TCREUR_Public/130530.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 30, 2013, Vol. 14, No. 106



UNICREDIT BANK: S&P Lowers Rating on Hybrid Debt to 'BB'


* DENMARK: Systematically Important Banks Need State Guarantee


COMMERZBANK: S&P Lowers Rating on Sr. Subordinated Debt to 'BB+'
SERVUS HOLDCO: S&P Assigns Prelim. 'B' Corporate Credit Rating
SUNWAYS AG: Aims to Avert Insolvency Proceedings


FOLEY'S PUB: Hearing on Survival Prospects Set for Today
WOODLANDS GOLF CLUB: In Receivership, To Remain Operation


* ITALY: Bankruptcies Up 12% to 3,500 in First Quarter 2013
* Moody's Lowers Ratings on Four Italian Regions to 'Ba1'


SERVUS HOLDCO: Fitch Assigns 'B' Long-Term Issuer Default Rating
SERVUS HOLDCO: Moody's Assigns 'B2' CFR; Outlook Stable


* POLAND: Bankruptcies to Increase by 10% in 2013


INT'L FINANCIAL: Moody's Raises Long-Term Deposit Ratings to B2
RENAISSANCE CONSUMER: Fitch Rates Loan Participation Notes 'B'
SDM-BANK JSC: Fitch Upgrades LT Issuer Default Rating to 'B+'
TINKOFF CREDIT: Fitch Rates RUB3-Bil. Sr. Unsecured Notes 'B+'
* SLOVENIA: Set to Decide on Bank Recapitalization Program


AUTOVIA DE LA MANCHA: S&P Lowers Rating on EUR110MM Loan to 'B'
IM SABADELL: S&P Raises Rating on Class A Notes From 'BB'
SANTANDER FINANCIACION: S&P Raises Rating on Cl. C Notes From BB-

U N I T E D   K I N G D O M

DECO 12: Fitch Lowers Rating on GBP13.6MM Class D Notes to 'D'
EAST END PARK: Goes Into Administration
INTEROUTE TRANSPORT: In Administration, Closes Operations
SOUTHERN PACIFIC: S&P Affirms 'B-' Rating on Class E Notes
STERLINGMAX I: Fitch Downgrades Rating on Class B Notes to 'D'

VEDANTA RESOURCES: Fitch Rates US$1.7BB Unsecured Bonds 'BB'


* European Bank Contingent Capital Likely to Rise, Fitch Says
* Upcoming Meetings, Conferences and Seminars



UNICREDIT BANK: S&P Lowers Rating on Hybrid Debt to 'BB'
Standard & Poor's Ratings Services lowered its long- and short-
term counterparty credit ratings on UniCredit Bank Austria AG
(Bank Austria) to 'A-/A-2' from 'A/A-1'.  The outlook is

At the same time, S&P lowered its ratings on the bank's
subordinated debt to 'BBB-' from 'BBB' and its ratings on the
hybrid debt to 'BB' from 'BB+'.

The 'AA-' ratings on Bank Austria's guaranteed obligations, which
reflect a deficiency guarantee from the City of Vienna, are

"We have taken the rating action, following our review of Bank
Austria's first-quarter 2013 financials, to reflect the bank's
recent strong expansion abroad--particularly in Turkey and
Russia, countries that we regard as having high economic risks--
and our expectation that the bank will pursue further growth in
these regions.  In our view, the shifting geographical exposure
mix will result in increasing credit, market, operational, and
political risks for the bank," S&P said.

Due to the change in risk exposures and S&P's expectations for
the medium-term trends, it has revised the anchor for Bank
Austria's rating to 'bbb' from 'bbb+'.  The anchor reflects
blended economic risk for Bank Austria in all countries of
operations and the domestic industry risk assessment.  S&P has
consequently also revised downward Bank Austria's stand-alone
credit profile (SACP) to 'bbb' from 'bbb+'.

Bank Austria's ratings continue to reflect S&P's assessment of
Bank Austria's "strong" business position, "moderate" capital and
earnings, "adequate" risk position, "average" funding, and
"adequate" liquidity.  To the resulting SACP of 'bbb', S&P adds
two notches of uplift because of our view of Bank Austria's
"high" systemic importance and a "moderately high" likelihood of
support from the Austrian government, leading to a counterparty
rating of 'A-' on the bank.

The downgrade of Bank Austria's subordinated and hybrid debt
resulted from the revision of the bank's SACP because S&P
determines these debt ratings by notching downward from the SACP.

The negative outlook on Bank Austria reflects that on its parent,
UniCredit SpA, because S&P believes a deterioration of UniCredit
group's creditworthiness might negatively affect S&P's view of
Bank Austria's business, risk, and funding and liquidity
positions.  In S&P's view, Bank Austria's ratings would be
sensitive to such a deterioration of the parent because of the
tight operational interaction between the two entities, among
other things.

Furthermore, S&P might consider a negative rating action on the
bank if it accelerates its expansion in Russia and Turkey or
other high-economic-risk countries.  S&P considers that a further
material increase in the share of higher risk countries in the
portfolio mix would lead to lower business stability, as
downturns in these markets could lead to over-proportional

S&P could revise the outlook to stable if it took a similar
action on UniCredit SpA.  An outlook revision would also require
a stabilization of the bank's geographical exposure mix.


* DENMARK: Systematically Important Banks Need State Guarantee
Peter Levring at Bloomberg News reports that Denmark's Economic
Council said banks identified as systemically important need an
explicit guarantee of state backing to match their extra capital

According to Bloomberg, Claus Thustrup Kreiner, co-chair of the
government-backed council in Copenhagen, said March 14 proposals
by a government-backed committee on how to treat Denmark's too-
big-to-fail lenders should make clear that the state would be
willing to bail them out.  Mr. Kreiner, as cited by Bloomberg,
said that vagueness in the existing text will only deter bond
investors and raise bank funding costs.

"The moral hazard issue is created as soon as any level of
government support is introduced," Bloomberg quotes Mr. Kreiner
as saying in an interview.  "We prefer to have clarity and
transparency over uncertainty and to make the public backing

The Economic Council is adding its voice to a debate that has
pitted Denmark's biggest banks against its policy makers,
Bloomberg relates.  The six lenders identified by a public
committee as too big to fail say they need to be shielded from
Danish bail-in laws for their designation to be meaningful,
Bloomberg says.  The government and central bank counter that
such a step would encourage banks to take greater risks and place
too big a burden on the state, according to Bloomberg.

Danish banks have struggled to persuade investors they're as safe
as their Swedish rivals after Denmark became the first European
Union country to force losses on senior bank creditors within a
resolution framework, Bloomberg discloses.  The 2011 failure of
Amagerbanken A/S left most banks in Denmark locked out of funding
markets as creditors shunned the nation's bail-in legislation,
Bloomberg notes.

According to Bloomberg, Benny Engelbrecht, who sits on Denmark's
parliamentary committee on bank laws for the ruling Social
Democrats, said he's unlikely to back proposals that move away
from Denmark's practice of bailing in unsecured bank creditors.
He said that stance also applies to systemically important banks,
Bloomberg relates.


COMMERZBANK: S&P Lowers Rating on Sr. Subordinated Debt to 'BB+'
Standard & Poor's Ratings Services said it lowered its long- and
short-term counterparty credit ratings and its senior unsecured
debt ratings on Germany-based Commerzbank AG to 'A-/A-2' from
'A/A-1'.  S&P also lowered its issue ratings on Commerzbank's
non-deferrable senior subordinated debt to 'BB+' from 'BBB'.  At
the same time, S&P removed these ratings from CreditWatch with
negative implications, where S&P placed them on Feb. 7, 2013.
The outlook on Commerzbank is negative.

In addition, S&P took various rating actions on hybrid capital
instruments issued by members of the Commerzbank group.  S&P
raised its issue ratings to 'B+' from 'C' on the hybrid Tier 1
instruments issued by Commerzbank Capital Funding Trust I, II,
and III (Commerzbank FT I-III), as well by UT2 Funding PLC.  S&P
raised its issue ratings to 'BB' from 'CCC' on the Tier 1 hybrids
issued by Dresdner Funding Trust I (Dresdner FT I).  S&P affirmed
the 'C' issue ratings on hybrids issued by HT1 Funding GmbH.

The downgrade follows S&P's review of Commerzbank's recent
financials and discussions with its management on the bank's
future prospects.

"We anticipate that Commerzbank needs more time to restructure
its currently unbalanced business model.  We think it will take
the bank longer than we previously anticipated to manage down its
considerably high risk in its noncore loan books.  In our
opinion, Commerzbank will have an increasingly tough time
generating stronger, more stable, and sustainable earnings in
core businesses that would be closer to levels at similarly rated
banks. Consequently, we have lowered our assessments of
Commerzbank's risk position and business position," S&P said.

The upgrades of the Tier 1 hybrids issued by Commerzbank FT I-III
and UT2 Funding PLC reflects the resumption of coupon servicing
in 2012.  S&P also take into account its expectation that
sufficient distributable profits for future coupon payments
should generally be available.  Because S&P views some financial
uncertainties linked to Commerzbank's transition process, S&P
widened the differential between the SACP and the hybrid ratings
to four notches from the three notches S&P typically assigns for
similar structures.

The upgrade of the Dresdner FT I Tier 1 hybrids reflects S&P's
view that Commerzbank's regulatory capital ratios will easily
exceed the regulatory minimum requirements, regulatory
intervention has become less likely due to restructuring
progress, and the bank will likely meet its coupon payments due
on June 30.

S&P affirmed the ratings on the hybrids issued by HT1 Funding
GmbH, because it anticipates that Commerzbank will not resume
coupon payments on this instrument this year.  Germany-based
global multiline insurer Allianz SE might, however, pay
indemnities on this instrument as in 2012.

The negative outlook on Commerzbank indicates the possibility of
a downgrade if the expected tangible progress in Commerzbank's
derisking is more than offset by the negative trends S&P sees in
economic risks across many European banking sectors, including

Commerzbank's creditworthiness could deteriorate if S&P was to
lower its economic risk assessments in its main operating
regions, which could prompt S&P to revise down its anchor for
Commerzbank to 'bbb+' from 'a-'.  Similarly, Commerzbank's risk
position is vulnerable to its generally high-risk lending
concentrations and its below-average credit performance in some
loan segments.

S&P's maintenance of the one-notch uplifts S&P factors into the
long-term rating for Commerzbank's positive transition relies on
its successful execution of its repositioning and restructuring
plans over a two-year horizon.

A revision of the outlook to stable would most likely come on the
back of economic improvements in the main markets where
Commerzbank operates.  Similarly, S&P's uncertainty about a
potential weakening in Commerzbank's creditworthiness could
decrease if it made quicker-than-anticipated progress in reducing
riskier loans in noncore businesses, while maintaining adequate
capital and earnings.

SERVUS HOLDCO: S&P Assigns Prelim. 'B' Corporate Credit Rating
Standard & Poor's Ratings Services said that it has assigned its
'B' preliminary long-term corporate credit rating to Servus
HoldCo Sarl, the holding company of Germany-incorporated auto
parts and capital goods group Stabilus.  The outlook is stable.

At the same time, S&P assigned its preliminary 'B' issue rating
to Stabilus' proposed EUR315 million senior secured bond with a
'3' recovery rating, indicating S&P's expectation of meaningful
(50%-70%) recovery in the event of a payment default.

Final ratings will depend on S&P's receipt and satisfactory
review of all final transaction documentation.  Accordingly, the
preliminary ratings should not be construed as evidence of final
ratings.  If Standard & Poor's does not receive final
documentation within a reasonable time frame, or if final
documentation departs from materials reviewed, it reserves the
right to withdraw or revise its ratings.

The preliminary ratings are based on S&P's expectation that the
proposed refinancing transaction will be completed as presented
to S&P by Stabilus and its majority shareholder, European private
equity company Triton.

Stabilus plans to issue a EUR315 million senior secured five-year
bond to refinance its capital structure.  Bond proceeds will be
combined with cash held of EUR30 million to redeem existing
outstanding bank debt of EUR242 million, repay a EUR45 million
shareholder loan, and disburse EUR49 million as a net loan to its
shareholder and payout on outstanding instruments that offer
shared equity upside, such as profit-participating loans (PPLs).
As part of its refinancing plan, Stabilus will also benefit from
the extension of a EUR25 million five-year committed and undrawn
revolving credit facility (RCF).

The preliminary ratings are primarily constrained by S&P's view
of Stabilus' "highly leveraged" financial profile and its
"aggressive" financial policy, reflecting that the company was
acquired through a leveraged buyout as well as the EUR49 million
net loan to its shareholder and PPL payout disbursed as part
of the proposed refinancing transaction.

Stabilus' credit ratios reflect its highly leveraged financial
profile.  At end of fiscal year 2012 (ended Sept. 30) and
adjusting for the obligation at maturity under the PPLs, adjusted
debt to EBITDA was about 12.9x and funds from operations (FFO)
represented 4.7% of adjusted debt.

Using the fair value of the PPLs as reported by Stabilus in
fiscal 2012 in its financial statements and as reviewed by its
auditors, Stabilus' debt to EBITDA was about 4.6x and FFO to
adjusted debt about 13%.  S&P believes these ratios will weaken
slightly to 6x and 10%, respectively, in fiscal 2013.

The outlook is stable, based on S&P's anticipation that Stabilus
will be able to maintain its solid market shares and operating
margins while gradually expanding its business outside of Europe
and developing its Powerise business.

S&P could consider raising the ratings in the medium term if
Stabilus were to report an extended, sustainable strengthening of
its operating performance.  On the other hand, S&P could lower
the ratings if Stabilus were to report weaker revenues and
profitability than it currently achieves.

SUNWAYS AG: Aims to Avert Insolvency Proceedings
After the appointment of a preliminary insolvency administrator
following a third party application, business operations of the
Sunways Group largely returned to normal.  Due to the
extraordinary termination of credit lines by two house banks a
difficult situation had occurred for customers and suppliers of
the company.  The associated restrictions were mainly eliminated
by the arranged proceedings.  The preliminary insolvency
administrator has the responsibility to verify the existence of
insolvency reasons and to safeguard the assets of the company for
the claims of creditors.

Hoong Khoeng Cheong, Chairman of the Management Board/CEO of
Sunways AG: "We want to use the time ahead and, with the support
of all stakeholders, avert insolvency proceedings.  In this way
we can reach the best solution for everyone: customers,
suppliers, banks, shareholders, and employees.  We aim to align
Sunways in the next three months so that we will again be able to
generate profits in the future."

Sunways AG -- is a Germany-based company
engaged in the development, production and distribution of solar
cells, and related equipment for use in the photovoltaics sector.
Its main products include silicon-based monocrystalline,
multicrystalline and transparent solar cells for the generation
of photovoltaic energy, and solar inverters for efficient energy


FOLEY'S PUB: Hearing on Survival Prospects Set for Today
Donal O'Donovan at The Irish Independent reports that the owner
of the well known Foley's pub on Merrion Row fears losing his pub
to a rival bid despite successfully forcing a bank-appointed
receiver to hand back the business earlier this year.

It is understood an offer in excess of EUR2.5 million has been
made for the pub and freehold Georgian building ahead of a
hearing at the Examiner's Court today, May 30, the Irish
Independent relates.

The rival offer has been made by a Monaghan-based businessman,
the Irish Independent understands.

Publican Sean Foley hit the headlines in March when he succeeded
in regaining control from the banks of his family-run pub,
located just around the corner from Leinster House, the Irish
Independent recounts.

The courts ousted receiver David O'Connor of accountants BDO
after finding that there was a broken seal on his "deed of
appointment" from the bank, the Irish Independent relates.

The receiver had been appointed over debts of more than EUR4
million owed to Bank of Scotland (Ireland), the Irish Independent

The decision freed owner Sean Foley to then seek court protection
through an examinership under Tim O'Keeffe -- who was appointed
over the objections of the bank, the Irish Independent notes.

However, the rival, outside offer for the pub now threatens to
scupper his hopes of defying the bank and holding on to his
family business through examinership, the Irish Independent

According to the Irish Independent, Mr. Foley is understood to
have tabled a much lower offer for the business, based on a
multiple of the pub's turnover.

The two offers are being considered by Mr. O'Keeffe of
accountants Copsey Murray, who was appointed in April as examiner
over Belohn Ltd., which owns and operates Foley's Bar and the
O'Reilly Bar in Merrion Row, the Irish Independent discloses.

The examiner is due to report back to the High Court today on the
prospects for the survival of the pub, which has a staff of 20,
the Irish Independent states.

WOODLANDS GOLF CLUB: In Receivership, To Remain Operation
Kildare Nationalist reports that Woodlands Golf Club at Coill
Dubh, Naas had gone into receivership.

However, the management of Woodlands Golf Club at Coill Dubh,
Naas, has since stressed that while the receiver has a charge
over the property and land, the club as such will remain
operational, according to Kildare Nationalist.

"We are in negotiation with the receiver in order to continue
operating the club," the report quoted secretary Orla Winder as

Ms. Winder, the report notes, added that the club was still open
to members and for green fees, while competitions would go ahead
as planned.

Ultimately, the course and properties attached will be sold but
it's understood there is still considerable optimism that the
club membership will be in a position to actually purchase the
entire facility, the report discloses.

Despite the sale of some land for development purposes midway
through the last decade, understood to have brought in around
EUR1 million to the club, it appears that debts mounted and were
recently said to total around EUR2.5 million, with the club
involved in negotiations with Ulster Bank in a bid strike a deal
and write down some of the debt, the report notes.

The report relays that it's also believed some club members were
proposing to contribute funding as part of this process but
clearly no agreement could be reached, culminating in last week's
revelation that the receiver had been called in.

The report says that the announcement reflects the position of
golf clubs up and down the country which are struggling to
balance their books.

While the future for Woodlands is to some extent uncertain at
this point, Ms. Winder emphasized that the club would remain
operational, the report adds.

Woodlands Golf Club was very much a Celtic Tiger success story,
having begun life as a 9-hole course owned by a local
businessman, Peter Daly.  In 1993, the members were given the
opportunity to purchase the club, after which the course was
redesigned. Following the purchase of an additional 60 acres of
adjoining land in 1996, it was upgraded to an 18-hole course,
which was officially opened by the then finance minister Charlie
McCreevy in June 2000.


* ITALY: Bankruptcies Up 12% to 3,500 in First Quarter 2013
ANSA reports that the Cerved market research agency said on
Wednesday bankruptcies in Italy reached a record high in the
first quarter of this year as the country's longest recession in
over 20 years continues to bite hard.

Cerved data made available to ANSA reported that the number of
bankruptcy procedures started in the first three months of 2013
hit a record of 3,500, up 12% on the same period last year.

According to ANSA, the agency said this is in addition to the
19,000 companies that voluntarily decided to close in the first
quarter, up 5.8% on the same period in 2012.

* Moody's Lowers Ratings on Four Italian Regions to 'Ba1'
Moody's Investors Service downgraded by one notch to Ba1 from
Baa3 the ratings of the Italian regions of Campania, Piedmont and
Sicily. At the same time, Moody's has downgraded the rating of
the Italian region of Lazio by two notches to Ba2 from Baa3. The
outlooks on these entities' ratings are negative.

Rationale For The Downgrades

The downgrades reflect heightened concerns about these regions'
financial positions in the current environment. Austerity-driven
cuts in central government resources are stressing regional
budgets, resulting in growing fiscal rigidity. Ongoing liquidity
pressures have contributed to the accumulation of sizeable
overdue payables and commercial debts. These regions are expected
to cover a large proportion of this accumulated imbalance by
incurring sizeable new borrowing from the national government
under a recently introduced funding arrangement.

Significant new long-term borrowing to refinance commercial debt
exposures will further constrain the budgets of Campania, Lazio
and Piedmont, which already display high debt loads and
inflexible budgets. Among these regions, Lazio is expected to
face the highest increase in financial leverage. Although this
will partially clean up regional accounts in the short term,
Moody's expects that these regions will likely have to further
consolidate their accounts, including challenging expenditure
rationalizations and tax hikes. Lower anticipated central
government resources, including the national healthcare funding,
will likely complicate these consolidation efforts, which are key
to avoid further accumulation of accounts payable and manage
liquidity pressure.

While Moody's expects Sicily to face only a moderate increase in
debt levels to clear overdue payables, the downgrade primarily
reflects continued fiscal slippage and the challenges stemming
from its weak and demanding socio-economic environment.

Region Of Campania

Moody's has downgraded Campania's issuer and debt ratings by one
notch to Ba1 from Baa3. Campania's Ba1 ratings reflect inherent
fiscal rigidities, high commercial and financial debt exposure.
Going forward, Moody's expects a sizeable increase in the
region's financial leverage to clear overdue payables. The rating
agency anticipates that Campania's net direct and indirect debt
will increase by at least EUR2 billion by YE2014, from the EUR7.6
billion debt outstanding at year-end 2012 (representing about 62%
of latest realized operating revenue).

Campania is exposed to a frail and demanding socio-economic
environment, as reflected by a GDP per capita substantially below
the national average and high unemployment levels, which may
challenge any future consolidation initiative that will be
implemented by the region in response to growing fiscal rigidity.

The rating agency does note, however, that these challenges are
partially mitigated by Campania's recently improved cash flows
and commitment to cleaning-up and streamlining its budget,
including in particular the healthcare sector.

Region of Lazio

Moody's has downgraded Lazio's debt rating by two notches to Ba2
from Baa3. Among the regions affected by this action, Moody's
notes that Lazio faces the highest level of financial pressure
and will likely experience the greatest increase in financial
leverage going forward. Lazio displays a stretched budget, which
features a large accumulated budgetary imbalance, very high debt
burden, and cash flow strains, which are reflected in the
region's extensive recourse to cash advances from its treasurer

As Lazio has the largest proportion of overdue payables among
Italian regions and a stretched liquidity position, Moody's
expects that the region will take on the largest amount of debt
among Italian regions. The rating agency projects that Lazio's
net direct and indirect debt will increase by between EUR3
billion and EUR5 billion by YE2014, from the EUR10.9 billion debt
outstanding at year-end 2012 (representing about 79% of latest
realized operating revenue).

To accommodate growing debt-servicing costs, Moody's expects that
Lazio is likely to further consolidate its budget and make
extensive recourse to its tax-raising flexibility. Lazio's large
tax base only partly mitigates the challenges associated with
these consolidation efforts in the current environment. Although
operating deficits have been reduced in recent years, Moody's
believes that streamlining the healthcare sector is a key
challenge for Lazio.

Region of Piedmont

Moody's has downgraded Piedmont's issuer and debt ratings by one
notch to Ba1 from Baa3. Piedmont's Ba1 ratings reflect the
region's weak financials, as evidenced by its large accumulated
budgetary imbalance and a fragile cash flow profile. The ratings
also consider Piedmont's high debt levels, which are likely to
increase further by the end of 2014 given the need to clear
overdue accounts payable. Moody's projects Piedmont's net direct
and indirect debt to increase by between EUR1.7 billion and about
EUR3 billion by YE2014, from the EUR7.1 billion debt outstanding
at year-end 2012 (representing 72% of pre-closing operating
revenue for the year). This will add long-term rigidity to the
regional budget.

While Moody's acknowledges that the region has taken steps to
protect itself against refinancing risk at maturity, the rating
agency notes that Piedmont remains exposed to legal and financial
risks stemming from last year's decision to cancel five swap
contracts covering EUR1.86 billion in debt.

In response to growing fiscal pressure, Piedmont is currently
enacting recovery plans in the healthcare and transport sectors,
both of which have historically exerted pressure on the regional

Autonomous Region of Sicily

The downgrade to Ba1 from Baa3 concludes the review for downgrade
on Sicily's issuer and senior unsecured debt ratings, initiated
on July 26, 2012, and captures the region's deteriorating
operating performance and sizeable budgetary deficit that it
reported in 2012. These indicators illustrate the challenges
associated with a stagnant revenue and rigid expenditure profile.
Going forward, Moody's notes that the sluggish regional economy
will likely constrain Sicily's tax revenue and complicate fiscal-
consolidation initiatives planned by the region. In contrast to
its ordinary-statute peers, Sicily's budget is directly exposed
to the performance of the regional economy, which displays below-
average wealth and employment levels and relies extensively on
regional spending.

Moreover, in line with the other Italian regions affected by this
rating action, Moody's expects Sicily to take on new loans of at
least EUR1 billion to cover overdue payables by YE2014, from
EUR5.7 billion net direct and indirect debt outstanding at year-
end 2012 (representing 40% of pre-closing operating revenue for
the year).

The senior secured debt rating assigned to Sicily's state-
serviced issuance was affirmed at Baa2 and remains aligned to the
sovereign rating.

Rationale For The Negative Outlook

The negative rating outlooks account for the execution risks
associated with the consolidation initiatives that these regions
are expected to implement in the current environment. They also
mirror the negative outlook on Italy's sovereign rating and
reflect systemic pressure.

What Could Change The Ratings Up/Down

An inability on the part of these four regions to consolidate
regional finances in response to increased fiscal rigidity and/or
growing liquidity pressure will exert downward rating pressure.
In addition, a downgrade of Italy's sovereign rating could
trigger downgrades of these sub-sovereign ratings.

Conversely, a stabilization of the outlooks or an upgrade of
these ratings would require a stabilization of the outlook or
upgrade of the sovereign rating, or evidence of an individual
region's ability to effectively manage increased fiscal pressure
and improve its financial and debt metrics.

The principal methodology used in these ratings was Regional and
Local Governments, published in January 2013.


SERVUS HOLDCO: Fitch Assigns 'B' Long-Term Issuer Default Rating
Fitch Ratings has assigned Servus Holdco S.a r.l. Luxembourg
(Stabilus) a Long-term foreign currency Issuer Default Rating
(IDR) of 'B'. The Rating Outlook is Stable. Fitch has also
assigned expected ratings of 'B+(EXP)'/'RR3' to the proposed
five-year senior secured notes of up to EUR315 million to be
issued by Servus Luxembourg Holding S.C.A. and guaranteed by

The IDR factors in the changed capital structure following the
planned issue of the notes and the establishment of a new EUR25m
super senior revolving credit facility (RCF) that matures after
four years and nine months. The notes' final rating is subject to
a review of the final documentation materially conforming to
information already received by Fitch.

Proceeds from the proposed notes together with approximately
EUR30 million of cash will be used to refinance existing debt in
an amount of approximately EUR242 million (approximately 50%
senior and mezzanine each), while a total of approximately
EUR81.2 million will be used as a distribution to shareholders
(repayment of a shareholder loan and provision of upstream
loans). Additionally, approximately EUR12.1 million will be paid
to holders of profit participating instruments. The notes will
benefit from guarantees of major subsidiaries as well as from a
guarantee from the parent company Stabilus and be secured by
first-priority liens over collateral (while enforcement proceeds
are first allocated to super senior ranking debt). Fitch points
out that the proposed notes allow for up to 50% of cumulative net
income being paid-out as dividends.

The super senior RCF in an amount of committed EUR25 million plus
EUR15 million of presently not committed ranks ahead of the notes
and its utilization is subject to a covenant test. The resulting
total amount of EUR40 million prior ranking debt is permanent, as
the existing super senior RCF can be replaced within the lifetime
of the notes. Additionally, certain hedging liabilities as well
as an amount of up to EUR7.5 million for indemnities related to
the previous financing rank ahead of the notes at the level of
the super senior RCF.

Moreover, the notes documentation also allows for Stabilus to re-
leverage. The parent company may assume further debt provided a
fixed-charge cover test of 2.0 is met. Secured debt ranking equal
to the notes may be incurred by the issuer of the notes if the
consolidated debt/EBITDA ratio is below 3.25x.


Favourable Business Profile

Approximately 64% of Stabilus' revenues stem from its automotive
segment. The second largest segment is industrials (30% of
sales). After-market sales, which typically enjoy higher
operating margins, are so far marginal.

Stabilus' main product -- gas springs (used in all business
segments) -- has achieved commoditization status and Stabilus is
the market leader with a significant distance to its competitors.
This ensures high economies of scale and cash-generating
abilities. However, overall product diversification and relative
significance of Stabilus' products -- mainly components -- for
OEMs remains limited.

The company has a solid track record of strong relations with its
customers and benefits from strong customer diversification both
in its automotive and industrial segments. The top three
customers account for approximately 26% of revenues, with the 10
largest customers in automotive accounting for approximately 50%
of that segment's revenues. In parallel, Stabilus is present in
the high-growth market of electromechanical opening and closing
systems (power rise systems). Profitability in its smallest
business division, swivel chairs (6%of revenues), is weak. The
division is currently subject to a turnaround program.

Strong Profitability
Stabilus enjoys strong profitability compared to its peer-group
(in particular to other automotive suppliers) with an EBITDAR-
margin of 16.7% in FY2012. Cash flow generation was also strong
with funds from operations (FFO)/sales at 10% and a free cash
flow (FCF) of 3.3%. Moreover, the company has generated positive
FCF since the restructuring in 2010. Fitch expects lower but
still positive FCF in 2013, with improvements to more than 2%
again in 2014.

Debt Levels
The debt levels and key financial metrics are commensurate for
the assigned default rating level. Total adjusted debt/EBTIDAR
was 4.4x and FFO adjusted leverage was 5.6x at end-FY2012. At
end-FY2013, following refinancing, Fitch expects total adjusted
debt/EBITDAR to be around 4.5x, FFO adjusted leverage of 5.1x,
while FFO interest coverage ratio is estimated at around 3x on a
full year basis. Fitch has not treated any of the profit
participating instruments as debt due to their characteristics
which are similar to equity, in particular the absence of
material independent enforcement rights.

Increased Competitive Risk
Stabilus has been successful in positioning itself as a systems
supplier of automated, electromechanical opening and closing
systems and therefore moves up the scale in terms of importance
for the OEMs. However, in this segment, Stabilus competes with
much larger and more diversified suppliers, which are expected to
react to the group's ambitious growth plans in this segment. In
addition, this segment is likely to have higher R&D and capex

Cyclicality and Fixed Cost Base
Stabilus predominantly operates in mature markets, marked by the
high volatility and cyclicality of new vehicle sales and
industrial products manufacturing (e.g. heavy-weight vehicles).
This is particularly relevant as Stabilus' fixed cost base is
high and a material adverse change in demand for its products
would likely hurt its profitability and cash-flow generation


Future developments that could lead to positive rating actions

- Successful execution of the strategy to further grow the
  business and at the same time enhance diversification from
  a product standpoint as well as geographically
- FFO adjusted leverage is sustainably below 4x.
- FFO interest cover improves to 3.5x or above.

Future developments that could lead to negative rating action

- FFO adjusted leverage going to or above 6x.
- FCF-Margins deteriorating to a level of below 1%.

Expected Recovery for Creditors upon Default

The senior secured notes expected 'B+(EXP)'/'RR3' rating reflects
Fitch's expectation of above average recoveries in the range of
51%-70%. The instrument rating is reflective of Stabilus'
elevated FFO adjusted leverage above 5x and takes into account a
EUR25 million super senior RCF and up to EUR7.5 million of
indemnities both effectively ranking ahead of the bond. Driving
these recovery expectations is an estimated Stabilus post
restructuring EBITDA at approximately 35% below the group's 2012
EBITDA to reflect a hypothetical adverse scenario of depressed
sales and compressed margins as a function of high operational
leverage and earnings cyclicality. This in combination with an
estimated going concern multiple of 5x enterprise value/ EBITDA,
results in a more favorable valuation than the agency's
alternative estimation of a liquidation scenario.

SERVUS HOLDCO: Moody's Assigns 'B2' CFR; Outlook Stable
Moody's Investors Service assigned a Corporate Family Rating of
B2 and a Probability of Default Rating of B2-PD to Servus HoldCo
S.a.r.l., the holding company of the Stabilus group. Concurrently
Moody's has assigned a provisional (P)B2 rating to EUR315 million
of Senior Secured Notes to be issued by Servus Luxembourg Holding
SCA, a wholly indirectly owned subsidiary of Servus HoldCo
S.a.r.l. The outlook on all ratings is stable.

The assignment of a definitive rating on the EUR315 million
senior secured notes is subject to a review of the associated

Moody's issues provisional ratings in advance of the final sale
of securities, and these ratings only represent Moody's
preliminary opinion. Upon a conclusive review of the transaction
and associated documentation, Moody's will endeavor to assign
definitive ratings to the securities. A definitive rating may
differ from a provisional rating.

Ratings Rationale:

The assigned B2 corporate family rating is mainly supported by
(i) Stabilus' very strong market position for gas springs across
most geographical regions and end market applications in a very
consolidated market environment, (ii) the high barriers to entry
to Stabilus' markets through (a) the capital intensity of the
business, which would require sizeable investments to replicate
the company's business model, (b) the long standing customer
relationships of Stabilus with major auto OEMs and industrial
customers, (c) the very consolidated nature of the gas spring
market (Stabilus has market share of 88% in Europe and 94% in
NAFTA for automotive gas springs), which would leave very little
market space for new entrants, and (d) the economies of scale
required to be able to be profitable in a price competitive
market, which would make it difficult for new entrants to
penetrate the market on a small scale, (iii) the group's
geographically diversified and large scale production base with a
high level of automation in high labor countries, (iv) the
group's very broad product portfolio, which can be produced from
a standardized production process, and (v) its exposure to non-
automotive related applications accounting for around 36% of
total turnover, which should help reducing overall cyclicality
for Stabilus.

The rating of Stabilus remains constrained by (i) the group's
relatively small size with revenues of EUR444 million in 2012,
(ii) a geographical concentration on developed economies with
Europe and the Americas accounting for 84% of turnover
notwithstanding that the company has limited exposure to Southern
Europe and some of the turnover realized in Europe is ultimately
exported by customers of Stabilus to emerging markets, (iii) the
group's exposure to cyclical end industries, (iv) its capital
intensity due to the high automation level of its production
asset base notwithstanding that Stabilus' capital expenditures
have been significantly above depreciation levels over the last
three years to September 30, 2012, , and (v) the group's high
leverage with adjusted Debt / EBITDA of around 5.0x pro-forma of
the refinancing and as per fiscal year-end September 2012
(including 25% of all senior and mezzanine PPLs). In addition,
the development of automatic tailgate opening and closing systems
is a technological threat to the traditional gas springs, which
Stabilus is trying to counteract with the marketing of its own
Powerise systems. The development of Powerise, opens the market
to new competitors, which are not competing with Stabilus for gas
springs. This is also highlighted by the lower market share of
Stabilus in the Powerise market, which Moody's expects to grow
strongly going forward.

Moody's understands that operating entities representing at least
80% of consolidated EBITDA will provide upstream guarantees and
that noteholders and lenders will get share pledges over entities
also accounting for at least 80% of consolidated EBITDA.
Therefore Moody's has positioned these instruments ahead of
pension obligations and future minimum lease payments.

Considering the preferred access to collateral the super senior
revolving credit facility has been given the highest rank in the
waterfall of debt. Given the relatively small size of the
revolving credit facility compared to the overall indebtedness of
the group pro-forma of the refinancing Moody's has ranked the
trade payable at the same level as the senior secured guaranteed
notes in line with standard practice. Consequently the instrument
rating on the EUR315 million notes is in line with the Corporate
Family rating. Due to Stabilus' debt restructuring in 2010, the
capital structure still contains Profit Participation Loans
("PPL") which are deeply subordinated and only entitled to
distribution according to the restricted payments covenant, and
which are largely held by previous lenders of the group. In its
assessment Moody's has given 75% equity credit to the Senior and
Mezzanine PPLs, adding around EUR70 million to Stabilus' debt

On May 14, 2013 Moody's has published a Request for Comment for a
new proposed approach for assigning debt and equity treatment to
hybrid securities of speculative-grade nonfinancial companies
with a Corporate Family Rating (CFR) of Ba1 or below. The Request
for Comment is open until June 14, 2013. Should this approach be
finalized as proposed in the request for comment, the equity
credit assigned to Stabilus' senior and mezzanine Profit
Participation Loans ('PPLs') would likely drop from 75% to 0% due
to the absence of formal stapling between the holder of the
common equity (funds advised by Triton) and the holders of the
senior and mezzanine PPLs holders, which does not ensure the
alignment of economic interests between these parties. This new
methodology could potentially have negative implications for the
Corporate Family Rating of Stabilus, which could drop by one
notch. Moody's would however expect that the instrument rating
would remain unchanged due to the higher loss absorption from the
inclusion of these PPLs in the LGD waterfall as subordinated

Stabilus' liquidity profile pro-forma of the refinancing will be
adequate. The company will only have EUR9 million of cash &
marketable securities on balance sheet and access to an undrawn
EUR25 million revolving credit facility pro-forma of the closing
of the refinancing. Alongside the group's expected operating cash
flow generation (pre-Working capital) this should just be
sufficient to fund all operating needs of the group mainly
consisting of working cash (estimated at approximately 3% of
revenues), working capital requirements and capex.

The company's revolver will include one financial covenant
defined as adjusted minimum EBITDA of EUR45 million (to be tested
on a quarterly basis). Non-compliance with the financial covenant
would not constitute an event of default if the revolving credit
facility remains undrawn during a 10-day period prior to each
quarter end.

The stable outlook incorporates Moody's expectation that
Stabilus' operating performance and cash flow generation will
remain in line with the historical performance of the last two
years (until September 2012) in the short to medium term. The
stable outlook also assumes that the capital structure of the
group will not be leveraged up from current levels through more
aggressive financial policies and external growth. Finally the
stable outlook assumes that the company will maintain an adequate
liquidity profile going forward.

Moody's would consider upgrading Stabilus if Debt / EBITDA would
drop sustainably below 4.5x, EBIT margin would increase
sustainably above 10% and FCF/Debt would be maintained in the
mid-single digits.

Negative pressure would build on the rating if Debt / EBITDA
would be moving towards 6.0x and Stabilus would generate negative
free cash flow generation leading to a deterioration of the
liquidity position of the group.

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


* POLAND: Bankruptcies to Increase by 10% in 2013
According to Warsaw Business Journal, Ludovic Subran, chief
economist at Euler Hermes, told ISBnews that the number of
bankruptcies in Poland will increase by 10% in 2013 and by
another 5% in 2014.

He explained that this will be the result of lower GDP growth
than Poland should have, WBJ notes.

"Because of continued slowdown in Western markets, both Polish
imports and exports have fallen, which negatively impacts the
Polish economy.  That said, we think that Poland is managing its
budget in a very positive manner," WBJ quotes Mr. Subran as


INT'L FINANCIAL: Moody's Raises Long-Term Deposit Ratings to B2
Moody's Investors Service upgraded the long-term deposit ratings
of Russia's International Financial Club to B2 from B3. The
bank's short-term local- and foreign-currency deposit ratings and
the standalone bank financial strength rating (BFSR) of E+ were
affirmed. The outlook on the bank's BFSR and the long-term
ratings is stable.

Ratings Rationale:

Moody's upgrade of International Financial Club's ratings was
prompted by (1) the bank's improved profitability and operating
efficiency that now provide a better loss absorption capacity;
and (2) still good asset quality metrics despite the seasoning of
the loan book following the rapid loan book growth.

In 2012, International Financial Club improved its return on
average assets to 2.05% (2011: 0.34%, 2010: -1.64%), while pre-
provision income as a percentage of average assets advanced to
3.02% (2011: 0.30%, 2010: -0.85%). At the same time, the cost-to-
income ratio decreased to 52% in 2012 from 92% in 2011. In
Moody's view, the improvements in profitability are driven by the
bank's business growth and economies-of-scale, and position
International Financial Club more favorably to absorb potential
negative pressure stemming from a possible deterioration of asset

Moody's also notes that despite the slowdown of the previously
rapid loan book growth to 29% in 2012 (2011: 67%, 2010: 230%,
2009: 447%), International Financial Club's asset quality
remained strong as at year-end 2012, with non-performing loans
accounting for only 1.00% of total gross loans (2011: 1.02%,
2010: 1.29%, 2009: 1.85%). Moody's attributes the bank's good
asset quality metrics to its focus on large Russian companies of
good credit quality; in Moody's view, credit relationships are
facilitated to some extent by the bank's large shareholders.
Although Moody's expects that the bank's asset quality will
deteriorate somewhat in 2013, the rating agency considers that
the bank's problem loan ratio will remain below the Russian
system average of around 8%.

At the same time, International Financial Club has (1) high
single-name concentrations both in loans and deposits; (2) still
modest capital adequacy metrics; and (3) limited business
diversification. The negative rating drivers constrain the bank's
long-term ratings at B2.

The bank's 20 largest credit exposures exceed 300% of its
shareholders' equity. Moody's notes that these concentration
risks render the bank's capital, liquidity and business profile
potentially vulnerable to the performance and/or behavior of the
largest groups of clients. These concentration risks are
additionally amplified by the bank's modest equity-to-assets
ratio of 9.92% at year-end 2012, according to audited IFRS.
Moody's also notes that the bank's profitability is highly
reliant on corporate lending (corporate loans accounted for 92%
of total gross loan book as at year-end 2012), particularly
taking into consideration recently intense competition and
declining net interest margin in the sector.

What Could Change The Ratings Up/Down

International Financial Club's ratings could be upgraded in case
of a material reduction in single-name concentrations and a
strengthening of its capital buffer.

Any significant deterioration of International Financial Club's
risk appetite and/or loan book quality may prompt Moody's to
downgrade the bank's long-term ratings.

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

Domiciled in Moscow, Russia, International Financial Club
reported total assets of RUB53.1 billion at year-end 2012 under
IFRS (audited), up 27% compared to year-end 2011. The bank's net
profit totaled RUB970 million in 2012, a material increase from
RUB124 million reported in 2011.

RENAISSANCE CONSUMER: Fitch Rates Loan Participation Notes 'B'
Fitch Ratings has assigned Renaissance Consumer Funding Limited's
fixed-coupon three-year 7.75% US$350 million issue of limited
recourse loan participation notes, with final maturity on May 31,
2016 a final 'B' rating and a Recovery Rating of 'RR4'.

The proceeds from the issue will be on-lent to Russia-based
Commercial Bank Renaissance Credit (RenCredit, 'B'/Stable/'b').
In case of bankruptcy, the claims of investors in the current
issue will rank at least pari passu with the claims of other
senior creditors, save those preferred by relevant legislation.
In accordance with Russian legislation, the claims of retail
depositors, which Fitch estimates will comprise approximately 65%
of RenCredit's liabilities following the bond issue, rank above
those of other senior unsecured creditors. Financial covenants of
the agreement include RenCredit's obligation to maintain its
prudential total capital adequacy ratio at least at the 12%

As at end-Q113, RenCredit was the 65th-largest bank in Russia by
assets and is one of the five leaders in the consumer finance
segment in Russia. RenCredit is majority controlled by Onexim
Holdings via Renaissance Capital Investments Limited (RCIL) which
also controls investment bank Renaissance Capital ('B'/Negative).
In April 2013, Mr. Evgeny Yurchenko acquired a 6.5% stake in
Renaissance Capital International Services Limited, CBRC's
holding company and subsidiary to RCIL, which lead to a decrease
of the share indirectly held by Onexim Holdings Limited from
89.52% to 83.02%.

RenCredit's ratings (all unaffected):

-- Long-term foreign and local currency IDRs: 'B'; Outlook

-- National Long-term Rating: 'BBB(rus)', Outlook Stable

-- Short-term IDR: 'B'

-- Viability Rating: 'b'

-- Support Rating: '5'

-- Senior unsecured debt Long-term Rating: 'B'; Recovery
    Rating 'RR4',

-- Subordinated debt Long-term Rating: 'B-'; Recovery
    Rating 'RR5',

-- Senior unsecured debt National Long-term Rating: 'BBB(rus)'

SDM-BANK JSC: Fitch Upgrades LT Issuer Default Rating to 'B+'
Fitch Ratings has upgraded JSC SDM-Bank's (SDM) Long-term Issuer
Default Rating (IDR) to 'B+' from 'B'. At the same time, the
agency has affirmed the Long-term IDRs of Chelindbank (Chelind)
at 'BB-', Rosevrobank (REB) and Locko-bank (Locko) at 'B+' and
SKB-Bank (SKB) at 'B'. All of the ratings have Stable Outlooks.


The IDRs of each of the five banks are driven by their stand-
alone strength, as reflected in their Viability Ratings (VRs).
The ratings reflect the limited franchises and market shares of
each of the banks and, to varying degrees, uncertainty over the
long-term sustainability of their business models and
governance/key person risks related to their narrow ownership.
The ratings also take into account potential cyclicality in the
performance of the Russian economy and the banking sector,
meaning that the banks' performance could be volatile over time.

At the same time, the banks' ratings also take into account their
generally sound current financial metrics and already significant
track records, which include their quite smooth negotiation of
the 2008-2009 crisis. Chelind's higher ratings relative to peers
reflect its strong loss absorption capacity, conservative
management and, in Fitch's view, somewhat more sustainable
franchise. The lower ratings of SKB are driven by its tighter
capitalization, rapid growth and higher-risk retail lending


SDM's upgrade reflects its extended track record of reasonable
asset quality, comfortable liquidity and adequate profitability,
the stability to date of its franchise and funding and
conservative management. However, the ratings continue to
consider the questionable longer-term sustainability of SDM's
relationship-driven business model and the bank's limited size by
international standards resulting, among other things, in
significant concentrations on both sides of its balance sheet.

At end-2012 SDM's reported non-performing loans (NPLs; loans 90
days overdue) were a modest 1.8%, while a further 0.8% were
rolled over. Although SDM's loan book concentration remains high
(the 20 largest exposures comprised 50% of the end-2012 loan
book, or 2.2x Fitch Core Capital (FCC)), Fitch is comfortable
with the quality of most of the largest exposures as they are
either short-term working capital loans to local medium-sized
trade companies or real estate-related project finance loans
which are reasonably secured with already operational properties
with low loan-to-value ratios (LTVs).

SDM's customer funding equalled 95% of end-2012 liabilities and
is mostly attracted from long-standing clients. Fitch identified
some customers (7.5% of end-2012 liabilities) which could be in
some way connected to SDM's management and/or the controlling
private shareholder. However, risks are mitigated by the bank's
healthy liquidity position, with the buffer of liquid assets
sufficient to withstand outflow of 38% of deposits. Liquidity is
also supported by the relatively fast amortizing loan book
(average loan book turnover is 12 months) and the bank's proven
ability to de-leverage under stress.

SDM's capital position is reasonable for the rating category,
with a FCC of 16% at end-2012. However, in light of significant
loan concentrations, SDM's loss absorption capacity is moderate,
with the bank at end-2012 able to absorb credit losses equal to
5% of the loan book before breaching minimum regulatory capital
requirements. Fitch expects internal capital generation and loan
growth to be broadly in line for the foreseeable future, meaning
that, barring unexpected losses, the capital position is likely
to remain largely unchanged.


The affirmation of Chelind's ratings reflects the bank's sound
reported financial metrics, including its solid profitability,
adequate capitalization and reasonable asset quality. The ratings
also reflect Fitch's view that the bank's business model and
credit profile should be more sustainable than at similar-sized
Russian peers given Chelind's significant franchise in its home
Chelyabinsk region and the bank's conservative management and
limited risk appetite. At the same time, the ratings are
constrained by the bank's limited prospects for further growth
and diversification and potential cyclicality of the heavily
industrialized economy in Chelind's home region.

Chelind's recent solid profitability (net interest margin of 8.6%
and return on average assets of 2.2% in 2012) is underpinned by
its quite high lending rates, moderate funding costs (supported
by the bank's well-recognised local brand) and limited impairment
charges at the current point in the credit cycle. NPLs decreased
to 5.4% at end-2012 from 7% at end-2011 and 10% at end-2010, in
part due to loan growth, and recent NPL generation has been low.

Chelind has a significant presence in the Chelyabinsk region (10%
of regional retail deposits, 13% of regional SME loans at end-
2012) through its 29 branches and 22 sub-branches. At end-Q113,
Chelind's liquidity cushion was comfortable (liquid assets
covered 25% of customer deposits), given the bank's predominantly
retail customer base and rather granular funding, with the 20
largest depositors accounting for 14% of liabilities.
Capitalization is higher than at peers, with a FCC ratio of 23%
at end-2012 and a regulatory capital ratio of 16.8% at end-Q113,
although fixed assets, including revaluations, accounted for a
significant 49% of FCC at end-2012.


The affirmation of Locko's IDRs and VR reflects moderate
improvements in the bank's capitalization, adequate profitability
for a universal commercial bank (16.8% return on equity in 2012
under IFRS) and solid reported asset quality. However, the
ratings also reflect the bank's limited franchise, moderate
concentrations in the loan book with significant exposure to real
estate development and rental business (65% of FCC), some
uncertainty as to underlying credit quality and significant
refinancing risk steaming from wholesale borrowings, at the
moment moderately mitigated by the cushion of liquid assets on
balance sheet.

At end-2012, Locko reported a low NPL ratio of 1.1%. However,
Locko's practice of rolling over credit lines prior to maturity
may distort real loan quality, while also shortening the reported
maturity of the loan book and improving regulatory liquidity
ratios. The largest 20 corporate loan exposures comprised 22% of
the total book (or 1.1x of FCC) at the same date; however, Fitch
views certain borrowers (with a combined exposure of 20% of FCC)
operating in the development sector as potentially
interconnected, suggesting somewhat higher concentrations than
reported. The FCC ratio was a reasonable 16.8% at end-2012.

As of end-Q113, Locko had RUB12.3 billion of wholesale funding
which might need to be repaid within a 12 month period (including
RUB10 billion of local bonds with put options), representing 20%
of total liabilities. To manage this, Locko plans to set coupons
in line with market rates on its bonds with put options in order
to retain this funding, and is also considering a further RUB3
billion bond issue in H213, although both measures will depend on
favorable market conditions, Fitch understands. The available
liquidity buffer (cash and equivalents, net short-term interbank
loans and unpledged bonds eligible for repo with the Central
Bank) comprised RUB16 billion, equal to 25% of liabilities, at
end-Q113, mitigating refinancing risks.


REB's ratings reflect the bank's solid profitability, reasonable
asset quality and comfortable liquidity cushion. However, the
ratings are constrained by the bank's limited franchise (focused
primarily on the Moscow region), tightly managed regulatory
capital and some uncertainty over the long-term sustainability of
the bank's cheap customer funding.

REB's asset quality remains reasonable, with NPLs comprising a
moderate 3% of the end-2012 loan book. Fitch views REB's
corporate loan book as being of moderate risk, as it is dominated
by short- to medium-term working capital exposures with
reasonable collateral in most cases. At the same time, the agency
has concerns about the poor reported financial standing of some
of REB's largest borrowers and expects additional problems if
there is a marked deterioration in the operating environment.

REB's solid profitability (ROAA and ROAE in 2012 were a high 3.1%
and 23.7%, respectively) is underpinned by the low cost of
funding, which in turn is driven by the high proportion of almost
interest-free current accounts of corporate clients (roughly 50%
of end-2012 liabilities). At least 20% of these funds came from
state-controlled and budget-financed entities at end Q113. Fitch
has some concerns about the sustainability of these funds,
although they are rather granular and there is a long-term track
record of them being relatively resilient to stresses. At end-
February 2013, REB's liquidity buffer was sufficient to withstand
a 50% deposit outflow.

REB's FCC ratio was a reasonable 12% at end-2012. However, the
regulatory (total) capital ratio was a moderate 11.5% at end-
2012, meaning the bank had capacity to withstand only 3% of
additional credit losses.


The affirmation of SKB's ratings reflects still fast growth in
long-term unsecured retail lending, resulting in a largely
unseasoned retail book, and modest capitalization. The ratings
also take into account SKB's growing franchise, the increased
diversification of its revenue base, reasonable liquidity
position and currently adequate reported asset quality.

SKB significantly expanded its retail business after the crisis,
with an exceptionally fast growth rate of about 90% per annum in
2010-2011. In 2012 growth moderated to 30%, mainly due to base
effects, while in absolute terms the pace of expansion remained
approximately the same. This, together with the bank's focus on
long-term unsecured retail lending (average duration of portfolio
about five years) results in a largely unseasoned portfolio,
which may demonstrate higher loss rates when loans mature,
especially if economic conditions deteriorate. At end-2012, the
bank reported NPLs equal to 8.2% of the portfolio, fully covered
by impairment reserves.

SKB's FCC ratio at end-2012 was a moderate 8%, and the 12.4%
regulatory capital ratio at end-Q113 meant that the bank was able
to absorb additional losses equal to only a modest 3.2% of the
loan book before breaching the minimum 10% capital adequacy ratio


Upside potential for Chelind, REB, Locko and SDM's ratings is
limited given current rating levels and the banks' limited
franchises. However, REB's ratings could be upgraded in case of a
material strengthening of the bank's regulatory capital position
and funding base, and Locko could be upgraded in case of a
reduction in loan concentrations, in particular to the real
estate sector, and refinancing risks.

The ratings of each of the four banks could be downgraded in case
of a marked deterioration in the operating environment, resulting
in weaker asset quality and capitalization, or a significant
increase in risk appetite, causing a weakening of underwriting

Upward pressure on SKB's ratings could result from further
deceleration in growth rates, an extended track record of
reasonable asset quality as the loan book seasons and a
strengthening of the bank's capitalization. Higher loss rates as
the portfolio matures, resulting in weaker performance and
capitalization, could put downward pressure on the ratings if not
offset by equity injections.


SDM's and Locko's senior unsecured debt is rated in line with the
banks' Long-term IDRs, reflecting Fitch's view of average
recovery prospects, in case of default. Locko's subordinated debt
rating is notched once off its VR in line with Fitch's criteria
for rating these instruments. Any changes to the banks' VRs would
likely impact the ratings of both senior and subordinated debt.


The '5' Support Ratings and 'No Floor' Support Rating Floors of
the five banks reflect their small size and limited franchises,
making government support uncertain. In Fitch's view, support
from the banks' private shareholders can also not be relied upon.
An upgrade of these ratings is unlikely in the foreseeable
future, although acquisition by a stronger owner could lead to an
upgrade of a Support Rating.


  Long-term foreign and local currency IDRs: upgraded to 'B+'
  from 'B', Outlook Stable
  Short-term IDR: affirmed at 'B'
  Viability Rating: upgraded to 'b+' from 'b'
  Support Rating: affirmed at '5'
  Support Rating Floor: affirmed at 'No Floor'
  National Long-term rating: upgraded to 'A-(rus)' from
   'BBB(rus)', Outlook Stable
  Senior unsecured debt: upgraded to 'B+' from 'B'; Recovery
   Rating 'RR4'
  Senior unsecured debt National Long-term Rating: upgraded to
   'A-(rus)' from 'BBB(rus)'


  Long-Term foreign currency IDR: affirmed at 'BB-', Outlook
  Short-Term foreign currency IDR: affirmed at 'B'
  Viability Rating: affirmed at 'bb-'
  Support Rating: affirmed at '5'
  Support Rating Floor: affirmed at 'No Floor'
  National Long-term rating: affirmed at 'A+(rus)', Outlook


  Long-term foreign and local currency IDRs: affirmed at 'B+',
   Outlook Stable
  Short-term IDR: affirmed at 'B'
  Viability Rating: affirmed at 'b+'
  Support Rating: affirmed at '5'
  Support Rating Floor: affirmed at 'No Floor'
  National Long-term rating: affirmed at 'A(rus)', Outlook Stable


  Long-term foreign and local currency IDRs: affirmed at 'B+',
   Outlook Stable
  Short-term IDR: affirmed at 'B'
  Viability Rating: affirmed at 'b+'
  Support Rating: affirmed at '5'
  Support Rating Floor: affirmed at 'No Floor'
  National Long-term rating: affirmed at 'A-(rus)', Outlook
  Senior unsecured debt: affirmed at 'B+'; Recovery Rating 'RR4'
  Senior unsecured debt National Long-term rating affirmed at 'A-
  Subordinated debt: affirmed at 'B(exp)', Recovery Rating 'RR5'


  Long-term foreign currency IDR: affirmed at 'B', Outlook Stable
  Short-term IDR: affirmed at 'B'
  Viability Rating: affirmed at 'b'
  Support Rating: affirmed at '5'
  Support Rating Floor: affirmed at 'No Floor'

TINKOFF CREDIT: Fitch Rates RUB3-Bil. Sr. Unsecured Notes 'B+'
Fitch Ratings has assigned Tinkoff Credit Systems' (TCS) RUB3
billion senior unsecured fixed-rate exchange bond issue (BO-12
series), with a final maturity in May 2015 and a put option after
1.5 years, a Long-term rating of 'B+'. The notes have a Recovery
Rating of 'RR4'.

TCS has Long-term foreign and local currency Issuer Default
Ratings (IDR) of 'B+' with a Stable Outlook, a National Long-term
Rating of 'A(rus)' with a Stable Outlook, a Short-term foreign
currency IDR of 'B', a Viability Rating of 'b+', a Support Rating
of '5', and a Support Rating Floor of 'No Floor'.

Fitch upgraded TCS's Long-term IDRs to 'B+' from 'B' on 21 March


The issue's ratings correspond to TCS's Long-term local currency
IDR ('B+'/Stable). The latter factors in TCS's (i) extended track
record of exceptionally strong financial results, (ii) its
ability to diversify acquisition channels and grow the business,
while keeping credit losses and costs under control and (iii)
reasonable capital and funding profiles. However, the rating also
reflects the potential cyclicality of the bank's performance and
some concerns over longer-term sustainability of its business

Rating Sensitivities

Downward pressure on TCS's Long-term IDRs, and consequently the
issue's ratings, could arise if there was a marked downturn in
the Russian economy or further sustained rapid growth of retail
lending, resulting in markedly higher consumer indebtedness and
potentially weaker credit underwriting at TCS. Significant
deposit outflows, resulting in a sharp tightening of liquidity,
could also result in negative rating action. Conversely, an
extended period of more balanced growth, sound performance and
successful franchise protection and development could result in
moderate rating upside over the medium term.

The debt ratings could also be downgraded in case of a further
marked increase in the proportion of retail deposits in the
bank's liabilities (47% of end-2012 liabilities), resulting in
greater subordination of bondholders. In accordance with Russian
legislation, the claims of retail depositors rank above those of
other senior unsecured creditors.

* SLOVENIA: Set to Decide on Bank Recapitalization Program
Boris Cerni at Bloomberg News reports that the European
Commission was set to deliver its verdict on Slovenia's plan to
avoid being the euro area's sixth bailout victim with a US$1.2
billion bank recapitalization program and a record state-asset
sale plan.

The European Union's executive arm was set to say yesterday at
2:00 p.m. in Brussels whether Slovenia is taking the right steps
to dodge financial assistance or needs to do more to stay afloat
on its own, Bloomberg discloses.  The former Yugoslav republic
already tested investor confidence with a US$3.5 billion debt
sale on May 2 to cover the budget, repay debt and fund banks,
Bloomberg notes.

Slovenia is struggling to fix a banking industry crippled by
Europe's slump and an economy in its second recession since 2009,
Bloomberg says.  According to Bloomberg, the government of Prime
Minister Alenka Bratusek sent its economic overhaul program to
Brussels on May 9 to reassure its EU partners Slovenia won't need
outside aid.

A day earlier, legislators approved changes to insolvency
legislation designed to accelerate corporate restructuring and
aid the ailing banking industry, Bloomberg relates.

According to Bloomberg, under the government's overhaul program,
a newly created bank asset-management company would take over
EUR3.34 billion (US$4.3 billion) of bad loans from Slovenian
banks at a value of EUR1.1 billion.


AUTOVIA DE LA MANCHA: S&P Lowers Rating on EUR110MM Loan to 'B'
Standard & Poor's Ratings Services said that it had lowered to
'B' from 'B+' its underlying long-term debt rating (SPUR) on the
EUR110 million senior secured amortizing loan maturing July 2031
to Spanish toll road special-purpose company Autovia de la
Mancha, S.A. (Aumancha).  The outlook on the SPUR is stable.

The recovery rating remains unchanged at '3', reflecting S&P's
expectation of a meaningful (50%-70%) recovery of principal in
the event of a payment default.

The insured 'AA-' rating and stable outlook on Aumancha's debt
continues to reflect the unconditional and irrevocable guarantee
provided by Assured Guaranty (Europe) Ltd. (AA-/Stable/--).
Under Standard & Poor's criteria, a rating on monoline-insured
debt reflects the higher rating: on the monoline insurer, if any;
or Standard & Poor's underlying rating (SPUR) on the debt.
Therefore, the current rating on the loan reflects that on the
monoline insurer.

S&P lowered the SPUR to reflect the continuing shadow toll
payment delays from the Spanish regional government of Castile La
Mancha (CLM; not rated) to the concessionaire of the shadow toll-
road, Aumancha, despite the significant improvement observed
during the last year.

S&P considers CLM to be an irreplaceable counterparty, as it
represents the source of virtually all operating revenues for the
project.  S&P therefore applies a counterparty dependency
assessment to CLM that depends, on the one hand, on S&P's view of
CLM's credit quality and, on the other hand, its history of
arrears to commercial debt holders such as Aumancha.

CLM's regional government expressed its intention to fully
normalize shadow toll payments in mid-2012 after taking office in
2011, and managed to do so, fully eliminating arrears in July
2012.  S&P understands, however, that arrears resumed in December
2012, and that the monthly toll payments corresponding to
November and December 2012 remain overdue, despite CLM's having
made all 2013 toll payments on time.

Other than the outstanding toll payments, the project's credit
fundamentals remain relatively strong, despite the downward
traffic trend observed since late 2011.

S&P believes the project will be able to meet the next debt
service payments without recourse to the still-fully-funded 12-
month debt-service reserve account (DSRA).  The next debt-service
payment (about EUR6.2 million) is due on July 15, 2013.  As of
mid-May 2013 (latest information available), Aumancha had free
cash balances of EUR8.7 million, which could increase if CLM
normalizes shadow toll payments before the debt-service payment
date.  S&P believes that, even if CLM does not make further
shadow toll payments before the next payment date, Aumancha's
free cash balances will not be lower than EUR7 million, which
covers the full amount due.

S&P understands that, as of mid-May 2013, cash balances at the
DSRA (EUR6.2 million), the major maintenance reserve account
(EUR4.9 million), and the expropriation reserve account
(EUR1.5 million) remained funded above or at their
contractually established levels.

The SPUR on Aumancha's EUR110 million senior secured amortizing
bank loan maturing July 2031 is 'B'.  The recovery rating is '3',
indicating S&P's expectation of meaningful (50%-70%) recovery
prospects in the event of a payment default.

"We calculate the recovery rating based on what we consider to be
the most likely hypothetical default scenario -- a default by the
grantor -- given that the rest of the project's underlying
fundamentals are relatively strong.  Under the hypothetical
scenario of an imminent default of CLM, we would expect that the
project would default after exhausting all liquidity available in
the project, at around two years after CLM stopped payments to
the project.  We would expect the project's lenders to step in
and take control of the concession, and we assume the government
would resume payments about three years after defaulting,
following a restructuring.  After assuming no further traffic
growth during the rest of the concession, and applying a
conservative discount rate of 12%, the net present value of the
road project's future cash flow would cover around 80% of the
outstanding debt at the point of default," S&P said.

Although S&P calculates a substantial (70%-90%) recovery of
outstanding principal on the senior secured loan in the event of
a payment default, it disregards the guarantee from Assured
Guaranty (Europe) Ltd. and caps the recovery rating at '3'.  The
cap reflects S&P's jurisdiction-specific adjustments to recovery
ratings in countries where S&P believes that creditor recoveries
would be negatively affected by the particularities of the
insolvency regime.

The stable outlook on the SPUR reflects S&P's view that
Aumancha's liquidity situation and credit fundamentals -- other
than payments -- will remain relatively strong, including
continued sponsor support from CLM if needed.  It also reflects
S&P's view that CLM's ability to restore and maintain timely
shadow toll payments could be constrained by the challenging
economic and budgetary prospects for the region and Spain as a

S&P could lower the SPUR if its view on CLM's credit quality
weakened further.  At present, S&P do not have full visibility on
CLM's ability to continue timely shadow toll payments

S&P could raise the SPUR if it observed consistent timely shadow
toll payments from CLM to Aumancha over a prolonged period of
time, provided that S&P's perception of CLM's creditworthiness
does not deteriorate.

The stable outlook on the secured debt issue reflects that on
Assured Guaranty (Europe) Ltd.

IM SABADELL: S&P Raises Rating on Class A Notes From 'BB'
Standard & Poor's Ratings Services raised to 'A- (sf)' from 'BB
(sf)' its credit rating on IM Sabadell RMBS 2, Fondo de
Titulizacion de Activos' class A notes.  At the same time, S&P
has affirmed its ratings on the classes B and C notes.

Banco de Sabadell S.A. (BB/Negative/B) is the transaction's swap
counterparty.  It is not an eligible swap counterparty because,
under S&P's 2012 counterparty criteria, it did not comply with
its obligations under the swap documentation.  On Feb. 14, 2013,
S&P lowered and removed from CreditWatch negative all of its
ratings in this transaction for counterparty reasons and S&P
linked its ratings on all classes of IM Sabadell RMBS 2's notes
to its long-term issuer credit rating (ICR) on Banco de Sabadell.

Banco Santander S.A. is the bank account provider and paying
agent.  The documentation incorporates remedy actions that are in
line with S&P's 2012 counterparty criteria, limiting the maximum
achievable rating in this transaction at 'A- (sf)'.

Since S&P's February rating actions, the trustee has restructured
the transaction by increasing the reserve fund's target amount to
EUR25.1 million from EUR16.8 million.  This structural change has
increased the transaction's available credit enhancement.  Since
February, the available credit enhancement has increased to:

   -- 7.46% from 6.24% for the class A notes,

   -- 5.20% from 4.05% for the class B notes, and

   -- 3.12% from 2.02% for the class C notes.

This transaction has very low arrears and defaults.  As of
March 30 2013, 90+ days arrears up to defaults (defined as loans
in arrears for more than 12 months) represent only 1.26% of the
pool's outstanding balance.  Cumulative defaults represent 1.2%
of the pool's initial balance.  In S&P's view, the transaction's
performance has been stable since closing.

The swap agreement provides a significant amount of credit
enhancement to the transaction.  The swap counterparty pays the
weighted-average cost of the notes, plus a guaranteed margin of
40 basis points (bps), on the notes' outstanding balance.  In the
scenarios where S&P assumes that there is no swap agreement,
interest income (in addition to three-month Euro Interbank
Offered Rate [EURIBOR]) is limited to the pool's margin.  As of
March 30, 2013, this margin was 62 bps, after assuming margin
compression and further stresses.  The increased credit
enhancement that S&P has observed after the restructuring of the
transaction mitigates this stress.

In the scenarios where S&P do not give benefit to the swap
agreement and, given the additional credit enhancement from the
increased reserve fund, the class A notes can now achieve a
rating that is higher than S&P's long-term ICR on the swap
counterparty. Therefore, in accordance with S&P's 2012
counterparty criteria, it has delinked its rating on the class A
notes from our long-term 'BB' ICR on the swap counterparty.  The
results of S&P's credit and cash flow analysis indicate that the
available credit enhancement for the class A notes is now
commensurate with a higher rating than 'A- (sf)'.  However
because the bank account downgrade language restricts the rating
on these notes to 'A- (sf)', S&P has raised to 'A- (sf)' from 'BB
(sf)' its rating on this class of notes.

S&P has also delinked its rating on the class B notes from its
long-term ICR on the swap counterparty, because in the scenarios
where it do not give benefit to the swap agreement, these notes
are able to achieve a 'BB (sf)' rating.  S&P has therefore
affirmed its 'BB (sf)' rating on the class B notes.

S&P's rating on the class C notes is still linked to its long-
term ICR on the swap counterparty.  This is because the notes
need the swap counterparty's support to achieve a rating that is
at least as high as S&P's long-term ICR on the swap counterparty.
Consequently, S&P has affirmed its 'BB (sf)' rating on the class
C notes.

The transaction has no commingling reserve, although if the
servicer loses a 'A-2' short-term rating, the transaction
documents state that a reserve will become effective.  To size
for this risk, S&P has therefore applied a commingling stress of
one-month loss of interest, principal, prepayments in its cash
flow analysis.

IM Sabadell RMBS 2 is a residential mortgage-backed securities
(RMBS) transaction issued by Banco de Sabadell in June 2008.  It
securitizes a portfolio of first-ranking residential mortgage
loans granted to individuals in Spain.


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

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



Class             Rating
            To               From

IM Sabadell RMBS 2, Fondo de Titulizacion de Activos
EUR1.4 Billion Residential Mortgage-Backed Floating-Rate Notes

Rating Raised

A           A- (sf)          BB (sf)

Ratings Affirmed

B           BB (sf)
C           BB (sf)

SANTANDER FINANCIACION: S&P Raises Rating on Cl. C Notes From BB-
Standard & Poor's Ratings Services took various credit rating
actions in Fondo de Titulizacion de Activos Santander
Financiacion 1.

Specifically, S&P has:

   -- Raised to 'AA- (sf)' from 'A+ (sf)' and removed from
      CreditWatch negative its rating on the class B notes;

   -- Raised to 'BBB (sf)' from 'BB- (sf)' its rating on the
      class C notes; and

   -- Affirmed its ratings on the class D, E, and F notes.

S&P has reviewed the performance of the transaction's underlying
collateral and structural features.  S&P has also applied its
2012 counterparty criteria and nonsovereign ratings criteria.

S&P withdrew its rating on the class A notes following their
amortization on the April 2013 interest payment date.


S&P's analysis indicates that the available credit enhancement
for the class B and C notes has significantly increased since its
Dec. 9, 2011 review due to the full amortization of the senior
classes of notes.  Since then, the available credit enhancement
for the class B notes has increased to 84.54% from 42.82%, and
for the class C notes to 35.21% from 15.74%, based on the
collateral's performing balance (excluding defaults).

Based on the latest available investor report from the trustee
(dated April 2013), long-term delinquent loans (defined as loans
in arrears for between three and 12 months) accounted for 1.46%
of the outstanding portfolio balance excluding defaults--compared
with 2.03% of the outstanding portfolio balance excluding
defaults in our Dec. 9, 2011 review.

Since S&P's December 2011 review, it has continued to observe
stabilizing, or even decreasing delinquencies in the case of some
buckets.  However, long-term delinquencies have continued to roll
into defaults, since S&P's last review.  S&P has increased its
baseline default rate for the outstanding securitized portfolio.
This reflects the transaction's deteriorating performance
observed so far, and S&P's opinion of increasing uncertainty
regarding future macroeconomic performance.  S&P analyzed the
transaction's exposure to credit risk by applying its European
Consumer Finance Criteria.

As of the most recent April 2013 interest payment date (IPD), the
reported cumulative defaults ratio (loans delinquent for more
than 12 months) represented 10.90% of the original pool balance
at closing.  Recovery proceeds on defaulted assets are lower than
S&P's existing recovery assumptions.  Therefore, S&P has lowered
its recovery assumptions, resulting in a significant increase in
its loss-given-default expectations.

The class F notes' issuance proceeds funded the reserve fund at
closing.  It has been fully depleted since the January 2009 IPD
and it has not been replenished as the performing collateral
balance has decreased.

The available credit enhancement provided by the performing
balance is positive for the class B and C notes, but it is below
zero for the class D, E, and F notes, which are therefore

As of December 2011, the transaction had accumulated a
EUR40.4 million principal redemption shortfall, which is the
difference between the available remaining principal receipts and
the accrued redemption amount of notes.  Since then, this
principal redemption shortfall has decreased to EUR33.5 million
on the April 2013 IPD.


On Feb. 13, 2013, S&P placed on CreditWatch negative its ratings
on Santander Financiacion 1's class A and B notes because the
swap provider, Banco Santander S.A., did not take remedy actions
within the remedy period under the transaction documents.  Since
then, S&P has conducted a credit, cash flow, and structural
analysis to determine how much support this transaction gains
from the swap, and to see if the class B notes can achieve a
rating higher than 'BBB (sf)' without the benefit of the swap
agreement.  S&P has applied its 2012 counterparty criteria and
has considered the latest available portfolio and structural
features information.

When S&P conducted its cash flow analysis without giving benefit
to the swap agreement, the class B notes have sufficient credit
enhancement to allow them to support a 'AAA (sf)' rating.  This
is because it is now the most senior class in the structure and
it benefits from the diversion of cash flows of the class D and E
notes.  Therefore, S&P's rating on the class B notes is delinked
from its long-term issuer credit rating (ICR) on the swap


S&P's non-sovereign ratings criteria constrain its rating on the
class B notes at 'AA- (sf)' as under its criteria, the highest
rating S&P would assign to a structured finance transaction is
six notches above the investment-grade rating on the country in
which the securitized assets are located.  This transaction
securitizes Spanish consumer assets.  Therefore, the highest
rating achievable in this transaction is 'AA- (sf)', which is six
notches above S&P's 'BBB-' long-term sovereign rating on Spain.

                           SET-OFF RISK

When the transaction closed in 2006, consumer loans granted to
Santander Group employees represented 16.93% of the closing
pool's balance.  Due to the high original remaining term of these
loans, which slowly amortize because they benefit from negative
spread over 12-month Euro Interbank Offered Rate (EURIBOR), the
portion of employee loans in the pool has significantly increased
to 59% as of the April 2013 IPD.

The employee loans could potentially result in employee set-off
risk as those obligors could have a counterclaim against the
seller with respect to due and unpaid salaries.  If the seller of
the loans and the servicer become insolvent, the obligors could
also have the right to exercise a counterclaim against the
issuer. To reflect this employee set-off risk in S&P's analysis
and because the transaction has no features to mitigate this
risk, S&P has assumed that 100% of the employee's liability
toward the issuer could be set off, thereby reducing the
portfolio's performing balance.

S&P has therefore reduced the collateral balance by excluding the
outstanding amounts of the employee loans in the pool, which
amount to EUR73.7 million.  After making this adjustment to S&P's
cash flow analysis without giving benefit to the swap agreement,
the level of performing collateral to service the notes in its
analysis has reduced considerably.  Despite the reduced
performing collateral, the class B notes still have sufficient
credit enhancement to allow them to support a 'AAA (sf)' rating.
The credit enhancement available to the class B notes after
excluding the employee loans is 62.37%.  However, S&P's non-
sovereign ratings criteria caps the rating on these notes at 'AA-
(sf)'.  S&P has therefore raised to 'AA- (sf)' from 'A+ (sf)' and
removed from CreditWatch negative its rating on the class B

When S&P conducted its analysis without giving benefit to the
swap agreement, the class C notes have sufficient credit
enhancement to support a 'AA+ (sf)' rating.  However, when S&P
took the outstanding amounts of the employee loans into account
in its cash flow analysis by reducing the collateral balance,
only the class B notes experienced a sufficient credit
enhancement increase to support a rating that is higher than our
long-term 'BBB' ICR on the originator, Banco Santander.  Because
the transaction has no structural features to mitigate the
existing employee set-off risk, S&P's 2012 counterparty criteria
weak-links its rating on the class C notes to its long-term ICR
on Banco Santander. Therefore, S&P has raised to 'BBB (sf)' from
'BB- (sf)' its rating on the class C notes.

The class D notes are not asset-backed, according to the
transaction's current level of undercollateralization.  However,
the class D notes have not breached their interest-deferral
trigger (based on the principal redemption shortfall) since the
October 2011 IPD.  S&P has therefore affirmed its 'CCC- (sf)'
rating on this class of notes to reflect its opinion that the
issuer is unlikely to have the capacity to meet its financial
commitment relating to the principal due at maturity on this
class of notes.

The class E and F notes had already defaulted interest payments
in August 2009 and July 2009, respectively.  Since these
defaults, none of these classes has paid any of the defaulted
interest.  S&P has therefore affirmed its 'D (sf)' ratings on the
class E and F notes.

Santander Financiacion 1's notes are backed by a portfolio of
auto loan and consumer loans granted to Spanish residents and
Banco Santander employees.  Banco Santander is the servicer for
the transaction, which closed in December 2006.


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

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



Class      Rating              Rating
           To                  From

Fondo de Titulizacion de Activos Santander Financiacion 1
EUR1.914 Billion Asset-Backed Floating-Rate Notes

Rating Raised And Removed From CreditWatch Negative

B          AA- (sf)            A+ (sf)/Watch Neg

Rating Raised

C          BBB (sf)            BB- (sf)

Ratings Affirmed

D          CCC- (sf)
E          D (sf)
F          D (sf)

U N I T E D   K I N G D O M

DECO 12: Fitch Lowers Rating on GBP13.6MM Class D Notes to 'D'
Fitch Ratings has taken various rating actions on DECO 12 - UK 4
p.l.c.'s (DECO 12) commercial mortgage-backed notes due January
2020, as follows:

  GBP189.6m class A1 (XS0289644121) affirmed at 'AAsf'; Outlook

  GBP113.6m class A2 (XS0289644477) downgraded to 'BBB+sf' from
  'A-sf'; Outlook Negative

  GBP34.6m class B (XS0289644550) affirmed at 'BBBsf'; Outlook

  GBP27.7m class C (XS0289644634) affirmed at 'Bsf'; Outlook

  GBP13.6m class D (XS0289644717) downgraded to 'Dsf' from
  'CCsf'; Recovery Estimate (RE) 20%

  GBP0.0m class E (XS0289644808) downgraded to 'Dsf' from 'Csf';
  RE 0%

  GBP0.0m class F (XS0289644980) affirmed at 'Dsf'; RE 0%

Key Rating Drivers

The affirmation of the class A1 is supported by the switch to a
sequential paydown structure following the allocation of losses,
(GBP0.4 million), on the Industrial Realisation (Famborough)
Limited Loan at the October 2012 interest payment date (IPD). The
recent downgrade of Tesco plc (to 'BBB+'/Stable from 'A-
'/Negative) explains the downgrade of the class A2: Fitch
continues to see the loan as increasingly reliant on the
supermarket chain's credit quality and the significant
incremental leverage over the class A1 justifies a rating-cap

The downgrade of the class D and E notes reflects the loss
allocation on the April 2013 IPD, following the sale of the last
properties securing the LMM Overseas Investment Ltd loan and the
Group 7 Suffolk loan. Losses of GBP5.6 million led to a complete
write-down of the class E and F notes and a partial write-down of
the class D notes (13.5% loss).

The Tesco loan (91.6% of the pool balance) is an interest only
loan secured by a sale and leaseback of 16 Tesco stores across
the UK. The portfolio comprises 12 superstores and four 'Extra'
format stores, let to Tesco until December 2026 with a break
option in December 2016. Fitch understands that the ability to
exercise the break option is conditional on full loan repayment
and therefore believes the occurrence of such scenario to be
quite remote. Since the previous rating action, the loan has
displayed stable performance, with a loan-to-value ratio (LTV)
and interest-coverage ratio (ICR) of 68.1% and 1.37x,

Out of the remaining three loans, the GBP17.5 million Borehamwood
Investments loan (4.6% of the pool) and the GBP3.0 million
Chesterton Commercial loan (0.8% of the pool) are currently in
work-out. Both loans are expected to suffer heavy losses (Fitch
LTVs stands at over 140% for both facilities).

The debt service payments of the GBP11.2 million 2006/2007 Regent
Capital loan (3.0% of the pool) are supported by a rental
guarantee equating to 15.7 years of rental income (GBP13.8
million) and held in a cash reserve. The properties are currently
being marketed for both letting and sale. Fitch expects the loan
to repay at maturity in January 2017.

Ratings Sensitivities

Any change to Tesco plc's Long-term IDR, is likely to result in
further rating actions, especially for the class A2 notes.
Sequential pay-down and vacant possession value protect the
rating of the class A1 notes, which are now subject to an
unlikely deterioration in market conditions for UK supermarket

EAST END PARK: Goes Into Administration
Evening Times reports that Dunfermline's hopes of survival at
East End Park Ltd has taken a fresh twist after it was revealed
that the company that owns the troubled club's stadium went into

East End Park Ltd, the business set up by discredited majority
shareholder Gavin Masterton, has been placed into administration
with Blair Nimmo, according to Evening Times.

The report notes that the latest news is being viewed positively
by club administrator Bryan Jackson.

"The recent development is a help.  We need to talk to Blair
Nimmo of KPMG Ltd about a licence to occupy the ground or a
short-term lease.  This would ensure there is a ground to play on
and allow time to sort something out," the report quoted Mr.
Jackson as saying.

INTEROUTE TRANSPORT: In Administration, Closes Operations
Thames News reports that Thame-based Interoute Transport
Services' transport operation has closed after going into
administration, with the loss of many local jobs.

Interoute Transport Services has seen the transport side of its
operation wound-up after collapsing into administration,
according to Thames News.  The report relates that the Pall-Ex
and Hazchem member was placed into administration on May 17,
after attempts to sell the business proved unsuccessful.

Carl Jackson, partner at administrator Quantuma, told that the transport side of the business had
been loss making for several years and had been propped up by the
warehousing operation, the report discloses.

However, the report relates that a significant reduction of
business volume from a major customer had proved too much for the
business to bear.

Quantuma is continuing to operate the warehouse side of the
operation in the hope of securing a buyer, the report adds.

SOUTHERN PACIFIC: S&P Affirms 'B-' Rating on Class E Notes
Standard & Poor's Ratings Services affirmed all of its credit
ratings in Southern Pacific Securities 05-1 PLC.

The rating actions follow S&P's credit and cash flow analysis of
the latest transaction information that it has received as of
March 2013.  S&P's analysis reflects the application of its U.K.
residential mortgage-backed securities (RMBS) and its 2012
counterparty criteria.

In the December 2012 investor report, Acenden (the servicer)
updated how arrears are reported to include amounts outstanding,
delinquencies, and other amounts owed.  Other amounts owed
include, among others, arrears of fees, charges, costs, ground
rent, and insurance.  Delinquencies are principal and interest
arrears on the mortgage loans, based on the borrowers' monthly
installments.  Amounts outstanding are principal and interest
arrears after payments by borrowers are first allocated to other
amounts owed.  This difference in the allocation of payments for
the transaction and the borrower results in amounts outstanding
being greater than delinquencies.  Following FSA Policy Statement
10/9, Acenden is no longer able to enforce on a mortgage loan if
a borrower is only in arrears of other amounts owed.  However,
borrowers remain liable for these amounts, which must be repaid,
at the latest, at loan redemption.  Both amounts outstanding and
delinquencies have increased recently, but delinquencies have
increased at a slower rate than amounts outstanding.  In S&P's
analysis, it has considered the level of amounts outstanding as
the portfolio's level of arrears.

S&P has been advised that Acenden references the level of amounts
outstanding to arrive at the 90+ days arrears trigger.  The level
of 90+ day arrears has risen to 38.68%, and the relevant 22.5%
trigger remains breached.  As such, the transaction pays
principal sequentially.  Since the amounts outstanding continue
to increase, S&P considers that sequential payment of principal
will likely continue.

The increased arrears have in turn led to a higher weighted-
average foreclosure frequency (WAFF) since S&P's May 14, 2012

WAFF and Weighted-Average Loss Severity (WALS)

Rating     WAFF      WALS
level       (%)       (%)

AAA        70.08    35.25
AA         61.94    31.03
A          51.75    23.35
BBB        45.51    19.30
BB         37.16    16.55
B          32.44    14.12

The transaction has deleveraged.  As a result, the increase in
the transaction's available credit enhancement has been
sufficient to offset the increase in S&P's WAFF assumptions since
its May 2012 review.

S&P's 2012 counterparty criteria caps its ratings on the class
B1c and C1c notes at the 'A+' long-term issuer credit rating on
Barclays Bank PLC as the guaranteed investment contract account

Following S&P's analysis, it has affirmed its ratings on the
class B1c, C1c, D1c, and E notes because it considers the
available credit enhancement to be commensurate with the
currently assigned ratings.

S&P's credit stability analysis indicates that the maximum
projected deterioration that it would expect at each rating level
for time horizons of one year and three years under moderate
stress conditions is in line with its credit stability criteria.

Southern Pacific Securities 05-1 is a U.K. nonconforming RMBS
transaction originated by Southern Pacific Mortgage Ltd and
Southern Pacific Personal Loans Ltd.


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

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



Class       Rating

Ratings Affirmed

Southern Pacific Securities 05-1 PLC
EUR306 Million And GBP489.7 Million
Mortgage-Backed Floating-Rate Notes

B1c           A+ (sf)
C1c           A+ (sf)
D1c           BB- (sf)
E             B- (sf)

STERLINGMAX I: Fitch Downgrades Rating on Class B Notes to 'D'
Fitch Ratings has downgraded Sterlingmax I MBS's class B notes to
'Dsf' from 'CCsf' and subsequently withdrawn the ratings. The
class A notes have paid in full (PIF). The rating actions are as

Class A2 notes (XS0177867503): rated 'CCCsf', redeemed on 15 May

Class B notes (XS0177868063): downgraded to 'Dsf' from 'CCsf',
rating withdrawn

Key Rating Drivers

Sterlingmax I MBS was liquidated on May 15, 2013 using the net
proceeds from the enforcement of the security. As a result, the
class A notes have been PIF, as this class received all interest
and principal owed to them upon the redemption. Conversely, the
class B notes have not received the complete principal owed
absorbing a partial loss as EUR5.2m remained unpaid, 53% of their
initial balance, while the classes C, D, E and F (not rated) did
not receive any payment at all thus have absorbed a loss of 100%
of their outstanding balance.

The liquidation of the notes is the result of the acceleration of
the transaction and the enforcement of the security, declared by
the trustee on behalf of the fund due to the direction received
from more than two thirds of the controlling class noteholders,
class A. The controlling class noteholders had the right to
appoint the acceleration of the notes and the enforcement of the
security since an event of default occurred caused by the failure
to pay interest on the class B notes.

On April 9, 2013, the trustee on behalf of the fund communicated
the acceleration of the notes and enforcement of the security.
Consequently between the April 26, 2013 and May 2, 2013, the
liquidation agent proceed with the auction of the collateral, and
on May 15, 2013 proceeded with the liquidation of the transaction
with the above mentioned result, and communicated that no other
collateral is available and no further payments will be made.

Sterlingmax I MBS was a securitization of a portfolio mainly
composed by UK mezzanine CMBS (52% of the collateral) and RMBS
(34%) tranches originated prior to 2007, predominantly in 2005
and 2006.

Fitch currently rates other 27 securitizations of mezzanine CMBS
and RMBS.

VEDANTA RESOURCES: Fitch Rates US$1.7BB Unsecured Bonds 'BB'
Fitch Ratings has assigned UK-based Vedanta Resources PLC's
(VRPLC, BB+/ Stable) US$1.7 billion senior unsecured bonds a
final rating of 'BB'. The bonds comprise two tranches: US$1.2
billion 6% bonds due January 2019 and US$500 million 7.125% bonds
due May 2023.

The assignment of the final rating follows a review of the final
documentation materially conforming to the draft documentation
previously received.

Key Rating Drivers

Rising regulatory risks: The rating reflects the impact of
regulatory risks in the metals & mining industry, particularly in
India, on VRPLC's businesses. The ban on iron ore mining
operations during FY13 impacted VRPLC's iron ore mines in the
state of Goa, its largest mines, causing EBITDA from iron ore
mining business to decline to US$84 million from US$721 million
in FY12. Consequently the company's consolidated EBITDA fell to
US$4.9 billion (FY12: US$5.4 billion on a proforma basis
considering full year's operations of Cairn India Ltd).

VRPLC's copper operations in India have also been impacted by the
closure of the unit since end-March 2013 due to environmental
concerns. The company has been facing challenges in obtaining
clearance for its bauxite mining operations and also expanding
its alumina processing facility in India. While the Supreme Court
has allowed commencement of iron ore mining in the state of
Karnataka, Fitch expects VRPLC's operations to continue to be
impacted by regulatory challenges in the near term.

Reduced refinancing risk: VRPLC has refinanced most of the
holding company debt maturing in FY14. The company is also
refinancing its major debt maturing in FY15, resulting in
extended maturities and improved liquidity. Consequently VRPLC's
debt maturities in FY15 will decline to around US$1.4 billion
from US$2.7 billion currently (assuming the put on the US$1.25
billion convertible debt is exercised on the put date in July
2014), reducing refinancing risk. Most of the debt maturing in
FY14 at VRPLC's operating entities has also been refinanced.

Re-organization lowering holding company debt: VRPLC's has
received most of the approvals required for its re-organization
announced in February 2012. The re-organization is likely to
reduce the high level of debt at the holding company level to
about one-third of the current US$9 billion. Until the
restructuring is complete, Fitch expects dividend and other cash
flows from operating entities to be used for interest servicing.

Cash flow subordination remains: The group structure after re-
organization will continue to result in subordination of cash
flows at VRPLC given the minority shareholding at its key
operating entities. The agency will continue to evaluate the
group structure of VRPLC, the level of subordination and VRPLC's
ability to access cash flows from its subsidiaries after re-

Rating Sensitivities

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

- Continued positive free cash flow (FCF post acquisitions) and
  net leverage (adjusted net debt/operating EBITDAR) of below
  2x on a sustained basis

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

- Margin pressures, more-than-expected capex, or a major debt-
  funded acquisition resulting in net leverage of over 2.75x on
  a sustained basis

The single-notch differential between the IDR and the senior
unsecured rating reflects structural subordination at VRPLC (the
holding company) due to its complex and fragmented holding
structure. Fitch may equalize the senior unsecured rating with
the IDR if structural subordination is reduced such that the
difference between the adjusted net debt (plus minority
interest)/EBITDAR and the adjusted net debt/EBITDAR ratios is
sustained around 1x.

In FY13, VRPLC recorded revenue of US$15 billion (FY12: US$15.6
billion on a proforma basis) and EBITDA of US$4.9 billion (FY12:
US$5.4 billion on a proforma basis). At end-March 2013, VRPLC's
total debt was US$16.6 billion, with about US$9 billion of debt
at the holding company level, and liquidity in the form of cash
balance of about US$8 billion which was largely held at
subsidiaries, Hindustan Zinc Ltd and Cairn India Ltd.


* European Bank Contingent Capital Likely to Rise, Fitch Says
Issuance of contingent capital instruments (coco) could rise in
preparation for the next EU-wide bank stress test in 2014 and as
banks develop recovery plans, Fitch Ratings says. There is
increasing emphasis on stress-testing in European bank
supervision, while recovery planning is a critical plank of the
EU's Recovery & Resolution Directive proposals.

"Cocos with a high capital ratio trigger are particularly
relevant in stress tests and recovery planning as their write-off
or equity conversion, once a pre-determined trigger is breached,
is designed to absorb losses on a "going concern" basis before
fundamental viability is threatened. In recognition of this, we
assign such instruments either 50% or 100% equity credit in our
bank capital analysis, broadly depending on coupon flexibility.
Unlike most recovery options, cocos do not require a management
decision as they are automatically triggered, so they should be
an effective recovery tool," Fitch says.

In a very severe stress scenario, a bank could deteriorate beyond
repair so that "gone-concern" loss-absorbing debt, such as a low
trigger coco or "vanilla" subordinated debt, will be critical for
resolution. In some cases there could be sufficient of these
instruments to restore the bank, or parts of it, to viability
without hitting senior creditors, meaning the amount of this
junior capital could become a key risk differentiator between

The usefulness of this loss-absorbing debt would also depend on
where the debt sits in a group structure. Different stress
scenarios could lead to a variation in the outcome and how a bank
recovers or is resolved.

A recent example of a contingent capital instrument that
qualifies as core capital under Basel III is BBVA's USD1.5bn
preferred securities (rated 'BB-') with pre-set triggers for
contingent conversion and fully discretionary coupon payments
issued earlier this month.

On May 16, the European Banking Authority announced that the next
public EU-wide stress test would be in 2014. Some supervisors,
such as the UK's Prudential Regulation Authority, already run
periodic regulator stress and scenario testing.

* 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 * * *