as cited by Bloomberg, said that plan
was rejected by Mr. Almunia, who wants all units to be sold this

A quick sale of the Austrian unit may appease Mr. Almunia and
gain more time to sell the Balkan lenders, Bloomberg notes.
Mr. Donig said that Hypo Alpe has sent information memorandums to
about 10 potential bidders for the ex-Yugoslavia unit, which
comprises banks in Slovenia, Croatia, Serbia, Montenegro, and
Bosnia and Herzegovina, Bloomberg relates.

Austria is also revisiting plans to spin off the "bad bank" wind-
down unit, which already is its biggest division, accounting for
11.7 billion euros of total assets, Bloomberg discloses.

Hypo Alpe-Adria International AG is a subsidiary of BayernLB.  It
is active in banking and leasing.  In banking, HGAA serves both
corporate and retail customers and offers services ranging from
traditional lending through savings and deposits to complex
investment products and asset management services.


* GREECE: Fitch Upgrades LT Foreign & Local IDRs to 'B-'
Fitch Ratings has upgraded Greece's Long-term foreign and local
currency IDRs to 'B-' from 'CCC'. The Short-term foreign currency
IDR has also been upgraded to 'B' from 'C' and the Country
Ceiling upgraded to 'B' from 'B-'. The Outlook on the Long-term
IDRs is Stable.


The upgrade of Greece's sovereign ratings by one notch to 'B-'
reflects the following factors:

The Greek economy is rebalancing: clear progress has been made
towards eliminating twin fiscal and current account deficits and
'internal devaluation' has at last begun to take hold. The price
has been high in terms of lost output and rising unemployment and
the capacity for recovery is still in doubt. Nonetheless,
sovereign debt relief and an easing of fiscal targets have lifted
Central Bank measures of economic sentiment to a three-year high
and the risk of eurozone exit has receded.

The Economic Adjustment Programme (EAP) is on track amid a
semblance of political and social stability. The current
administration has displayed much greater ownership of the EU-IMF
funded EAP than its predecessors, committing to further upfront
fiscal consolidation and a renewed push on structural reforms.
Still, tangible economic recovery remains elusive, while
resistance to reform is high, underlining the continuing risks to

Greek primary fiscal adjustment of over 9% of GDP in 2009-12
(excluding one-off support to the financial sector), and around
16% in cyclically adjusted terms, ranks as the most ambitious
instance of fiscal consolidation among advanced economies in
recent times. The current account deficit has also shrunk from
10% of GDP in 2011 to 3% in 2012. The revised EU-IMF program
gives Greece two additional years (2015-16) to attain a primary
surplus of 4.5% of GDP. This relaxation is reflected in Fitch's
expectation of a milder economic contraction of around 4.3% in
2013 (-6.4% in 2012) and a weak recovery in 2014.

Structural reforms are progressing. The financial system has
stabilized: EUR16 billion-EUR17 billion of time deposits have
returned to the system since mid-2012 and bank recapitalization
is well advanced. Meanwhile, a small, but significant milestone
was passed earlier this month with the completion of the first
major privatization since the EAP began. Considerable progress
has also been made with labor market reforms and 80% of the
earlier loss of competitiveness has been clawed back. However,
product market reform remains a major challenge: progress in this
area will be important to support a sustainable recovery and for
the success of the EAP.

Extensive private and public sovereign debt restructuring has put
program funding on a more secure footing and should moderate the
rise in the peak public debt/GDP ratio to around 180% in 2013-14.
Notwithstanding this still extremely high headline public debt
ratio, the significantly reduced interest cost and maturity
extension provided by the debt restructuring and EAP financing
means that sovereign debt service now appears more secure than
the size of the debt stock would otherwise imply. Even so, public
debt sustainability is still far from assured and will be
dependent on economic recovery and a sustained primary fiscal

The degree of default risk for private creditors, encapsulated in
the previous 'CCC' rating, has subsided. In Fitch's view,
sovereign debt restructuring and debt buy-backs have reduced
private creditors' share of general government debt to the point
(15%, excluding T-bills), where there would be little to be
gained financially from any further restructuring. Barring Greek
exit from the euro, Fitch could envisage official creditors
bearing the brunt of any future default, albeit the political
considerations of any such move may not be straightforward.

Greece's sovereign ratings are underpinned by its still high
income per capita, which far exceeds 'B' and 'BB' medians, its
superior measures of governance on most counts and membership of
the eurozone, which shields it from balance of payments and
exchange rate risks and has facilitated access to unprecedented
financial assistance.


The Stable Outlook reflects Fitch's assessment that upside and
downside risks to the rating are more broadly balanced than in
the recent past. Nonetheless, the following risk factors
individually, or collectively, could trigger a rating action:

Sustained economic recovery founded on solid implementation of
the EU-IMF program, including broad structural reforms, would be
grounds for an upgrade.

Conversely, failure of the economy to recover, leading to the re-
emergence of renewed funding gaps could trigger a negative rating
action. Likewise, renewed political and social instability,
leading to an unravelling of the EU-IMF program, would intensify
the risks of Greek exit from the euro zone and widespread default
-- sovereign and private sector -- leading to a downgrade.

Macroeconomic imbalances have generated high public and external
debt and left Greece acutely vulnerable to domestic and external
shocks, such as developments in Cyprus. Fitch does not interpret
the Troika's (EU/IMF/ECB) treatment of Cyprus as implying any
diminution of support for Greece. However, the agency considers
that developments in Cyprus could have a knock-on effect to
Greece, were the EAP to go off track again, leading to
speculation among Greek businesses and depositors about how
larger financing gaps might be filled.


The ratings and Outlooks are sensitive to a number of

-- Political and social stability are maintained and the current
   administration remains in place.

-- Continued broad adherence to the EU-IMF EAP. The
   sustainability of Greece's public finances and its continued
   membership of the eurozone depend upon the implementation of
   structural and fiscal reforms and their effectiveness in
   laying the foundations for a sustained economic recovery.
   Outright rejection of the EAP, or material slippage against
   targets, would trigger a downgrade.

-- Fitch assumes that the EUR50bn allocated to recapitalisation
   of Greek banks is sufficient and that the financial sector
   makes no further material demands on the sovereign balance

-- Public debt outcomes are sensitive to assumptions about
   growth, the primary balance and interest rates.

-- Greece remains a member of the eurozone and does not seek to
   impose capital controls in the face of renewed strains on
   sovereign creditworthiness. In the event of a Greek exit from
   EMU, Fitch would treat the forcible redenomination of
   sovereign and private sector debt as a default event in line
   with its Distressed Debt Exchange rating criteria.

-- The eurozone remains intact and that there is no
   materialisation of severe tail risks to global financial
   stability and investor confidence.


BANCA MONTE: Posts EUR100.7-Mil. Net Loss in First Quarter 2013
Sonia Sirletti and Francesca Cinelli at Bloomberg News report
that Banca Monte dei Paschi di Siena SpA, the bailed-out Italian
bank embroiled in a fraud probe, reported a smaller first-quarter
loss than analysts estimated as revenue exceeded forecasts.

Monte Paschi reported a net loss of EUR100.7 million (US$130
million), less than the EUR154 million average loss estimate of
nine analysts surveyed by Bloomberg.

Chief Executive Officer Fabrizio Viola must return Monte Paschi
to profit this year under its EUR4.1 billion rescue plan to avoid
handing over a stake to the government, Bloomberg notes.  He's
putting assets up for sale and cutting the workforce after losses
totaling EUR7.9 billion in the past two years, Bloomberg

According to Bloomberg, revenue dropped 22% to EUR1.17 billion in
the first quarter from a year earlier, compared with EUR1.02
billion estimated by analysts.  Net interest income fell to
EUR597 million from EUR883 million, Bloomberg says.  Loan-loss
provisions grew to EUR484.2 million from EUR430.3 million a year
before, Bloomberg states.

Banca Monte dei Paschi di Siena SpA -- is
an Italy-based company engaged in the banking sector.  It
provides traditional banking services, asset management and
private banking, including life insurance, pension funds and
investment trusts.  In addition, it offers investment banking,
including project finance, merchant banking and financial
advisory services.  The Company comprises more than 3,000
branches, and a structure of channels of distribution.  Banca
Monte dei Paschi di Siena Group has subsidiaries located
throughout Italy, Europe, America, Asia and North Africa.  It has
numerous subsidiaries, including Mps Sim SpA, MPS Capital
Services Banca per le Imprese SpA, MPS Banca Personale SpA, Banca
Toscana SpA, Monte Paschi Ireland Ltd. and Banca MP Belgio SpA.

                          *     *     *

As reported by the Troubled Company Reporter-Europe on Feb. 4,
2013, Standard & Poor's Ratings Services said that it lowered its
long-term counterparty credit rating on Italy-based Banca Monte
dei Paschi di Siena SpA (MPS) to 'BB' from 'BB+'. S&P also
lowered its rating on MPS' Lower Tier 2 subordinated notes to
'CCC+' from 'B-'.  These ratings remain on CreditWatch, where S&P
originally placed them with negative implications on Dec. 5,
2012.  S&P lowered the ratings on MPS' junior subordinated debt
to 'CCC' from 'CCC+' and on its preferred stock to 'CCC-' from
'CCC'.  S&P also placed these ratings on CreditWatch with
negative implications.  S&P affirmed its 'B' short-term
counterparty credit rating on the bank.  The downgrade follows
MPS' recent announcement related to the investigation of
potential losses on three structured transactions.


CENTRAL EUROPEAN: Bankruptcy Court Approves Reorganization Plan
Central European Distribution Corporation and Roust Trading Ltd.
on May 13 disclosed that CEDC's Prepackaged Plan of
Reorganization (the Plan) on May 13 won approval from the U.S.
Bankruptcy Court for the District of Delaware, clearing the way
for CEDC to emerge from the restructuring process as a
financially stronger company.

The approval means that the Court has confirmed the Plan
submitted to the Court by CEDC and that the company may proceed
with the closing of the restructuring transactions contemplated
by the Plan, which, assuming all conditions are met, is expected
on or about May 31.

"The Court's approval of our financial restructuring is a very
positive step forward for the Company," said Roustam Tariko, CEDC
Chairman.  "The Company's world-class brands are now able to
continue to build on their success locally and globally and
perform as category leaders."

Required competition authority approvals already have been
granted by regulatory authorities in the Company's key markets of
Poland, Russia and Ukraine.

At the closing of the transaction, which eliminates approximately
US$665.2 million of debt from the balance sheets of CEDC and its
U.S. subsidiaries, the Company will make a cash payment to
holders of its 2013 Convertible Notes and certain of its 2016
Senior Secured Notes and issue new notes to holders of its 2016
Senior Secured Notes and new shares to RTL, cancelling all
previously issued 2013 Convertible Notes and 2016 Senior Secured
Notes and shares of outstanding CEDC common stock.  As a result
of the cancellation of CEDC's common stock, as of the day of
closing of the transaction CEDC will cease to be a public company
in the U.S. and in Poland and anticipates that its common stock
will no longer be subject to listing and trading on the Warsaw
Stock Exchange.  RTL, owned by Mr. Tariko, will receive 100% of
the outstanding stock of the reorganized Company in exchange for
funding CEDC's cash payments under the Plan and the cancellation
of CEDC's existing debt obligations to RTL.

The approval of the Plan marks the culmination of more than a
year's worth of work to bolster the Company's financial structure
and create a long-term business alliance with Mr. Tariko's
Russian Standard Vodka.  During that process, two entities shared
responsibility for safeguarding the interest of all CEDC
constituencies from a corporate governance standpoint: the
Special Committee of independent directors, headed by CEDC Vice
Chairman N. Scott Fine, and the Restructuring Committee,
consisting of Mr. Tariko and Mr. Fine and his fellow independent
Director Markus Sieger.  These committees were assisted by the
firm of Skadden, Arps, Slate, Meagher and Flom LLP as legal
advisor, the firm of Houlihan Lokey Capital Inc. as financial
advisor, and the firm of Alvarez & Marsal LLC as chief
restructuring officer.

CEDC and its U.S. subsidiaries, CEDC Finance Corporation
International, Inc. and CEDC Finance Corporation LLC
(collectively CEDC FinCo), on April 7, 2013, commenced voluntary
proceedings under Chapter 11 of the U.S. Bankruptcy Code.

The Chapter 11 filing did not involve the Company's operating
subsidiaries in Poland, Russia, Ukraine or Hungary.  Those
operations, which are independently funded and generate their own
revenues, have continued normally and without interruption during
the U.S. restructuring process.

The terms of the Plan were described in the Amended and Restated
Offering Memorandum, Consent Solicitation Statement and
Disclosure Statement, dated March 8, 2013 (the Offering
Memorandum), filed as an exhibit to a tender offer statement on
Schedule TO-I/A on March 8, 2013, as amended and supplemented by
Supplement No. 1 to the Offering Memorandum, dated March 18, 2013
(the Supplement), filed as an exhibit to the Form 8-K filed on
March 19, 2013.

                            About CEDC

Mt. Laurel, New Jersey-based Central European Distribution
Corporation is one of the world's largest vodka producers and
Central and Eastern Europe's largest integrated spirit beverages
business with its primary operations in Poland, Russia and

On April 7, 2013, CEDC and two subsidiaries sought bankruptcy
protection under Chapter 11 of the Bankruptcy Code (Bankr. D.
Del. Lead Case No. 13-10738) with a prepackaged Chapter 11 plan
that reduces debt by US$665.2 million.

Attorneys at Skadden, Arps, Slate, Meagher & Flom LLP serve as
legal counsel to the Debtor.  Houlihan Lokey is the investment
banker.  Alvarez & Marsal will provide the chief restructuring
officer. GCG Inc. is the claims and notice agent.

LOT POLISH: EU Commission Approves US$127-Mil. Rescue Loan
Marcin Sobczyk at The Wall Street Journal reports that the
European Commission approved a rescue loan of about US$127
million the Polish government gave late last year to LOT Polish
Airlines to save it from bankruptcy.

The Commission said the loan was in line with European Union
rules on state aid that are designed to prevent market
distortions by national governments, the Journal relates.

"The Commission found, in particular, that the aid was limited in
time and scope," the Journal quotes the Commission as saying on
Wednesday.  "The Commission has approved the measure temporarily
until it can take a position on the restructuring plan to be
submitted by Poland by June 20, 2013."

State-owned LOT has struggled for years in a highly competitive
market, posting losses due to high costs and a lack of scale, the
Journal notes.

LOT, the Journal says, is likely to ask for more money from the
Polish government to turn the company around.  Poland wants to
sell the airline later this year, the Journal states.

According to the Journal, as part of the restructuring, LOT will
shed workers and fleet.  It now has about 2,200 employees and 47
aircraft, the Journal says.

Headquartered in Warsaw, Poland, Polskie Linie Lotnicze LOT, or
LOT Polish Airlines -- serves about a dozen
cities in Poland and about 120 destinations across Europe and
North America.  Subsidiaries include regional carrier EuroLOT and
charter operator Centralwings.  Overall, LOT and its affiliates
maintain a fleet of about 55 aircraft, consisting of Embraer
regional jets, Boeing 767s and 737s, and ATR turboprops.  The
airline is a member of the Star Alliance marketing group, and LOT
serves many of its North American destinations through code-
sharing with Star partners United Airlines and Air Canada.
(Code-sharing allows airlines to sell tickets on one another's
flights and thus extend their networks.) The Polish government
owns 68% of the company.


ABSOLUT BANK: Moody's Extends Review for Downgrade on Ba3 Ratings
Moody's Investors Service is continuing its review of Ba3 long-
term local- and foreign-currency deposit ratings of Absolut Bank
for downgrade.

The completion of the review is subject to the completion of the
deal announced on December 24, 2012, whereby KBC Group NV (KBC),
which currently owns 100% stake in Absolut Bank via its
subsidiary KBC Bank NV (deposits A3 stable, BFSR D+ stable/BCA
baa3), announced its intention to sell its stake in Absolut Bank
to a group of Russian companies managing assets of Russia's Non-
State Pension Fund "Blagosostoyanie" (NSPF Blagosostoyanie, not
rated). As Moody's understands, the sale transaction is still
under way, and the counterparties intend to complete the deal in
the second quarter of 2013, in accordance with the previously
announced timeframes.

Moody's assessment is primarily based on the joint statement,
published in December 2012, and Absolut Bank's audited financial
statements for 2012 prepared under IFRS.

Rating Rationale:

Moody's notes that Absolut Bank's Ba3 long-term deposit ratings
currently benefit from one notch of support uplift from the
bank's b1 baseline credit assessment (BCA), which reflects the
rating agency's assessment of a low probability of parental
support from KBC. Moody's continues to incorporate a low
probability of parental support to Absolut Bank's ratings because
the rating agency expects KBC to maintain its support towards
Absolut Bank until the aforementioned transaction is fully
concluded. However, Moody's is likely to remove this one notch of
uplift if and when KBC completes the transaction.

Moody's further adds that Absolut Bank's strategic fit for the
new shareholder (NSPF Blagosostoyanie and the companies managing
its assets) is yet to be defined. Moreover, the new shareholder
may need to replace some financial facilities that had been
provided to Absolut Bank by KBC, although Moody's notes that the
volume of such parental funding decreased significantly over the
last several months: according to the bank's management, at
April 30, 2012, funding from KBC stood at RUB6.7 billion (US$214
million), about 7% of Absolut Bank's total liabilities.

Focus of The Review

The extended review for downgrade of Absolut Bank's ratings will
focus on: (1) the progress that KBC and NSPF Blagosostoyanie
(including its management companies) make towards implementing
the Absolut Bank transaction; (2) the strategy envisaged by NSPF
Blagosostoyanie with regard to Absolut Bank when the former
obtains control; and (3) NSPF Blagosostoyanie's willingness and
ability to provide support to Absolut Bank in the event of need.

What Could Move the Rating Down/Up

The ratings review reflects the risk that parental support from
KBC might discontinue on completion of the sale transaction,
expected to be finalized by the end of the second quarter of
2013. Any expectations of subsequent weakening of Absolut Bank's
financial fundamentals, which might include profitability,
capital adequacy and/or asset quality, could exert negative
pressure on the bank's standalone ratings.

As indicated by the ratings review, there is little scope for
upwards rating pressure. However, upwards pressure could develop
over time, following improvement in Absolut Bank's franchise
value accompanied by adequate profitability and good capital
adequacy. Positive pressure could also be exerted on the rating
as a consequence of notably improved asset quality following
recent improvements in the bank's risk profile.

Principal Methodology

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

Headquartered in Moscow, Russia, Absolut Bank reported total
audited IFRS assets of US$3.5 billion and total shareholder
equity of US$584 million as at year-end 2012.

ROSPROMBANK: Moody's Lowers National Scale Rating to ''
Moody's Interfax Rating Agency downgraded the National Scale
Rating (NSR) of Rosprombank to from The NSR
carries no specific outlook.

Rating Rationale:

Moody's downgrade of Rosprombank's ratings is prompted by the
bank's weak standalone credit strength stemming from negative
pressure on capital adequacy. This pressure arises from the
bank's weak core profitability given the squeeze in net interest
margin and an overall decline in recurring revenues as well as
low operating efficiency.

Under Moody's central scenario, Rosprombank capital level is very
weak and insufficient to cover the credit and market losses
anticipated by the rating agency. Moody's notes that
Rosprombank's capital is mainly pressured by weak financial
performance, as the bank's core profitability (net interest
income and net fees) were insufficient to cover its operating
costs in 2012 and in Q1 2013. The bank reported a regulatory
capital adequacy ratio of 14.9% as at April 1, 2013, and this
metric is likely to face sustained pressure.

Rosprombank reported a net unaudited loss of RUB23.4 million
($800 thousand) in Q1 2013 (under Russian accounting standards),
which was mainly driven by contraction of net interest margin to
a low annualized 3% (adjusted for credit-linked fees) compared to
3.8% in 2012. Given the intense competition for creditworthy
borrowers in Russia, Rosprombank's yield on assets decreased to
annualized 8.3% in Q1 2013 (year-end 2012: 8.8%). However, this
decrease was not followed by lower operating expenses, thereby
putting pressure on the net interest margin.

Moody's notes that Rosprombank had a very limited exposure to its
parent Cyprus Popular Bank (deposits: C/Not-Prime no outlook,
BFSR/BCA: E/c no outlook), and was not reliant on parental
funding at Q1 2013. However, given the challenging credit
conditions in Russia and uncertainties regarding Rosprombank's
strategy resulting from the resolution of Cyprus Popular Bank,
Moody's does not anticipate a recovery of the bank's financial
performance over the next 12 to 18 months.

Principal Methodologies

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

Moody's Interfax Rating Agency's National Scale Ratings (NSRs)
are intended as relative measures of creditworthiness among debt
issues and issuers within a country, enabling market participants
to better differentiate relative risks. NSRs differ from Moody's
global scale ratings in that they are not globally comparable
with the full universe of Moody's rated entities, but only with
NSRs for other rated debt issues and issuers within the same
country. NSRs are designated by a ".nn" country modifier
signifying the relevant country, as in ".ru" for Russia.

Headquartered in Moscow, Russia, Rosprombank reported total
assets of RUB7.4 billion (around US$240 million) at Q1 2013
(under RAS, unaudited).

               About Moody's And Moody's Interfax

Moody's Interfax Rating Agency (MIRA) specializes in credit risk
analysis in Russia. MIRA is a joint-venture between Moody's
Investors Service, a leading provider of credit ratings, research
and analysis covering debt instruments and securities in the
global capital markets, and the Interfax Information Services
Group. Moody's Investors Service is a subsidiary of Moody's
Corporation (NYSE: MCO).

ROSPROMBANK: Moody's Lowers Long-Term Deposit Ratings to 'Caa2'
Moody's Investors Service downgraded Rosprombank's long-term
local and foreign-currency deposit ratings to Caa2 from B3, and
lowered the standalone bank financial strength rating (BFSR) to E
from E+, equivalent to a baseline credit assessment (BCA) of caa2
(formerly b3). Moody's says the downgrade is based on
Rosprombank's weak standalone credit strength stemming from
pressure on capital adequacy.

The bank's deposit ratings carry a negative outlook and the
rating action concludes the review initiated on January 23, 2013.

Rating Rationale:

Moody's downgrade of Rosprombank's ratings is prompted by the
bank's weak standalone credit strength stemming from negative
pressure on capital adequacy. This pressure arises from the
bank's weak core profitability given the squeeze in net interest
margin and an overall decline in recurring revenues as well as
low operating efficiency.

Under Moody's central scenario, Rosprombank capital level is very
weak and insufficient to cover the credit and market losses
anticipated by the rating agency. Moody's notes that
Rosprombank's capital is mainly pressured by weak financial
performance, as the bank's core profitability (net interest
income and net fees) were insufficient to cover its operating
costs in 2012 and in Q1 2013. The bank reported a regulatory
capital adequacy ratio of 14.9% as at April 1, 2013, and this
metric is likely to face sustained pressure.

Rosprombank reported a net unaudited loss of RUB23.4 million
(US$800 thousand) in Q1 2013 (under Russian accounting
standards), which was mainly driven by contraction of net
interest margin to a low annualized 3% (adjusted for credit-
linked fees) compared to 3.8% in 2012. Given the intense
competition for creditworthy borrowers in Russia, Rosprombank's
yield on assets decreased to annualized 8.3% in Q1 2013 (year-end
2012: 8.8%). However, this decrease was not followed by lower
operating expenses, thereby putting pressure on the net interest

Moody's notes that Rosprombank had a very limited exposure to its
parent Cyprus Popular Bank (deposits: C/Not-Prime no outlook,
BFSR/BCA: E/c no outlook), and was not reliant on parental
funding at Q1 2013. However, given the challenging credit
conditions in Russia and uncertainties regarding Rosprombank's
strategy resulting from the resolution of Cyprus Popular Bank,
Moody's does not anticipate a recovery of the bank's financial
performance over the next 12 to 18 months.

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

Headquartered in Moscow, Russia, Rosprombank reported total
assets of RUB7.4 billion (around US$240 million) at Q1 2013
(under RAS, unaudited).


* SLOVENIA: Bailouts of Ailing Banks Set to Begin Next Month
Julia Chatterley at CNBC reports that Uros Cufer, country's
finance minister, on Tuesday said the bailouts of the weakest
banks in Slovenia should begin next month, but he insisted that
he is not concerned with the time-frame of the process.

Mr. Cufer said the first assets would be transferred to the
nation's so-called bad bank by the end of June, with the exercise
due to be completed by the third quarter, CNBC relates.

Slovenia plans to move EUR3.3 billion of bad loans from its three
largest banks, NLB, Nova KBM and Abanka Vipa, to the bad bank in
return for state guaranteed bonds worth EUR1.1 billion, CNBC

Mr. Cufer assured investors that Tuesday's successful bond
auction would not delay the country's economic reforms, CNBC
notes.  The finance ministry raised almost EUR55 million in the
sale, which followed a larger auction earlier in May -- just two
days after Moody's downgraded the country's credit rating -- in
which it raised EUR2.7 billion, according to CNBC.

Mr. Cufer added that the state-owned companies Slovenia has
pledged to sell in order to avoid an international bailout is the
first of a number of measures, CNBC recounts.

"We put the list of 15 companies to the parliament and this is
just a first package so we will see how things proceed and see
what else we can do," CNBC quotes Mr. Cufer as saying.

The much-anticipated sell-off package includes the country's
second largest bank, its biggest telecoms operator and the
national airline, CNBC states.

EU Economic and Monetary Affairs Commissioner Ollie Rehn said it
was premature to decide on the credibility of Slovenia's reform
plans on Monday, CNBC relates.


FONDO DE TITULIZACION 5: Moody's Assigns Ca Rating on C Notes
Moody's Investors Service has assigned the following definitive
ratings to the debt issued by Fondo de Titulizacion de Activos
PYMES Santander 5:

EUR1368M A Notes, Definitive Rating Assigned A3 (sf)

EUR342M B Notes, Definitive Rating Assigned B1 (sf)

EUR342M C Notes, Definitive Rating Assigned Ca (sf)

Fondo de Titulizacion de Activos PYMES Santander 5 is a
securitization of standard loans and credit lines granted by
Banco Santander (Baa2/P-2; Negative Outlook) to small and medium-
sized enterprises (SMEs) and self-employed individuals in Spain.

At closing, the Fondo -- a newly formed limited-liability entity
incorporated under the laws of Spain -- will issue three series
of rated notes. Santander will act as servicer of the loans and
credit lines for the Fondo, while Santander de Titulizacion
S.G.F.T., S.A. will be the management company (Gestora) of the

Rating Rationale:

As of April 2013, the audited provisional asset pool of
underlying assets was composed of a portfolio of 23,219 contracts
granted to SMEs and self-employed individuals located in Spain.
In terms of outstanding amounts, around 71.6% corresponds to
standard loans and 28.4% to credit lines. The assets were
originated mainly between 2010 and 2012 and have a weighted
average seasoning of 1.4 years and a weighted average remaining
term of 3.9 years. Around 10.8% of the portfolio is secured by
first-lien mortgage guarantees. Geographically, the pool is
concentrated mostly in Catalonia (20.3%), Madrid (19%) and
Andalusia (13.1%). At closing, any loans in arrears will be
excluded from the final pool.

In Moody's view, the strong credit positive features of this deal
include, among others: (i) a relatively short weighted average
life of 2.3 years; (ii) a granular pool (the effective number of
obligors is near 1,000); and (iii) a geographically well-
diversified portfolio. However, the transaction has several
challenging features: (i) a strong linkage to Santander related
to its originator, servicer, accounts holder and liquidity line
provider roles; (ii) a relatively high exposure to the
construction and building industry sector (25.5% according to
Moody's industry classification); (iii) no interest rate hedge
mechanism in place; and (iv) a complex mechanism that allows the
Fondo to compensate (daily) the increase on the disposed amount
of certain credit lines with the decrease of the disposed amount
from other lines, and/or the amortization of the standard loans.
These characteristics were reflected in Moody's analysis and
provisional ratings, where several simulations tested the
available credit enhancement and 20% reserve fund to cover
potential shortfalls in interest or principal envisioned in the
transaction structure.

The ratings are primarily based on the credit quality of the
portfolio, its diversity, the structural features of the
transaction and its legal integrity.

In its quantitative assessment, Moody's assumed a mean default
rate of 16.46%, with a coefficient of variation of 39.85% and a
recovery rate of 37.5%. Moody's also tested other set of
assumptions under its Parameter Sensitivities analysis. For
instance, if the assumed default probability of 16.46% used in
determining the initial rating was changed to 17.46% and the
recovery rate of 37.5% was changed to 35%, the model-indicated
rating for Serie A, Serie B and Serie C would change from A3(sf),
Ba3(sf) and Ca(sf) to Baa1(sf), B1(sf) and Ca(sf) respectively.
Given that, over time, riskier loans may represent a larger share
of the portfolio hence causing higher volatility in its mean
default rate, Moody's decided to assign Serie B notes a lower
rating than that indicated by the cashflow model output as the
smaller size of this tranche makes it more vulnerable to higher
default scenarios.

The global V-Score for this transaction is Medium/High, which is
in line with the score assigned for the Spanish SME sector and
representative of the volatility and uncertainty in the Spanish
SME sector. V-Scores are a relative assessment of the quality of
available credit information and of the degree of dependence on
various assumptions used in determining the rating. The main
source of uncertainty in the analysis relate to the Transaction
Complexity. This element has been assigned a Medium/High V-Score,
as opposed to Medium assignment for the sector V-Score. For more
information, the V-Score has been assigned accordingly to the
report " V-Scores and Parameter Sensitivities in the EMEA Small-
to-Medium Enterprise ABS Sector " published in June 2009.

The methodologies used in this rating were "Moody's Approach to
Rating CDOs of SMEs in Europe" published in February 2007,
"Refining the ABS SME Approach: Moody's Probability of Default
assumptions in the rating analysis of granular Small and Mid-
sized Enterprise portfolios in EMEA", published in March 2009 and
"Moody's Approach to Rating Granular SME Transactions in Europe,
Middle East and Africa", published in June 2007.

In rating this transaction, Moody's used ABSROM to model 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 Inverse Normal distribution
assumed for the portfolio default rate. On the recovery side
Moody's assumes a stochastic (normal) recovery distribution which
is correlated to the default distribution. 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 stress


UKRLANDFARMING: Tap Issue No Impact on Fitch's 'B' Notes Rating
Fitch Ratings says that UkrLandFarming's (ULF) planned US$150
million 10.875% tap issue to its recently priced EUR275 million
10.875% notes due 2018 does not affect the 'B' rating assigned to
this instrument on March 26, 2013, nor the group's foreign and
local currency Issuer Default Rating (IDR) of 'B' and 'B+'
respectively with Stable Outlook.

The additional notes will have the same terms and conditions as
well as the same ranking and substantially similar covenants as
the existing senior notes. The add-on notes will be senior
unsecured obligations of ULF and benefit from upstream guarantees
(which are suretyships under Ukrainian law) from several
operating subsidiaries, including Avangardco's main subsidiaries.
Fitch understands that these guarantors accounted for
approximately 84% of net assets and 85% of consolidated EBITDA
for 2012. Avangardco, the largest egg producer in Ukraine and
Eurasia, is rated 'B' by Fitch.

"The proceeds from the latest bond issuance, including the
proposed tap issue, will be used for general corporate purposes
including the refinancing of existing debt and funding of bolt-on
acquisitions, especially the purchase of land lease rights. This
added debt issue does not increase the net debt of the group
while gross leverage would increase by 0.2x EBITDA, therefore not
affecting the group's credit ratios in any meaningful way. We
expect funds from operations (FFO) gross leverage of around 2x in
FY13 and FFO margin above 25%; these metrics are commensurate
with the assigned ratings in the sector," Fitch says.

"We note an improvement in ULF's liquidity position, with bond
placement proceeds used to repay part of shorter term debt. We
expect ULF's cash flow from operations less maintenance capex in
2013 to cover US$193 million of 2013 maturities left post-
placement of the tap issue by a factor of 2.2x. Additional
liquidity comfort is provided by US$58 million of available
undrawn committed bank lines, 60% of which now are represented by
lines of third-party banks."

ULF's key rating drivers and sensitivities are explained in our
press release "Fitch Publishes UkrLandFarming 'B' Foreign
Currency IDR; Outlook Stable" dated March 7, 2013 available at

U N I T E D   K I N G D O M

ATMOSPHERE BARS: In Administration; Nearly 500 Jobs at Risk
Duncan Robinson at The Financial Times reports that Atmosphere
Bars and Clubs has gone into administration, putting nearly 500
jobs at risk.

Atmosphere, which tends to operate in northern satellite towns
such as Wigan, had struggled in the economic downturn and had
been lossmaking for some time, the FT discloses.

According to the FT, the group posted an annual pre-tax loss of
GBP4.1 million for the year to February 26, 2012, with management
blaming "unsustainable" discounting by rivals for the loss.  This
came after a pre-tax loss of GBP5.2 million the year before, the
FT notes.

Daniel Butters, joint administrator at Deloitte, said that
atmosphere was put into administration by its directors "as a
consequence of cash flow problems", the FT relates.

Mr. Butters, as cited by the FT, said that the business would
continue to trade and that all venues will remain open while the
group searches for a buyer.

Atmosphere Bars and Clubs is the late-night bar operator behind
the Chicago's Bars chain.

BOTANIC INNS: NAMA Deal Secures 300 Jobs After Administration
Kevin Magee at BBC News reports that a deal involving the Irish
Republic's assets recovery agency, National Asset Management
Agency, has safeguarded 300 jobs in Botanic Inns.

But the future of another 300 staff is undecided as other bars in
a sister company are to be put up for sale, BBC notes.

The Ulster Bank moved against the Botanic Inns Group and called
in the administrators last week, BBC relates.

But the deal means the man who ran all the bars, will remain in
charge of five of them and one hotel, BBC states.

Steven Magorrian will continue to run six licensed premises after
the leases on those properties were successfully re-negotiated
with NAMA on Monday night, BBC discloses.  The bars he has
retained are the Botanic Inn, Madisons Hotel, the King's Head,
the Northern Whig, the Elms and the Fly, BBC says.

However, a handful of other bars -- the Apartment, the Kitchen
Bar, Ryans, McHughs, The Parador, Molly Browns and Denvir's Hotel
in Downpatrick -- which were in a different company called
Kurkova, remain in administration while a new owner is sought,
according to BBC.

It is understood that PWC was involved in negotiations with the
Ulster Bank and NAMA for all the pubs to remain under the same
management, but the Ulster Bank put both companies, containing
all the bars, into administration, BBC notes.

It is believed the Ulster Bank was owed in the region of GBP6.5
million, BBC says.

NAMA, which owned the bars in the Botanic Inns Group part of the
company, agreed to draw up new leasing arrangements to allow
Mr. Magorrian to continue to run them, BBC relates.

The appointment of an administrator by the Ulster Bank means the
other pubs in the group, contained in the company Kurkova, are
currently being run by the administrator KPMG, BBC discloses.

Botanic Inns is one of Belfast's best known pubs.

MAN STRATEGIC: Fitch Affirms 'BB' Subordinated Debt Rating
Fitch Ratings has affirmed Man Strategic Holdings Ltd.'s
(formerly Man Group PLC) Long-term Issuer Default Rating (IDR) at
'BBB' and revised its Outlook to Stable from Negative. The 'BBB'
rating on its senior unsecured debt, 'BBB-' rating on its
subordinated debt and 'BB' rating on its hybrid capital notes
were also affirmed.

Rating Action Rationale

The rating action reflects the recently announced measures to
redeem or buy-back all of Man's outstanding debt instruments. On
a pro forma basis, these measures will generate an annual US$78
million of interest/coupon savings and result in a modest (around
US$180 million) reduction in net cash, as calculated by Fitch,
primarily due to the 50% equity credit assigned to the hybrid
capital notes. In the absence of gross debt, the downside risks
to the credit profile previously cited in Fitch's comment of 26
September 2012, which included declining funds under management
(FUM), earnings pressure and a high payout policy, are more

Man's IDR reflects its sound franchise in alternative investment
fund management, strong liquidity, and moderate credit, liquidity
and market risks arising from the use of its balance sheet to
support its franchise.

FUM have been on a declining trend for some time and net outflows
persisted in Q113. Stemming outflows remains an important
challenge for management: persistent outflows are likely to
constrain ratings and a material deterioration in flows could
again introduce downwards pressure on the credit rating, albeit
the ratings sensitivity to flows is reduced by imminent debt
reductions. Conversely, a sustained stabilization or improvement
in FUM and, by extension, underlying earnings, could lead to
positive ratings pressure.

Management fee margins are strong relative to long-only managers
and EBITDA margins are still quite healthy, however declining FUM
and a shift towards less structured FUM have led to pressure on
the blended margin, necessitating cost cutting initiatives to
help mitigate the pressure on earnings. Performance fees are
inevitably volatile but can provide material upside when
triggered and Fitch notes an increased proportion of FUM above or
close to high water marks as a result of solid year-to-date

Downward pressure could also arise from a material reduction in
net cash or increase in gross leverage as a result, for example,
of an acquisition.


Man's subordinated notes are rated one notch below its IDR,
reflecting their subordination. Man's hybrid bond is rated three
notches below its IDR, reflecting its deep subordination (two
notches) and incremental non-performance risk characteristics
(one notch). The ratings are broadly sensitive to the same
considerations that might affect Man's IDR.

The rating actions are as follows:

Long-term IDR: 'BBB'; Outlook revised to Stable from Negative

Senior unsecured debt: affirmed at 'BBB'

Dated subordinated debt: affirmed at 'BBB-'

Hybrid debt: affirmed at 'BB'

PENDRAGON PLC: Fitch Assigns 'B+' Rating to GBP175MM Bond
Fitch Ratings has assigned Pendragon plc's GBP175 million 6.875%
seven-year bond a final 'B+' rating. The rating is in line with
Pendragon's 'B+' Senior Secured Rating.

The bond's final rating follows a review of the final terms and
conditions conforming to information already received when Fitch
assigned the expected rating on April 23, 2013.

The proceeds of the notes will be used for refinancing existing
debt, most of which matures in June 2014 and for general
corporate purposes. The notes will constitute direct, secured and
unconditional obligations of the issuer, Pendragon, and its
guarantor subsidiaries.

The 'B+' senior secured rating applied to the bond is one notch
above Pendragon's Issuer Default Rating (IDR). The rating
differential reflects Fitch's recovery analysis of the company on
a going concern basis, using an industry consistent multiple
applied to an appropriately stressed EBITDA level, which derived
a recovery band of 50% to 70% and a Recovery Rating of RR3 and
lead to a one notch uplift from the IDR.


Relationships with Auto OEMs
A significant driver of Pendragon's operations and financial
performance is driven by its relationships with the various auto
OEMs from which it sources vehicles. While its franchise
agreements with the OEMs give Pendragon territorial sales rights
and provides it a relatively stable gross margin, Pendragon is
also vulnerable to the financial health and / or strategy of the

Highly Leveraged Capital Structure
Fitch adjusts Pendragon's on-balance sheet reported debt and off-
balance sheet operating lease obligations by adding the stock
financing provided by third party finance providers not supplied
by the financing arms of the auto OEMs. As such, the company's
reported gross and net funds from operations (FFO) adjusted
leverage at end-2012 was 4.8x and 4.5x, respectively. Fitch
expects these ratios to remain stable in the short to medium

Cost Structure Flexibility
Given the low operating margins inherent in the vehicle sales
business model, the structure and flexibility of Pendragon's
operating cost structure is important to offset the possibly
volatile demand dynamics. Pendragon has relatively mid-ranging
EBITDA margins exhibited in the sector, and since the downturn of
2008 and 2009, has improved its cost flexibility. Nevertheless,
another sharp downturn in market demand could stress Pendragon's
financial profile.

UK Auto Market
Following the sharp market downturn in 2008 and 2009 in the UK,
auto sales have stabilized in the past three years, but still
remain a considerable amount below their 2008 peak. Given the
sensitivity of earnings to volume movements, the outlook for auto
sales remains a key indicator of future performance. A mitigating
factor for Pendragon is its aftersales business, which is not
highly cyclical and contributes close to 40% of the company's
gross profit.

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

-- FFO adjusted leverage below 3x
-- FFO fixed charge cover above 2.5x
-- Free cash flow (FCF) margin above 1%

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

-- FFO adjusted leverage above 6x
-- FFO fixed charge cover below 1.5x
-- Negative FCF

TATA STEEL: $1.6-Bil. Write-Down No Impact on Moody's Ba3 Rating
Moody's Investors Service says that the decision by Tata Steel
(Ba3 negative) to write off $1.6 billion in goodwill related
largely to its investment in Tata Steel UK Holdings (TSUKH, B3
negative) has no immediate impact on its ratings. However, the
announcement highlights the structural challenges in the European
steel market, and the continued poor performance at TSUKH, which
are incorporated in both entities' negative rating outlooks.
Indeed, failure to stem the losses at TSUKH could lead to
sustained rating pressures that could ultimately result in a

"As TSUKH continues to struggle with overcapacity and sluggish
demand from Europe, and with FYE March 2013 likely to reflect the
nadir of Tata Steel's credit metrics, the write-down does not
come as a surprise", says Alan Greene, Vice President -- Senior
Credit Officer at Moody's.

"TSUKH generated negative EBITDA per tonne of $26 in the third
quarter ending December 2012 and we expect it to barely break
even over the full year", adds Greene, who is also lead analyst
for Tata Steel and TSUKH.

In stark contrast, Tata Steel India's EBITDA per tonne was $243
in the same period, a recent low point, on the back of a slower
Indian economy, though still amongst the highest of all Moody's
rated steel companies. Moody's notes that steel prices in India
remain depressed and with producers still adding capacity it
believes the return of Tata Steel's Indian business towards a
sustained EBITDA of USD300/tonne or more, may take some quarters
to emerge.

"Nevertheless, with no letup in the weak demand and overcapacity
seen in Europe, there is a risk that the weakening of Tata
Steel's credit metrics continues into FY2014. Moody's expects
consolidated adjusted debt/EBITDA to have been around 5.8x for
FY13 and are looking for an improvement to 5.5x in FY14. However,
further erosion of credit metrics could precipitate a rating
downgrade," says Greene.

TSUKH's burgeoning debt level remains a challenge for the group.
The rate of amortization of the EUR2.2 billion tranche of its
senior facility agreement (SFA) accelerates in FY14 and FY15 with
some EUR570 million due over this period. At the same time,
capital expenditure to renew plant and improve efficiency is
still needed and at a rate of GBP350 million to 400 million, is
close to matching the depreciation charge.

TSUKH's B3 rating factors in two notches of support from Tata
Steel, reflecting TSUKH's strategic importance within the group
and expectations of continued support. Tata Steel's incremental
investments in Tata Steel Holdings Pte Ltd., which is the link
with the procurement entities and non-Indian operations, are
ultimately the mechanism for providing the support to TSUKH.

Moody's will be looking to the upcoming full-year results
announcement and subsequent quarters to ascertain whether a
gradual turn-around of TSUKH's performance can be achieved. This
would include in particular its ability to generate positive free
cash flow and EBITDA. Negative rating pressure could develop in
the event of a worsening in the operating environment beyond
Moody's expectations over the next 6 months.

"The emergence of funding constraints affecting the expansion of
the profitable parts of Tata Steel, due to TSUKH's losses,
suggests that further action, along the lines of the disposal of
Teeside Cast Products in 2011 is needed in order to reverse
TSUKH's cash outflow," adds Greene.

The principal methodology used in these ratings was Global Steel
Industry Methodology published in October 2012.

Tata Steel UK Holdings is the 100%-owned subsidiary of Tata Steel
Ltd and is the holding company for the European steel operations
that principally comprise the former Corus Group. Tata Steel Ltd,
is an integrated steel company headquartered in Mumbai, India.
The Tata Steel Group is the world's 12th largest steelmaker
producing 24.03 million tons of crude steel in FY2012

* UK: Moody's Looming Reforms Credit Negative for Water Sector
Moody's Investors Service said that it views as credit negative
for the existing UK vertically integrated monopoly water and
sewerage companies the inclusion of the draft Water Bill in the
Queen's Speech on May 8, 2013, which shows that the government's
plans for changes to the water sector in England and Wales remain
on track. In particular, Moody's views as credit negative for
these companies one of the main elements of the bill, namely
proposed reforms to support competition in the retail and
upstream segments. However, the rating agency notes that the
impact of increased competition may be limited over the medium

According to a government briefing note, the purpose of the draft
Water Bill is to make the water sector more resilient, increase
customer choice and support growth by encouraging investment and
innovation. The main benefits of the bill, according to the note,
would include (1) making water supplies more resilient, including
by encouraging development of new water sources or innovative
treatment schemes and making it easier for water companies to
sell water to each other; (2) increasing choice for business
customers; and (3) supporting growth by encouraging new
investment and making it easy for new companies to enter the

A revised draft of the bill is likely to be published in the
coming weeks and is expected to be broadly aligned with the first
draft published in July 2012. This initial draft focused largely
on increasing opportunities for competition that the government
and the Water Services Regulation Authority, Ofwat, the economic
regulator for water companies in England and Wales, believe will
bring improvements for customers. Moody's notes that the
government is now placing greater emphasis on increasing
resilience, although it is unclear whether this signals
substantive changes in the proposals.

Retail competition for non-household customers is expected to
begin in 2017, but could be delayed, and will likely be credit
neutral for the sector as a whole, although particular companies
could suffer as a result of the way in which price limits are
set. It is unclear what model of upstream reform may be taken
forward and what its consequences will be, however, the
introduction of meaningful upstream competition appears unlikely
before 2019 at the earliest.

It is not known what, if any, changes will be made in the
proposed legislation following the February 2013 report by the
House of Commons Environment, Food and Rural Affairs (EFRA)
Committee on the draft bill. The report by Members of Parliament
(MPs) found that further analysis of the likely impact was needed
before upstream reforms are introduced. According to the report,
which welcomed plans to increase competition in the sector, the
case for upstream reform had not yet been fully made out. Given
the potentially serious implications, the report said that
further work was required to establish how upstream reform might
be introduced in a way that will preserve investor confidence.

The MPs highlighted that the draft bill provided only a broad
framework and left too much detail to be decided by Ofwat, or to
be introduced through secondary legislation that receives less
parliamentary scrutiny. The report recommended that the
government include key principles for upstream reform within the
draft bill and publish statutory guidance for Ofwat in order to
provide greater certainty as to the potential scale and impact of
future changes. The government has not yet responded to the
Committee report and it seems that it may not now do so before
publishing a revised draft of the bill.

In February 2013, Ofwat published its draft methodology on the
framework and approach of setting price limits for the next five-
year regulatory period commencing April 1, 2015 (AMP6). The
proposals include (1) separate price controls for retail and
wholesale services, to facilitate competition; (2) increased
customer involvement in companies' business planning and focus on
long-term outcomes rather than short-term outputs; (3) more
tailored incentives, in particular on water trading and
abstraction; and (4) a total expenditure (totex) assessment.
Moody's considers the draft methodology credit neutral for the
sector as a whole as price limits for the wholesale segment,
which account for approximately 90% of water and sewerage
companies' revenues, retain key aspects of the existing regime,
including an allowed return on the regulated asset base.

The Queen's Speech, delivered at the State Opening of the UK
Parliament, sets out the government's proposed legislative
programme for the coming session. The draft Water Bill may have
its first reading in the House of Lords, the upper chamber of the
UK Parliament. It would then be passed to the House of Commons
and, subject to its progress in the context of other priorities,
could become law over the coming 12 months.

* UK: Fitch Says BTL Mortgage Market Growth May Hit Performance
The continued growth of the UK buy-to-let (BTL) market could lead
to weaker future performance of the sector, especially where
lenders are targeting amateur and first-time landlords rather
than professional investors, Fitch Ratings says. The latest
quarterly figures from the Council of Mortgage Lenders show BTL
mortgages increased to 13.4% of total outstanding mortgage
lending in the UK at end-March, up from 13% the previous quarter
and 12.9% at the end of Q112. At the peak of the housing market,
BTL represented around 10% of total lending.

"The attractive returns on rental investments available today
provides an opportunity for investors to beat the low returns
from savings and other investments. However, we believe that
reversion rates in the market, which are now typically over 4%
above the base rate, will make many investments unsustainable
once interest rates return to more normal levels. Pre-crisis
reversion rates tended to typically range between 0.5% and 2%
above the base rate, enabling investments to provide a positive
return at higher interest rates. Under today's typical reversion
rates, returns may significantly diminish in the long-term,
leading to poor performance, particularly amongst those with
little experience of managing an investment property in a
stressed environment," Fitch says.

"In the financial crisis, we observed that while the professional
landlord sector of the market performed relatively well, the
performance of the amateur landlord sector was much less
impressive. The performance of typical transactions made up of
pre-crisis BTL lending to amateur landlords saw three months plus
arrears rates rise above 4% in some instances, whereas similarly
seasoned transactions that were more representative of the
professional BTL sector saw arrears rates of less than 2%,
according to our data.

"Although BTL mortgage arrears have been low and repossessions
subdued over the last couple of years, supported by a buoyant
rental market and low interest rates, conditions are unlikely to
remain so favorable for BTL in the longer term. When BTL cases
are repossessed, losses against the property value can be
substantially more than for owner-occupied property. In our
recent study of UK repossessions, we saw that the typical
discount on sale for BTL cases was around 50% higher than that
suffered on owner-occupied property."


* Fitch Says Stabilizing Rating Trends Support EMEA Corp. Bond
Fitch Ratings says that Q113 rating migrations remained negative
but improved to the best level since Q211 after the volume of
downgraded bonds from eurozone-domiciled non-financial issuers

Downgrades fell for the third consecutive quarter to 1.1% of
outstanding volume from 1.7% at the end of 2012, while the
upgrade rate remained relatively unchanged. Firms in the eurozone
accounted for three-quarters of downgrade volume -- a marked
decline on the 91% level set in the prior quarter. Most of the
activity related to Italian and French financials.

Financial downgrade volume continued to fall in Q113, extending
the easing trend that has developed over the past two quarters.
The downgrade rate of 1.3% is far below the 5% average recorded
in 2012. First quarter upgrades were broadly in-line with the
positive activity in the second half of 2012, but half the
average 2012 average rate.

New issuance in the first quarter declined by 41% year-on-year,
driven by a 70% drop in covered bonds as corporates resumed
regular volumes of issuance following prior-year pre-funding for
2013. Financials issued at a 33% lower rate compared to the prior
quarter and non-financials receded 13%.

High yield marked a record quarter with EUR28 billion in new
bonds by developed-market non-financials. Issuance from
corporates in the eurozone was stagnant despite the overall
improvement in market conditions.

Superior returns from high yield continued to attract investor
funds, with the asset class seeing net inflows totalling EUR2.9
billion in the first quarter. Lagging investment-grade returns
explain the EUR3 billion of net outflows for this segment over
the same period.

New issue coupons touched fresh lows across the credit spectrum
in Q113 as investors continued to drive down risk-premia. Firms
took the opportunity to extend yield curves, with 30% of new
issuance in the quarter possessing a tenor greater than or equal
to 10 years, compared to 18% in 2008.

Fitch's quarterly EMEA corporate bond market report provides
detailed analysis and data on rating and issuance trends. The
full report, entitled "EMEA Corporate Bonds: Rating and Issuance
Trends" is available at

* Tata Steel Charge Highlights Industry's European Troubles
Tata Steel's USD1.6bn write-down on its European operations
highlights the weak medium-term growth prospects for all steel
producers in the region and the difficulty producers have in
adjusting to changes in demand, Fitch Ratings says.
Tata attributed the write-down to a prolonged fall in demand,
which the company said was down nearly 8% in FY13 and almost 30%
since 2007. For the sector as a whole, we expect growth in the
major Western European markets to remain anaemic over the medium
term, even as the eurozone recovers from its current weakness.
Demand from emerging European markets will be stronger, driven by
faster economic growth and higher investment.

"The three largest steel-consuming sectors in Western Europe are
construction, automotive and mechanical engineering. For 2013, we
expect construction volumes to fall a further 5%-10%, while
automotive demand is likely to fall marginally. Mechanical
engineering has been a bright-spot due to emerging-market export
orders, but growth started to slow in early 2012 and is likely to
be marginal in 2013," Fitch says.

"The weak demand outlook for European steel-makers has driven
some producers to idle or retire higher-cost facilities. However,
longer-term adjustments are typically slow and costly. The sector
has high exit costs, given significant capital investment levels,
high decommissioning costs and labour notice periods. Recently,
steel producers have also faced increased government opposition
to plans that would lead to large-scale job cuts.

"We set out our assessment of the world's main steel producing
markets and our expectations for the sector in the "Global Steel
Handbook," published in March and available at"

* Upcoming Meetings, Conferences and Seminars

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

                 * * * End of Transmission * * *