/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/130613.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, June 13, 2013, Vol. 14, No. 116 Headlines G E R M A N Y ARMACELL INT'L: S&P Assigns Prelim. 'B' Corporate Credit Rating G R E E C E HELLENIC BROADCASTING: Gov't Shuts Operations; 2,500 Jobs Axed I R E L A N D IRISH BANK: Nearly EUR8BB Loans to Be Put Up for Sale in October SMURFIT KAPPA: Fitch Puts 'BB+' Rating on Sr. Notes on Watch Neg. XTRA-VISION: Hilco Buys Business; More Than 800 Jobs Secured I T A L Y BPM SECURITIZATION 2: Moody's Cuts Rating on Class C Notes to Ba2 K A Z A K H S T A N ASIACREDIT BANK: S&P Cuts Counterparty Credit Ratings to 'B-/C' N E T H E R L A N D S CLARE ISLAND: S&P Cuts Ratings on Two Note Classes to 'CCC+' P O L A N D * CITY OF ZABRZE: Fitch Affirms 'BB+' FC/LC Currency Ratings R O M A N I A HIDROELECTRICA SA: Euro Insol Submits Reorganization Plan R U S S I A RENAISSANCE CREDIT: S&P Raises Counterparty Credit Rating to 'B+' SVIAZ-BANK: Fitch Affirms 'BB' Long-Term Issuer Default Rating EUROPLAN ZAO: Fitch Upgrades Issuer Default Ratings to 'BB' * KRASNOYARSK KRAI: S&P Affirms 'BB+' Rating; Outlook Negative S P A I N FONCAIXA FTGENCAT 4: Moody's Confirms 'B2' Rating on Cl. C Notes S W E D E N JB EDUCATION: Declares Bankruptcy After Drop in Student Number S W I T Z E R L A N D GATEGROUP HOLDING: S&P Lowers Corporate Credit Rating to 'BB-' U N I T E D K I N G D O M AIRE VALLEY: Fitch Upgrades Rating on Class D Notes to 'BBsf' CORNERSTONE TITAN: Fitch Affirms 'CC' Rating on Class F Notes DWELL: On Brink of Administration; 200 Jobs at Risk GREEN FIELDS II: S&P Assigns Prelim. 'BB' Rating to Class A Notes METROPOLIS GROUP: Restructures, Transfers Assets to Holding Firm PUNCH TAVERNS: ABI Rejects Revised Restructuring Proposal X X X X X X X X * Upcoming Meetings, Conferences and Seminars ********* ============= G E R M A N Y ============= ARMACELL INT'L: S&P Assigns Prelim. 'B' Corporate Credit Rating --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary 'B' corporate credit rating to Armacell International Holding GmbH, a Germany-based manufacturer of engineered foams for insulation and technical applications. The outlook is stable. At the same time, S&P assigned preliminary 'B' issue ratings and '3' recovery ratings to the company's proposed US$65 million revolving credit facility and US$340 million first-lien term loan. The '3' recovery rating indicates S&P's expectation of meaningful (50% to 70%) recovery for investors in the event of a payment default. S&P also assigned a preliminary 'CCC+' issue rating and '6' recovery rating to the proposed US$85 million second-lien term loan. The '6' recovery rating indicates S&P's expectation of negligible recovery (0% to 10%) 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 a final rating. If the final documentation departs from the materials S&P reviewed, it reserves the right to revise its rating. Armacell is being acquired by private equity firm Charterhouse Capital Partners from Investcorp. S&P's preliminary ratings on Armacell reflect its assessment of the company's business risk profile as "fair" and financial risk profile as "highly leveraged". The stable outlook reflects S&P's expectation that Armacell will continue to generate positive FOCF in 2013-2014. This is because S&P expects that the company will be able to withstand weakness in the European economic and construction environment through its global operations and exposure to more dynamic U.S. and emerging markets. It also reflects S&P's view that Armacell will demonstrate healthy EBITDA cash interest coverage ratios of about 3.0x and maintain adequate liquidity. S&P anticipates an adjusted debt-to-EBITDA ratio of 6.0x-6.5x in 2013 and not exceeding 6.0x in 2014 (excluding the shareholder loan), a level S&P views as commensurate with the current rating. S&P currently do not foresee rating upside, owing to the company's highly leveraged capital structure. Any such rating upside over the next few years would require a sufficiently supportive financial policy, demonstrated positive free cash flow, and an adjusted debt-to-EBITDA ratio improving to about 5.0x (excluding the shareholder loan). S&P could consider a downward rating action if Armacell's liquidity weakened, free cash flow turned negative, or EBITDA eroded unexpectedly. This could materialize in the event of a more severe recession in Europe, if this was not fully offset by international operations. S&P could also consider lowering the rating if Armacell's adjusted debt-to-EBITDA ratio increased above 7.0x without near-term prospects of recovery. =========== G R E E C E =========== HELLENIC BROADCASTING: Gov't Shuts Operations; 2,500 Jobs Axed -------------------------------------------------------------- Nicholas Paphitis at Bloomberg News reports that Greek state TV and radio were gradually pulled off the air late Tuesday, hours after the government said it would temporarily close all state- run broadcasts and lay off about 2,500 workers as part of a cost- cutting drive demanded by the bailed-out country's international creditors. According to Bloomberg, the conservative-led government said the Hellenic Broadcasting Corp., or ERT, will reopen "as soon as possible" with a new, smaller workforce. It wasn't immediately clear how long that would take, and whether all stations would reopen, Bloomberg notes. A Finance Ministry statement said ERT has been formally disbanded, and authorities would "secure" the corporation's facilities, Bloomberg relates. Debt-stifled Greece has depended on rescue loans from its European partners and the International Monetary Fund since May 2010, Bloomberg discloses. In exchange, it imposed deeply resented income cuts and tax hikes, which exacerbated a crippling recession and forced tens of thousands of businesses to close, sending unemployment to a record of 27%, Bloomberg states. As part of the bailout agreement, Greece's government pledged to cut 15,000 state jobs by 2015, out of a total of about 600,000, according to Bloomberg. ============= I R E L A N D ============= IRISH BANK: Nearly EUR8BB Loans to Be Put Up for Sale in October ---------------------------------------------------------------- Mark Hennessy at The Irish Times reports that nearly EUR8 billion worth of loans held by the Irish Bank Resolution Corporation on properties in the United Kingdom and Germany are to be put on the market in late October, though markets doubt that they can be sold. Minister for Finance Michael Noonan imposed a cap on the discounts that can be offered by KPMG Ireland to potential buyers -- a 4.5% discount in the calculation of future cash-flows, or just a 2.32% discount across all loan asset valuations, the Irish Times discloses. However, private equity funds, hedge funds and property investors, according to the London-based CoStar News, have so far expressed doubts about the planned sale, which could leave the National Asset Management Agency having to take the loans on board if they cannot be sold, the Irish Times notes. The loan books now due to go on sale in late October or early November include a EUR6 billion portfolio of British commercial loans, and a EUR1.5 billion mostly German portfolio, though the particular loans included have not yet been chosen, the Irish Times states. Meanwhile, it will also include the Royal Exchange in London, which was bought by Anglo Irish Bank's private banking division in 2005 during the height of the boom, the Irish Times says. According to the Irish Times, under the timetable set by Mr. Noonan, KPMG is expected to have all its sales or transfers completed or agreed by the end of this year, though the legislation includes the caveat "or as soon as practicable thereafter". KPMG's Kieran Wallace and Eamonn Richardson appointed Savills, Jones Lang LaSalle, Allsop & Co and CBRE last month to value the IBRC's EUR7.88 billion portfolio of UK commercial property loans loan book, the Irish Times recounts. Anglo Irish Bank was an Irish bank headquartered in Dublin from 1964 to 2011. It went into wind-down mode after nationalization in 2009. In July 2011, Anglo Irish merged with the Irish Nationwide Building Society, with the new company being named the Irish Bank Resolution Corporation. Standard & Poor's Ratings Services said that it lowered its long- and short-term counterparty credit ratings on Irish Bank Resolution Corp. Ltd. (IBRC) to 'D/D' from 'B-/C'. S&P also lowered the senior unsecured ratings to 'D' from 'B-'. S&P then withdrew the counterparty credit ratings, the senior unsecured ratings, and the preferred stock ratings on IBRC. At the same time, S&P affirmed its 'BBB+' issue rating on three government- guaranteed debt issues. The rating actions follow the Feb. 6, 2013, announcement that the Irish government has liquidated IBRC. SMURFIT KAPPA: Fitch Puts 'BB+' Rating on Sr. Notes on Watch Neg. ----------------------------------------------------------------- Fitch Ratings has placed Smurfit Kappa Acquisitions and Smurfit Kappa Treasury Funding's senior secured notes on Rating Watch Negative (RWN) on the expected release of security. Smurfit Kappa Group's (SKG) Long-term foreign currency Issuer Default Rating (BB/Stable) is not affected by this rating action. SKG has announced that it is in discussion with its banks about the refinancing of the outstanding secured credit facility with a new unsecured bank facility. The release of the security on the credit facility will also trigger the release of the security on all the outstanding bonds issued by the controlled companies Smurfit Kappa Acquisitions and Smurfit Kappa Treasury Funding. Fitch currently rates the secured notes one notch higher than SKG's IDR, incorporating the benefit from the security and the collateral. The release of the security on the bonds would imply that the one-notch uplift was no longer justified and Fitch would rate the unsecured notes at the level of the IDR. For this reason, Fitch has placed the secured notes on RWN. The completion of the refinancing and the release of the security will result in the resolution of the RWN and the equalization of the instrument ratings with the IDR. KEY RATING DRIVERS - Improved Debt Profile Fitch views the refinancing as positive, as it will complete the transformation of the group's debt structure from a "leveraged finance" style into a more simple structure. After the refinancing, all long-term debt will be unsecured and will continue to rank pari passu. Although representing a credit positive, the refinancing by itself is not enough to drive an immediate positive rating action on the IDR. Fitch will review SKG's ratings in the next few weeks, as part of its normal review cycle. - Rating Headroom SKG continues to show steady deleveraging and improvement in its credit metrics. Funds from operations (FFO) gross leverage improved in 2012 to 3.9x from 4.3x in 2011. Fitch expects this metric to further improve to 3.6x in 2013, notwithstanding the expected increase in capex to a normalized level of 95%-100% of depreciation. SKG's credit metrics have ample margins within the current rating category. RATING SENSITIVITIES Positive: Future developments that could lead to positive rating actions include: -- The continuation of the current path in debt reduction and the improvement in credit metrics, with FFO adjusted leverage improving to below 3.5x, free cash flow (FCF)/revenue remaining above 1% and FFO interest coverage increasing to above 3.0x. Negative: Future developments that could lead to negative rating action include: -- A material deterioration in the operating performance, with sustained negative FCF. -- A re-leveraging of the group, due to either deterioration in trading conditions or to M&A activity, with FFO adjusted leverage worsening to above 4.5x. FULL LIST OF RATING ACTIONS: The following instruments' 'BB+' ratings have been placed on RWN: Smurfit Kappa Acquisitions EUR500m notes due 2017 EUR200m and USD300m notes due 2018 EUR500m notes due 2019 EUR400m and EUR250m notes due 2020 Smurfit Kappa Treasury Funding USD292m notes due 2025 XTRA-VISION: Hilco Buys Business; More Than 800 Jobs Secured ------------------------------------------------------------ Peter Flanagan at Irish Independent reports that more than 800 staff at Xtra-vision have been thrown a lifeline after British investment firm Hilco bought the retailer. According to Irish Independent, Hilco, which has also bought the Irish arm of HMV, said it had agreed a deal to take the troubled DVD chain out of receivership. The deal safeguards Xtra-vision's immediate future, although it has yet to be decided if all the company's branches will be kept open for the long term, Irish Independent notes. Hilco is believed to be in discussions with the landlords and suppliers of Xtra-vision before it makes a final decision on how many stores will be retained, Irish Independent says. Xtra-vision went into receivership last April after trade credit was withdrawn by a number of its key suppliers, Irish Independent recounts. Founded in 1979 by Richard Murphy, Xtra-vision is one of the most familiar brands in the country. It had over 400,000 customers but had fallen on hard times because of weak consumer spending and an explosion in internet streaming and downloading that has caused huge disruption among main street retailers, Irish Independent relates. At the time the retailer employed more than 1,000 staff across 152 stores, Irish Independent states. That has since fallen back to 800 staff across 130 stores, Irish Independent notes. ========= I T A L Y ========= BPM SECURITIZATION 2: Moody's Cuts Rating on Class C Notes to Ba2 ----------------------------------------------------------------- Moody's Investors Service has downgraded the ratings of three mezzanine and three junior notes in three Italian residential mortgage-backed securities (RMBS) transactions: BP Mortgages Srl, BP Mortgages Srl -- Series 2007 -- 2 and BPM Securitization 2 Srl. At the same time, Moody's confirmed the ratings of one note in Bipitalia Srl, and one note in BP Mortgages Srl -- Series 2007-2. Insufficiency of credit enhancement to address sovereign risk has prompted this downgrade action. The rating action concludes the review of four notes placed on review on March 13, 2013, following Moody's review of the impact on structured finance transactions stemming from sovereign risk. This rating action also concludes the review of three notes placed on review on August 2, 2012 following Moody's downgrade of the Italian government bond ratings to Baa2 from A3 on July 13, 2012 and on one note placed on review on November 27, 2012, following Moody's review of the Italian RMBS sector. Ratings Rationale: The rating action primarily reflects the insufficiency of credit enhancement to address sovereign risk. Moody's confirmed the ratings on two notes whose credit enhancement and structural features provided enough protection against sovereign and counterparty risk. The determination of the applicable credit enhancement driving these rating actions reflects the introduction of additional factors in Moody's analysis to better measure the impact of sovereign risk on structured finance transactions. - Additional Factors Better Reflect Increased Sovereign Risk Moody's has supplemented its analysis to determine the loss distribution of securitized portfolios with two additional factors, the maximum achievable rating in a given country (the local currency country risk ceiling) and the applicable portfolio credit enhancement for this rating. With the introduction of these additional factors, Moody's intends to better reflect increased sovereign risk in its quantitative analysis, in particular for mezzanine and junior tranches. The Italian country ceiling, and therefore the maximum rating that Moody's will assign to a domestic Italian issuer including structured finance transactions backed by Italian receivables, is A2. Moody's Individual Loan Analysis Credit Enhancement (MILAN CE) represents the required credit enhancement under the senior tranche for it to achieve the country ceiling. By lowering the maximum achievable rating for a given MILAN, the revised methodology alters the loss distribution curve and implies an increased probability of high loss scenarios. In all four affected transactions, Moody's maintained the current expected loss assumption as a percentage of original pool balance and MILAN CE assumptions. The expected loss assumptions therefore remain at 1.2% for Bipitalia Residential Srl, 3.67% for BP Mortgages Srl, 4.72% for BP Mortgages Srl -- Series 2007-2 and 1.51% for BPM Securitization 2 Srl. The MILAN CE assumptions also remain at 12.5% for Bipitalia Residential Srl, 10% for BP Mortgages Srl, 12.5% for BP Mortgages Srl -- Series 2007-2 and 10% for BPM Securitization Srl. - Exposure to Counterparty Risk Moody's rating review has taken into consideration the exposure to Citibank NA (A3/P-2) "Citibank" acting as issuer account bank and swap counterparty in BPM Securitization 2 Srl and Commerzbank AG (Baa1/P-2) "Commerzbank" acting as swap counterparty in Bipitalia Residential Srl. Moody's concluded that although Commerzbank and Citibank are not posting collateral following the breach of the first rating trigger as swap counterparty the increased risk does not have a negative impact on the outstanding ratings in Bipitalia Residential Srl and BPM Securitization 2 Srl, although the non-posting of collateral has increased the linkage between the notes and the respective swap counterparties' ratings. With regard to Citibank still acting as issuer account bank although it has breached the P-1 replacement trigger, in this case Moody's also concluded that this additional risk does not have a negative impact on the outstanding ratings in BPM Securitization 2 Srl, although it increase the linkage between the notes and the issuer account bank's rating. Finally in the downgrade of the B and C notes for BPM securitization 2 Srl Moody's review has also taken into consideration the increase in probability of set-off and commingling events occurring stemming from the downgrade of Banca Popolare di Milano S.c.a.r.l. to Ba3/NP from Baa3/P-3 on review for further downgrade that was done on May 16, 2013. - Other Developments May Negatively Affect the Notes In consideration of Moody's new adjustments, any further sovereign downgrade would negatively affect structured finance ratings through the application of the country ceiling or maximum achievable rating, as well as potentially increased portfolio credit enhancement requirements for a given rating. As the euro area crisis continues, the ratings of structured finance notes remain exposed to the uncertainties of credit conditions in the general economy. The deteriorating creditworthiness of euro area sovereigns as well as the weakening credit profile of the global banking sector could further negatively affect the ratings of the notes. Methodologies The methodologies used in these ratings were "Moody's Approach to Rating RMBS Using the MILAN Framework", published in May 2013 and "The Temporary Use of Cash in Structured Finance Transactions: Eligible Investment and Bank Guidelines", published in March 2013. In reviewing these transactions, Moody's used its cash flow model, ABSROM, to determine the loss for each tranche. The cash flow model evaluates all default scenarios that are then weighted considering the probabilities of the lognormal distribution assumed for the portfolio default rate. In each default scenario, Moody's calculates the corresponding loss for each class of notes given the incoming cash flows from the assets and the outgoing payments to third parties and noteholders. Therefore, the expected loss for each tranche is the sum product of (1) the probability of occurrence of each default scenario and (2) the loss derived from the cash flow model in each default scenario for each tranche. As such, Moody's analysis encompasses the assessment of stressed scenarios. In the context of the rating review, the transactions have been remodeled and some inputs have been adjusted to reflect the new approach. List of Affected Ratings Issuer: Bipitalia Residential S.r.l. EUR733M A2 Notes, Affirmed A2 (sf); previously on Aug 2, 2012 Downgraded to A2 (sf) EUR16M B Notes, Affirmed A2 (sf); previously on Aug 2, 2012 Downgraded to A2 (sf) EUR19M C Notes, Confirmed at Baa1 (sf); previously on Mar 13, 2013 Baa1 (sf) Placed Under Review for Possible Downgrade Issuer: BP Mortgages S.r.l. EUR1172.65M A2 Notes, Affirmed A2 (sf); previously on Aug 2, 2012 Downgraded to A2 (sf) EUR25.3M B Notes, Downgraded to A3 (sf); previously on Mar 13, 2013 A2 (sf) Placed Under Review for Possible Downgrade EUR32.6M C Notes, Downgraded to Baa3 (sf); previously on Nov 27, 2012 Downgraded to Baa2 (sf) and Remained On Review for Possible Downgrade Issuer: BP Mortgages S.r.l. Series 2007-2 EUR1382M A2 Notes, Confirmed at A2 (sf); previously on Mar 13, 2013 A2 (sf) Placed Under Review for Possible Downgrade EUR28.2M B Notes, Downgraded to Baa1 (sf); previously on Aug 2, 2012 Downgraded to A2 (sf) and Placed Under Review for Possible Downgrade EUR36.2M C Notes, Downgraded to Baa3 (sf); previously on Aug 2, 2012 Baa1 (sf) Placed Under Review for Possible Downgrade Issuer: BPM Securitization 2 Srl EUR1574.6M A2 Notes, Affirmed A2 (sf); previously on Aug 2, 2012 Downgraded to A2 (sf) EUR40.3M B Notes, Downgraded to Baa3 (sf); previously on Mar 13, 2013 A2 (sf) Placed Under Review for Possible Downgrade EUR50.4M C Notes, Downgraded to Ba2 (sf); previously on Aug 2, 2012 Baa2 (sf) Placed Under Review for Possible Downgrade =================== K A Z A K H S T A N =================== ASIACREDIT BANK: S&P Cuts Counterparty Credit Ratings to 'B-/C' --------------------------------------------------------------- Standard & Poor's Ratings Services said it had lowered its long- and short-term counterparty credit ratings on Kazakhstan-based JSC AsiaCredit Bank to 'B-/C' from 'B/B'. The outlook is stable. At the same time, S&P lowered its Kazakhstan national scale rating on the bank to 'kzBB-' from 'kzBB+'. The rating actions reflect S&P's view that AsiaCredit Bank's capital position is weakening. This resulted from rapid loan growth over the past two years that was not sufficiently supported by shareholder capital injections, while earnings generation remained low. The postponement of a planned capital infusion in 2012 caused S&P's risk-adjusted capital (RAC) ratio for AsiaCredit Bank to decline by more than S&P had anticipated. Consequently, S&P has revised its assessment of the bank's capital and earnings to adequate from strong. S&P now forecasts the RAC ratio (before adjustments for diversification) to decrease to 9.5%-10.0% over the next 12-18 months. This forecast is based on S&P's assumption of loan growth of about 120% in 2013 and 45% in 2014, and fresh capital of Kazakhstani tenge (KZT) 3 billion (about US$20 million) in the first half of 2013, KZT5 billion in October 2013, and KZT5 billion in 2014. However, because the majority shareholder has already postponed a capital injection, S&P is uncertain whether the planned injections would take place in the given time frame. If AsiaCredit Bank does not receive the planned KZT8 billion in additional capital this year, the RAC ratio could weaken further. If the bank's future capital policy, philosophy, and growth rates were to differ from S&P's current assumptions it could reassess its view of the bank's solvency. AsiaCredit Bank's earnings capacity remains moderate, in S&P's view. S&P expects the bank's net interest margins to remain depressed, due to the rising cost of attracting new customers, general market trends, onerous operating expenses because of high investments in franchise growth, and increasing provisions for the rapidly expanding credit portfolio. In S&P's opinion, the bank is underprovisioned. The ratio of loan loss reserves to total loans was 1.7% at year-end 2012, according to International Financial Reporting Standards. This is insufficient to cover loans more than 90 days overdue (5.2% of total loans on Feb. 1, 2013) and restructured loans (about 5%). S&P considers that the bank would have to create significantly more provisions in 2013- 2014, which would hamper its profitability and capacity to build up capital. Furthermore, in S&P's view AsiaCredit Bank's concentrated corporate depositor base leaves it exposed to potential large deposit outflows. This is although S&P acknowledges that AsiaCredit Bank's funding position differs little from that of other small to midsize Kazakh banks. S&P believes attracting retail deposits would entail a significant amount of investments in the distribution network and an increase in the cost of funding. The ratings reflect S&P's 'bb-' anchor for banks operating primarily in Kazakhstan, as well as AsiaCredit Bank's weak business position, adequate capital and earnings, moderate risk position, average funding, and adequate liquidity, as S&P's criteria define these terms. The stand-alone credit profile is 'b-'. ===================== N E T H E R L A N D S ===================== CLARE ISLAND: S&P Cuts Ratings on Two Note Classes to 'CCC+' ------------------------------------------------------------ Standard & Poor's Ratings Services took various credit rating actions in Clare Island B.V. Specifically, S&P has: -- raised to 'AA- (sf)' from 'A- (sf)' its rating on the class II notes; -- affirmed its 'AAA (sf)' rating on the class I notes and its 'BB+ (sf)' ratings on the III-A notes and III-B notes; and -- lowered to 'CCC+ (sf)' from 'B- (sf)' its ratings on the class IV-A and IV-B notes. The rating actions follow S&P's assessment of the transaction's performance using data from the March 12, 2013 trustee report. S&P has also applied its 2012 counterparty criteria. S&P subjected the capital structure to a cash flow analysis to determine the break-even default rate for each rated class at each rating level. In S&P's analysis, it used the reported portfolio balance that it considers to be performing (EUR324,807,316), the current weighted-average spread (3.76%), and the weighted-average recovery rates that S&P considered appropriate. S&P incorporated various cash flow stress scenarios using alternative default patterns and levels, in conjunction with different interest and currency stress scenarios. "From our analysis, we have observed that EUR75.2 million of the class I notes have paid down since our Jan. 30, 2012 review. In our view, this has increased the available credit enhancement for the class I, II, III-A, and III-B notes. We have observed that the pool's credit quality has remained stable since our last review. The maximum rating achieved under the largest obligor default test for the class IV-A and IV-B notes is now lower, due to the reduced portfolio balance. This is a supplemental stress test that we introduced in our 2009 criteria update for corporate collateralized debt obligations (CDOs). The class IV-A and IV-B notes are therefore exposed to increased obligor concentration risk," S&p said. During S&P's review, it observed that non-euro-denominated assets comprise 10.9% of the aggregate collateral balance. These assets are hedged under a cross-currency swap agreement. In applying S&P's 2012 counterparty criteria, it considered cash flow scenarios for classes I and II where the hedging counterparty does not perform and therefore the transaction is exposed to changes in currency rates. The results of S&P's credit and cash flow analysis, as well as the application of its 2012 counterparty criteria, indicated that the class II notes' available credit enhancement is now commensurate with a higher rating than previously assigned. S&P has therefore raised to 'AA- (sf)' from 'A- (sf)' its rating on the class II notes. In S&P's opinion, the available credit enhancement for the class I notes is commensurate with its current rating, taking into account the results of its credit and cash flow analysis and the application of its 2012 counterparty criteria. S&P has therefore affirmed its 'AAA (sf)' rating on the class I notes. S&P's ratings on the class III-A and III-B notes are lower than its ratings on any of the counterparties in the transaction. Therefore, applying S&P's 2012 counterparty criteria would not constrain its ratings on these classes of notes. S&P has affirmed its 'BB+ (sf)' ratings on the class III-A and III-B notes because its analysis indicates that the available credit enhancement for these classes of notes is commensurate with their current ratings. S&P has lowered to 'CCC+ (sf)' from 'B- (sf)' its ratings on the class IV-A and IV-B notes because its ratings are constrained by the application of the largest obligor default test. The results of S&P's stress test showed that the available credit enhancement for the class IV-A and IV-B notes would be limited if the largest obligor were to default, when S&P assumed a 5% recovery rate. Clare Island is a cash flow collateralized loan obligation (CLO) transaction that securitizes loans to primarily speculative-grade corporate firms. The transaction closed in March 2002 and is managed by GSO Capital Partners International LLP. STANDARD & POOR'S 17G-7 DISCLOSURE REPORT SEC Rule 17g-7 requires an NRSRO, for any report accompanying a credit rating relating to an asset-backed security as defined in the Rule, to include a description of the representations, warranties and enforcement mechanisms available to investors and a description of how they differ from the representations, warranties and enforcement mechanisms in issuances of similar securities. The Rule applies to in-scope securities initially rated (including preliminary ratings) on or after Sept. 26, 2011. If applicable, the Standard & Poor's 17g-7 Disclosure Report included in this credit rating report is available at: http://standardandpoorsdisclosure-17g7.com RATINGS LIST Class Rating To From Clare Island B.V. EUR462.2 Million Senior, Mezzanine, and Subordinated Notes Rating Raised II AA- (sf) A- (sf) Ratings Affirmed I AAA (sf) III-A BB+ (sf) III-B BB+ (sf) Ratings Lowered IV-A CCC+ (sf) B-(sf) IV-B CCC+ (sf) B-(sf) =========== P O L A N D =========== * CITY OF ZABRZE: Fitch Affirms 'BB+' FC/LC Currency Ratings ------------------------------------------------------------ Fitch Ratings has affirmed the City of Zabrze's Long-term foreign currency and local currency ratings at 'BB+' and Long-term National rating at 'BBB+(pol)'. The Outlook on all ratings is Stable. Key Rating Drivers The affirmation reflects the city's expected gradually improving operating performance in the medium term. The operating balance may be sufficient to cover the increasing debt service in 2014- 2015. The ratings take into account the city's currently tight liquidity and low financial flexibility as debt may approach the new borrowing limit from 2014. The ratings also reflect the expected strong growth in the debt of municipal companies. Zabrze's debt service will increase to PLN45 million in 2015 from PLN35 million in 2012. Fitch forecasts that the operating balance may grow to PLN53 million in 2015 (2012: PLN39 million) as result of the city's authorities approach of gradually increasing the local taxes and fees rates together with limitation of the current spending growth. However, for 2013, we expect that the operating balance may be only just above the PLN40 million debt service, as development of the operating revenue may be weak due to the expected slowdown of the national economy. For 2013-2015, Fitch expects only a small recovery in the city's low liquidity and that Zabrze may utilize its short-term credit line of PLN30 million. The city frequently used this credit line during 2012. From 2014, Zabrze's flexibility to incur additional debt may be constrained. According to the new formula of the borrowing limit, the city's individual limit for 2014-2015 has to take into account current balances of 2011-2012, when Zabrze showed relatively low operating performance. This may negatively affect the city's borrowing capacity, although direct debt may remain moderate, at below 45% of current revenue in 2014-2015. The risk related to the reconstruction of the city's football stadium has increased as the construction works have been delayed by eight months and the project needs a financing scheme change. The SovereignFund TFI S.A. which should provide equity of PLN162 million to the stadium company (SPV) has withdrawn from the contract. In the short term, the SPV has to obtain financing of the remaining PLN60 million-PLN70 million from a planned bond issue. The city may sign a support agreement to support repayment of the SPV's bonds. Fitch assumes that Zabrze's payments relating to the stadium project are adequate to cover the equity redemption and financing cost under the new scheme. The city has calculated about PLN21 million annually in 2014-2026 for this purpose. In Fitch's view, indirect risk including the bonds issued by the stadium company will grow from PLN130 million in 2012 and peak at about PLN234 million in 2014. The main growth driver will be the financing of the second stage of the waste and sewerage project by the city's company, ZPWiK Sp. z o.o. The resulting risk from the project finance is low due to the company's self-financing capability. Rating Sensitivities The restoration of liquidity on a sustainable basis and operating performance improvement with operating margins above 9% in two consecutive years could lead to an upgrade. If the operating margin fell below 2%, leading to debt coverage exceeding 20 years and/or growth in direct and indirect debt far exceeded projections, the ratings could be downgraded. ============= R O M A N I A ============= HIDROELECTRICA SA: Euro Insol Submits Reorganization Plan --------------------------------------------------------- Ecaterina Craciun at Ziarul Financiar reports that Euro Insol, the legal administrator of Hidroelectrica SA, on Tuesday submitted the company's reorganization plan to the court. Hidroelectrica SA is a Romanian state-owned hydropower producer. Hidroelectrica entered the insolvency process on June 20, 2012, in order to be re-organized. Euro INSOL was appointed the judicial administrator. On March 31, 2013, Hidroelectrica had some 4,900 employees, down from over 5,200 recorded when the company entered the insolvency process. =========== R U S S I A =========== RENAISSANCE CREDIT: S&P Raises Counterparty Credit Rating to 'B+' ----------------------------------------------------------------- Standard & Poor's Ratings Services said that it has raised its long-term counterparty credit rating on Russia-based Commercial Bank Renaissance Credit LLC (RenCredit) to 'B+' from 'B' and affirmed its short-term counterparty credit rating at 'B'. The outlook is stable. S&P also raised its Russia national scale rating on RenCredit to 'ruA' from 'ruA-'. The upgrade reflects S&P's view that RenCredit has improved its funding mix, moving close to the industry average. RenCredit has considerably reduced its reliance on wholesale funding over the past two years, and its retail deposit base has been stable over the past few years. Customer deposits increased by 78.2% in 2012 and represented approximately 74% of the funding base at the end of 2012, compared with only 20% three years earlier. During the first four months of 2013, RenCredit further increased customer deposits by almost 7.6% (according to the Russian accounting standards balance sheet). The loan-to-deposit ratio improved to 124.3% as of Dec. 31, 2012, compared with 157.2% in 2011, and S&P expects it to remain at a similar level in 2013. S&P believes RenCredit's retail franchise is valuable, although weaker than that of larger universal banks. RenCredit's capacity to retain deposits has improved from a few years ago, evidenced by the bank's: -- High and increasing ratio of granular retail deposits in the funding mix; -- Satisfactory rollover ratio at the due date (84% at year- end 2012 compared with 81% in 2011); -- Wide geographic diversity of its retail network (operations in 61 of 83 regions in Russia); -- Well-recognized brand; -- Moderate interest rates versus peers'; and -- Relatively low concentration of top 20 depositors to total liabilities (11.1% as of year-end 2012) combined with management's decision to eliminate massive depositors (of more than US$10 million) from the balance sheet. S&P believes RenCredit's' funding mix will continue to improve over the next two years, complemented by the bank's ability to attract funds from international capital markets. S&P bases its ratings on RenCredit on its 'bb' anchor for banks operating predominantly in Russia, as well as S&P's view of RenCredit's "moderate" business position, "adequate" capital and earnings, "moderate" risk position, "average" funding, "adequate" liquidity, and "low systemic importance" in Russia. The stable outlook reflects S&P's expectation that RenCredit will maintain its current capitalization, as S&P believes the bank's margins will remain high and provide an adequate buffer for its high and rising credit costs. S&P's central scenario is that the bank's deposit franchise will be sufficiently developed to continue attracting retail deposits and fund loan growth. S&P notes RenCredit's significant cost of risk, but think it is offset by the bank's good risk-management process and focus on higher-margin products. A positive rating action is unlikely over the next 12 months. However, S&P might consider an upgrade in the longer term if the bank's earnings generation capacity and a lower cost of risk than it currently expects led to significant capital growth, resulting in a stabilized risk-adjusted capital ratio at more than 10%. S&P would consider a negative rating action if the bank demonstrated very high credit costs significantly worse than peers', largely exceeding 15% for instance. A negative rating action might also follow more aggressive capital management or weakening liquidity, notably if the bank lost its capacity to attract deposits at a market-average price. SVIAZ-BANK: Fitch Affirms 'BB' Long-Term Issuer Default Rating -------------------------------------------------------------- Fitch Ratings has affirmed Russia's Sviaz-Bank (SB) and Globexbank's (GB) Long-term Issuer Default Ratings (IDRs) at 'BB' with Stable Outlooks. At the same time, Fitch has downgraded SB's Viability Rating (VR) to 'b' from 'b+' and GB's VR to 'b-' from 'b'. KEY RATING DRIVERS: IDRS, SENIOR DEBT RATINGS, NATIONAL RATINGS, SUPPORT RATINGS GB's and SB's IDRs are driven by the potential support that the banks could receive, if needed, from their majority shareholder, state-owned Vnesheconombank (VEB, 'BBB'/Stable). Fitch's view of potential support for the banks takes into account (i) the track record of sufficient support to date, (ii) potential reputational risk for VEB and its senior management in case of a default at GB or SB, given the strong parent bank presence in the subsidiaries' boards of directors, and (iii) the apparent absence of any near- term plans to sell the banks. At the same time, Fitch maintains a three-notch difference between VEB's Long-term IDR and the Long-term IDRs of SB and GB to reflect (i) the moderate long-term strategic importance of the subsidiaries for VEB, (ii) their limited role in helping VEB fulfill its development bank mandate, and (iii) still significant sale risk over the time horizon of the Long-term ratings. RATING SENSITIVITIES: IDRS, SENIOR DEBT RATINGS, NATIONAL RATINGS, SUPPORT RATING SB and GB could be downgraded if (i) VEB is downgraded; (ii) timely support for either bank is not forthcoming in case of need; or (iii) in Fitch's view, a sale of either bank has become significantly more likely than currently perceived. In addition, GB could be downgraded if there are further significant increases in high risk exposures which, in Fitch's view, could be the result of related party transactions and/or corporate governance weaknesses. The agency believes a larger proportion of such business on the balance sheet could potentially make support for the bank less politically acceptable and/or more costly. An upgrade of either bank is currently viewed as unlikely. However, if the banks gain significant policy roles and VEB affirms their importance for the long-term implementation of its development mandate, then upgrades may become possible. KEY RATING DRIVERS: SB'S VR The downgrade of SB's VR to 'b' from 'b+' is driven by pressure on the bank's capital stemming from (i) growth of problem loans, (ii) continuing asset growth, and (iii) expected changes in regulatory capital requirements. The bank's recent fast growth, moderate profitability and high concentrations on both sides of the balance sheet also weigh on the rating. However, the VR is supported by the bank's so far comfortable liquidity, reasonable management and still only moderate asset quality problems. SB's non-performing loans (NPLs; loans overdue by 90 days or more) represented 3.3% of gross loans at end-2012. However Fitch expects asset quality to worsen in 2013 mainly as a result of one large problem exposure equal to 5.4% of gross loans. At the same time, the bank's Fitch Core Capital (FCC) ratio was a low 9% at end-2012, Fitch estimates that the bank could have created additional reserves equal to only 2.1% of the loan book before the regulatory capital ratio of 12.4% (at end-Q113) would have fallen to the minimum 10% level. In the agency's view, SB would not at present be able to comply with the new regulatory 7.5% Tier 1 capital ratio, which may be introduced as early as Q413, although VEB's plans to convert around RUB10bn of Tier 2 subordinated debt into a Tier 1 hybrid should address this shortfall. SB's pre-impairment profit was equal to a modest 1.3% of average loans in 2012, driven by low margins on lending to larger corporates and indicating limited ability to absorb potential further loan impairment through the income statement. SB is primarily deposit funded, and highly liquid assets, backed up by unused lines from VEB, provide a sizable cushion to meet any deposit outflow. RATING SENSITIVITIES: SB'S VR SB's VR could be downgraded further if asset quality problems continue to accumulate and capitalization remains tight. The rating could be upgraded if the franchise, profitability and capitalization strengthen and asset quality stabilizes. KEY RATING DRIVERS: GB'S VR The downgrade of GB's VR to 'b-' from 'b' reflects the increase in higher risk real estate exposures and weakening of the bank's capitalization. The VR also reflects weak governance, recent rapid growth, low profitability, high concentrations and significant dependence on wholesale funding. However, the VR is supported by currently acceptable liquidity. At end-Q113, Fitch estimates GB's total real estate exposure, booked in various balance sheet lines, at around RUB42 billion or 1.6x FCC. Net of less risky exposures to infrastructure construction (RUB9 billion) and loans for acquisitions of completed properties with low loan-to-value ratios (RUB16 billion), higher risk exposures (comprising mainly real estate mutual funds) still amounted to a significant 1.0x of FCC. Furthermore, Fitch has concerns about GB's governance and risk management as a result both of some of the real estate transactions and the acquisition in 2011 of NTB bank (subsequently merged into GB). In part due to weak asset quality at NTB, GB's NPLs rose to 1.6% at end-2012, from 0.4% at end- 2011. Capitalization has tightened as a result of rapid growth, and at end-Q113, the regulatory capital ratio of 11.6% meant that the bank could create reserves of only RUB5.5 billion (equal to 20% of the higher risk real estate exposures, or 3.3% of total loans) before the regulatory capital ratio would have decreased to 10%. GB's pre-impairment profit was equal to 1.7% of average loans in 2012, as at SB reflecting low margins on lending to larger corporates. Third party wholesale funding was a significant 35% of liabilities at end-2012, while highly liquid assets comprised 18% of assets. RATING SENSITIVITIES: GB'S VR A further increase in high risk exposures and renewed indications of governance and risk management weaknesses could result in another downgrade of the VR. Reductions in high-risk exposures, an improved asset quality track record and stronger capitalization could result in an upgrade of the rating. The rating actions are as follows: SB Long-term foreign and local currency IDRs: affirmed at 'BB'; Stable Outlook Short-term foreign currency IDR: affirmed at 'B' Viability Rating: downgraded to 'b' from 'b+' Support Rating: affirmed at '3' National Long-term rating: affirmed at 'AA-(rus)'; Stable Outlook Senior unsecured debt: affirmed at 'BB' Senior unsecured debt National rating: affirmed at 'AA-(rus)' GB Long-term foreign and local currency IDRs: affirmed at 'BB'; Stable Outlook Short-term foreign currency IDR: affirmed at 'B' Support Rating: affirmed at '3' Viability Rating: downgraded to 'b-' from 'b' National Long-term rating: affirmed at 'AA-(rus)'; Stable Outlook Senior unsecured debt: affirmed at 'BB' Senior unsecured debt National rating: affirmed at 'AA-(rus)' EUROPLAN ZAO: Fitch Upgrades Issuer Default Ratings to 'BB' ----------------------------------------------------------- Fitch Ratings has upgraded ZAO Europlan's Long-term foreign and local currency Issuer Default Ratings (IDRs) to 'BB' from 'BB-' and Carcade LLC's Long-term foreign and local currency IDR to 'BB-' from 'B+'. The Outlooks are Stable. KEY RATING DRIVERS: IDRS, NATIONAL LONG-TERM RATINGS The upgrade of Europlan's and Carcade's IDRs reflects their continued track record of solid performance, strong asset quality and low credit losses helped by solid underwriting and rigorous collection function, strong liquidity positions and increasing funding diversification also mitigating refinancing risk. However, the ratings are constrained by companies' rapid growth, still rather narrow franchises (especially of Carcade), cyclicality of the Russian auto-market and gradual margin compression as a result of increasing competition. Carcade is a medium-sized (net investment in lease (NIL) of US$380 million at end-Q113) mono-liner focusing on passengers cars (69% of total NIL), while its bigger peer Europlan (US$791 million NIL) has a more diversified lease book being split into passenger cars (41%), light commercial vehicles and trucks (33%) and other (26%). Although Fitch assesses commercial vehicles and equipment segments as more risky, primarily due to less liquid secondary market, this has not caused any problems to Europlan so far. Both companies' asset quality benefits from low lessee concentration, strong collateral coverage due to approximately 25%-30% pre-payment and a high share of foreign cars/equipment helping secondary sales in case of any economic downturn (due to rouble depreciation). Both companies have recently established banking subsidiaries (consolidated in their IFRS accounts) in an effort to reach private individuals for whom leasing is not allowed by Russian legislation. Although this indeed could help business growth and funding diversification (both can collect retail deposits), as retail borrowers may be more risky compared to core commercial clientele and both companies do not have the specific banking experience, the performance in the rollout phase may be somewhat worse compared to traditional leases. However the development of car lending is likely to be gradual with the current contribution being moderate at 5% of total credit exposure in Europlan and 11% in Carcade at end-Q113. Despite competition, interest yields are still solid, with Carcade charging their customers slightly more (31%) compared to Europlan (26%). For both companies this is sufficient to comfortably cover the cost of funding and operating expenses. And as the credit losses are negligible for both (below 1% for the past three years) the remaining risk-adjusted margin is a solid 4.9% for Europlan and sound 8.2% for Carcade in 2012 providing considerable buffer against potential stresses (losses in the 2008-2009 crisis did not exceed 4% for both companies). Liquidity risk is moderate given that companies generally match lease receivables with funding maturities, which should allow them to meet debt repayments through deleveraging if refinancing becomes problematic, as was the case in the last crisis. However, the downside of such a hypothetical unwinding scenario would be reduced franchise and profitability. Foreign exchange risk is low for both companies, as majority of assets and liabilities are in roubles. Europlan is somewhat better capitalized with an end-Q113 debt-to- equity (D/E) ratio of 4.2x compared to 5.8x for Carcade. Fitch expects debt-to-equity ratios to increase somewhat in 2013 due to planned growth of 30% and 42%, respectively, for Europlan and Carcade. However, both companies intend to keep the debt to equity ratio below 6x, which is still reasonable for the current rating levels. RATING SENSITIVITIES: IDRS, NATIONAL LONG-TERM RATINGS There is currently limited upgrade potential for companies' ratings, although continued franchise strengthening and healthy business growth, including through car lending, better funding diversification, and maintenance of reasonable leverage will be credit positive. A significant increase in leverage (particularly for Carcade), a marked erosion of franchise or performance due to greater competition, or a sharp deterioration in asset quality due to a prolonged downturn in the economy, could exert downward pressure on the ratings. RATING RATIONALE AND SENSITIVITIES: SENIOR DEBT RATINGS Senior debt ratings are currently aligned with both companies' IDRs. The debt ratings could be downgraded in case of a marked increase in the proportion of pledged assets - currently this is more of a risk for Europlan, which had 58% of NIL pledged at end-2012 compared to 23% for Carcade - resulting in lower recoveries for the other senior creditors in a hypothetical default scenario. List of Rating Actions: Europlan -- Long-term foreign and local currency IDR upgraded to 'BB' from 'BB-'; Outlook Stable -- Short-term foreign-currency IDR affirmed at 'B' -- National Long Term Rating upgraded to 'AA-(rus)' from 'A+(rus)'; Outlook Stable -- Senior unsecured debt: upgraded to 'BB' from 'BB-' -- Senior unsecured debt National rating: upgraded to 'AA-(rus)' from 'A+(rus)' Carcade -- Long-term foreign and local currency IDR: upgraded to 'BB-' from 'B+'; Stable Outlook -- Short-term IDR: affirmed at 'B' -- Long-term National Rating: upgraded to 'A+(rus)' from 'A(rus)'; Stable Outlook -- Senior unsecured debt: upgraded to 'BB-' from 'B+' -- Senior unsecured debt National rating: upgraded to 'A+(rus)' from 'A(rus)' * KRASNOYARSK KRAI: S&P Affirms 'BB+' Rating; Outlook Negative -------------------------------------------------------------- Standard & Poor's Ratings Services said that it had revised its outlook on Krasnoyarsk Krai, a region in Eastern Siberia, to negative from stable. At the same time S&P affirmed the 'BB+' long-term issuer credit and 'ruAA+' Russia national scale ratings on the krai. S&P revised the outlook to negative from stable because it sees a one-in-three likelihood of a downgrade within the next 12 months. S&P affirmed the ratings because it expects that, over the next three years, Krasnoyarsk Krai will maintain a modest debt burden despite weaker performance. The ratings on the krai reflect S&P's view of Russia's developing and unbalanced institutional framework, which, together with the limited ability of the krai's financial management to contain expenditure growth under federal pressure, results in a weak budgetary performance for the krai. A concentrated economy exposes the krai's revenues to the volatility of world commodity markets and also constrains the ratings. The ratings are supported by S&P's view of the krai's positive liquidity position, low contingent liabilities, and modest, albeit gradually increasing, debt burden. The negative outlook reflects S&P's view of Krasnoyarsk Krai's constrained capacity to curb spending growth, which might lead to deficits after capital accounts of about 14% of total revenues in 2013-2015, faster debt accumulation, and ultimately to a weakening of the krai's liquidity position. S&P could take a negative rating action within the next 12 months if, in line with its downside scenario, the krai's debt service coverage ratio falls below 100% as a result of shorter maturities of newly attracted debt and cash depletion. In S&P's view this would indicate a change to the krai's prudent liquidity management practice and would likely result in its changing its view of its liquidity to "neutral". S&P could revise the outlook back to stable within the next 12 months if it thought that the krai's budgetary performance were set to gradually improve as envisaged in its base-case scenario, thanks to cost-containment measures implemented by the krai's management, and if the krai maintained its "positive" liquidity position by extending debt maturities. ========= S P A I N ========= FONCAIXA FTGENCAT 4: Moody's Confirms 'B2' Rating on Cl. C Notes ---------------------------------------------------------------- Moody's Investors Service has confirmed all the ratings that were on review in FONCAIXA FTGENCAT 3, FTA, FONCAIXA FTGENCAT 4, FTA, and FONCAIXA FTGENCAT 5, FTA. These confirmations reflect sufficient credit enhancement on the back of deleveraging, which enables the notes to address sovereign risk and exposure to counterparty risk. Moody's notes also that performance has shown signs of stabilization over the last six months. This rating action concludes the review for downgrade initiated by Moody's on March 13, 2013, following the publication of Moody's Special Comment "Structured Finance Transactions: assessing the impact of sovereign risk", March 11, 2013. All three affected transactions are Spanish asset-backed securities (ABS) transactions primarily backed by loans to small and medium- sized enterprises (SMEs), and benefitting from a guarantee from the Generalitat de Catalunya (Ba3/NP). Caja de Ahorros y Pensiones de Barcelona (La Caixa, now Caixabank, Baa3/P-3) originated all three transactions. Ratings Rationale: These confirmations reflect the presence of adequate credit enhancement to address sovereign risk and performance concerns. The introduction of new adjustments to Moody's modeling assumptions to account for the effect of deterioration in sovereign creditworthiness has, to varying degrees, affected all of the Spanish SME ABS included in this rating action. Moody's confirmed the ratings of securities whose credit enhancement and structural features provided enough protection against sovereign and counterparty risk. The determination of the applicable credit enhancement that drives this rating action reflects the introduction of additional factors in Moody's analysis to better measure the impact of sovereign risk on structured finance transactions. - Additional Factors Better Reflect Increased Sovereign Risk Moody's has supplemented its analysis to determine the loss distribution of securitized portfolios with two additional factors, the maximum achievable rating in a given country (the local currency country risk ceiling) and the applicable portfolio credit enhancement for this rating. With the introduction of these additional factors, Moody's intends to better reflect increased sovereign risk in its quantitative analysis, in particular for mezzanine and junior tranches. The Spanish country ceiling, and therefore the maximum rating that Moody's will assign to a domestic Spanish issuer including structured finance transactions backed by Spanish receivables, is A3. The portfolio credit enhancement represents the required credit enhancement under the senior tranche for it to achieve the country ceiling. By lowering the maximum achievable rating, the revised methodology alters the loss distribution curve and implies an increased probability of high loss scenarios. Under the updated methodology incorporating sovereign risk on ABS transactions, loss distribution volatility increases to capture increased sovereign-related risks. Given the expected loss of a portfolio and the shape of the loss distribution, the combination of the highest achievable rating in a country for structured finance transactions and the applicable credit enhancement for this rating uniquely determine portfolio distribution volatility, which the coefficient of variation (CoV) typically measures for ABS transactions. A higher applicable credit enhancement for a given rating ceiling or a lower rating ceiling with the same applicable credit enhancement both translate into a higher CoV. - Moody's Revises Key Collateral Assumptions Moody's maintained the default rate and its recovery rate assumptions for all three transactions, which it updated on 18 December 2012. According to the updated methodology, Moody's increased the CoV, which is a measure of volatility, in all three transactions. For FONCAIXA FTGENCAT 3, FTA, the current default assumption is 13.5% of the current portfolio and the assumption for the fixed recovery rate is 55.0%. Moody's has increased the CoV to 123.5% from 90%, which, combined with the revised key collateral assumptions, resulted in a portfolio credit enhancement of 26.6%. For FONCAIXA FTGENCAT 4, FTA, the current default assumption is 11% of the current portfolio and the assumption for the fixed recovery rate is 55.0%. Moody's has increased the CoV to 140.3% from 114%, which, combined with the revised key collateral assumptions, resulted in a portfolio credit enhancement of 24.5%. For FONCAIXA FTGENCAT 5, FTA, the current default assumption is 13.4% of the current portfolio and the assumption for the fixed recovery rate is 55.0%. Moody's has increased the CoV to 128.13% from 95%, which, combined with the revised key collateral assumptions, resulted in a portfolio credit enhancement of 24.5%. - Moody's Has Considered Exposure to Counterparty Risk The conclusion of Moody's rating review also takes into consideration exposure to Caixabank, which acts as the servicer, swap counterparty and collection account bank in all three transactions. This rating action incorporates exposure to commingling risk with Caixabank. The collections of the portfolios are transferred daily from Caixabank to the transactions' accounts at Barclays Bank PLC (A2/P-1), where the reserve funds are also held. This mitigates considerably the exposure to Caixabank. As part of its analysis, Moody's also assessed the exposure to Caixabank as swap counterparty for the transactions, which in this case is quite significant because the swap counterparty paying on the balance of the notes provides substantial support to the notes. Because Caixabank is now rated below A1 (it is now Baa3/P-3), a mechanism for the posting of cash collateral was set up. The posting of the cash on a Barclays account is performed on a weekly basis for all three deals. The revised/confirmed ratings of the notes are consistent with this exposure. - Other Developments May Negatively Affect the Notes In consideration of Moody's new adjustments, any further sovereign downgrade would negatively affect structured finance ratings through the application of the country ceiling or maximum achievable rating, as well as potentially increased portfolio credit enhancement requirements for a given rating. As the euro area crisis continues, the ratings of structured finance notes remain exposed to the uncertainties of credit conditions in the general economy. The deteriorating creditworthiness of euro area sovereigns as well as the weakening credit profile of the global banking sector could further negatively affect the ratings of the notes. Moody's describes additional factors that may affect the ratings in its Rating Methodology, "The Temporary Use of Cash in Structured Finance Transactions: Eligible Investment and Bank Guidelines", March 18, 2013; and the Request for Comment, "Approach to Assessing Linkage to Swap Counterparties in Structured Finance Cashflow Transactions: Request for Comment", July 2, 2012. In reviewing these transactions, Moody's used ABSROM to model the cash flows and determine the loss for each tranche. The cash flow model evaluates all default scenarios, which Moody's then weights considering the probabilities of the inverse-normal distribution assumed for the portfolio default rate. In each default scenario, Moody's calculates the corresponding loss for each class of notes given the incoming cash flows from the assets and the outgoing payments to third parties and noteholders. Therefore, the expected loss for each tranche is the sum product of the probability of occurrence of each default scenario and the loss derived from the cash flow model in each default scenario for each tranche. As such, Moody's analysis encompasses the assessment of stressed scenarios. In the context of the rating review, Moody's has remodeled the transactions and adjusted a number of inputs to reflect the new approach. Methodologies The methodologies used in these ratings were "Moody's Approach to Rating EMEA SME Balance Sheet Securitisations", published in May 2013 and "The Temporary Use of Cash in Structured Finance Transactions: Eligible Investment and Bank Guidelines", published in March 2013. The revised approach to incorporating country risk changes into structured finance ratings forms part of the relevant asset class methodologies along with the publication of its Special Comment "Structured Finance Transactions: Assessing the Impact of Sovereign Risk" published in March 2013. List Of Affected Ratings Issuer: FONCAIXA FTGENCAT 3, FTA EUR449.3M A(G) Notes, Confirmed at A3 (sf); previously on Mar 13, 2013 A3 (sf) Placed Under Review for Possible Downgrade EUR10.7M B Notes, Confirmed at Ba1 (sf); previously on Mar 13, 2013 Ba1 (sf) Placed Under Review for Possible Downgrade EUR7.8M C Notes, Confirmed at B1 (sf); previously on Mar 13, 2013 B1 (sf) Placed Under Review for Possible Downgrade Issuer: FONCAIXA FTGENCAT 4, FTA EUR326M A (G) Notes, Confirmed at Baa1 (sf); previously on Mar 13, 2013 Baa1 (sf) Placed Under Review for Possible Downgrade EUR9.6M B Notes, Confirmed at Ba3 (sf); previously on Mar 13, 2013 Ba3 (sf) Placed Under Review for Possible Downgrade EUR7.2M C Notes, Confirmed at B2 (sf); previously on Mar 13, 2013 B2 (sf) Placed Under Review for Possible Downgrade Issuer: FONCAIXA FTGENCAT 5, FTA EUR449.4M A (G) Notes, Confirmed at Baa2 (sf); previously on Mar 13, 2013 Baa2 (sf) Placed Under Review for Possible Downgrade EUR21M B Notes, Confirmed at B1 (sf); previously on Mar 13, 2013 B1 (sf) Placed Under Review for Possible Downgrade =========== S W E D E N =========== JB EDUCATION: Declares Bankruptcy After Drop in Student Number -------------------------------------------------------------- The Local reports that JB Education announced on Tuesday it would declare bankruptcy. At the end of May, JB Education sent shockwaves through Sweden's free school establishment when it announced it would be quitting its primary and secondary school operations in Sweden due to a drop in the number of students, the Local recounts. The firm, which had been a pioneer in Sweden's free school movement, added that it would sell its adult education operations to Academedia, Sweden's largest education company, the Local discloses. Staff members within JB Education's administrative roles have already been let go, the Local relates. According to the Local, CEO Ander Hultin told the TT news agency "We were hit by a drop in the number of upper-secondary school students over recent years; the numbers in our school almost halved." "The owners, Axcel, came to a point where became meaningless to continue." JB Education is one of Sweden's largest operators of publicly funded, privately managed free schools. JB Education, previously known as John Bauer Gymnasiet, opened its first school in Sweden in Jonkoping, central Sweden, in 2000. It currently operates schools in 20 locations around the country. ===================== S W I T Z E R L A N D ===================== GATEGROUP HOLDING: S&P Lowers Corporate Credit Rating to 'BB-' -------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered to 'BB-' from 'BB' its long-term corporate credit rating on gategroup Holding AG, a Switzerland-based airline solutions provider. At the same time, S&P lowered its issue rating on the EUR350 million 6.75% senior unsecured notes due 2019, issued by wholly owned subsidiary gategroup Finance (Luxembourg) S.A., to 'BB-' from 'BB'. The recovery rating on this instrument is '4', indicating S&P's expectation of average (30%-50%) recovery prospects in the event of a payment default. The downgrade reflects S&P's view that gategroup is unlikely to materially improve its credit metrics to levels that it considers commensurate with a 'BB' rating within the next 12 months. At financial year-end Dec. 31, 2012, gategroup's Standard & Poor's- adjusted funds from operations (FFO) to debt was 14%, which S&P considers low for the "significant" financial risk profile descriptor that S&P had previously assigned. S&P has therefore reassessed gategroup's financial risk profile as "aggressive". In S&P's opinion, the significant decline in the adjusted EBITDA margin--to 5.3% in 2012 from 7.5% in 2011--was due to the ongoing weak conditions in the European airline industry, and has led to much weaker financial ratios. "Under our base-case scenario, the group's current operating performance is unlikely to meet our guideline for the rating of more than 20% adjusted FFO to debt. Our forecast includes the benefit of restructuring savings of about CHF15 million-CHF25 million in 2013. For the 12 months ending March 30, 2012, adjusted FFO to debt was 12%. In 2013, we forecast that this ratio will improve to about 17%, which still falls short of the 20% that we consider commensurate with a 'BB' rating. The group faces what we consider to be increasingly difficult business conditions in its European Airline Solutions business, and, so far, it has not been able to offset these with its extensive cost-efficiency programs," S&P said. "In our current base-case credit scenario, we expect modest revenue growth and an adjusted EBITDA margin of about 5.5%. We forecast that the European economy will remain soft in 2013, which, in a downside scenario, could materially constrain the operating performance of gategroup's European businesses," S&P added. "Our rating on gategroup reflects our assessment of the company's business risk profile as "fair". This takes into account its exposure to the cyclical and price-competitive commercial airline industry, which we consider to be highly dependent on favorable global economic conditions. In our view, gategroup's exposure to the industry entails one-off event risks and cash flow volatility. The company also has high customer concentration, with weakening credit quality, and limited bargaining power with its customers. That said, gategroup benefits from a strong market position--we estimate a global market share of about 23%--and high customer retention rates. It operates in 35 countries and is the main supplier for its top-10 customers at their hub airports," S&P added. The issue rating on the EUR350 million 6.75% senior unsecured notes due 2019 is 'BB-', in line with the corporate credit rating. The recovery rating on this instrument is '4', indicating S&P's expectation of average (30%-50%) recovery prospects in the event of a payment default. The ratings on the notes are supported by S&P's expectation that, in the event of default, the group would be reorganized as a going concern. They also reflect S&P's view that the Swiss insolvency regime is relatively favorable to creditors. The ratings are, however, constrained by the unsecured nature of the notes, and what S&P views as weak documentary protection against the incurrence of additional secured and unsecured debt. "In order to determine recovery prospects, we simulate a hypothetical default scenario. Under this scenario, we assume a default in 2016. We value gategroup on a going-concern basis, with an estimated stressed enterprise value of about CHF375 million at the hypothetical point of default. This is based on a stressed EBITDA of about CHF68 million, and a multiple of about 5.5x. In our simulated default scenario, we assume a prolonged period of weak economic conditions, dampening the appetite for global travel. Additionally, we assume that the loss of major customers would cause revenues to sharply decline. At the same time, we believe deteriorating contract terms, because of the airlines' continued struggle to cut costs, would cause gategroup's margins to deteriorate," S&P noted. "After deducting priority liabilities of about CHF100 million, comprising enforcement costs and priority claims, we arrive at a residual value of CHF275 million available for unsecured creditors. This leads to our view that recovery prospects for the noteholders would be in the 30%-50% range, translating into a recovery rating of '4'. We believe that the presence of maintenance financial covenants in the RCF documentation and the large carve-outs in the notes' documentation for the incurrence of additional debt create a risk for the noteholders' recovery prospects. Accordingly, we could lower our recovery rating if the notes' position in the capital structure materially deteriorates in the future," S&P said. The stable outlook reflects S&P's view that gategroup will continue to deliver resilient operational and financial performance over the short to medium term, and that liquidity will remain sufficient to support its debt-service and ongoing operational needs. S&P believes that the risk of a negative rating action would most likely arise from further deterioration in the business conditions of gategroup's European Airline Solutions business. This could lead S&P to revise downward its assessment of the group's business risk profile to "weak" from its current assessment of "fair." Downside rating risk could also arise if gategroup's EBITDA margin were to weaken materially from current levels; to such an extent that FFO to debt is less than 12%, on a sustainable basis. S&P could raise the rating if operating performance improves significantly as a result of improved market conditions, leading to FFO to debt of between 20%-25%, on a sustainable basis. =========================== U N I T E D K I N G D O M =========================== AIRE VALLEY: Fitch Upgrades Rating on Class D Notes to 'BBsf' ------------------------------------------------------------- Fitch Ratings has affirmed Aire Valley Master Trust's class A, B and C notes, and upgraded the class D notes to 'BBsf' from 'Bsf'. Key Rating Drivers Strong Credit Enhancement: The ratings are based on strong collateral performance and sufficient level of credit enhancement to cover the applicable risk factor stresses. Credit enhancement for the class A 'AAAsf' rated notes has increased to 21.92% from 20.54% in May 2012 due to the redemption of certain notes and the non-amortizing nature of the reserve funds. The upgrade of the class D notes reflects the stable asset performance and increase in credit enhancement for the class D notes to 5.05% from 4.36% due to the replenishment of the reserve fund. The reserve fund draw in April 2012 was caused by the low constant repayment rate (CPR) that Aire Valley has experienced in the past three years rather than any performance issues. The reserve fund was drawn to cover the bullet principal payment of the 2007-2 Series 1 class A3 notes, which was due in April. Since the draw, the reserve fund has replenished back to its target level of GBP380 million. The fast replenishment is due to the top seniority position the reserve fund holds in the principal priority of payments, which is only utilized when the reserve fund is drawn to cover note principal payments. Stable Asset Performance: The collateral performance has remained stable since our last review. Three-months plus arrears, which were 1.8% at the time of last review, have decreased to 1.4% of the pool. This is well below the average for UK prime mortgages, presently around 2%. The decrease in arrears is most likely a result of sustained buoyancy of borrower affordability in the buy-to-let market (BTL), increase in rents resulting in higher cash flows for BTL borrowers and an improvement in servicing and forbearance practices. The majority of borrowers in Aire Valley are in this earlier BTL subset and are contributing to a weighted average mortgage rate across the entire pool of 2.3%. Fitch expects interest rates to remain at low levels for the next year, which coupled with expected stabilization in the level of unemployment, is likely to support the program's continued solid performance. Given the relatively low level of arrears, losses have also remained low at 0.35% in the past 12 months. These have been covered comfortably with excess spread, which stands at approximately 0.55%. Non-Asset Trigger Breach: Aire Valley breached its non-asset trigger in May 2012, due to trust assets falling below the minimum trust size of GBP10.7bn. This breach was expected, and the natural repercussion of the prohibition of the sale of new loans into the trust, which was caused by a breach of a step-up trigger in October 2008. The consequences of this breach are mostly limited. The trigger dictates that the Funding 1 vehicle should receive all principal receipts, in place of the seller. However, this stipulation is redundant as the seller has not received any principal receipts since 2008, because of the large volume of outstanding notes that have been and are still due and payable. This has primarily been caused by the low CPR; less than 5% over the past three years. The low CPR has limited the speed of note amortization, and meant that due and payable notes have remained outstanding. Moreover, given 90.9% of the pool is on an interest-only mortgage, scheduled principal payments are also limited. In addition, given the large volume of outstanding due and payable class A notes relative to principal collections, the more junior notes (class B, C and D) have not received any principal payments since the 2004-1 series 2 junior notes paid in full in June 2008. However, in the agency's view, the trigger has had a far more nuanced effect on note amortization, as all controlled amortization notes are now converted to pass-through notes, and the amortization rule 2, which limited the pay down of pass- through notes that had stepped up (in favor of controlled amortization notes), is no longer in use. The agency therefore continues to expect a more marginal and subtle effect on amortization amongst the different class A notes than it does across the entire capital structure. Limited Impact of Margin Step-Up: The last remaining notes reached their step-up date in Q213. In a low CPR scenario, which is the current situation, the resultant increase in note margin will put a strain on the transaction's cash flow. Although the current level of excess spread and asset margin are expected to be able to cover the increase in margin costs in the near term, the weighted average cost of notes will further increase as senior notes pay down. Rating Sensitivities Unanticipated increases in the frequency of defaults and loss severity on defaulted receivables due to factors such as an increase in unemployment or interest rates could produce loss levels higher than the base case and deplete reserve funds and reduce credit enhancement available to the notes, resulting in potential rating actions. The ratings are also sensitive to counterparty risks and may be revised if a direct support counterparty is downgraded below its minimum required ratings. Additional stresses, including a 10% increase in market value decline and a 0.2% reduction in credit enhancement were applied to take the BTL nature of the pool and the proportion of the pool currently in possession into account. Initial key rating drivers are further described in the new issue report dated 08 August 2008 at www.fitchratings.com. The rating actions are as follows: Aire Valley Mortgages 2004-1 plc Series 3 Class A1: affirmed at 'AAAsf'; Outlook Stable Series 3 Class A2: affirmed at 'AAAsf'; Outlook Stable Series 3 Class B1: affirmed at 'AAsf'; Outlook Stable Series 3 Class B2: affirmed at 'AAsf'; Outlook Stable Series 3 Class C1: affirmed at 'BBB-sf'; Outlook Stable Series 3 Class C2: affirmed at 'BBB-sf'; Outlook Stable Series 3 Class D1: upgraded to 'BBsf'; Outlook Stable Series 3 Class D2: upgraded to 'BBsf'; Outlook Stable Aire Valley Mortgages 2005-1 plc Series 2 Class A1: affirmed at 'AAAsf'; Outlook Stable Series 2 Class A2: affirmed at 'AAAsf'; Outlook Stable Series 2 Class A3: affirmed at 'AAAsf'; Outlook Stable Series 2 Class B1: affirmed at 'AAsf'; Outlook Stable Series 2 Class B2: affirmed at 'AAsf'; Outlook Stable Series 2 Class C2: affirmed at 'BBB-sf'; Outlook Stable Aire Valley Mortgages 2006-1 plc Series 1 Class A: affirmed at 'AAAsf'; Outlook Stable Series 2 Class A1: affirmed at 'AAAsf'; Outlook Stable Series 2 Class A2: affirmed at 'AAAsf'; Outlook Stable Series 2 Class A3: affirmed at 'AAAsf'; Outlook Stable Series 1 Class B1: affirmed at 'AAsf'; Outlook Stable Series 1 Class B2: affirmed at 'AAsf'; Outlook Stable Series 1 Class B3: affirmed at 'AAsf'; Outlook Stable Series 2 Class B2: affirmed at 'AAsf'; Outlook Stable Series 2 Class B3: affirmed at 'AAsf'; Outlook Stable Series 1 Class C2: affirmed at 'BBB-sf'; Outlook Stable Series 2 Class C2: affirmed at 'BBB-sf'; Outlook Stable Aire Valley Mortgages 2007-1 plc Series 2 Class A1: affirmed at 'AAAsf'; Outlook Stable Series 2 Class A2: affirmed at 'AAAsf'; Outlook Stable Series 2 Class A3: affirmed at 'AAAsf'; Outlook Stable Series 1 Class B: affirmed at 'AAsf'; Outlook Stable Series 2 Class B: affirmed at 'AAsf'; Outlook Stable Series 1 Class C: affirmed at 'BBB-sf'; Outlook Stable Series 2 Class C: affirmed at 'BBB-sf'; Outlook Stable Aire Valley Mortgages 2007-2 plc Class 1A1: affirmed at 'AAAsf'; Outlook Stable Class 1A2: affirmed at 'AAAsf'; Outlook Stable Class 1B: affirmed at 'AAsf'; Outlook Stable Class 1C: affirmed at 'BBB-sf'; Outlook Stable Aire Valley Mortgages 2008-1 plc Series 1 Class A1: affirmed at 'AAAsf'; Outlook Stable Series 1 Class A2: affirmed at 'AAAsf'; Outlook Stable Series 2 Class A1: affirmed at 'AAAsf'; Outlook Stable Series 2 Class A2: affirmed at 'AAAsf'; Outlook Stable Series 2 Class C: affirmed at 'BBB-sf'; Outlook Stable Series 2 Class D: upgraded to 'BBsf'; Outlook Stable CORNERSTONE TITAN: Fitch Affirms 'CC' Rating on Class F Notes ------------------------------------------------------------- Fitch Ratings has affirmed Cornerstone Titan 2006-1 Plc's notes due April 2015, as follows: GBP0m class A (XS0262023459) paid in full GBP13.1m class B (XS0262023962) affirmed at 'Asf'; Outlook revised to Negative from Stable GBP19.5m class C (XS0262024184) affirmed at 'BBBsf'; Outlook revised to Negative from Stable GBP24.6m class D (XS0262024424) affirmed at 'BBsf'; Outlook revised to Negative from Stable GBP19.9m class E (XS0262025157) affirmed at 'Bsf'; Outlook revised to Negative from Stable GBP28.3m class F (XS0262025405) affirmed at 'CCsf'; Recovery Estimate (RE) 20% GBP12.5m class G (XS0262025744) affirmed at 'Dsf'; RE0% GBP3.6m class H (XS0262026551) affirmed at 'Dsf; RE0%' GBP0m class J (XS0262027104) affirmed at 'Dsf; RE0% KEY RATING DRIVERS The affirmation reflects the full repayment of four loans, as expected by Fitch, since the last rating action, in June 2012. This resulted in full repayment of the class A notes, a partial repayment of the class B notes, and a reduction in the pool balance to GBP121.4 million from GBP564.1 million. However, the upcoming legal final maturity of the notes, in April 2015, adds uncertainty to the workout process for the two remaining loans, which both failed to repay at maturity. This downside risk is reflected in the class B to E's Negative Outlooks. Both outstanding loans are subject to an unhedged floating rate of interest. Assuming rates stay low, there is scope for substantial surplus income from the loans to repay the bulk of the class B notes (GBP2.3 million was swept at the most recent interest payment date in April 2013). However, the value of this route must be traded off against the cost of the tail period eroding further. The larger of the two remaining loans, the GBP72.6 million Lloyds Chamber loan (60% of the transaction), defaulted in June 2011. It is secured by an office building constructed some 35 years ago and located on the outskirts of London's financial district, in what is traditionally known as the insurance district. The property is fully let to AON Corporation ('BBB+'/Stable/'F2') until June 2018. With the majority of space sub-let to third parties, and AON's procurement of alternative office space, a departure of the tenant at lease expiry is likely. The special servicer is aiming for a consensual sale of the property, which is on the market. Given the high level of capital expenditure required to attract a new anchor tenant into an out- dated property, and the likelihood of striking a lease on materially weaker terms than that with AON (which pays over 30% above market rates), Fitch expects this loan to make a loss. The property was revalued in October 2011, which revealed a 27% fall since closing. Fitch estimates further value declines since and a loan to value ratio well in excess of 100%. The loan also has a GBP8.3 million B note, which adds additional leverage and could further complicate any workout. The other loan in the pool is the Argos Distribution Centre loan, which defaulted at its maturity in January 2013. The loan, which includes a subordinated B-note, is secured by a 600,000 square foot grade A distribution center located in an established industrial park near Bedford, 85 miles north west of London. The asset is fully let to Argos until the end of 2022. Given the property's quality and long residual income profile -- and with signs of resurgent investor interest in fundamentally sound secondary assets -- Fitch expects the loan to repay with minimal or no loss. RATING SENSITIVITIES With legal final maturity in April 2015, the ratings are at risk of delays in the sales process for both loans. Additional sources of risk include further value declines particularly with respect to the Lloyds Chamber loan office, given its decaying lease term. DWELL: On Brink of Administration; 200 Jobs at Risk --------------------------------------------------- Graham Ruddick at The Telegraph reports that Dwell, the upmarket furniture retailer, is close to collapsing into administration, putting 200 jobs at risk. According to the Telegraph, the 24-store chain, which has a store at Westfield London and Westfield Stratford City at the Olympic Park, has lined up Duff & Phelps as administrator and was expected to make an announcement yesterday. The company hired Argyll Partners last month to try to find a buyer but it is understood this has been unsuccessful, the Telegraph relates. The company's most recent annual results, which cover the 12 months to January 27 2012, shows that pre-tax losses expanded from GBP439,721 to GBP1.69 million, the Telegraph discloses. The accounts show that Dwell, which is owned by Key Capital Partners, had net debt of GBP6.1 million but GBP11.7 million of debt due for repayment during the next 12 months, the Telegraph notes. According to the The Financial Times' Andrea Felsted, Aamir Ahmad, who originally founded the business as a mail-order furniture company in 2003, has been looking to take control of the chain. He left the business late last year, but remains a creditor, the FT states. Several retail restructuring groups, including GA Europe, also looked at the business, the FT discloses. Dwell is an upmarket furniture retailer. GREEN FIELDS II: S&P Assigns Prelim. 'BB' Rating to Class A Notes ----------------------------------------------------------------- Standard & Poor's Ratings Services said that it assigned its 'BB (sf)' preliminary issue credit rating to the euro-denominated series 2013-1 class A notes to be issued by Green Fields II Capital Ltd. The notes are sponsored by Swiss Reinsurance Company Ltd. (Swiss Re), the ceding insurer. The notes will be exposed to windstorm risk, affecting France including Corsica, between July 2013 and December 2016, as modeled by Risk Management Solutions Inc. "We have based our preliminary rating on the lower of our 'BB' rating on the catastrophe risk; our long-term 'AAA' issuer credit rating on the European Bank for Restructuring and Development (EBRD) as the issuer of the assets in the collateral accounts; and the risk of nonpayment of the quarterly contract payment by Swiss Reinsurance Company Ltd., which has a 'AA-' long-term rating," S&P said. METROPOLIS GROUP: Restructures, Transfers Assets to Holding Firm ---------------------------------------------------------------- Tim Ingham at MusicWeek reports that Metropolis Group, owner of the famous West London recording studio, has undergone significant financial restructuring. The company's management placed its trading company, Metropolis Group Limited (MGL), into administration on May 31, which is now being handled by administrators MacIntyre Hudson LLP, according to MusicWeek. The report notes that the MGL business and its assets were successfully transferred to Metropolis London Music Ltd (MLML), the group's holding company. The report relates that Metropolis continues to operate as a going concern, with all permanent staff now employed under the new structure. According to Metropolis Chief Executive Officer Ian Brenchley, three new investors have been brought on board, who he called "incredibly strategic and experienced with a music and media business background," the report notes. Mr. Brenchley told MusicWeek in an interview that all staff had been retained. "It's a new lease of life really. . . . It's business as usual as far as our clients are concerned." MusicWeek received calls from worried creditors June 10, but Mr. Brenchley said: "As far as our liabilities are concerned, that's in the hands of the administrators. We're managing that with the freelancers and all the people who historically owed any money. We'll ensure that's all taken forward and that we remain on good, friendly terms." PUNCH TAVERNS: ABI Rejects Revised Restructuring Proposal --------------------------------------------------------- Nathalie Thomas at The Telegraph reports that a powerful group of lenders to Punch Taverns, one of Britain's biggest pub groups, has rejected fresh proposals to restructure its GBP2.4 billion securitized debt mountain, describing the latest plan as too "vague". The board of Punch, which has more than 4,000 pubs in the UK, on Monday unveiled a revised plan to tackle its debts, which stacked up last decade during an acquisition boom, the Telegraph relates. A previous proposal published in February was rejected by a group of lenders who have the voting power to block a deal and who are represented by a special committee set up the Association of British Insurers, the Telegraph recounts. Punch's executive chairman, Stephen Billingham, has warned that the company could face administration if it fails to restructure its debt, which is contained in two complex vehicles that need to be serviced with vast amounts of cash to avoid a breach of covenants, the Telegraph notes. However, in a statement on Wednesday, the ABI special committee, as cited by the Telegraph, said the plan published on Monday only amounted to a "marginal revision" of the previously rejected proposals. It is "vague" and is "not a fully formed proposal capable of being considered". According to the Telegraph, the committee said its financial and legal advisers had "no involvement" in talks over the terms of the revised proposals and attacked the board for publishing plans publicly "without prior negotiation and discussions" and without allowing bondholders to conduct "appropriate due diligence". "Although certain key terms remain to be clarified, the ABI Committee considers that it is unlikely that it will be able to support a proposal developed around the thinking described in the update," the Telegraph quotes the committee as saying. Punch claims it has undergone an "extensive process" with its lenders, the Telegraph relates. Mr. Billingham has made it clear that the board wants to reach an agreement by the end of this month, the Telegraph notes. Punch Taverns plc is a United Kingdom-based pub company. The Company is engaged in the operation of public houses under either the leased model or as directly managed by the Company. The Company operates in two business segments: punch partnerships, a leased estate and punch pub company, a managed estate. =============== X X X X X X X X =============== * Upcoming Meetings, Conferences and Seminars --------------------------------------------- June 13-16, 2013 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort, Traverse City, Mich. Contact: 1-703-739-0800; http://www.abiworld.org/ July 11-13, 2013 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Hyatt Regency Newport, Newport, R.I. Contact: 1-703-739-0800; http://www.abiworld.org/ July 18-21, 2013 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop The Ritz-Carlton Amelia Island, Amelia Island, Fla. Contact: 1-703-739-0800; http://www.abiworld.org/ Aug. 8-10, 2013 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Workshop Hotel Hershey, Hershey, Pa. Contact: 1-703-739-0800; http://www.abiworld.org/ Aug. 22-24, 2013 AMERICAN BANKRUPTCY INSTITUTE Southwest Bankruptcy Conference Hyatt Regency Lake Tahoe, Incline Village, Nev. Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. 3-5, 2013 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Wardman Park, Washington, D.C. Contact: http://www.turnaround.org/ Nov. 1, 2013 AMERICAN BANKRUPTCY INSTITUTE NCBJ/ABI Educational Program Atlanta Marriott Marquis, Atlanta, Ga. Contact: 1-703-739-0800; http://www.abiworld.org/ Dec. 2, 2013 BEARD GROUP, INC. 19th Annual Distressed Investing Conference The Helmsley Park Lane Hotel, New York, N.Y. Contact: 240-629-3300 or http://bankrupt.com/ Dec. 5-7, 2013 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Terranea Resort, Rancho Palos Verdes, Calif. Contact: 1-703-739-0800; http://www.abiworld.org/ ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than US$3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. 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